important notices - programmed...booklet also constitutes the explanatory statement required by, and...

Integrated Group Limited Scheme Document �

Important NoticesPurpose of Scheme Booklet

This Scheme Booklet is dated 2 April 2007 and provides information to Integrated Shareholders necessary for them to make a decision as to how to vote on the resolution to be considered at the Scheme Meeting. The Scheme Booklet also constitutes the explanatory statement required by, and provided pursuant to, section 412(1) of the Corporations Act to explain the terms of the Scheme and provide such other information as is required by the Corporations Act and Corporations Regulations. If you have sold all your Integrated Shares, then please ignore all enclosed documents.

What you should do next

Read this booklet and consider the Merger

Your Directors recommend you read this Scheme Booklet in its entirety before making a decision on whether or not to vote in favour of the Scheme. Frequently asked questions are included on pages 14 - 18, to help answer any questions you may have. If you have any doubts as to what action you should take, please contact your legal, financial or other professional adviser.

Vote on the Merger

As an Integrated Shareholder, it is your right to vote on whether the Merger should proceed. You can vote by proxy, using the enclosed personalised proxy form, or in person by coming to the Scheme Meeting to be held at 11.00am on 10 May 2007 at the Karri Room, the Parmelia Hilton Hotel, Perth, Western Australia.

If you vote by proxy, your proxy form must be received by 11.00am on 8 May 2007, for your vote to be counted. You must do this by posting or faxing your proxy form to the addresses or fax numbers set out on page 13.

Other important information

Investment decisions

This Scheme Booklet is intended for all Integrated Shareholders collectively, does not constitute financial product advice and has been prepared without reference to your individual investment objectives, financial situation or needs. The information in this document should not be relied upon as the sole basis for any investment decision in relation to your Integrated Shares. You should seek independent financial, tax and other professional advice before making any investment decision in relation to your Integrated Shares and how to vote at the Scheme Meeting.

Forward looking statements

Certain statements in this Scheme Booklet are about the future. You should be aware that there are a number of risks (both known and unknown), uncertainties, assumptions and other important factors that could cause the actual conduct, results, performance or achievements of Integrated or Programmed to be materially different from the future conduct, results, performance or achievements expressed or implied by such statements or that could cause the future conduct, results, performance or achievements to be materially different from historical conduct, results, performance or achievements. Deviations as to future conduct, results, performance and achievements are both normal and to be expected.

None of Integrated, Programmed, their respective directors, officers and advisers, or any other person gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this Scheme Booklet will actually occur. You are cautioned about relying on any such forward looking statements.

In particular, none of Integrated, Programmed or any of their respective directors, officers and advisers is responsible for any forward looking statements in the Independent Expert Report in Appendix 1, unless expressly stated otherwise. Any forward looking statements set out in the Independent Expert Report have been prepared by KPMG.

The forward looking statements in this Scheme Booklet reflect views held only as of the date of this Scheme Booklet, unless otherwise stated. Subject to the Corporations Act and any other applicable laws or regulations, each of Integrated and Programmed disclaims any duty to update these statements.

Responsibility for information

The Integrated Information has been prepared by Integrated and is the responsibility of Integrated. Programmed and its directors and officers and the advisers of Integrated and Programmed, do not assume any responsibility for the accuracy or completeness of the Integrated Information.

The Programmed Information has been prepared by Programmed and is the responsibility of Programmed. Integrated and its directors and officers and the advisers of Programmed and Integrated, do not assume any responsibility for the accuracy or completeness of the Programmed Information.

Except to the extent that they are responsible under the Corporations Act, Integrated, Programmed and their respective directors, officers and advisers do not assume any responsibility for the accuracy or completeness of the Independent Expert Report. KPMG has prepared the Independent Expert Report in relation to the Scheme which is included in Appendix 1 and is responsible for that report.

Roles of ASIC and ASX

A copy of this Scheme Booklet has been examined by ASIC pursuant to section 411(2) of the Corporations Act and registered with ASIC pursuant to section 412(6) of the Corporations Act. Neither ASIC nor any of its officers takes any responsibility for the contents of this Scheme Booklet.

A copy of this Scheme Booklet has been lodged with ASX. Neither ASX nor any of its officers takes any responsibility for the Scheme Booklet.

Court process

The Court is not responsible for the contents of this Scheme Booklet and, in ordering that the Scheme Meeting be held, the Court does not in any way indicate that the Court has approved or will approve the terms of the Scheme. An order of the Court under section 411(1) of the Corporations Act is not an endorsement of, or any other expression of opinion on, the Scheme.

Integrated Shareholders in jurisdictions outside Australia and New Zealand

Integrated Shareholders that are considered to be Ineligible Foreign Holders will not be able to receive New Programmed Shares under the Scheme. New Programmed Shares that otherwise would be issued to these shareholders in connection with the Scheme will be issued to the Sale Agent (or its nominee) to be sold on ASX, with the net proceeds of such sale to be paid to the Ineligible Foreign Holders.

Ineligible Foreign Holders should refer to section 7.6 of this Scheme Booklet.

Privacy and personal information

Integrated needs to collect personal information to implement the Scheme. This personal information may include the names, contact details and details of shareholdings of Integrated Shareholders together with contact details of individuals appointed by Integrated Shareholders as proxies, corporate representatives or attorneys at the Scheme Meeting. The collection of some of this information is required or authorised by the Corporations Act. Integrated Shareholders who are individuals, and other individuals in respect of whom personal information is collected, have certain rights to access the personal information collected about them and may contact Integrated by email at [email protected] if they wish to exercise those rights. The information may be disclosed to Programmed, Programmed’s advisers, Integrated’s advisers and service providers to the extent necessary to effect the Scheme. If the information outlined above is not collected, Integrated may be hindered in, or prevented from, conducting the Scheme Meeting or implementing the Scheme effectively, or at all.

Defined terms and interpretation

Capitalised terms used in this Scheme Booklet are defined in the Glossary in section 8 of this Scheme Booklet.

For further information

If you have any questions after reading this Scheme Booklet, you can call the Integrated Company Secretary on +61 8 9322 2111 between 8am and 5pm Monday to Friday or email [email protected].

Integrated Group Limited Scheme Document��

Important dates 1

Letter from the Chairman of Integrated 2

Letter from the Chairman of Programmed 4

Why you should vote in favour of the Scheme 5

Why you may consider voting against the Scheme 11

Implications if the Scheme does not proceed 12

How to vote 13

Questions and answers 14

Section 1 – Summary of the Scheme 20

Section 2 – Profile of Integrated 26

Section 3 – Profile of Programmed 38

Section 4 – Profile of the Merged Group 66

Section 5 – Risk factors 80

Section 6 – Tax implications 86

Section 7 – Additional information 94

Section 8 – Glossary 104

Appendix 1 – Independent Expert Report 108

Appendix 2 – Merger Implementation Agreement 223

Appendix 3 – Scheme of Arrangement 283

Appendix 4 – Deed Poll 300

Appendix 5 – Notice of Scheme Meeting 315

Appendix 6 – Sample proxy form 318

Contents


Important Dates

Important note: The timetable provided above is indicative only. Integrated has the right (with Programmed’s consent and subject to any necessary approvals or orders from the Court) to vary any or all of these dates and times and will provide reasonable notice of any such variation. Certain dates and times are subject to change due to the review and approval of the Court and other regulatory authorities. Any changes to the timetable will be announced through ASX and on Integrated’s website (www.intgroup.com.au).

All references to times in this Scheme Booklet are references to the time in Perth, Western Australia.

Key Events Key Dates

Record date for Integrated Interim Dividend Wednesday, 4 April 2007

Payment date for Integrated Interim Dividend Wednesday, 11 April 2007

Proxy forms to be received from Integrated Shareholders no later than 11.00am on Tuesday, 8 May 2007

Time and date for determining eligibility to vote at the Scheme Meeting

5.00pm on Tuesday, 8 May 2007

Scheme Meeting to be held at the Karri Room, the Parmelia Hilton Hotel, Perth, Western Australia

11.00am on Thursday, 10 May 2007

Court hearing for approval of the Scheme Friday, 25 May 2007

Effective Date of the Scheme Monday, 28 May 2007

Suspension of Integrated Shares from ASX trading Close of trading on Monday, 28 May 2007

New Programmed Shares to be issued under the Scheme expected to begin trading on ASX on a deferred settlement basis

Tuesday, 29 May 2007

Scheme Record Date Monday, 4 June 2007

Implementation of Scheme, including payment of the Scheme Consideration Thursday, 7 June 2007

New Programmed Shares begin trading on ASX on a normal settlement basis Monday, 18 June 2007

Integrated Group Limited Scheme Document�

Dear Integrated Shareholders

Proposed merger between Integrated Group Limited and Programmed Maintenance Services Limited

On 12 February 2007, the boards of Integrated Group Limited (Integrated) and Programmed Maintenance Services Limited (Programmed) announced a proposal to merge the two companies (Merger) by way of a scheme of arrangement (the Scheme). Under the proposed Merger, Integrated Shareholders will receive $1.25 in cash and 0.26 New Programmed Shares for each Integrated Share they hold. In addition, Integrated Shareholders who are registered shareholders as at 5.00pm on 4 April 2007 will be entitled to receive the interim dividend declared by Integrated for the six months ended 31 December 2006 of 5 cents per share, to be paid on 11 April 2007. As holders of New Programmed Shares, Integrated Shareholders would also be entitled to receive any final dividend declared by Programmed for the year ending 31 March 2007.

Based on the closing price of Programmed shares on 9 February 2007, being the last full trading day prior to the announcement of the Merger, the Scheme Consideration, together with the Integrated Interim Dividend, represents a 24.8% premium to the volume weighted average share price (VWAP) of Integrated Shares for the month prior to the announcement and a 32.3% premium to the VWAP for the 3 month period prior to the announcement.

In addition to this premium, Integrated’s directors believe that the Merger will unlock the opportunity to create a new force in workforce, facilities management and maintenance solutions, with significant growth prospects, providing labour hire and contract maintenance services to support and maintain infrastructure, manufacturing, industrial and resource operations, safely and profitably in Australia, New Zealand and the United Kingdom. With a significant part of the offer being in Programmed Shares, Integrated Shareholders will benefit from the synergies and growth that the new Merged Group is expected to deliver.

Integrated has a strong management team in place and a sound plan to grow its business further. For Integrated the Merger will provide a significantly stronger platform from which to continue its present strategy. The Merger should deliver its plan for growth faster and with less risk than as a standalone entity by:

• sharing infrastructure to expand Integrated’s workforce operations further into regional Australia and New Zealand, and potentially establishing operations in the United Kingdom; • leveraging Programmed’s capability and track record in infrastructure maintenance to expand Integrated’s existing technical maintenance and managed labour services into the mining and oil and gas markets where managed labour and maintenance services are in strong demand but are not yet serviced in any significant way by either Integrated’s technical maintenance division or by Programmed; and

• using Programmed’s United Kingdom corporate presence to support the expansion of Integrated’s marine business further overseas and to open up the potential to offer international marine manning services.

It is important to note that Integrated and Programmed operate different but complementary businesses. There is no overlap in business operations and therefore the Merger is not anticipated to involve the combination or integration of either entity’s frontline operations. This significantly reduces the risks of the Merger associated with mixing operating cultures and teams from different organisations, or the loss of clients, contracts or employees in either group (which risks are often found in the merging of businesses of the same kind). The major advantages of the Merger result from the improved growth outlook the combined platform provides for the Merged Group’s business, using and sharing location infrastructure and back office functions, and the potential for each of Programmed and Integrated to leverage their existing customer relationships to generate new business for the other.

Letter from the Chairman of Integrated


The Merger is premised upon combining two companies to create and provide, amongst other things:

• a stronger platform for growth;

• better support and services to customers; • improved shared service support and technology for all operating units;

• greater opportunities for further acquisitions;

• a wider range of enhanced roles for employees; and

• a larger, more relevant company for Integrated Shareholders. The Directors of Integrated have appointed KPMG to prepare an Independent Expert Report on the Merger. The report, contained in Appendix 1, concludes that the Merger is in the best interests of shareholders.

The Merger with Programmed is to occur by way of the Scheme, which requires the approval of Integrated Shareholders. This Scheme Booklet contains full details of the Merger proposal. You are urged to read this document carefully as the information it contains is important.

Your Directors (who together hold approximately 11.7% of Integrated’s share capital) unanimously support the Merger and recommend that, in the absence of a superior proposal, you vote in favour of it at the meeting of Integrated Shareholders to be held on 10 May 2007. Subject to that same qualification, the Integrated Directors intend to vote all of the Integrated Shares that they own or control in favour of the Scheme. If the meeting votes in favour of the Scheme then, subject to court approval after the meeting, the Scheme will be binding on all Integrated Shareholders. If you are unable to attend the Scheme meeting, you are encouraged to vote by completing the enclosed personalised proxy form and returning it to Integrated’s Share Registry, Computershare Investor Services, by mail or fax, as soon as possible and in any event by 11.00am on 8 May 2007.

If you are in doubt as to the action you should take in relation to the Merger, you should consult your legal, financial or other professional adviser without delay. If you need any assistance completing the proxy form, please contact Integrated’s Company Secretary on +61 8 9322 2111 or by email at [email protected].

Yours faithfully

Neil HamiltonChairman


Dear Integrated Shareholders

On 12 February 2007 Programmed Maintenance Services Limited (Programmed) and Integrated Group Limited (Integrated) announced a merger of the two companies which we believe presents attractive new opportunities for you as an Integrated Shareholder.

Programmed is a substantial provider of outsourced property maintenance and infrastructure and facilities management services with a proud history of having delivered solid earnings growth in every year since its listing on the ASX in October 1999. The merger of the Integrated and Programmed businesses will create a substantial provider of temporary and permanent labour hire, facilities management and maintenance solutions throughout Australia, New Zealand and the United Kingdom.

Programmed is offering you $1.25 in cash and 0.26 Programmed Shares for each Integrated Share you hold. In addition, you will receive the interim dividend of 5 cents per Integrated Share which was declared by Integrated for the six months ended 31 December 2006, provided you are a registered holder of Integrated shares as at 5.00pm on 4 April 2007. As a holder of New Programmed Shares, you would also be entitled to any final dividend declared by Programmed for the six months ending 31 March 2007.

The Merger provides a number of significant benefits for Integrated Shareholders.

• Programmed is offering to buy your Integrated Shares at an attractive premium to the price your shares traded before the transaction was announced. Importantly, not only do you receive cash, but you also become a shareholder in the Merged Group. • The New Programmed Shares you receive will provide you with the opportunity to participate in the ongoing benefits of the Merger. These include increased scale, enhanced strategic and financial strength, and superior growth prospects through the leveraging of each company’s customer relationships.

• The Merger allows you to become a shareholder in a company with a more diverse shareholder base and a larger market capitalisation, both of which are expected to generate greater liquidity in Programmed Shares.

You should read the Scheme Booklet sent to you by Integrated, as it contains full details of the Merger proposal. Integrated Shareholders who are foreign shareholders should refer to section 7.6 of this Scheme Booklet.

The transaction has been unanimously recommended by the Integrated Board and the Integrated directors recommend that, in the absence of a superior offer from another party, you vote in favour of the transaction at the upcoming shareholders meeting on 10 May 2007. The Integrated Directors who own shares in Integrated intend to vote in favour of the transaction.

In addition, the Independent Expert has considered the proposed transaction and concluded that it is in the best interests of Integrated Shareholders.

The Programmed Board is excited about the future of the combined business and the growth which our two companies can deliver together. We encourage you to vote in favour of the merger and look forward to welcoming you as a shareholder in Programmed.

Yours sincerely

Geoff TomlinsonChairman, Programmed Maintenance Services Limited

Letter from the Chairman of Programmed


Why you should vote in favour of the Scheme

Reason

1Your D�rectors unan�mously recommend that Integrated Shareholders vote �n favour of the Scheme, �n the absence of a super�or proposal

Reason

2The Independent Expert has concluded that the Scheme �s �n the best �nterests of Integrated Shareholders

Reason

3The Scheme Cons�derat�on prov�des an �n�t�al prem�um to trad�ng pr�ces of Integrated Shares pr�or to the announcement of the Merger

Reason

4Integrated Shareholders w�ll be able to share �n the strateg�c and financ�al benefits of the Merger wh�ch are expected to be s�gn�ficant

Reason

5 No super�or proposal to date has emerged

Reason

6Integrated Shares are unl�kely to trade at current levels �n the absence of the Merger proposal

Reason

7No brokerage w�ll be payable and part�al CGT rollover rel�ef w�ll be ava�lable to res�dent shareholders

These reasons are discussed in further detail on the following pages.


1. Your Directors unanimously recommend that Integrated Shareholders vote in favour of the Scheme, in the absence of a superior proposal1

For the reasons set out below, your Directors unanimously recommend that Integrated Shareholders vote in favour of the Scheme, in the absence of a superior proposal. Subject to the same qualification, each of your Directors intends to vote all of the Integrated Shares they own or control in favour of the Scheme at the Scheme Meeting. In aggregate, your Directors own or control approximately 11.7% of the Integrated share capital. Further detail about the interests of your Directors in Integrated Shares is set out in section 7.7 of this Scheme Booklet (Interests in Integrated securities).

2. The Independent Expert has concluded that the Scheme is in the best interests of Integrated Shareholders

The Independent Expert, KPMG, has reviewed the terms of the Scheme and has concluded that the Scheme is in the best interests of Integrated Shareholders.

In its report, the Independent Expert has assessed:

• the full underlying value of an Integrated Share to lie in the range of $2.56 to $2.93; and

• the fair market value of the Scheme Consideration, together with the Integrated Interim Dividend, to lie in the range of $2.62 to $2.80 per Integrated Share.

As the low end of the value of the Scheme Consideration together with the Integrated Interim Dividend ($2.62) lies within the Independent Expert’s assessed range of values for an Integrated Share ($2.56 to $2.93) the consideration offered is considered to be fair.

A copy of the Independent Expert Report is set out in Appendix 1 of this Scheme Booklet. Integrated Shareholders are encouraged to read that report in its entirety. It contains important information relevant to the Scheme, the advantages and disadvantages of the Merger and the assumptions, qualifications and disclaimers on which the Independent Expert’s conclusions are based.

3. The Scheme Consideration provides an initial premium to trading prices of Integrated Shares prior to the announcement of the Merger

Based on the closing price of Programmed Shares on ASX of $5.14 on 9 February 2007, being the last trading day prior to the announcement of the Merger, the Scheme Consideration, together with the Integrated Interim Dividend, implies a total value of $2.64 per Integrated Share. This represents a:

• 16.7% premium to the closing price of Integrated Shares on 9 February 2007 of $2.26 per share; • 24.8% premium to the one month VWAP of Integrated Shares up to and including 9 February 2007 of $2.11 per share; and

• 32.3% premium to the three month VWAP of Integrated Shares up to and including 9 February 2007 of $1.99 per share.

In addition to the initial premia mentioned above, those Integrated Shareholders who receive New Programmed Shares under the Scheme will be able to share in any future strategic and financial benefits of the Merger which are expected to be significant and are detailed on pages 8 to 10 (inclusive).

Persons registered as holders of Integrated Shares at 5.00pm on 4 April 2007 will be entitled to receive the Integrated Interim Dividend. Accordingly, persons who become registered holders of Integrated Shares after 4 April 2007 will not receive the Integrated Interim Dividend.

Why you should vote in favour of the Scheme

1. As set out in section 7.8, one of the Directors (Neil Hamilton) has an interest in 5,000 Programmed Shares.


The premia implied by the Scheme Consideration, together with the Integrated Interim Dividend, are shown graphically below:

$2.26$2.11

$1.99

$1.35

$1.55

$1.75

$1.95

$2.15

$2.35

$2.55

$2.75

Closing Price 1 month VWAP 3 month VWAP

Offer Value - $2.64(1)

16.7% premium(1) 24.8% premium(1) 32.3% premium (1)

Premium Analysis

Notes:1. This represents the implied value of the Scheme Consideration, together with the Integrated Interim Dividend, based on Programmed’s closing share price on 9 February 2007 of $5.14.

In addition, those Integrated Shareholders who receive New Programmed Shares under the Scheme and continue to hold them will be entitled to any final dividend declared by Programmed for the financial year ending 31 March 2007, provided the Implementation Date occurs on or before the Programmed Record Date. If Programmed declares the Programmed Final Dividend but Integrated Shareholders do not receive it because the Programmed Record Date is before the Implementation Date, Integrated will pay Scheme Shareholders the Integrated Final Dividend. Programmed presently has a policy of paying dividends to shareholders which are equivalent to approximately 60% of the net profit after tax for the relevant financial year, though Integrated Shareholders should note that Programmed has not yet declared any final dividend in respect of the financial year ending 31 March 2007. Since 9 February 2007, the price of Programmed shares on ASX has increased from $5.14 to $5.19 as at 22 March 2007. As a result, the implied premium of the Scheme Consideration, together with the Integrated Interim Dividend, to the closing price of Integrated Shares on 9 February 2007 of $2.26 is now 17.2%. Integrated Shareholders should be aware that the price of Programmed Shares may fluctuate upwards or downwards prior to, and after, implementation of the Scheme. Accordingly, Integrated Shareholders should be aware that, as part of the Scheme Consideration includes Programmed Shares, the implied value of the Scheme Consideration to Integrated Shareholders will vary with the price of Programmed Shares. Further, all references to the implied value of the Scheme Consideration, or the implied value of the Scheme Consideration together with the Integrated Interim Dividend, are subject to the effects of rounding. It should be noted, in relation to potential fluctuations upwards or downwards of Programmed Shares immediately after the Implementation Date, that Programmed will issue approximately 18.8 million New Programmed Shares under the Scheme; that some Integrated Shareholders may seek to sell those shares on ASX; and that any New Programmed Shares attributable to Ineligible Foreign Holders will be sold on ASX on their behalf. If a significant number of Programmed Shares are sold, the value at which Programmed Shares are traded on ASX may be adversely affected. The price of Programmed Shares may, however, rise if, in addition to general movements in equity markets, there is increased investor demand for Programmed Shares as a result of the Merger.

Please refer to sections 2.5(b) and 3.8(b) of this Scheme Booklet for the recent share price history of Integrated and Programmed shares respectively.


4. Integrated Shareholders will be able to share in the strategic and financial benefits of the Merger which are expected to be significant

Scheme Shareholders will receive Scheme Consideration which includes 0.26 Programmed Shares per Integrated Share (although Ineligible Foreign Holders will not be issued Programmed Shares – see section 7.6 (Shareholders outside Australia and New Zealand)).

Accordingly, the Scheme Consideration is structured to enable Integrated Shareholders to share in any strategic and financial benefits of the Merger, which are expected to be significant for the reasons specified below.

The complementary nature of the Integrated and Programmed businesses means that the Merger will create a larger, broad-based outsourced maintenance and labour hire services company, capable of leveraging maintenance services and labour management systems and tools, to provide better service to the combined customer base.

More specifically, it is expected that the Merger will provide the following strategic and financial benefits:

a) Faster penetration into new regions - there is great potential for Integrated’s workforce division to use the existing infrastructure and customer base of Programmed to expand further into regional Australia, New Zealand and the United Kingdom. In addition, there are opportunities for Integrated’s Marine Division, which recently expanded into New Zealand, to seek further international expansion by establishing operations in the United Kingdom and potentially offering marine manning services internationally. Greater corporate scale will improve support for both Integrated and Programmed operations in their respective markets.

b) Access to new customers - there is potential for Integrated and Programmed to leverage each other’s existing customer relationships to generate faster revenue growth than either business is likely to be able to achieve on a standalone basis. The Merged Group will have a combined customer base of in excess of 7,500 customers. There is less than a 12% overlap between the top 300 customer bases of Integrated and Programmed respectively, which provides potential for Integrated and Programmed to develop relationships with each others’ existing customers.

c) Further development of technical maintenance - Integrated has planned to develop further into managed labour and maintenance services in the oil and gas and mining markets, and in particular to leverage off its marine exposure in offshore oil and gas operations in Western Australia and New Zealand. The additional track record and capability of Programmed in building and infrastructure maintenance will add significantly to the Merged Group’s capability to extend its reach to these new markets.

d) Improved internal support functions - the increased scale and capacity of the internal support functions provides the potential to improve the quality of service, lower unit costs and enable a greater investment in related information technology.

e) Operational cost savings - the combination is expected to generate net annual pre-tax cost savings of approximately $3 million within 2 years of the Merger, based on Integrated’s preliminary estimates. These cost savings are expected to be realised in the areas of information technology and communications, treasury and insurance, corporate and areas of office leasing. Further information in relation to cost savings and risks is set out in sections 4.5(d) and 5.5 of this Scheme Booklet.

f) Enhanced financial strength - the combination will enhance the operational and financial strength of each of Integrated and Programmed such that the Merged Group will be better positioned to fund growth and participate in industry consolidation in recruitment, labour hire and outsourced maintenance markets. The higher cash flow to EBITDA ratio of Integrated’s business (that is, the higher percentage conversion of earnings into cash in any given year) means that the Merged Group will benefit from additional cash flows which will better enable it to fund growth and potential acquisitions.


g) Greater labour flexibility - Programmed’s access to Integrated’s large workforce pool will enable Programmed to better meet seasonal demands and respond more quickly to customer requests for labour on short notice which can be challenging in today’s environment of skilled labour shortages.

h) Greater earnings diversity - Integrated Shareholders will gain exposure to new revenue and earnings streams through Programmed’s industrial services and property maintenance businesses. As shown below, based on the pro-forma Merged Group financial information for the financial year ending 31 March 2007 (set out in section 4.6), Programmed’s property maintenance business would be expected to generate the majority of the Merged Group’s earnings for the financial year ending 31 March 2007.

Integrated Group EBIT(1) Merged Group Pro-forma EBIT

Source: Integrated and Programmed FY07 estimates1. Corporate costs have been allocated to the business divisions on the basis of sales. 2. Figures are based on the pro-forma Merged Group financial information set out in section 4.6 (and the assumptions and qualifications underlying that pro-forma Merged Group financial information).

In addition, the diverse industry exposure of the Merged Group - covering mining and resources, food, wine and hospitality, education and the broader manufacturing and service sectors - means that the Merged Group will be well placed to weather cyclical downturns and industry-specific shocks.

i) Greater scale and investor relevance - the combination will create a much larger listed company than Integrated or Programmed on its own. This is likely to improve the liquidity of the Merged Group’s shares and to attract a greater level of analyst coverage and investor interest in the Merged Group. Regarding the potential impact of the Merger on the liquidity of the Merged Group’s shares, the Independent Expert stated:

“As a result of the expanded Programmed having an expanded and more diversified range of business operations and investments and prospects for accelerated growth than either Programmed or Integrated as stand alone entities, there appears to be reasonable prospects that a greater number of investors will be attracted to the expanded Programmed than is currently the case in respect of Integrated alone, which should, all other things being equal, result in greater liquidity in share trading” (Independent Expert Report, page 5). The Independent Expert goes on to say:

“We also note that any increase in Programmed’s scale may also potentially translate into a positive re-rating of Programmed’s shares by the investment community” (Independent Expert Report, page 5).

Industrial Services 5%

Workforce 19%

Technical Maintenance 4%

Marine 13%

Property Maintenance

59%

Workforce 54%

Technical Maintenance 10%

Marine 36%

Integrated Group Limited Scheme Document�0

5. No superior proposal to date has emerged

Since the Scheme was announced on 12 February 2007, no third party has presented any alternative offer to Integrated’s Board or sought to initiate any discussions which could lead to such a proposal being made. Furthermore, your Directors have no basis for believing that any such alternative offer will be forthcoming.

In this regard, your Directors have not sought any alternative third party proposal in accordance with Integrated’s “no solicitation” obligations under the Merger Implementation Agreement.

Further information with respect to the “no solicitation” obligation is set out in section 1.3 of this Scheme Booklet.

6. Integrated Shares are unlikely to trade at current levels in the absence of the Merger proposal

Your Directors believe that if the Merger does not proceed and no alternative proposal emerges, it is unlikely that the price of an Integrated Share will trade in the short term at or above $2.64, being the implied total value of the Scheme Consideration, together with the Integrated Interim Dividend, based on the closing price of Programmed Shares on ASX of $5.14 on 9 February 2007.

It is not possible to say at what level Integrated Shares will trade if the Scheme does not proceed, and your Directors cannot say when or if the market price would reach the implied value of $2.64 per Integrated Share referred to above. Regarding the potential impact on Integrated’s share price if the Merger does not proceed, the Independent Expert stated that:

“In the event the Scheme is unsuccessful and all other things being equal, there is a prospect of Integrated’s shares falling from their current levels reflecting the withdrawal of the premium over recent trading prices offered under the Scheme. In this regard we note that Integrated’s closing price increased from $2.26 on the last trading day prior to the announcement of the Scheme to $2.61 on the day of the announcement” (Independent Expert Report, page 5).2

7. No brokerage will be payable and partial CGT rollover relief will be available to resident shareholders

Scheme Shareholders will not be required to pay brokerage or stamp duty in relation to the disposal of their Scheme Shares or the acquisition of New Programmed Shares under the Scheme. Scheme Shareholders may have to pay brokerage on disposal of New Programmed Shares at any time after the Scheme becomes Effective.

Scheme Shareholders may also be entitled to partial CGT rollover relief in relation to the share component of the Scheme Consideration. Further information on the relevant tax consequences for Australian residents is contained in section 6 of this Scheme Booklet (Tax implications).

j) Improved attraction and retention of employees - the combination will provide greater career opportunities for all staff in the Merged Group, which should lead to improved retention and attraction of high quality employees.

k) No operational overlaps - as Integrated and Programmed operate different but complementary businesses, the Merger does not involve the combination or integration of either party’s frontline operations. This significantly reduces risks of the Merger involving loss of clients, contracts and employees in either group (which risks are often found in the merging of businesses of the same kind), without detracting from the key benefits of the Merger.

Upon implementation of the Scheme, Scheme Shareholders will own approximately 20.9% of the Merged Group and will be able to share in the above strategic and financial benefits.

2. The Independent Expert notes that it is also possible that Integrated’s shares may trade above pre-announcement levels as a consequence of the additional information provided to the market, including information contained in the Independent Expert Report and in this Scheme Booklet in relation to the prospects of Integrated for the future (see Independent Expert Report, page 5).

Integrated Group Limited Scheme Document ��

Integrated Shareholders may form a different view and are not obliged to follow the recommendation of your Directors or agree with the Independent Expert.

Factors which may lead you to vote against the Scheme include those set out below. Your Directors believe that the advantages of the Scheme outweigh these factors.

You should note that if Integrated Shareholders vote in favour of the Scheme by the necessary majorities and the Court approves the Scheme, the Scheme will proceed and you will receive the Scheme Consideration even if you voted against the Scheme.

1. Contrary view to your Directors about the merits of the Merger

You may believe the Scheme is not in the best interests of Integrated Shareholders notwithstanding your Directors’ recommendation and the Independent Expert’s conclusion.

Both your Directors and the Independent Expert have based their judgement on future earnings and events which cannot be predicted with certainty, and may prove to be inaccurate (with potentially either positive or negative consequences).

2. Preference for Integrated to remain as an independent entity

You may believe that Integrated will deliver greater returns to Integrated Shareholders over the long term by remaining as an independent company, notwithstanding the strategic and financial benefits which are expected to be achieved from the Merger. Further, following the Merger, Integrated Shareholders’ 100% interest in Integrated’s businesses will be exchanged for an interest of approximately 20.9% in the business of the Merged Group, being Integrated’s and Programmed’s businesses (and the risk and return characteristics of an investment in the Merged Group will be different, in some respects, from those presently applicable to Integrated).

3. Tax consequences

Implementation of the Scheme may have taxation consequences for Integrated Shareholders. For example, the implementation of the Scheme may result in a taxable gain or loss for Integrated Shareholders sooner than the relevant Integrated Shareholder may have wished. Further information on the relevant tax consequences for Australian residents is contained in section 6 of this Scheme Booklet. In addition, Integrated Shareholders should seek their own professional advice regarding the individual tax consequences applicable to them.

Why you may consider voting against the Scheme


If the Scheme does not become Effective for any reason:

• Integrated Shareholders will not receive the Scheme Consideration, but will still receive the Integrated Interim Dividend provided they are registered shareholders as at 5.00pm on 4 April 2007. The Integrated Interim Dividend will be paid on 11 April 2007. • Integrated Shares will not be transferred to Programmed (they will be retained by Integrated Shareholders).

• Integrated will continue to operate as a standalone entity under the leadership of the current Integrated Board and management.

• The Integrated Share price may fall from current levels in the absence of the Merger proposal. This has been highlighted by the Independent Expert in section 11.2 of the Independent Expert Report and is discussed on page 10 of this Scheme Booklet.3

• Integrated’s growth strategy may not be achieved as expediently. Regarding the timing of Integrated’s growth strategy, the Independent Expert stated that:

“…completion of the Scheme will, in effect, facilitate the strategic initiatives Integrated was pursuing prior to the announcement of the Scheme within a much quicker timeframe than Integrated would be able to achieve as a stand-alone entity” (Independent Expert Report, page 87).

Implications if the Scheme does not proceed

3. The Independent Expert notes that it is also possible that Integrated’s shares may trade above pre-announcement levels as a consequence of the additional information provided to the market, including information contained in the Independent Expert Report and in this Scheme Booklet in relation to the prospects of Integrated for the future (see Independent Expert Report, page 5)


Your vote is importantIt is important that you vote on the resolution to be considered at the Scheme Meeting. The Scheme will not proceed unless the resolution is passed by the required majorities, being:

• a majority in number (i.e. more than 50%) of Integrated Shareholders who vote at the Scheme Meeting (in person or by proxy); and

• at least 75% of the total number of votes cast at the Scheme Meeting (whether cast in person or by proxy).

Voting entitlementIntegrated Shareholders entitled to vote on the Scheme resolution are those shareholders who hold Integrated Shares at 5.00 pm on Tuesday, 8 May 2007.

Exercise your voteYou may vote by attending the Scheme Meeting in person (or by sending an attorney or corporate representative on your behalf) or by completing and returning a proxy form (see below and the Notice of Scheme Meeting contained in Appendix 5 for further details).

Voting in personTo vote in person, you must attend the Scheme Meeting at 11.00am on Thursday, 10 May 2007 at the Karri Room, the Parmelia Hilton Hotel, Perth, Western Australia.

All persons attending the meeting must disclose their name when entering the Scheme Meeting. All persons entitled to vote at the meeting will then be given a voting card and admitted to the Scheme Meeting.

Voting by attorneyIf you appoint an attorney to attend the Scheme Meeting, you should lodge the original or a certified copy of the power of attorney under which they have been authorised to attend and vote at the Scheme Meeting with Integrated or the Integrated Share Registry by 11.00am on Tuesday, 8 May 2007, being 48 hours before the start of the Scheme Meeting or, if the Scheme Meeting is adjourned, at least 48 hours before the resumption of the Scheme Meeting in relation to the resumed part of the Scheme Meeting.

Voting by corporate representativeIf you are a corporation, your authorised corporate representative may attend and vote at the Scheme Meeting. You should ensure that your authorised corporate representative brings evidence of his or her appointment as a corporate representative to the meeting unless evidence has already been provided to the Integrated Share Registry.

Voting by proxyIf you cannot attend the Scheme Meeting but otherwise wish to vote, you may appoint a proxy by completing the personalised proxy form accompanying this Scheme Booklet and returning it to the Integrated Share Registry by posting it in the reply paid envelope provided, or by delivering or faxing it to one of the addresses or fax numbers below.

Computershare Investor Services Pty Limited GPO Box D182 Perth WA 6840 Computershare fax number + 61 8 9323 2033

Integrated Group Limited Levels 1-3 44A Kings Park Road West Perth, WA, 6005 Integrated fax number + 61 8 9216 2186

You will only be able to exercise your vote by proxy if it is received by Integrated or the Integrated Share Registry by 11.00am on Tuesday, 8 May 2007, being 48 hours before the start of the Scheme Meeting or, if the Scheme Meeting is adjourned, at least 48 hours before the resumption of the Scheme Meeting in relation to the resumed part of the Scheme Meeting. Appointing a proxy will not stop you attending the Scheme Meeting in person and voting at the Scheme Meeting instead of your proxy.

How to vote


Questions and answers

Q1: What is the Merger? On 12 February 2007, Integrated announced that it had entered into a Merger Implementation Agreement with Programmed under which Integrated had agreed to merge with Programmed by way of a scheme of arrangement. If the Merger is implemented, Integrated will become a wholly-owned subsidiary of Programmed and will be delisted from ASX. Programmed will continue to be listed on ASX.

Q2: Why should I vote in favour of the Scheme?

The Integrated Board considers that potential advantages of the Merger include that:

• the Scheme Consideration provides an initial premium to the trading price of Integrated Shares prior to the announcement of the Merger; and

• given the share component of the Scheme Consideration, Integrated Shareholders will be able to share in the strategic and financial benefits of the Merger, which are expected to be significant.

For further detail regarding the strategic and financial benefits and other advantages of the Merger, please see pages 5 to 10 (inclusive) of this Scheme Booklet.

Q3: What does the Integrated Board recommend?

The Directors unanimously recommend that you vote in favour of the Scheme, in the absence of a superior proposal. Subject to the same qualification, each Director who holds Integrated Shares, or on whose behalf Integrated Shares are held, intends to vote in favour of the Scheme.

At no stage following the announcement of the Merger have the Directors received any alternative proposal from a third party and the Directors have no basis for believing that any such alternative offer will be forthcoming.

The Directors have carefully considered the advantages and disadvantages of the Merger and believe that it is in the best interests of Integrated Shareholders.

Q4: What is the opinion of the Independent Expert?

The Independent Expert has considered the Merger and has concluded that the Merger is in the best interests of Integrated Shareholders. The Independent Expert Report is set out in full in Appendix 1 (Independent Expert Report).

Q5: What will happen to my Integrated Interim Dividend?

The Merger Implementation Agreement allows Integrated to pay to Integrated Shareholders an interim dividend (up to 5 cents per Integrated Share) without the value of this dividend being deducted from the cash component of the Scheme Consideration. In accordance with the Merger Implementation Agreement, on 27 February 2007 the Integrated Board announced it had declared an interim dividend of 5 cents per Integrated Share for the half year ended 31 December 2006. Integrated Shareholders registered as holders of Integrated Shares at 5.00pm on 4 April 2007 will be entitled to receive the Integrated Interim Dividend of 5 cents per Integrated Share, payable on 11 April 2007. Those Integrated Shareholders will be entitled to the Integrated Interim Dividend regardless of whether the Scheme becomes Effective.

Q6: What will I receive if the Merger is implemented?

Integrated Shareholders (who are not Ineligible Foreign Holders) will receive, for each Integrated Share they hold on the Record Date, the Scheme Consideration, which comprises $1.25 in cash and 0.26 Programmed Shares. The value of the Scheme Consideration on the Implementation Date will depend, in part, on the Programmed Share price at that time.

If the number of Integrated Shares held by an Integrated Shareholder at the Record Date means that their aggregate entitlement to New Programmed Shares is not a whole number, then any fractional entitlement will be rounded up or down to the nearest whole number, with fractions of 0.5 or more to be rounded up.


Q6: What will I receive if the Merger is implemented?(Continued)

In addition, as holders of New Programmed Shares, Integrated Shareholders would also be entitled to any final dividend declared by Programmed for the year ending 31 March 2007, provided the Implementation Date occurs on or before the Programmed Record Date. Programmed has not yet declared any final dividend for the year ending 31 March 2007.

If you are a shareholder with a registered address outside Australia or New Zealand you are likely to be an Ineligible Foreign Holder and, as such, the Programmed Shares which would otherwise have been issued to you and other Ineligible Foreign Holders will, instead, be issued to a Sale Agent who will sell those shares on ASX. Programmed will pay you your proportion of the net proceeds received from the Sale Agent (after deduction of any applicable brokerage and other selling costs, taxes and charges). For further details you should refer to question 25 below and section 7.6 (Shareholders outside Australia and New Zealand).

Q7: What if the Scheme is not implemented until after the Programmed Record Date?

If Programmed declares a final dividend for the year ending 31 March 2007, but the Scheme is not implemented until after the Programmed Record Date, then Scheme Shareholders will not be paid the Programmed Final Dividend, as they will not have become Programmed shareholders as at the Programmed Record Date. However, in these circumstances, Integrated will pay Scheme Shareholders the Integrated Final Dividend.

Q8: How will the Merger be The Merger is to be implemented by way of a scheme of arrangement.

In order for the Merger to be implemented:

• the Scheme must be approved by the necessary majorities of Integrated Shareholders at the Scheme Meeting; and

• the Court must approve the Scheme.

Further details on how the Merger will be implemented are set out in section 7.2 (Implementation of the Scheme).

Q9: When and where will the Scheme Meeting be held?

The Scheme Meeting will be held at 11.00am on Thursday, 10 May 2007 at the Karri Room, the Parmelia Hilton Hotel, Perth, Western Australia.

Q10: What voting majorities For the Scheme to proceed:

• a majority in number (i.e. more than 50%) of Integrated Shareholders who vote at the Scheme Meeting (in person or by proxy) must vote in favour of the resolution to approve the Scheme; and

• at least 75% of the total number of votes cast at the Scheme Meeting (whether in person or by proxy) must be cast in favour of the resolution to approve the Scheme.

Q11: Who is entitled to vote at the Scheme Meeting?

Integrated Shareholders who are recorded as members on the Integrated Share Register as at 5.00 pm on 8 May 2007.

Q12: Is voting compulsory? No, voting is not compulsory. However, your vote is important. If you cannot attend the Scheme Meeting to be held on 10 May 2007, you may complete and return the personalised proxy form enclosed with this Scheme Booklet.

For further details regarding how to vote and submit proxy forms for the Scheme Meeting, see page 13 (How to vote).

are required in order to agree to the Scheme?

implemented?


Q13: Who will manage the Merged Group following the completion of the Merger?

Max Findlay, the current Managing Director of Programmed, will be the Managing Director of the Merged Group.

The current Integrated Managing Director, Chris Sutherland, will lead the Integrated Group division of the Merged Group and will report directly to Max Findlay.

Q14: Who will be on the board of directors of the Merged Group?

Programmed will be the parent company of the Merged Group. The board of directors of Programmed following the Merger will comprise the current Programmed Board. In addition, two members of the Integrated Board, Neil Hamilton and Jon Whittle will join the Programmed Board if the Scheme becomes Effective.

For further detail, please see section 4.3 of this Scheme Booklet (Board of Directors).

Q15: What other factors should I consider in deciding whether to vote in favour of the Scheme?

The Integrated Directors have considered the advantages and disadvantages of the Merger. Some of the key matters to which the Directors have had regard in making their recommendation that you vote in favour of the Scheme (in the absence of a superior proposal) are set out on pages 5 to 10 (inclusive) under the heading ‘Why you should vote in favour of the Scheme’ and page 11, under the heading ‘Why you may consider voting against the Scheme’.

You should also be aware of the risks associated with the Merger, which are set out in section 5 (Risk factors).

Q16: What are the risks of There are risks associated with the Merger, including the risks:

• that the integration of the two groups and the estimated cost synergies will not be achieved in an orderly and timely manner;

• that key personnel will be lost as a result of the Merger;

• that Integrated Shareholders or Programmed Shareholders may sell their shares in Programmed after the Scheme is implemented, which may have an adverse effect on the market price of shares in Programmed;

• that a counterparty may decide to terminate a material contract with Integrated or Programmed as a result of the Merger; and

• associated with Programmed assuming a higher level of debt in connection with the Merger than it previously had.

For a more detailed discussion of these and other risks, see section 5 (Risk factors).

Q17: What are the steps The following steps must be completed in order to implement the Scheme:

• the conditions precedent described in section 7.3 (Conditions precedent to the Scheme) must be satisfied or waived by 12 June 2007, being the Sunset Date, (or such other date as Integrated and Programmed may agree);

• Integrated Shareholders must approve the Scheme at the Scheme Meeting; and

• the Scheme must be approved by the Court.

necessary for the completion of the Merger?

the Merger?


Q18: When will the Merger become Effective?

If all the necessary steps described above have been successfully completed, the Merger will become Effective the day the Court order approving the Scheme is lodged with ASIC, which is expected to be on 28 May 2007.

Q19: Who is entitled to receive the Scheme Consideration?

Only persons registered as holders of Integrated Shares at 5.00 pm on the Record Date (expected to be 4 June 2007) will be entitled to receive the Scheme Consideration, comprising $1.25 in cash and 0.26 New Programmed Shares per Scheme Share (subject to the terms of the Scheme).

Q20: When will I receive the Scheme Consideration?

The cash component of the Scheme Consideration of $1.25 per Scheme Share will be paid to you by cheque or deposit of funds on the Implementation Date, expected to be 7 June 2007. You will also be issued with your New Programmed Shares on the same date and a holding statement detailing your holding will be sent to you shortly thereafter. Ineligible Foreign Holders should refer to question 25 and section 7.6 (Shareholders outside Australia and New Zealand) for further details.

Q21: When can I start trading Programmed Shares?

The last day of trading in Integrated Shares on ASX is expected to be 28 May 2007.

The New Programmed Shares to be issued pursuant to the Scheme are expected to begin trading on 29 May 2007 on a deferred settlement basis. It is the responsibility of each Integrated Shareholder to determine their entitlement to New Programmed Shares under the Scheme before trading those shares to avoid the risk of selling shares that they do not own. It is expected that New Programmed Shares will begin trading on 18 June 2007 on a normal settlement basis.

Q22: Will I be required to pay broker fees or stamp duty?

No. You will not have to pay brokerage or stamp duty in relation to the Merger. However, if you sell your New Programmed Shares after the implementation of the Merger, you may have to pay brokerage.

Q23: What if I do not want to keep Programmed Shares?

If you receive New Programmed Shares under the Scheme, it is expected that you will be able to sell those New Programmed Shares on a deferred settlement basis on ASX at any time on or after 29 May 2007. It is the responsibility of each Integrated Shareholder to determine their entitlement to New Programmed Shares under the Scheme before trading those shares to avoid the risk of selling shares that they do not own.

Q24: What are the tax implications of the Merger?

A summary of the tax implications of the Scheme for Integrated Shareholders who are resident in Australia for tax purposes is set out in section 6 (Tax implications).

Your decision on how to vote on the Scheme should be made only after consultation with your financial, tax or other adviser based on your own investment objectives, financial situation, taxation position and particular needs.

Q25: What if I am a shareholder outside Australia or New Zealand?

Programmed is not obliged to issue New Programmed Shares as consideration to you if you are an Ineligible Foreign Holder (that is, if your address in the Integrated Share Register is outside Australia or New Zealand) unless Programmed is reasonably satisfied that the issue of New Programmed Shares to you is not prohibited or will not give rise to unduly onerous compliance obligations on the part of Programmed.

Integrated and Programmed currently expect that all Integrated Shareholders whose addresses in the Integrated Share Register are outside Australia or its external territories or New Zealand will be Ineligible Foreign Holders.


Q25: What if I am a shareholder outside Australia or New Zealand?(Continued)

In this event, New Programmed Shares that would have been issued to you will be issued to the Sale Agent who will sell these shares on ASX and Programmed will pay you your proportion of the net proceeds received from the Sale Agent (after deduction of any applicable brokerage and other selling costs, taxes and charges). Ineligible Foreign Holders should refer to section 7.6 (Shareholders outside Australia and New Zealand) for further details.

Q26: What will happen if the Merger does not proceed?

If the Scheme does not become Effective, Integrated Shareholders will retain their Integrated Shares and Integrated will continue to operate as a standalone entity. Integrated will continue to focus on its current strategy as detailed in section 2.4. The rights of Integrated Shareholders will remain unchanged, although the current price for Integrated Shares may fall. The price of Integrated Shares may fall to a price consistent with levels at which they traded before the Merger was announced. You will still receive the Integrated Interim Dividend, provided you are registered as an Integrated Shareholder as at 5.00pm on 4 April 2007.

Integrated will be liable to pay for any costs and expenses incurred by Integrated in relation to the Scheme (for example, printing costs and advisers’ fees) whether or not the Merger proceeds. These costs are expected to be material. No break fee will be payable to Programmed if the Scheme does not proceed simply as a result of Integrated Shareholders not agreeing to it at the Scheme Meeting. A break fee will, however, become payable by Integrated to Programmed in certain circumstances, namely where a competing proposal is announced and the proponent of that proposal acquires at least 50% of the Integrated Shares (or of the shares in any Integrated Subsidiary) or if Programmed terminates the Merger Implementation Agreement as a result of a material unremedied breach of the Merger Implementation Agreement by Integrated. A break fee may also be payable by Programmed to Integrated in certain circumstances.

For further details of the break fee arrangements between Programmed and Integrated, see section 1.3 (Key terms of Merger Implementation Agreement). For further information regarding the implications if the Scheme does not proceed, see page 12.

Q27: What other information is available?

This Scheme Booklet provides detailed information in relation to the Merger that all Integrated Shareholders should read.

Integrated announced its half year results to 31 December 2006 on 27 February 2007. Integrated’s results are available from ASX or on its website (www.asx.com.au) or on Integrated’s website (www.intgroup.com.au).

Programmed expects to announce its full year results to 31 March 2007 on or about 30 May 2007. Programmed’s results (when announced) will be available from ASX or on its website (www.asx.com.au) or on Programmed’s website (www.pmsltd.com.au).

If you have any questions after reading this information, you can call Integrated’s Company Secretary on +61 8 9322 2111 between 8.00am and 5.00pm Monday to Friday or email [email protected].

Alternatively, please contact your legal, financial or other professional adviser.


Section 1 Summary of the Scheme


Section 1 – Summary of the Scheme

1.1 The Scheme

On 12 February 2007, Integrated announced that it had entered into a Merger Implementation Agreement with Programmed under which Integrated had agreed to merge with Programmed by way of a scheme of arrangement. If the Merger is implemented, Integrated will become a wholly-owned subsidiary of Programmed and will be delisted from ASX. Programmed will continue to be listed on ASX.

If the Scheme becomes Effective Integrated Shareholders will receive $1.25 in cash and 0.26 Programmed Shares for every Integrated Share held as at the Record Date. In addition, Integrated Shareholders who are registered shareholders as at 5.00pm on 4 April 2007 will be entitled to receive the Integrated Interim Dividend for the six months ended 31 December 2006 of 5 cents per Integrated Share, payable on 11 April 2007.

If the Scheme is implemented on or before the record date for any final dividend declared by Programmed for the year ending 31 March 2007, as holders of New Programmed Shares, Integrated Shareholders would also be entitled to receive any such dividend provided they continue to hold their New Programmed Shares until the relevant record date. Programmed presently has a policy of paying dividends to shareholders which are equivalent to approximately 60% of the net profit after tax for the relevant financial year, though Integrated Shareholders should note that Programmed has not yet declared any final dividend for the year ending 31 March 2007. If the Programmed Final Dividend is declared, but the Scheme is not implemented until after the Programmed Record Date, then Scheme Shareholders will not be paid the Programmed Final Dividend, as they will not have become Programmed shareholders by the Programmed Record Date. However, in these circumstances, Integrated will pay Scheme Shareholders the Integrated Final Dividend. If the number of Integrated Shares you hold means that your aggregate entitlement to New Programmed Shares is not a whole number, then any fractional entitlement will be rounded up or down to the nearest whole number, with fractions of 0.5 or more to be rounded up.

If you are an Integrated Shareholder with a registered address outside Australia or New Zealand, you should refer to section 7.6.

1.2 Implementation of the Scheme and timing

a) Timing Important dates and times are set out on page 1 (Important dates). b) Key conditions precedent

A number of conditions precedent must be satisfied or waived before the Scheme can be implemented, as further described in section 7.3 (Conditions precedent to the Scheme). In particular, the Scheme is subject to:

• approval of Integrated Shareholders at the Scheme Meeting; and

• approval of the Court.

The status of the key conditions precedent as at the date of this Scheme Booklet is discussed in section 7.4 (Status of conditions precedent).


c) Scheme Meeting

Integrated Shareholders will be asked to approve the Scheme at the Scheme Meeting to be held at 11.00am on 10 May 2007 at the Karri Room, the Parmelia Hilton Hotel, Perth, Western Australia. For the Scheme to proceed: • a majority in number (i.e. more than 50%) of Integrated Shareholders who vote at the Scheme Meeting (in person or by proxy) must vote in favour of the resolution to approve the Scheme; and • at least 75% of the total number of votes cast at the Scheme Meeting (whether in person or by proxy) must be cast in favour of the resolution to approve the Scheme.

If the Scheme becomes Effective, the Scheme will be binding on all Integrated Shareholders (including those who voted against the resolution to approve the Scheme or who did not vote at all).

Please see page 13 (How to vote) for actions to be taken by Integrated Shareholders who propose to attend and vote at the Scheme Meeting or to appoint a proxy to attend and vote on their behalf.

d) Court approval

If the necessary majorities of Integrated Shareholders vote in favour of the Scheme and all other conditions of the Scheme have been satisfied, the Court will be asked to approve the Scheme. e) Implementation of the Scheme

If the conditions precedent are satisfied and the Court orders approving the Scheme are obtained, the Scheme will be implemented on the Implementation Date, which is presently expected to be Thursday, 7 June 2007.

On the Implementation Date: • Integrated will enter the name of Programmed in the Register as the holder of all of the Integrated Shares; and • in consideration for the transfer of the Integrated Shares to Programmed, Programmed will:

i) pay the $1.25 cash component of the Scheme Consideration to Scheme Shareholders; and

ii) issue the New Programmed Shares to which Scheme Shareholders are entitled, in each case as required under the provisions of the Scheme.

Holding statements for New Programmed Shares will be dispatched to applicable Scheme Shareholders shortly after the Implementation Date.

Ineligible Foreign Holders should refer to section 7.6 (Shareholders outside Australia and New Zealand) for further details.



f) Sunset date

If the Scheme is approved by Integrated Shareholders at the Scheme Meeting, the Merger may still not be implemented. The Merger Implementation Agreement can be terminated by either party to it if the Scheme has not become Effective on or before 12 June 2007, or such other date as Integrated and Programmed may agree.

It is important for Integrated Shareholders to understand that delays in the implementation of the Scheme could lead to the Scheme not proceeding if it fails to become Effective by 12 June 2007.

Page 12 of this Scheme Booklet sets out the implications if the Scheme does not become Effective.

1.3 Key terms of Merger Implementation Agreement

Integrated and Programmed have entered into a Merger Implementation Agreement dated 12 February 2007 to provide a framework for proposing and implementing the Scheme.

The Merger Implementation Agreement sets out the rights and obligations of Integrated and Programmed in relation to the Scheme. A copy of the Merger Implementation Agreement is contained in Appendix 2.

A summary of the key terms of the Merger Implementation Agreement is set out below. a) Conditions

Implementation of the Scheme is conditional upon (among other things):

• Integrated Shareholder approval;

• the Independent Expert concluding that the Scheme is in the best interests of Integrated Shareholders;

• the approval of the Scheme by the Court;

• obtaining necessary regulatory consents and approvals (including ASIC and ASX approvals) on acceptable terms; • no “Prescribed Occurrences” or “Material Adverse Change” (each being defined in the Merger Implementation Agreement) occurring in relation to either party; and

• the warranties given by the parties being and remaining materially true and correct.

The parties are required to use their best endeavours to satisfy the conditions.

b) Warranties and indemnities

Mutual warranties and indemnities have been given by each party including in relation to corporate capacity, authorisation, no contravention of respective constitutions and the accuracy of information provided to the other party as part of their due diligence investigations.

Further warranties and indemnities are provided by Integrated in favour of Programmed in relation to the accuracy of information provided in the Scheme documentation and that the Scheme will not cause the termination of any material contracts.


c) No shop, no talk restriction

During the restriction period (being the period from the date of the Merger Implementation Agreement to the earliest of four months after that date, the Effective Date and the date the Merger Implementation Agreement is terminated in accordance with its terms): i) no shop restriction: Integrated must ensure that neither it, its related entities nor any of its representatives directly or indirectly approaches, solicits inquiries from or initiates discussions, expressions of interest, offers or proposals with any person (other than Programmed or its related entities) in relation to a competing proposal;

ii) no talk restriction: Integrated must ensure that neither it, its related entities nor any of its representatives participate in any discussions or negotiations, provide any information, or take any other action to facilitate a competing proposal (subject to the fiduciary duties exception specified below); and

iii) fiduciary duties exception: notwithstanding the above no talk restriction, the Integrated Board may engage a third party in discussions if it has received a written proposal and, acting in good faith and in accordance with its fiduciary and other duties to shareholders and after having taken legal and financial advice, it forms the view that it is in the best interests of Integrated Shareholders for the discussions to take place. d) Termination rights

The Merger Implementation Agreement can be terminated by either party if (among other things) any condition precedent is not satisfied or waived (by the party able to waive the condition), the Independent Expert alters its conclusion or withdraws its report, the Scheme does not become Effective by the Sunset Date, or either Integrated Shareholders or the Court fail to approve the Scheme.

Programmed may terminate the Merger Implementation Agreement where:

• Integrated is in material breach of the Merger Implementation Agreement for more than 10 Business Days after notice in writing of the breach; or

• the Integrated Board or any Director withdraws or qualifies their support for the transaction or otherwise acts in a manner which is inconsistent with obtaining approval for the transaction.

Integrated may terminate the Merger Implementation Agreement where Programmed is in material breach of the Merger Implementation Agreement for more than 10 Business Days after notice in writing of the breach or where a competing proposal is announced which in the opinion of the Directors is more favourable than the Merger. e) Programmed’s break fee

Integrated must pay Programmed a break fee of $1.9 million if:

• a takeover bid or other merger proposal is launched by a third party in respect of Integrated and that bid or proposal results in the bidder or proponent acquiring 50% or more of the shares of Integrated (or any Subsidiary of Integrated); or

• Programmed terminates the Merger Implementation Agreement due to a material unremedied breach of the Merger Implementation Agreement by Integrated.



f) Integrated’s break fee

Programmed must pay Integrated a break fee of $1.9 million if Integrated terminates the Merger Implementation Agreement due to a material unremedied breach of the Merger Implementation Agreement by Programmed.

1.4 Tax considerations for Integrated Shareholders

Australian resident Integrated Shareholders may be eligible to receive CGT rollover relief in relation to the share component of the Scheme Consideration. Tax considerations, including the conditions to achieve rollover relief, are set out in section 6 of this Scheme Booklet.

1.5 No fees payable by you

No brokerage or stamp duty will be payable by Integrated Shareholders in relation to the disposal of their Scheme Shares or the acquisition of New Programmed Shares under the Scheme. Scheme Shareholders may have to pay brokerage on disposal of their New Programmed Shares at any time after the Scheme becomes Effective.

1.6 Questions

If you have any questions after reading this information, you can call the Integrated Company Secretary on +61 8 9322 2111 between 8.00am and 5.00pm Monday to Friday or email [email protected]

Section 2 Profile of Integrated


Section 2 – Profile of Integrated

2.1 Overview

Integrated was established in 1992 and has grown to become a major provider of recruitment, labour hire and managed labour services across Australia.

Integrated is headquartered in Perth, Western Australia and operates through 45 offices in Australia and New Zealand.

Port Headland

Geraldton

BunburyPerth: 9 Locations

Kalgoorlie Port Augusta

Barossa Valley

Adelaide

Melbourne: 8 Locations

Launceston

Hobart

Sydney: 5 LocationsNewcastle

Gold CoastBrisbane: 6 LocationsIpswich

Rockhampton

Townsville

Darwin

New Plymouth

Integrated on-hires 6,000 to 7,000 persons each day to more than 2,000 customers across a broad range of industries.

Integrated’s business is focused on:

• a commitment to achieving zero injuries;

• staff who enjoy coming to work each day; • a workforce that gets paid correctly and is provided with ongoing opportunities; • customers who are highly satisfied and treated with respect;

• above average returns for Integrated Shareholders;

• an operation that can serve small local customers and large national customers alike;

• a focus on long term contracts, partnerships and alliances as its preferred method of engagement; and

• value adding acquisitions that add new locations or industries to Integrated’s business.

Esperance


2.2 Structure of Integrated Group

Integrated operates through three divisions:

• Workforce, which provides recruitment and labour hire services to the industrial, manufacturing and resources markets; • Marine (trading as Total Marine Services in Australia and Wendell Group in New Zealand), which provides a full range of vessel management, manning and catering services; and

• Maintenance, which provides managed labour, supervision and technical maintenance services.

2.3 Integrated Board and management structure

a) Neil Hamilton, LL.B – Chairman - independent non-executive director. Age 54

Neil Hamilton is an independent, non-executive director and has been a director and Chairman for seven years since his appointment in August 1999. Mr Hamilton has substantial experience in a number of industries including insurance and resources. Mr Hamilton is Chairman of the Board and Chairman of the Remuneration Committee. Mr Hamilton is currently Chairman of IRESS Market Technology Ltd, a director of Insurance Australia Group Ltd and Chairman of the AFL Players Association Advisory Board. He is also a former director of each of Landcorp, Western Power Corporation, D’Orsogna Ltd, Chieftain Securities Ltd and Sons of Gwalia Ltd.

b) Jonathan Whittle – non-executive director. Age 52

Jonathan Whittle has been a director of the company for fourteen years. He has been a non-executive director since February 2006. Previously, he was Managing Director of Integrated from the time of the Company’s formation in November 1992 until 11 February 2006 when he retired from his executive role. He accepted the Board’s invitation to remain on the Board as a non-executive director. Mr Whittle has extensive experience in the recruitment industry, having worked in, and then managed, the West Australian operations of a multinational recruitment agency prior to establishing Integrated Workforce (the predecessor to Integrated). Mr Whittle is a member of the Remuneration Committee. He is also a director of Olea Australis Ltd and a former director of HBF.

Integrated Group Limited

Marine Services Technical Maintenance Services

Work Force



c) Trevor Clohessy, CA – independent non-executive director. Age 55 Trevor Clohessy has been an independent non-executive director for seven years since his appointment in August 1999. He is a former partner and co-founder of the accounting firm formerly known as Norgard Clohessy. Mr Clohessy is Chairman of the Audit Committee and a member of the Remuneration Committee. Mr Clohessy is also currently a director of Olea Australis Ltd, and a former director of each of Xanadu Wines Ltd and Ausron Ltd. d) Valerie Davies, FAICD – independent non-executive director. Age 55

Valerie Davies has been an independent non-executive director for seven years since her appointment in August 1999. Ms Davies is Principal of One.2.One Communications Pty Ltd and has extensive experience in the communications and human resources industries. She is a past recipient of the Telstra “WA Business Women of the Year” Award. Ms Davies is a member of the Audit Committee and Remuneration Committee. Ms Davies is also currently a director of Iluka Resources Limited, HBF Health Funds Inc, HealthGuard Ltd and Tourism Australia, and a former director of TAB (WA), Gold Corporation, Relationships Australia, ScreenWest, Fremantle Hospital & Health Service and the Asia Research Centre at Murdoch University.

e) Michael Gurry, B.Sc., DipAICD, FAICD, FAIM, SA Fin. – independent non-executive director. Age 60 Michael Gurry was appointed a non-executive director on 15 September 2006. Mr Gurry was formerly Chief Executive Officer of HBF, a major Western Australian health and general insurance company. He also has substantial experience in information systems and management consulting having previously held senior management roles at DMR and IBM. Mr Gurry is a Member of the Remuneration Committee. He is also a former Director of AHIA and HealthGuard Ltd and a former director of AeM Consulting Pty Ltd. Mr Gurry is currently the Chairman of United Way (WA).

f) Christopher Sutherland, B. Eng (Hons), FIE (Aust) – Managing Director. Age 43 Christopher Sutherland was appointed Chief Executive Officer of Integrated on 1 February 2006 and Managing Director on 1 May 2006. Mr Sutherland has substantial management, operational and leadership experience in a number of senior executive roles involving operations in Australia, Asia and Europe. Prior to his appointment as CEO of Integrated, Mr Sutherland was Executive Director, Asset Services, at Worley Parsons Limited. Before Worley Parsons, he held senior management positions with the Clough Group including CEO, Clough Services and General Manager, Group Strategy. Apart from his core strengths in engineering, maintenance, general management and strategic development, Mr Sutherland has experience and expertise in acquisitions, alliances and joint ventures, asset and project management, and provision of services to the offshore oil and gas industry. Mr Sutherland holds a Bachelor of Engineering (Civil) from the University of Western Australia and has completed Harvard Business School’s Advanced Management Program.

g) Stephen Leach, CA - Company Secretary and Chief Financial Officer. Age 38

The company secretary is Mr Stephen Leach, who was appointed to the positions of Chief Financial Officer and Company Secretary in October 2005 after having joined Integrated as Financial Controller in September 2004. Before joining Integrated, Mr Leach held management positions with Macmahon Holdings Limited in Australia and with listed multinationals in Southern Africa and the United Kingdom. Mr Leach holds a Bachelor of Commerce from Rhodes University, South Africa.


2.4 Integrated’s recent performance and future plans

a) Income Statements for Financial Year 2006 and 2005

The table below shows the consolidated income statement for Integrated for the financial years ended 30 June 2006 and 30 June 2005.

Over this period: • revenue increased 15.1% to $445.6 million; and

• profit from continuing operations (Workforce, Marine and Maintenance) increased 42.1% to $12.9 million. However, due to losses in the training division, which was sold in April 2006, net profit decreased 60.1% to $3.0 million.

2006 $’000

2005 $’000

Revenue from continuing operations 445,614 387,307

Other Income 915 -

Temporary employee expenses (365,291) (316,218)

Salaried employee expenses (32,025) (27,323)

Vessel charter hire (790) (894)

Vessel operating costs (1,968) (1,865)

Depreciation and amortisation expense (3,237) (4,163)

Occupancy expenses (2,442) (1,755)

Finance costs (3,122) (1,904)

Impairment of property, plant and equipment 168 (1,707)

Other expenses (22,276) (17,927)

Profit before income tax 15,546 13,551

Income tax expense (2,651) (4,477)

Profit from continuing operations 12,895 9,074

Loss from discontinued operations (9,745) (1,257)

Profit for the year 3,150 7,817

Profit attributable to minority interests (133) (253)

Profit attributable to members of Integrated Group Limited 3,017 7,564

Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company

Basic (cents per share) 18.1 12.5

Diluted (cents per share) 18.1 12.5

Earnings per share for profit attributable to the ordinary equity holders of the company

Basic (cents per share) 4.3 10.7

Diluted (cents per share) 4.3 10.7

Source: Integrated FY06 Annual Report



b) Balance Sheet

The table below presents the consolidated balance sheet of Integrated as at 31 December 2006.

2006 $’000

Current Assets

Cash and cash equivalents 1,801

Trade and other receivables 70,954

Inventories 385

Total Current Assets 73,140

Non-current Assets

Available-for-sale financial assets 1,000

Property, plant and equipment 10,610

Deferred tax assets 4,504

Intangible assets 30,740

Total Non-current Assets 46,854

Total Assets 119,994

Current Liabilities

Trade and other payables 37,047

Borrowings 24,127

Current tax liabilities 1,638

Provisions 1,222

Total Current Liabilities 64,034

Non-current Liabilities

Borrowings 3,706

Deferred tax liabilities 2,127

Provisions 3,395

Total Non-current Liabilities 9,228

Total Liabilities 73,262

Net Assets 46,732

Equity

Contributed equity 36,989

Reserves 591

Retained profits 9,152

Total Equity 46,732

Source: Integrated 31 December 2006 Interim Report


c) Half Year Results

On 27 February 2007, Integrated announced its results for the half year ended 31 December 2006 (1H07) reporting a significant turnaround in the business, as highlighted in the table below. Unless otherwise specified, comparisons in this section are against Integrated’s results for the half year ended 31 December 2005 (1H06) which have been normalised by removing losses associated with discontinued training operations and net impacts of vessel disposals. The 1H07 results include a three and a half month contribution from the Wendell Offshore Group which was acquired in early September 2006.

Revenue increased 5% to $232 million from $221 million in 1H06. EBITDA increased 16.3% to $11.8 million from $10.2 million in 1H06 and NPAT increased 16.7% to $6.5 million from $5.5 million in 1H06. The table below shows Integrated’s result for 1H07 compared to 1H06 on an actual and normalised basis. The column headed “Change” shows the variation between the results for 1H07 and the normalised 1H06 result.

Workforce

Workforce revenue increased 9.3% to $171 million from $157 million in 1H06 and EBITDA increased 0.8% to $8.1 million from $8.0 million in 1H06. The 1H07 EBITDA margin of 4.7% was down from 5.1% in 1H06. Actions have been taken to improve this slight margin decline including: • introducing stronger protocols around price negotiations; • moving away from competitive tendering for lower margin national supply contracts; and • a focus on reduction in overheads.

During 1H07, new branches were opened in Geraldton, Port Hedland, Port Augusta, Hemmant and Ringwood with further new openings planned in the half year ending 30 June 2007 (2H07). The outlook remains strong in WA and QLD with conditions steady or improving in other states. The table below compares the 1H07 result of the Workforce division with the result in 1H06 on a normalised basis.

F�nanc�als �H0� �H0� – Norm’d �H0� Half Year Comparat�ve $’000 % Marg�n $’000 % Marg�n $’000 % Marg�n % Change

Revenues 221,710 221,480 232,484 5.0%EBITDA 10,690 4.8% 10,169 4.6% 11,828 5.1% 16.3%Depreciation (1,985) (1,037) (1,233) Amortisation (26) (26) (221) EBIT 8,679 3.9% 9,106 4.1% 10,374 4.5% 13.9%Interest (net) (1,521) (1,189) (892) NPBT 7,158 3.2% 7,917 3.6% 9,482 4.1% 19.8%Tax (1,621) (2,382) (3,021) NPAT – Operations 5,537 2.5% 5,535 2.5% 6,461 2.8% 16.7%Amortisation of Performance Rights 0 0 (212) Discontinued Operations (5,981) 0 0 Outside Equity Interests (169) (169) 0 NPAT – Available to Shareholders (613) (0.3%) 5,366 2.4% 6,249 2.7% 16.5%Operating Cash Flow (5,274) 4,905 EPS (0.9) 8.9

Notes: 1.The financial performance of Integrated for 1H06 has been normalised by removing the losses associated with the discontinued training business ($5.981 million) and the net impact of the sale of all offshore vessels to Mermaid Marine Australia Ltd and the purchase of its manning business ($0.002 million).



Marine

Marine revenue increased 6.4% to $55 million from $51 million in 1H06.

The sale of the offshore fleet to Mermaid Marine Australia Limited in April 2006 for $23 million and the Alliance Agreement under which Integrated has secured a seven year contract to provide manning services for the Mermaid fleet, underpins Integrated’s position as a clear market leader in vessel management and manning services in the region. Fresh leadership and a clear plan around providing vessel management and manning services to all owners and operators, without the complications arising from owning a fleet which competes with the customer, has strategically positioned the Marine business to maximise future growth.

Marine EBITDA increased 31% to $5.3 million from $4.0 million in 1H06. The Mermaid Marine Alliance is performing strongly buoyed by Mermaid’s ongoing success. A number of new vessel owners have entered, and continue to enter, the market creating new opportunities and drill rig numbers globally are increasing rapidly with oil prices remaining at the US$50+ / barrel levels.

The acquisition of Wendell Offshore Group in early September 2006 has expanded Integrated’s marine capability to New Zealand and is expected to make a strong contribution in 2H07. The table below compares the 1H07 result of the Marine Division with the result in 1H06 on a normalised basis.

Revenue Earnings

Revenue Earnings

0

50

100

150

200

250

300

350

2002 2003 2004 2005 2006 2007

166.8

79.9

86.9

95118.2

134.9153.5

171.2

97.9 113.5 135.2 156.7 171.2

First Half Second Half

192.9

231.7

270.1

310.2

Half Year Comparative 1H06N 1H07 Workforce $’000 $’000 % Change

Revenues 156,708 171,248 9.3%EBITDA 7,996 8,063 0.8%EBITDA Margin % 5.1% 4.7% (0.4%)Depreciation (330) (453) Amortisation 0 0 EBIT 7,666 7,610 (0.7%)EBIT Margin % 4.9% 4.4% (0.4%)

Half Year Comparative 1H06N 1H07 Marine $’000 $’000 % Change

Revenues 51,383 54,691 6.4%EBITDA 4,018 5,271 31.2%EBITDA Margin % 7.8% 9.6% 1.8%Depreciation (355) (458) Amortisation 24 (121) EBIT 3,687 4,692 27.2%EBIT Margin % 7.2% 8.6% 1.4%

$m

First Half Second Half FY 2002

2002 2003 2004 2005 2006 2007

65

54.7

55.449.2 44 51.4 54.7

72.347

48.245.4

121.5

102.492.2 96.8

140

120

100

80

60

40

20

0

$m

65


Technical Maintenance

Maintenance revenue decreased 49.7% to $7.2 million from $14.3 million in 1H06. EBITDA, however, increased 68.5% to $1.1 million from $0.7 million in 1H06. At present the Maintenance business lacks scale, and performance will vary between reporting periods as projects of various types, risks and margins are completed and new projects are secured. The table below compares the 1H07 result of the Maintenance Division with the result in 1H06 on a normalised basis.

Revenue Earnings

Corporate costs

Unallocated corporate costs were $2.6 million (1.3% of revenue) up from $2.5 million in 1H06. In prior years corporate costs and shared service costs were not allocated between business divisions. However, for the purposes of the 1H07 result, shared service costs have been allocated. Accordingly, the 1H06 normalised results also include allocation of 1H06 shared service costs to enable a comparison of unallocated corporate costs.

d) Future Plans

The above results reflect the improved operating performance of the business resulting from the early benefits of significant restructuring over the past twelve months during which Integrated:

• sold its training division which was incurring losses and did not serve Integrated’s main industrial customers; • sold its offshore fleet of vessels to Mermaid Marine Australia Limited and secured a seven year contract to provide manning services for the entire Mermaid fleet; and • simplified its organisation structure and sharpened its focus.

Integrated has established a clear vision “to be the preferred supplier of recruitment, labour hire and managed labour services”.

First Half Second Half

Half Year Comparative 1H06N 1H07 Marine $’000 $’000 % Change

Revenues 14,291 7,191 (49.7%)EBITDA 652 1,098 68.5%EBITDA Margin % 4.6% 15.3% 10.7%Depreciation (48) (25) Amortisation 0 0 EBIT 604 1,073 77.8%EBIT Margin % 4.2% 14.9% 10.7%

2003 2004 2005 2006 2007

44.8

28.125.3

40.2

7.2

1619.8 12.7 14.3 7.2

2512.1

12.6 25.9

FY2003 and FY2004 not consolidated as acquired by IGL in Jul 04

50

45

40

35

30

25

20

15

10

5

0

$m



Integrated has a simple long term plan to grow its business organically and by acquisition as follows:

Workforce

• Expand further into regional locations in Australia, particularly those exposed to the mining and oil / gas activity.

• Expand further into New Zealand.

Marine

• Expand further overseas to begin development of an international marine manning / services business.

• Expand Integrated’s marine activity to all forms of offshore labour.

Technical Maintenance • Establish a significant technical maintenance business for the following strategic reasons:

i) The support functions of human resources, industrial relations, health and safety, payroll, insurance and workers compensation are common and complementary to both Workforce and Maintenance.

ii) Builds scale in the support function to lower unit costs and enable significant investment in related IT systems. iii) Increasing scale and quality in business processes and strong IT systems are significant barriers to entry in both Workforce and Maintenance.

iv) Creates a new growth business for Integrated Shareholders.

• Expand into the oil / gas and mining industries and leverage off Integrated’s marine capability for offshore oil and gas services.

The Integrated Board believes that Integrated can achieve the above objectives more quickly and with less risk as a part of the Merged Group than would be the case if these objectives are pursued by Integrated as an independent entity. Sections 4.5 and 7.12 contain certain information relevant to the intentions of the Merged Group.

Integrated is at present engaged in negotiations for the acquisition of two bolt-on complementary businesses consistent with its branch expansion plans for the second half of FY07. Neither acquisition is considered material. If both acquisitions were successfully concluded, purchase costs are expected to be no higher than $4.6 million and would be funded out of existing working capital.


2.5 Integrated shares

a) Ordinary shares

As at the date of this Scheme Booklet, Integrated has 70,471,758 ordinary shares on issue. If the Scheme becomes Effective, a further 1,904,000 Integrated Shares will be issued to Integrated’s Managing Director (as described in section 7.9(c) of this Scheme Booklet) providing a total of 72,375,758 Integrated Shares to be acquired under the terms of the Scheme.

As noted in section 7.9(c) of this Scheme Booklet, additional Integrated Shares to be issued to Integrated’s Managing Director will be issued after the date of the Scheme Meeting and, accordingly, Integrated’s Managing Director will not be able to vote such shares at the Scheme Meeting.

b) Integrated Share price history

The latest recorded sale price of Integrated Shares on ASX before the public announcement of the proposed Merger at close of trading on 9 February 2007 was $2.26. The latest recorded sale price of Integrated Shares on ASX before the date on which the Scheme Booklet was lodged for registration with ASIC was $2.54 on 30 March 2007. During the three month period immediately preceding the date on which the Scheme Booklet was lodged for registration with ASIC, the highest and lowest recorded sale prices of Integrated Shares on ASX were, respectively, $2.63 on 12 and 26 February 2007 and $1.87 on 11 and 12 January 2007. Set out below is a graph depicting the share price performance of Integrated Shares from 22 March 2005 until 22 March 2007.

22 M

ar 0

5

22 M

ay 0

5

22 J

ul 0

5

22 S

ep 0

5

22 N

ov 0

5

22 J

an 0

6

22 M

ar 0

6

22 M

ay 0

6

22 J

ul 0

6

22 S

ep 0

6

22 N

ov 0

6

22 J

an 0

7

22 M

ar 0

7

Share Price

Integrated Group

Share Price Performance



2.6 Additional information

a) Information disclosed to ASX and documents lodged with ASIC

Integrated is a disclosing entity for the purposes of the Corporations Act and, as such, is subject to periodic reporting and continuous disclosure obligations. In particular, as a listed company, Integrated must comply with ASX Listing Rules which require continuous disclosure of any information Integrated has concerning it that a reasonable person would expect to have a material effect on the price or value of its shares (subject to certain exceptions).

Except as set out in this Scheme Booklet, no information that an Integrated Shareholder or its professional advisers would reasonably require for the purpose of making an informed assessment as to whether to vote in favour of the Scheme has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules. Announcements made by Integrated are available from ASX or its website www.asx.com.au

In addition, Integrated is required to lodge various documents with ASIC. Copies of such documents may be obtained from an ASIC office.

b) Further information

For further information relating to Integrated, please visit Integrated’s website www.intgroup.com.au In addition, Integrated’s half year results to 31 December 2006 (announced on 27 February 2007) are available from ASX or on its website www.asx.com.au and on Integrated’s website www.intgroup.com.au c) Recent Integrated announcements

The following table summarises key announcements made to ASX by Integrated that may have affected share price movements over the period since 24 October 2006 (the date Integrated released its 2006 Annual Report).

Date ASX announcement

06/03/2007 Euroz Presentation

27/02/2007 First Half FY2007 Results Briefing and Announcement

27/02/2007 Half Yearly Report/Half Year Accounts

12/02/2007 Merger Presentation

12/02/2007 Merger Announcement

24/11/2006 2006 AGM Results

24/11/2006 2006 Integrated Group AGM - CEO Address Slides

24/11/2006 Chairman’s Address AGM 2006

07/11/2006 Response to ASX Query

Section 3 Profile of Programmed


Section 3 – Profile of Programmed

This section 3 (Profile of Programmed) has been prepared by Programmed and Programmed has accepted responsibility for this section. Integrated and its directors, officers and advisers do not assume any responsibility for the accuracy or completeness of this information.

3.1 Business Overview

Programmed is a substantial provider of property and infrastructure services. Programmed’s service offering can be broadly categorised into two areas:

• property maintenance and management services, such as painting, grounds maintenance, building maintenance, corporate signage and infrastructure and facilities maintenance, management and consulting; and

• specialised industrial services, which include sewerage and drainage maintenance, high pressure cleaning, vacuum loading, non-destructive digging and water recycling.

Programmed’s core business (both historically and currently by revenue) is long-term commercial painting maintenance, and it is a substantial provider of such services in Australia and New Zealand. Programmed currently provides maintenance services in respect of more than 60,000 buildings and structures for over 5,500 customers in the commercial, industrial, government and educational sectors in Australia, New Zealand and the United Kingdom. Programmed has 68 branches in Australia, 19 branches in New Zealand and 9 branches in the United Kingdom, and the Programmed Group employs in excess of 2,500 employees across all locations.

Since its listing on ASX on 1 October 1999, Programmed has grown from a company with an annual revenue of just over $121 million (in the financial year ended 31 March 2000) and a market capitalisation of $129 million at the listing date, to a company generating revenue of $283 million in the financial year ended 31 March 2006 and with a market capitalisation of $369.5 million as at close of trade on 22 March 2007. The company has a strong track record of sustained growth and profitability and is one of only 27 Australian companies included in Forbes Asia’s list of the region’s best 200 companies with sales under US$1 billion. The financial year ended 31 March 2006 marked Programmed’s eighth consecutive financial year of earnings growth. Programmed considers that its performance since its listing has been driven by several factors, as set out below.

a) Broad Product Range

Programmed offers a broad range of services covering property and infrastructure maintenance, enhancement, management, monitoring and consultancy services. Programmed aims to deliver services in accordance with a comprehensive and flexible maintenance plan, generally under long-term contracts which facilitate budgeting for the customer and assist in lowering overall costs. Programmed considers that the broad range of services it offers has enabled it to create unique service partnerships with its customers.


b) Customer Base

Programmed’s customer base includes a number of Australia’s largest companies (by revenue) as well as government departments, municipalities, hospitals, sport facilities and educational institutions. As a result, Programmed has a diverse source of customer revenue. Programmed’s top 10 customers (by revenue) contributed only 14% of total operating revenue for the financial year ended 31 March 2006. Recent new customers of Programmed include Medibank Private, Myers, Australian Electoral Commission and Port of Melbourne Corporation.

c) Demonstrated financial strength The graph in section 3.6 (Programmed’s performance) below demonstrates Programmed’s consistent year on year financial performance since its listing in 1999 until the end of financial year ended 31 March 2006. Section 3.6 below also sets out Programmed’s financial performance and position (on a consolidated basis) for the financial years ended 31 March 2006 and 31 March 2005.

Programmed is of the view that its focus on long-term contracts and the maintenance of existing infrastructure, rather than participation in property construction, has provided it with insulation from short-term fluctuations in the economic cycle. d) Experienced management team

Programmed’s senior management team has considerable experience in the Australian, New Zealand and United Kingdom property maintenance and painting industries. The senior management team averages over 15 years of service with Programmed and has overseen the delivery of Programmed’s earnings growth over the last eight years.

e) Strong industry fundamentals

Programmed considers that there is a growing trend in Australia, New Zealand and the United Kingdom towards outsourcing non-core activities and a greater focus by organisations on compliance with internal and external standards, and Programmed believes that industry conditions remain supportive of strong future earnings growth.

3.2 Corporate history

The Programmed business was established in 1951 in Victoria as a commercial painting business which, to this day, remains its core business operation. Programmed listed on ASX on 1 October 1999. Programmed has increased its geographic coverage over the years, first within Australia and then by moving into New Zealand and later into the United Kingdom through its acquisition of the Whittle Painting Group in 2000. Simultaneously, Programmed has expanded into a range of complementary maintenance businesses (such as grounds maintenance, building services and facilities management), consistent with its philosophy of providing a complete and comprehensive service package for customers. Apart from the organic growth of the building services and grounds businesses, Programmed has expanded the range of services it provides through a number of business acquisitions. Programmed’s Infraserv business was created through the purchase in 2004 of five infrastructure services contracts from Serco Australia Pty. Ltd., and in October 2005 Programmed acquired the Tungsten Group Pty. Ltd., which provides facilities management and related consultancy services.



The diagram below details the years in which the Programmed Group started providing particular services or acquired particular businesses, or started providing services in particular locations.

3.3 Strategy and business profile

Programmed’s strategy is to expand its service offering and move further down the supply chain from being purely a provider of property maintenance services to a provider of tailored management solutions, whereby Programmed now also develops solutions to maintenance issues and manages the delivery of various property and infrastructure facility maintenance services in line with customer requirements. Programmed’s aim is to create a unique service partnership with each customer. As part of its strategy, Programmed has made strategic acquisitions, such as its recent acquisition of the Tungsten and Infraserv businesses. The proposed acquisition of Integrated fits into this overall plan.

As illustrated in section 3.2 above and the charts below, Programmed’s strategy has resulted in significant revenue diversification by geography and product offering between 1999 and 2006.

Ground Services4%

Building Services

1%Industrial Services

13%United Kingdom

Services 0%

New Zealand15%

Australian Painting67%

Ground Services8%

Building Services

20%

Industrial Services

10%

United Kingdom Services

8%New Zealand13%

Australian Painting41%

In addition, Programmed is focusing on more effectively marketing its broad range of services to customers by leveraging its existing customer relationships. Programmed has already put in place people, systems and processes dedicated to leveraging customer relationships between its business divisions.

1999-00 Revenue Mix 2005-06 Revenue Mix

Painting Grounds Engineering

IndustrialServices

Infraserv

BuildingServices

CorporateImaging

BuildingServices NZ

Tungsten

1951 1956 1968 1971 1986 1993 1994 2000 2002 2004 2005

Victoria Queensland Western Australia

New SouthWales

South Australia

Tasmania

New Zealand

United Kingdom

Revenue: $121m Revenue: $283m


Business Divisions

Programmed currently operates 2 separate business divisions.

a) Property Maintenance Services - The Property Maintenance Services division is split geographically into Australia, New Zealand and the United Kingdom.

i) In Australia, Property Maintenance Services incorporates painting, grounds management, building services and Tungsten (including Infraserv) businesses. The division provides a range of trade- based maintenance services under long-term and one-off contracts – including painting, design and development of corporate imaging and signage, garden and grounds maintenance (including landscaping), building trade services (such as plumbing, electrical, air conditioning and other essential services) and compliance audits. The Tungsten business focuses on management of infrastructure facilities and assets and related consulting services, including asset maintenance services, asset vulnerability assessments, integrated protective and emergency services, call centres and a range of related services.

ii) In New Zealand, the property maintenance services cover long-term and one-off maintenance painting and building services. iii) In the United Kingdom only long-term and one-off maintenance painting services are offered.

b) Industrial Services - The Industrial Services division operates only in Australia (primarily on the East Coast) and focuses on underground asset maintenance. Services include specialised drain maintenance and management services, high pressure cleaning, vacuum loading, non-destructive digging and water recycling services. The table below shows the gross revenue for the financial year ended 31 March 2006 for each of the two business divisions, together with other details relating to each of those divisions. The information is based on the profile of each of the divisions as at 9 March 2007, with the exception of revenue and EBIT which is for the financial year ended 31 March 2006.

Revenue – FY06 (A$m) 196.0 36.9 22.3 28.3 283.4

EBIT – FY06 (A$m) 17.2 11.9 1.7 3.1 33.9

Staff Numbers 2000 250 200 200 2,650

Number of Branches 58 19 9 10 96

Property Maintenance ServicesIndustrial ServicesAustralia New

ZealandUnited

Kingdom

TOTALS for Programmed

Group

Note: Totals may not add due to the effects of rounding



3.4 Structure of Programmed Group

The following diagram represents the current corporate structure of the Programmed Group as at 9 March 2007.

3.5 Programmed Board and management structure

a) Programmed Board of Directors The Programmed Board currently comprises three non-executive directors and one executive director (the Managing Director). A brief profile of each director is provided below.

i) Geoff Tomlinson - Chairman (Independent) – Age 59

Appointed non-executive director and Chairman in August 1999, Mr Tomlinson is also the Chairman of Dyno Nobel Limited. He is a director of the National Australia Bank Limited and Amcor Limited. Mr Tomlinson has had an extensive career in the financial services industry, including 29 years with the National Mutual Group, including six years as Group Managing Director and Chief Executive Officer. Mr Tomlinson holds a Bachelor of Economics from the University of Western Australia.

ii) Susan Oliver - Non-Executive Director (Independent) – Age 56

Appointed non-executive director in August 1999, Ms Oliver also holds non-executive directorships with Transurban Group Limited, MBF Australia Limited Group, Methodist Ladies College Limited (Melbourne) and Australian Business Foundation Limited. Ms Oliver has held senior management positions in the Departments of Housing and Construction and Industry, Science and Resources, and in the consulting companies Invetech and Anderson Consulting. She has extensive professional experience in strategy, marketing, technology and scenario planning and currently runs her own consulting and advisory practice in these areas. Ms Oliver began her career in the construction industry and has a Bachelor of Property & Construction from Melbourne University and is a Member of the Australian Institute of Company Directors.

Programmed Maintenance Services Limited

PMS Share Schemes Administration

Pty Ltd

PMS Building Services Pty Ltd

Programmed Maintenance Services

(UK) Limited

Barry Bros. Specialised

Services Pty Ltd

Programmed Maintenance Services

(NZ) Limited

Tungsten GroupPty Ltd

Your Force Pty Ltd

Tungsten Group New Zealand

Pty Ltd

100% 100% 100% 100% 100% 100%

100% 100%


iii) Brian Pollock - Non-Executive Director (Independent) – Age 61

Appointed non-executive director in August 1999, Mr Pollock has over 30 years experience in the finance and property industry with the AMP Society and National Mutual. He is Chairman of Clive Peeters Limited, Members Equity Portfolio Management Limited and A.E. Smith & Son Pty. Ltd., Deputy Chairman of Becton Developments Limited, and a director of Macquarie Real Estate Equity Fund No 1 Pty Ltd, Macquarie Real Estate Equity Fund No 2 Pty Ltd, Macquarie Real Estate Equity Fund No 3 Pty Ltd and Macquarie Real Estate Equity Fund No 4 Pty Ltd. He is a Fellow of the Australian Property Institute and a Senior Associate of the Australian and New Zealand Institute of Insurance and Finance. He was National President of the Property Council of Australia in 1993 and 1994.

iv) Max Findlay - Managing Director – Age 60 Mr Findlay joined Programmed in August 1988 and was appointed Managing Director in March 1990. Mr Findlay is also Chairman of The Programmed Foundation. He has extensive experience in industry, including over 20 years in marketing and general management roles in the industrial and manufacturing industries. Mr Findlay holds a Bachelor of Economics (Politics) from Monash University and is a Fellow of the Australian Institute of Company Directors.

b) Programmed Senior Management

The diagram below sets out the senior management structure of Programmed as at the date of this Scheme Booklet.

Managing DirectorMax Findlay

General ManagerPainting Australia

Paul Warman

General ManagerBarry BrosIan Lilley

General ManagerNew ZealandNigel Caigou

General ManagerInformation Technology

Stewart Bell

General ManagerHuman Resources

Jim Sherlock

General ManagerServices

Mark Piwkowski

General ManagerUnited KingdomChris Hammond

General ManagerFinance & Administration

Ian Jones

General ManagerMarketing

Danny Shafar



Senior Management Profiles

i) Max Findlay - Managing Director

Max Findlay’s profile is set out under the heading “Programmed Board of Directors” on page 44.

ii) Ian Jones - General Manager, Finance & Administration and Company Secretary Ian Jones was appointed General Manager, Finance & Administration and Company Secretary in September 2000. He holds a Bachelor of Commerce and Master of Business Administration from the University of Melbourne, and has been a Chartered Accountant and Chartered Secretary for over twenty five years. Prior to joining the Company, Ian held senior financial roles for over ten years with AXA/National Mutual.

iii) Mark Piwkowski - General Manager, Services Mark Piwkowski joined Programmed in 1985. Originally employed within Painting Australia, Mark has responsibility for Services in Australia, including the Building Services, Grounds and Tungsten businesses. Mark has extensive sales and operations management experience and holds a Diploma in Corporate Management from the Institute of Managers and Accountants and Diploma in Marketing from the University of Sydney. He has also completed extensive studies with the Macquarie Institute of Management in Sydney.

iv) Paul Warman - General Manager, Painting Australia Paul Warman joined Programmed in 1988. He has held various senior management positions in the company over this time including State Manager- South Australia, State Manager - Queensland, General Manager- New Zealand and General Manger - Northern Region. He was appointed to his current role in November 2004. Prior to joining Programmed, Paul held a number of management positions in construction and maintenance related businesses. He has completed various external training courses, including the Advanced Management Programme at the Mt Eliza Business School.

v) Nigel Caigou - General Manager, New Zealand Nigel Caigou commenced with Programmed in 1990 and was appointed General Manager, New Zealand in 1997. Prior to joining Programmed, Nigel had 12 years in the civil engineering sector, holding various senior Management positions whilst working in Sydney over a nine year period to 1990. Nigel holds a New Zealand Certificate in Engineering (NZCE) and a Post Graduate Diploma in Management from Auckland University. vi) Chris Hammond - General Manager, United Kingdom Chris Hammond qualified as a Chartered Accountant in 1977. He joined the Whittle Group of Companies in 1981 and became the Group Finance Director in 1985, with responsibilities for the accounting, finance and company secretarial functions across the diverse Whittle Group. Chris was instrumental in buying out the Painting business from the Whittle Group in 1998 and negotiated the sale of the business to Programmed in 2000.

vii) Ian Lilley - General Manager, Barry Bros. Ian Lilley was appointed General Manager, Barry Bros. in 2006. He has extensive knowledge in the industry having been with Barry Bros. for eleven years as State Manager and State Operations Manager in Victoria. Previously, Ian spent four years with Programmed’s Painting division. Ian holds a Graduate Diploma in Business and Masters of Human Resource Management from Monash University.


viii) Jim Sherlock - General Manager, Human Resources

Jim Sherlock joined Programmed in 1999, and has over twenty years experience in operational and human resources management gained in the retail, hospitality, building, property and infrastructure maintenance industries. This includes senior human resource management positions with Coles Myer and Crown Casino. He is a member of the Australian Human Resources Institute and is currently undertaking a Master of Management course.

ix) Danny Shafar - General Manager, Marketing Danny Shafar has over 30 years experience in commercial building, property maintenance, sales and marketing and contract administration. Danny commenced with Programmed in 1983 as a trainee manager and has held various operational roles, including Regional Manager, Business Manager and State Manager Vic/Tas. His current role is General Manager Marketing, responsible for all aspects of Programmed Group Marketing and Business Development. Danny has a Bachelor of Building and a Master of Business Administration degree from the University of Melbourne and is a Registered Building Practitioner in Victoria.

x) Stewart Bell - General Manager, Information Technology

Stewart Bell was appointed General Manager Information Technology in October 2006. Stewart has over 15 years experience in a variety of key roles managing Information Technology across a broad range of disciplines including business process re-engineering, project management, IT operations and service delivery. Prior to joining Programmed, Stewart held a number of roles with Philip Morris based in Melbourne and various expatriate assignments in South East Asia.

3.6 Programmed’s performance Since listing on ASX in October 1999, Programmed has delivered consistent growth in earnings.

Programmed considers that this growth has been driven by the consistent application of Programmed’s strategy of selectively adding to its range of services while extending its geographic reach. Underpinning this growth has been Programmed’s continued investment in people and resources throughout the Programmed Group, and its culture of safety, innovation and pride in workmanship that permeates the business. The chart below illustrates Programmed’s historical growth in revenue and earnings between the financial year ended 31 March 2000 and the financial year ended 31 March 2006.

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Historical Financial Information

Note: The information in this chart represents past performance and is not an indication of future performance.



b) Income statement

The table below shows the consolidated income statements for Programmed for the years ended 31 March 2006 and 31 March 2005.

The financial year ended 31 March 2006 was Programmed’s eighth consecutive year of double digit growth in revenue and profit. During the financial year ended 31 March 2006 Programmed purchased the Tungsten group, extending the Programmed Group into what Programmed considers to be a growth sector of the maintenance outsourcing market. Programmed considers that the acquisition of the Tungsten group has enabled it to better service the demands of larger businesses and property owners who seek a single provider of outsourced non-core activities.

The historical financial information provided in this section (and in the chart above) is a summary only, and does not, and cannot be expected to, provide as full an understanding of the financial performance, financial position and activities of Programmed and its subsidiaries as the full consolidated financial report.

The financial information provided below reflects historical information and does not take into account the effects of the Merger. It should not be taken as an indication of the likely financial performance of Programmed following the completion of the Merger.

a) Historical financial information

The following section sets out certain historical financial information which has been extracted from Programmed’s 2006 Annual Report. A copy of Programmed’s 2006 Annual Report, including the consolidated financial report and independent audit report, is available on Programmed’s website: www.pmsltd.com.au. A copy will also be provided by Programmed free of charge to any Integrated Shareholder who requests it before the Scheme Meeting (see section 3.9(c)). The consolidated financial report was audited by Deloitte Touche Tohmatsu.

2006 2005 $000 $000 Revenue 283,379 232,002 Other Income 251 410 Changes in inventories of finished goods and work in progress 494 496 Raw materials and consumables used (24,910) (19,700) Employee benefits expenses (129,711) (97,493) Sub Contractor expenses (54,209) (53,528) Depreciation and amortisation expense (9,306) (7,965) Finance costs (4,283) (3,395) Equipment & motor vehicle costs (14,240) (11,328) Information technology and telecommunications costs (2,673) (2,673) Other expenses (15,065) (10,028) Profit from Ordinary Activities 29,727 26,798 Income tax expense (9,556) (8,543) Profit from continuing operations 20,171 18,255 Profit from discontinued operations - - Profit attributable to members of the parent entity 20,171 18,255 Earnings per share: Basic (cents per share) 28.5 26.3 Diluted (cents per share) 28.4 26.3


Results for the year ended 31/3/06 31/3/05 % Increase $m $m Revenue 196.0 157.4 24.5 Earnings before interest and tax 17.2 17.2 0.1

Set out below is a summary of selected financial information for parts of the Programmed Group for the financial year ended 31 March 2006. Australian Property Maintenance Services

The Australian Property Maintenance Services business continued to increase revenue, with non-painting services contributing 42 per cent of the total revenue for the year ended 31 March 2006. While earnings in the second half of the financial year ended 31 March 2006 increased by 7.5 per cent, the full year results were flat due to depressed demand in the painting business in New South Wales and Western Australia and the loss in 2004/05 of the New South Wales schools building services contract.



A new branch in Newcastle was profitable in its first year, and the Queensland and South Australian branches performed well. The painting business increased its earnings in Victoria and Queensland. The grounds management business continued its strong growth in both revenue and earnings, winning significant new contracts from the education, retirement and local government sectors. Performance was particularly strong in Victoria, where revenue was underpinned by landscaping services. New management was appointed in an effort to re-invigorate the performance of the New South Wales business.The South Australian branch performed well and the Queensland branch made a positive contribution in its first full year.

The Infraserv business performed ahead of Programmed’s expectations, with strong organic growth due to increases in customers’ business activity and government infrastructure spending. Following its acquisition in October 2005, Tungsten was able to secure new customer contracts. However, due to integration costs and office rationalisation, the Tungsten business made only a minor contribution to earnings in the second half of the financial year ended 31 March 2006. Australian Industrial Services

The Industrial Services business, which trades as Barry Bros. Specialised Services, produced a record result due to greater and more efficient utilisation of business assets and tighter operating cost controls. Equipment purchases of more than $12 million in the financial years ending 31 March 2005 and 31 March 2006 enabled the business to grow and expand geographically to Adelaide and Rockhampton. The business was also able to offer a broader range of services to meet the needs of existing customers.

The increased investment in infrastructure projects in the Eastern States contributed to revenue growth. A further two water recycling plants were commissioned during the financial year ended 31 March 2006 in Adelaide (October 2005) and Melbourne (January 2006), and a new street sweeping service for industrial and construction sites was introduced. To minimise risk and realise greater efficiencies, the Industrial Services business upgraded its business systems and introduced structured training programmes for all employees.

New Zealand




The financial year ended 31 March 2006 was another very good year for the New Zealand Property Maintenance Services, with all regions performing well despite economic uncertainty leading up to the election in New Zealand. The second half of the financial year ended 31 March 2006 was particularly strong. Significant new contracts were signed with two racing clubs, a meat works business and a listed agricultural business. The total value of contract recoverables and work in progress grew 17 per cent in local currency terms. The business’ customer satisfaction rating increased following campaigns to improve foremen’s communication skills and to sharpen the focus on meeting the needs of customers.

United Kingdom

* Earnings are after deduction of United Kingdom head office costs

The United Kingdom Trade Services business, trading under the name Whittle Painting Group, began to demonstrate its substantial growth potential during the financial year ended 31 March 2006. Average margin increased significantly as revenue from long-term maintenance programmes reached 25 per cent of total revenue, compared with 19 per cent in 2004/05. The long-term maintenance painting programmes generally have margins that are over four times higher than one-off painting contracts.

The Whittle Painting Group’s customised maintenance programmes are unique in the United Kingdom market, and a further 90 contracts were signed during the financial year ended 31 March 2006, bringing the total to 300 with an overall value, in terms of revenue over the life of the contract, of $22 million. As in New Zealand, the maintenance programmes are particularly popular in the education sector.

New branches were opened during the financial year ended 31 March 2006 in Slough, to service customers on the western side of London and Cambridge. These brought the number of branches in the United Kingdom (at that time) to eight, covering the north-west, midlands, south-west and east of England, as well as the Thames Valley.

c) Balance Sheet

The table below presents the consolidated balance sheets of Programmed as at 31 March 2006 and 31 March 2005.

Results for the year ended 31/3/06 31/3/05 % Increase $m $m Revenue 22.3 21.6 3.1 Earnings before interest and tax* 1.7 1.1 55.9



The acquisition of the Tungsten group, together with purchases of plant and equipment of $15.8 million, increased net debt to $74.4 million from $47.2 million at 31 March 2005. Contract recoverables at 31 March 2006 totalled $176.9 million, compared with $161.3 million at 31 March 2005, reflecting the increased volume of long term maintenance programmes. The total equity base at 31 March 2006 was $126.0 million, an increase of 6.3 per cent over financial year ended 31 March 2005 ($118.5 million), due to the solid operating results offset by higher dividend payments. Net tangible assets per share as at 31 March 2006 was $1.61, virtually unchanged from $1.60 as at 31 March 2005. d) Key Ratios

The table below presents key ratios in relation to Programmed for the year ended 31 March 2006 and 31 March 2005.

2006 2005 $000 $000 Current Assets Cash and cash equivalents 6,527 2,209 Trade and other receivables 131,313 109,303 Inventories 18,534 15,449 Other financial assets - 26 Current tax assets 459 - Other 3,903 3,081 Total Current Assets 160,736 130,068 Non-Current Assets Trade and other receivables 90,417 83,589 Inventories 7,681 7,782 Property, plant and equipment 32,945 25,924 Deferred tax assets 5,666 4,231 Goodwill 9,378 2,335 Other intangible assets 2,297 2,762 Total Non-Current Assets 148,384 126,623 Total Assets 309,120 256,691 Current Liabilities Trade and other payables 35,970 27,640 Borrowings 11,810 6,159 Current tax payables 2,363 2,546 Provisions 10,473 7,125 Total Current Liabilities 60,616 43,470 Non-Current Liabilities Borrowings 69,074 43,297 Deferred tax liabilities 51,145 48,548 Provisions 2,241 2,854 Total Non-Current Liabilities 122,460 94,699 Total Liabilities 183,076 138,169 Net Assets 126,044 118,522 Equity Issued capital 27,198 26,219 Reserves 5,976 8,263 Retained earnings 92,870 84,040 Total Equity 126,044 118,522


2006 2005 Dividends Interim – cents per share 7.5 6.5 Final – cents per share 9.5 8.5 Dividends per share – cents 17.0 15.0 Dividend payout ratio 60% 57% Dividend Franking 100% 71% EBIT / Revenue 12.0% 12.9% Return on Equity 17.0% 17.8% Interest Cover – times 8.2 9.6 Net Debt to Equity 59% 40% Net Debt to Recoverables & WIP 42% 29%

3.7 Sources of consideration

a) Total consideration payable

As at the date of this Scheme Booklet, there were 70,471,758 Integrated Shares on issue. In addition, pursuant to the Long Term Incentive Plan for the Integrated Managing Director, additional Integrated Shares will (if the Scheme becomes Effective) be issued to the Integrated Managing Director, Mr Christopher Sutherland, prior to the Record Date for the Scheme (as described in section 7.9(c) (Arrangements with Integrated’s Managing Director)).

The consideration for the acquisition of Integrated Shares pursuant to the Scheme will be satisfied partly in cash (in Australian dollars) and partly by the issue of New Programmed Shares to Scheme Shareholders.

Based on the number of Integrated Shares on issue as at the date of this Scheme Booklet:

• the maximum amount of cash that would be payable by Programmed in connection with the acquisition of Integrated Shares under the Scheme would be $88,089,698; and

• the maximum number of New Programmed Shares that would need to be issued in connection with the acquisition of Integrated Shares under the Scheme would be approximately 18.3 million New Programmed Shares.

Further, an additional $2,380,000 cash will be payable, and an additional 495,040 New Programmed Shares will be issued, in connection with the acquisition of the additional 1,904,000 Integrated Shares to be issued by Integrated prior to the Record Date pursuant to the Integrated Managing Director’s Long Term Incentive Plan (as described in section 7.9(c) (Arrangements with Integrated’s Managing Director)).

b) Sources of Share Consideration

Programmed has entered into the Deed Poll in favour of the Scheme Shareholders. Under the Deed Poll, Programmed covenants, amongst other things, to issue New Programmed Shares as contemplated by the Scheme. Programmed has the capacity to issue the maximum number of Programmed Shares which it may be required to issue under the Scheme.



c) Sources of Cash Consideration

Programmed proposes to obtain the cash required to fund the cash component of the Scheme Consideration by making drawings under an unsecured revolving loan facility (Loan Facility) which Programmed and other Programmed Group companies will enter into with Westpac Banking Corporation (Westpac).

d) Commitment letter and Loan Facility

A binding commitment letter has been signed by Programmed and Westpac, pursuant to which Westpac has agreed to enter into a formal agreement to underwrite the Loan Facility. As part of the commitment letter, Westpac and Programmed have agreed to a terms sheet in respect of the Loan Facility (the precise terms of which are discussed in more detail below). The terms sheet will form the basis of the formal agreement (Loan Facility Agreement) relating to the Loan Facility to be entered into between Westpac and Programmed. Westpac has obtained credit approval to the terms of the Loan Facility.

The amount which is to be available under the Loan Facility (subject to the terms of the Loan Facility Agreement) will be sufficient to fund the cash component of the Scheme Consideration and to fund transaction costs associated with the acquisition of Integrated Shares, including advisory costs, and to refinance an existing Integrated bank facility. The component of the Loan Facility which relates to funding the cash component of the Scheme Consideration is to have a term of 3 years from the date of execution of formal documentation, and the Loan Facility will be subject to unlimited cross guarantees between Programmed and each of its subsidiaries (including the Integrated Group following the Merger).

Westpac intends to bring in other financiers to participate in the Loan Facility in consultation with Programmed.

The commitment letter is subject to the condition that, before execution of the Loan Facility Agreement by Westpac and Programmed, there is no subsisting material adverse change in the financial condition, operations or prospects of the Programmed Group, or in the business or financial condition of the Integrated Group, and no change in national or international conditions which Westpac reasonably views as being prejudicial to its participation in (or to the syndication of) the Loan Facility at the agreed benchmark interest rates. Additionally, after consultation with Programmed, Westpac is entitled to change the pricing of the Loan Facility if there are changes in, or circumstances affecting, the syndication market which result in Westpac being unable to reduce its participation in the Loan Facility to its agreed maximum hold within 6 months of the date of the commitment letter. However, Westpac may not increase the interest margin by more than 15% or its underwriting fee by more than 10%. e) Summary of key terms of terms sheet

The terms sheet sets out the basis of the terms under which Westpac will provide the Loan Facility. A summary of the terms Programmed considers to be most important are set out below.

i) Conditions precedent

The conditions precedents to first drawdown under the Loan Facility are conditions which Programmed believes are not unusual for facilities of this nature, including:


• that all necessary corporate and regulatory approvals and consents have been obtained and remain in full force and effect;

• the representations and warranties given by Programmed being true and correct; and

• the need for Programmed to provide a certification that nothing has occurred which might reasonably be expected to have a material adverse effect. In this context, a material adverse effect means a materially adverse effect on the business, assets, operations, material contracts (taken as a whole) or condition, financial or otherwise of the Programmed Group; or a material impairment of Programmed to fulfil its obligations or to the rights or benefits of the financiers; or a material adverse effect on the validity or enforceability of the formal Loan Facility documentation. The conditions to drawdown also include that there is no “event of default” (or potential “event of default”) or “event of review” (each of which is described below) subsisting at the time of, or which will result from, the provision of the drawdown funds.

By way of an exception to the above, the Loan Facility Agreement is to include a provision to the effect that, the mere occurrence of an event of default, potential event of default or misrepresentation (other than a material event of default, potential event of default or misrepresentation) between the date on which an application is made to the Court for an order approving the Scheme and the earlier of the date on which Programmed is required to pay the cash component of the Scheme Consideration to Integrated Shareholders and a later prescribed date (on the basis of the timetable set out in this Scheme Booklet expected to be at least 15 business days after the Effective Date), will not prevent drawdown under the Loan Facility.

ii) General undertakings

Programmed and its subsidiaries (including the Integrated Group following the Merger) will give a number of “general undertakings” in relation to the Loan Facility, including some which will restrict or prevent the Merged Group from creating security interests over their assets; disposing of capital assets (above a certain threshold); entering into sale or lease back arrangements; entering into joint ventures and partnerships; and having capital expenditure exceed a prescribed limit.

Additionally, the payment by Programmed of dividends or management fees, or making distributions or like payments, in any one financial year ending 31 March will be restricted to:

• no more than 50% of net profit after tax if the gearing ratio is above 2.75 times;

• no more than 75% of net profit after tax if the gearing ratio is between 2.50 times and 2.75 times (both inclusive); and • no more than 100% of net profit after tax if the gearing ratio is less than 2.50 times,

and no payment or distribution will be permitted unless there is no “event of default”, “event of review” or potential “event of default”(as described below).



The gearing ratio is the ratio of “finance debt” to EBITDA, with “finance debt” being any indebtedness in relation to money borrowed or raised or any other financing and includes, for example, a deferred purchase price of more than 90 days. Additionally, where there has been an acquisition of a new business, EBITDA is calculated as if the acquired business has been a part of the group for the whole of the 12 month period prior to the acquisition (and with normalisation adjustments for synergies, significant items or other purposes only permitted with the prior consent of Westpac).

iii) Warranties and representations

Programmed and its subsidiaries (including the Integrated Group following the Merger) will give a number of warranties and representations which Programmed considers customary for a facility of this nature, including that nothing has occurred that has had, or is likely to have, a material adverse effect (as described in section 3.7(e)(i) above).

There are also additional “financial undertakings” which Programmed and its subsidiaries (including the Integrated Group following the Merger) will give, including to limit the gearing ratio (as defined in the terms sheet) to 3.25 times for the first 12 months following the signing of the Loan Facility Agreement and 3.0 times thereafter, and to ensure that the shareholder funds of Programmed remain at no less than $210,000,000 or 85% of shareholder funds for the previous financial year (whichever is greater).

iv) Events of review

Westpac and any other lenders under the Loan Facility will have the right to review the Loan Facility if:

• there is a change of control such that a party gains control of more than 20% of the shares of Programmed; or

• trading in Programmed Shares on ASX is suspended for more than 3 consecutive days. If following either event, agreement cannot be reached between the financiers under the Loan Facility and Programmed as to the maintenance or restructuring of the Loan Facility within 30 days, the financiers may demand repayment of the Loan Facility within 60 days from the date of that demand.

v) Events of default

The Loan Facility includes “events of default” (even if outside the control of the Programmed Group or the Merged Group) which Programmed considers customary for a facility of this nature, including the failure to pay amounts due under the Loan Facility, to comply with a financial undertaking or a general undertaking, or to pay a finance debt. If anything occurs (including an adverse change to the business assets or financial condition) which may have a material adverse effect (as described in section 3.7(e)(i) above) then this will also constitute an “event of default”.


3.8 Programmed shares

a) Capital structure

As at the date of this Scheme Booklet, Programmed has only one class of shares on issue, being fully paid ordinary shares. As at the date of this Scheme Booklet, there are 71,195,705 Programmed Shares on issue.

b) Market information about Programmed Shares

The consideration to be provided by Programmed in connection with the acquisition of Integrated Shares under the Scheme includes Programmed Shares. Programmed has been admitted to the Official List of ASX. Shares of the same class as those to be issued as part of the consideration under the Scheme have been granted official quotation by that stock exchange. Further information in relation to the New Programmed Shares to be issued to Scheme Shareholders is set out in section 1.1 (The Scheme).

The latest record sale price of Programmed Shares on ASX before the public announcement of the proposed Merger at close of trading on 9 February 2007 was $5.14. The latest recorded sale price of Programmed Shares on ASX before the date on which the Scheme Booklet was lodged for registration with the ASIC was $5.15 on 30 March 2007. During the three month period immediately preceding the date on which the Scheme Booklet was lodged for registration with ASIC, the highest and lowest recorded sale prices of Programmed Shares on ASX were, respectively, $5.48 on 15 January 2007 and $4.67 on 5 January 2007. Set out below is a graph depicting the share price performance of Programmed Shares from 22 March 2005 until 22 March 2007.

Neither the Programmed share prices given above, nor the historical share price information contained in the figure below, should be taken as necessarily being an indication of the likely Programmed share price following completion of the Merger.

c) Rights attaching to Programmed Shares

The Programmed Shares to be received as part of the consideration under the Scheme will be fully paid and, from the date of their issue, will rank equally with existing Programmed Shares. Accordingly, if the Programmed Shares which are to be issued in connection with the acquisition of Integrated Shares under the Scheme are issued prior to the Programmed Record Date, those Programmed Shares will be entitled to participate in any final dividend declared by Programmed in respect of the financial year ending 31 March 2007.

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An application will be made by Programmed to ASX for the granting of official quotation of the Programmed Shares to be issued under the Scheme within 7 days after the date of this Scheme Booklet. Quotation is not guaranteed or automatic on such application, but quotation is expected in the ordinary course as Programmed is already admitted to the official list of ASX. It is expected that the Programmed Shares to be issued pursuant to the Scheme will commence trading on ASX, initially on a deferred settlement basis, on 29 May 2007. It is the responsibility of each Integrated Shareholder to determine their entitlement to Programmed Shares under the Scheme before trading those shares to avoid the risk of selling shares that they do not own. Normal trading of the Programmed Shares issued pursuant to the Scheme is expected to commence on 18 June 2007.

The rights attaching to the Programmed Shares which will be issued as part of the consideration for the acquisition of Integrated Shares under the Scheme are set out in the Constitution of Programmed and, in certain circumstances, are regulated by the Corporations Act, the ASX Listing Rules, the ASTC Settlement Rules and the general law.

The following is a summary of the principal rights attaching to Programmed Shares. This summary does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of shareholders of Programmed, which can involve complex questions of law arising from the interaction of the Constitution of Programmed and statutory, common law and ASX Listing Rule requirements.

Share Capital

Without prejudice to any special rights conferred on the holders of any shares, and subject to the ASX Listing Rules, any share in the capital of Programmed may be issued with preferred, deferred or other special rights, obligations or restrictions, whether in regard to dividends, voting, return of share capital, payment of calls or otherwise, as the Programmed Board may from time to time determine. Except as otherwise provided by the Constitution of Programmed, all unissued shares in Programmed are under the control of the Programmed Board. The Programmed Board may grant options on the shares, issue or otherwise dispose of the shares on the terms and conditions and for the consideration it thinks fit. An issue of shares of the same class as an existing class of shares is not to be considered to constitute a variation of the rights of the holders of shares in the existing class.

Dividends

The Programmed Board may declare a dividend to be paid to the shareholders entitled. Subject to the rights of, or any restrictions on, the holders of shares created or raised under any special arrangement as to dividend, dividends are payable on all Programmed Shares in proportion to the amount of the total issue price paid up or credited as paid up in respect of the Programmed Shares.

Voting Rights

At a general meeting, subject to certain minor exceptions, on a show of hands each shareholder present has one vote. On a poll, each shareholder has one vote for each fully paid Programmed Share held, and for each other Programmed Share held a vote in respect of the Programmed Share which carries the same proportionate value as the proportion of the amount paid up (or agreed to be considered as paid up) on the total issue price of that Programmed Share bears to the total issue price of the Programmed Share.


General meetings and notices

Subject to the Corporations Act and the ASX Listing Rules, each holder of Programmed Shares is entitled to receive notice of, and to attend and vote at, general meetings of Programmed and to receive all notices, accounts and other documents required to be sent to shareholders under the Constitution of Programmed, the Corporations Act and the ASX Listing Rules. At a general meeting, holders of Programmed Shares are entitled to be present in person, or by proxy, attorney or (in the case of a body corporate) by representative.

Variation of class rights Subject to the Corporations Act and their terms of issue, the rights attaching to any class of shares may be varied with the written consent of holders of shares with at least 75% of the votes in the class, or by a special resolution passed at a separate meeting of the holders of shares of the class. In either case, the holders of shares in a class with not less than 10% of the votes in the class of shares whose rights have been varied or cancelled may apply to a court of competent jurisdiction to exercise its discretion to set aside such variation or cancellation.

The creation or issue of further shares ranking equally with a class of shares already on issue is not a variation of class rights.

Transfer of shares

Shares in Programmed may be transferred by:

• an instrument in writing which complies with the usual or common form prescribed by the Programmed Board from time to time; or • a proper transfer effected in accordance with the ASTC Settlement Rules and ASX requirements.

The Programmed Board may refuse to register a transfer of securities in the following circumstances:

• if the registration would contravene an applicable law or ASX Listing Rules;

• if the transfer concerns securities over which Programmed holds a lien; or

• if permitted to do so under the ASX Listing Rules.

Alteration of share capital

Programmed in general meeting may reduce or alter its share capital in any manner provided for by the Corporations Act. The Programmed Board may do anything to give effect to any resolution authorising reduction or alteration of the share capital of Programmed.

Winding up

If Programmed is wound up, the liquidator may divide among the shareholders in specie or in kind any part of Programmed’s assets. The division may be carried out as the liquidator thinks fit, subject to the right of any shareholder prejudiced by the division to dissent.



Any dissenting shareholder has ancillary rights as if the determination made by the liquidator were a special resolution passed under the Corporations Act relating to the transfer of Programmed’s assets by a liquidator in a voluntary winding up.

d) Employee Share Schemes

Programmed has in place the following employee share plans:

• the Employee Share Ownership Scheme; and

• the Senior Executive Share Acquisition Plan.

The Programmed Board also proposes to implement a new employee share ownership plan, as described below.

The following is a summary only of the key terms of each of the plans.

Employee Share Ownership Scheme The Employee Share Ownership Scheme (ESO Scheme) allows eligible employees of Programmed to beneficially acquire a specified number of ordinary shares in Programmed (ESO Scheme) for consideration paid by Programmed. In broad terms, the ESO Scheme operates on the basis that entitlements to Programmed Shares will be issued at no cost to employees and trading of the Programmed Shares will be restricted for 3 years or until earlier termination of employment.

The ESO Shares are acquired by a trustee on behalf of eligible employees of Programmed and, upon acquisition, the trustee is registered as the legal owner of the ESO Shares, with the eligible employee having a vested and indefeasible interest in the Programmed Shares. Eligible employees are entitled to the benefit of the dividends and voting rights attaching to the ESO Shares, except that the trustee, as legal owner of the ESO Shares, acts on behalf of the eligible employee in exercising the voting rights. The ESO Shares held by the trustee on behalf of an eligible employee shall not be sold, or transferred to the eligible employee, unless the eligible employee has ceased to be a Programmed employee or 3 years has elapsed since the ESO Shares were acquired on behalf of the employee. An eligible employee who ceases to be employed by Programmed must direct the trustee to either sell the ESO Shares or transfer legal ownership of the ESO Shares to them. As soon as practicable after the expiration of 3 years after the ESO Shares were acquired on behalf of an eligible employee, the trustee must transfer legal ownership of the shares to the employee (unless the employee has directed the trustee to sell the shares, in which case the trustee will sell the shares and pay the net proceeds of sale to the employee).

Senior Executive Share Acquisition Scheme

The Senior Executive Share Acquisition Scheme (SESA Scheme) enables a Programmed executive’s remuneration to be provided partially in the form of Programmed Shares. Trading in the Programmed Shares the subject of the SESA Scheme will be restricted for up to 10 years. The SESA Scheme allows eligible senior executives of Programmed to beneficially acquire a specified number of ordinary shares in Programmed (SESA Shares) for consideration paid by Programmed. The shares are held by a trustee on trust for the relevant senior executive, on the terms set out in the Programmed Senior Executive Share Acquisition Scheme Deed.


The SESA Shares are acquired by the trustee on behalf of the eligible senior executive and, upon acquisition, the trustee is registered as the legal owner of the SESA Shares and the eligible senior executive has a vested and indefeasible interest in the shares. The senior executives are entitled to the benefit of the dividends and voting rights attaching to the SESA Shares, except that the trustee, as legal owner of the SESA Shares, acts on behalf of the senior executive in exercising the voting rights. The SESA Shares held by the trustee on behalf of an eligible employee shall not be sold, or transferred to the eligible employee, unless the eligible employee has ceased to be a Programmed employee, 10 years has elapsed since the SESA Shares were acquired on behalf of the employee or the Programmed Board otherwise approves. A senior executive who ceases to be employed by Programmed must direct the trustee to either sell their SESA Shares or transfer legal ownership of the SESA Shares to them. As soon as practicable after the expiration of 10 years after SESA Shares were acquired on behalf of a senior executive, the trustee must transfer legal ownership of the shares to the employee (unless the employee has directed the trustee to sell the shares, in which case the trustee will sell the shares and pay the net proceeds of sale to the employee).

e) New Employee Share Ownership Plan

Programmed proposes to put in place new long term incentive schemes which will apply to eligible employees of the Merged Group including those employees of Integrated to whom an eligibility notice may have been given in accordance with the Integrated Performance Plan. These schemes will supersede the current ESO and SESA Schemes. The new schemes would include an Employee Share Ownership Plan (ESOP) for all employees, and long-term share options/performance rights incentives for eligible senior executives and managers.

The ESOP will allow employees to acquire a certain number of Programmed Shares at no cost to themselves and with the employees receiving the shares tax-free or, in the case of the United Kingdom and New Zealand, with any tax payable being covered by an additional cash bonus paid by the Programmed Group. Programmed’s aim is for all employees (in Australia, New Zealand and the United Kingdom) to be provided with up to $1,000 per annum of value in Programmed Shares.

The shares would be purchased on market and held by a trustee until the time at which they are distributed to the relevant employees. It is envisaged that the ESOP would operate, in broad terms, along the same lines as the current ESO Scheme.

The scheme proposed to be offered to senior executives and managers, including, post-Merger, to senior executives and managers of the Integrated Group, will involve an annual allocation of share options and/or performance rights to applicable persons with the options/rights to be issued for no consideration, with options having an exercise price that is not less than the market price on the day of grant of the option.

The options and rights will generally be issued for a four year period, and would be exercisable generally only after three years have passed, subject to certain performance hurdles (determined by the Programmed Board at the date of grant) being satisfied, and subject to the relevant senior executive and manager remaining in the employ of the Programmed Group. The relevant performance hurdles will include both internal and external performance criteria, as the Programmed Board determines.

It is envisaged that these schemes will be used to offer to relevant Integrated employees similar opportunities and benefits as are currently available to them under the Integrated Performance Plan.



f) Dividend Reinvestment Plan

Programmed has established a Dividend Reinvestment Plan (DRP) which provides Programmed Shareholders with a choice of reinvesting dividends paid on Programmed Shares rather than receiving those dividends in cash. The DRP has been suspended since July 2005.

The main features of the DRP are as follows.

Participation

Participation in the DRP is optional and open to all holders of Programmed Shares, except that a shareholder may not participate if they have a registered address in any place where, in the opinion of the Programmed Board, participation in the DRP or the making of an offer or invitation to participate in the DRP would be unlawful or would require the issue of a prospectus.

Participation may be either full or partial. Full participation applies in respect of all Programmed Shares registered from time to time in the participant’s name (including shares acquired under the DRP). Partial participation applies for a specific number of Programmed Shares nominated by the participant, with the participant receiving cash dividends on the balance of the shareholding in the normal way.

Participation may be varied or terminated at any time in accordance with the terms of the DRP.

Price of Programmed Shares

The price of Programmed Shares to be issued to participants under the DRP will be the weighted average market price (rounded to the nearest cent) of all Programmed Shares sold on ASX during the five trading days prior to the record date for the relevant dividend, less a discount (not exceeding 10%) determined by the Programmed Board.

Calculation of Entitlement

The dividend payable on Programmed Shares which are subject to the DRP (after deducting any amount, such as withholding tax, that Programmed is required or entitled to deduct) will be credited to a “DRP account” maintained on behalf of the relevant participant and then applied on the participant’s behalf in subscribing for additional Programmed Shares.

At the time of each dividend payment, the maximum whole number of additional Programmed Shares that can be acquired by each participant will be ascertained by dividing the amount in the participant’s DRP account by the relevant price as calculated in the manner set out above. Any balance remaining in a participant’s DRP account after Programmed Shares have been allotted will be carried forward in the participant’s DRP account and added to the next dividend entitlement. No interest will accrue in respect of any balance in a DRP account.

Costs

No brokerage, commission or other transaction costs will be payable by participants on Programmed Shares acquired under the DRP. Under the present law, no stamp duty will be payable on the allotment of Programmed Shares under the DRP.


Dividend and Other rights

Programmed Shares allotted under the DRP will, from the date of allotment, rank equally in all respects with all other Programmed Shares.

ASX listing

Programmed will apply for quotation on ASX of Programmed Shares allotted under the DRP.

Variation, Suspension and Termination

The DRP may be varied, suspended or terminated by the Programmed Board at any time.

The DRP has been suspended since July 2005.

3.9 Additional information

a) Interests of Programmed Group in Integrated securities

Relevant Interests in Integrated securities

As at the date of this Scheme Booklet, Programmed does not have a relevant interest in any of the Integrated Shares on issue.

Voting power in Integrated

As at the date of this Scheme Booklet, Programmed does not have any voting power in Integrated.

Dealings in Integrated Securities

Except as disclosed elsewhere in this Scheme Booklet, neither Programmed nor any associate of Programmed has provided, or agreed to provide, consideration for any Integrated Shares under a purchase or agreement during the four months ended on the day immediately before the date of this Scheme Booklet.

Except as disclosed elsewhere in this Scheme Booklet, during the period of four months ended on the day immediately before the date of this Scheme Booklet, neither Programmed nor any associate of Programmed has given or offered to give or agreed to give a benefit to another person where the benefit was likely to induce the other person, or an associate, to: • vote in favour of the Scheme; or

• dispose of Integrated Shares.

b) Interests of Programmed Directors

Directors of Programmed

As at the date of this Scheme Booklet, the directors of Programmed in office are:

Geoffrey Allan Tomlinson Chairman Maxwell John Findlay Managing Director Susan May Oliver Non-Executive Director Brian John Pollock Non-Executive Director



Interests in Programmed Securities

As at the date of this Scheme Booklet, the directors of Programmed held the following interests in securities in Programmed:

Interests in Integrated Securities

As at the date of this Scheme Booklet, no Integrated Shares are held by or on behalf of any of the directors of Programmed.

Interests in the Merger

Except as disclosed elsewhere in this Scheme Booklet, no director of Programmed holds at the date of this Scheme Booklet, or has held in the two years before the date of this Scheme Booklet, an interest in the Merger or Integrated.

Remuneration

The constitution of Programmed contains the following provisions as to remuneration of executive and non executive directors:

58. Remuneration of Directors - As remuneration for services each non-executive Director is to be paid out of the funds of the Company a sum determined by the Board payable at the time and in the manner determined by the Board but the aggregate remuneration paid to all the non executive Directors in any year may not exceed an amount fixed by the Company in general meeting. The expression “remuneration” in this Rule does not include any amount which may be paid by the Company under Rule 59, 60, 61 or 103.

59. Remuneration of Directors for extra services - Any Director who serves on any committee, who devotes special attention to the business of the Company, who otherwise performs services which in the opinion of the Board are outside the scope of the ordinary duties of a Director or who, at the request of the Board, engages in any journey on business of the Company, may be paid extra remuneration as determined by the Board.

60. Travelling and other expenses - Every Director is, in addition to any other remuneration provided for in this Constitution, entitled to be paid from Company funds all reasonable travel, accommodation and other expenses incurred by the Director in attending meetings of the Company or of the Board or of any Committees or while engaged on the business of the Company.

61. Retirement benefits - Any person (including any officer of the Company) may be paid a benefit (including a prescribed benefit) in connection with the retirement from office (including a prescribed office) of any officer of the Company, in accordance with the [Corporations Act]. The Board may make arrangements with any officer with respect to, providing for, or effecting payment of, benefits in accordance with this Rule.

Director Fully Paid Ordinary Shares G.A. Tomlinson 75,744 M.J. Findlay 1,049,317 S.M. Oliver 27,035 B.J. Pollock 9,863


In accordance with Rule 58 of the Constitution of Programmed the maximum aggregate remuneration which can be paid to all non-executive directors of Programmed in any year has been fixed at $400,000. The Programmed Board may seek an increase in this limit at its annual general meeting in 2007 given that two additional directors will be appointed to the Programmed Board if the Scheme is implemented (see section 7.11).

Indemnities

Programmed has executed a Directors’ Deed of Appointment in respect of each director of Programmed. Each Directors’ Deed contains an indemnity in favour of the director a party to the Deed, to the extent that Programmed is able to give such an indemnity. The indemnity is against any liability incurred by the Director in or arising out of the business of Programmed or in or arising out of the discharge of the duties of the director. Each Directors’ Deed of Appointment also gives the director a right of access to board papers and requires Programmed to maintain Directors and Officers Insurance.

Directors’ insurance Programmed maintains an insurance policy for the benefit of the directors of Programmed which insures them against liability for their conduct as directors of Programmed to the extent permitted by law. The existing insurance policy may insure the directors of Programmed, on the terms and subject to the conditions of the policy, against civil liabilities which they may incur in relation to the Merger.

c) Information disclosed to ASX and documents lodged with ASIC

Programmed is a “disclosing entity” for the purposes of the Corporations Act and as such is subject to continuous reporting and disclosure obligations. Specifically, as a listed company, Programmed is subject to the ASX Listing Rules which require (subject to certain exceptions) it to notify ASX immediately of any information of which it becomes aware concerning Programmed that a reasonable person would expect to have a material effect on the price or value of its shares.

ASX maintains files containing publicly disclosed information about all listed companies. Programmed’s file is available for inspection at ASX during normal business hours or from the ASX website (www.asx.com.au).

In addition, Programmed is also required to lodge various documents with ASIC. Copies of documents lodged with ASIC by Programmed may be obtained from, or inspected at, an ASIC office.

Programmed will provide free of charge, to any holder of Integrated Shares who requests it before the Scheme Meeting, a copy of:

• Programmed’s constitution;

• the annual financial report of Programmed for the year ended 31 March 2006 (being the annual financial report most recently lodged with ASIC before this Scheme Booklet was lodged for registration with ASIC);

• any half-year financial report lodged with ASIC by Programmed after the lodgement of the annual financial report referred to above and before lodgement for registration of this Scheme Booklet with ASIC;

• the annual financial report of Programmed for the year ended 31 March 2007 once that annual report has been lodged with ASIC; and



• any continuous disclosure notice given to ASX by Programmed after the lodgement with ASIC of the annual report of Programmed for the year ended 31 March 2006 referred to above and before lodgement for registration of this Scheme Booklet by ASIC.

The 2006 Annual Report and notices provided to ASX by Programmed over the past year can be downloaded from the Programmed website – www.pmsltd.com.au, while copies of any of the documents referred to above can be obtained by writing to:

The Company Secretary Programmed Maintenance Services Limited 52 Ricketts Road Mount Waverley Vic 3149

d) Material litigation

Legal proceedings arise from time to time in the course of the business of the Programmed Group. Programmed does not believe that the outcome of any current proceedings (as at the date of this Scheme Booklet) will have a material adverse effect on the business or financial position of Programmed.

e) Substantial shareholders in Programmed

As at 9 March 2007 the following persons were contained in Programmed’s register of substantial shareholders, based on substantial shareholding notices received:

f) Other material information

Except as set out in this Scheme Booklet, there is no information material to the making of a decision in relation to the Scheme, being information that is within the knowledge of any Programmed director at the time of the lodging of this Scheme Booklet with ASIC for registration, which has not been previously disclosed to Integrated Shareholders.

Substantial Shareholder Number of shares in Voting power which relevant interest held

Commonwealth Bank Group 6,557,862 9.21%

Invesco Australia Investment Management Ltd 6,055,652 8.51%

Perpetual Trustees Australia Limited 5,421,082 7.61%

Westpac Banking Corporation 4,575,045 6.43%

Section 4 Profile of Merged Group


Section 4 – Profile of Merged Group

This section contains a summary of the operations of, and financial information about, the Merged Group as it will exist if the Scheme is implemented, and has been prepared by Programmed and Integrated.

4.1 Key Benefits and Rationale for the Merger

Integrated and Programmed expect a number of strategic and financial benefits to arise from combining their respective operations. These benefits include the following:

• Faster penetration of Integrated’s Workforce business into new geographic markets and industry sectors such as building and infrastructure maintenance, using Programmed’s infrastructure and expertise. • The ability to leverage existing customer relationships of Programmed and Integrated to provide Programmed’s services to Integrated customers and vice versa. • Further development of technical maintenance services in the oil and gas and marine markets. • The increased scale and capacity of the internal support functions provides the potential to improve the quality of service, lower unit costs and enable a greater investment in related information technology.

• Potential operational cost savings arising from the elimination of duplicated functions.

• Enhanced financial strength and scale which will mean that Programmed and Integrated are better placed to pursue growth, seek further acquisitions and participate in industry consolidation.

• The ability for Programmed to meet more quickly and flexibly its customers’ demands through its ready access to Integrated’s large workforce pool.

• Greater earnings diversity through exposure to different earnings streams and a new customer base.

• The creation of a much larger listed company, which may increase investor interest in, and the liquidity of, the Merged Group’s shares.

• Greater opportunities for employees, leading to improved retention and attraction of high quality candidates.

More detail on each of these benefits can be found on pages 8 to 10 (inclusive) of this Scheme Booklet.

4.2 Overview of the Merged Group

If the Scheme is implemented, Programmed will remain the entity listed on ASX, and will be the ultimate holding company for the companies within the Programmed Group and the Integrated Group which together would form the Merged Group. Integrated, along with the other Integrated Group companies, will become wholly owned subsidiaries of Programmed.


The Merged Group will comprise three main operating divisions: Australian Services, International Services and Integrated Group. These operating divisions and their respective subdivisions are highlighted in the diagram below.

The Merged Group will be headquartered in Mount Waverley, Victoria, with a total workforce (comprising staff and field workers) across Australia, New Zealand and the United Kingdom of more than 9,500.

4.3 Board of Directors

The Board of Programmed will comprise its current members, with current Programmed Chairman, Geoff Tomlinson, remaining as Chairman and current Programmed Managing Director, Max Findlay, continuing in the role as Managing Director. In addition, Neil Hamilton and Jon Whittle will join the Board of Programmed if the Scheme becomes Effective. Further details regarding the current Board members of Programmed are set out in section 3.5(a).

4.4 Capital Structure and ownership

As at the date of this Scheme Booklet, Programmed has 71,195,705 ordinary shares on issue. Should the Scheme become Effective, Programmed will issue up to a maximum of approximately 18.8 million additional Programmed Shares to Scheme Shareholders. The circumstances under which the maximum number of additional Programmed Shares would be issued to Scheme Shareholders are described in section 3.7.

ManagingDirector

Integrated Group Australian Services International Services Corporate Activities

Workforce

Marine


Painting

Grounds

Building Services

Tungsten/Infraserv

NZ Painting

NZ Building Services

UK Painting

Finance

Human Resources

Marketing

Info. Technology

Group RiskIndustrial Services

ManagingDirector

Integrated Group Australian Services International Services Corporate Activities

Workforce

Marine


Painting

Grounds

Building Services

Tungsten/Infraserv

NZ Painting


UK Painting

Finance

Human Resources

Marketing

Info. Technology

Group RiskIndustrial Services

- From Integrated - From Programed - From both Integrated and Programmed



If the maximum number of additional New Programmed Shares are issued, the total number of Programmed Shares on issue will be approximately 90 million, and the overall fully diluted interest of Integrated Shareholders in Programmed immediately following Implementation of the Scheme will be approximately 20.9%.

As at 9 March 2007, there were four persons who, based on substantial shareholding notices filed with Programmed and ASX, were substantial shareholders of Programmed (within the meaning of the Corporations Act), the largest of which had voting power of 9.21%. All four of these persons will be substantial shareholders (within the meaning of the Corporations Act) in the Merged Group immediately after the issue of New Programmed Shares to Scheme Shareholders. No person who is registered as a shareholder of Integrated as at 9 March 2007 will become a substantial shareholder in the Merged Group immediately after the issue of New Programmed Shares to Scheme Shareholders.

4.5 Programmed’s Post-Merger Intentions for the Merged Group

a) Overview This section 4.5 sets out Programmed’s intentions, assuming the Scheme is implemented, on the basis of the facts and information concerning Integrated, its business and the general business environment which are known to Programmed and existing circumstances affecting the Integrated businesses, in relation to:

• the continuation of the business of Integrated; • changes to the business of Integrated and any redeployment of the fixed assets of Integrated; • the future employment of the present employees of Integrated;

• the composition of the Integrated Board once it becomes a wholly owned subsidiary of Programmed; and

• the removal of Integrated from the official list of ASX.

Final decisions will only be reached by Programmed, following implementation of the Scheme, after gaining increased knowledge through exposure to the Integrated businesses and material information and circumstances at the relevant time. Accordingly, the statements set out in this section 4.5 are statements of current intention only, which may change as new information becomes available or circumstances change.

b) Conduct of business

If the Scheme is implemented and subject to the matters set out below, Programmed intends that the business of Integrated will be continued substantially in the same manner as it is presently being conducted. However, Programmed intends to leverage existing customer relationships and infrastructure to expand Integrated’s business regionally and across New Zealand and the United Kingdom more quickly than Integrated could do on its own. c) Integrated’s management, employees and elimination of duplication

Programmed’s current intention is that the Integrated management team will become part of the Programmed management structure post-Merger. Current Integrated Chief Executive Officer, Chris Sutherland, will lead the Integrated Group division, reporting directly to Programmed’s Managing Director, Max Findlay.


Programmed does not intend to make any significant changes to Integrated’s management or operational activities. To the extent that activities and functions, including certain corporate functions and the provision of specialist technical or professional services (such as finance and accounting, human resources, technology and communications) presently carried out by Integrated will be duplicated within the Merged Group, such duplication will be eliminated where it is economically efficient to do so.

It is possible that this may result in the positions of some Integrated and/or Programmed employees in the corporate and administrative areas becoming redundant. Any employee who is made redundant will receive, on redundancy, payments and other benefits in accordance with their contractual and other legal entitlements. Employment decisions will, however, be made in the context of the expected continuing growth of the Merged Group. d) Synergies, integration and timing

In addition to the strategic benefits created by the Merger, Programmed believes that net annual pre-tax cost savings of approximately $2.5 to $3 million should result from the Merger within two years of the Merger becoming Effective. The key potential cost savings identified to date include:

• Corporate Centre Costs – reduction of costs associated with eliminating duplicate corporate functions and potential executive management functions, eg, director’s fees, ASX listing fees, annual reporting costs, audit fees, share registry fees and other accounting and tax related advisory fees;

• Treasury and Risk Functions – reduction in insurance premiums and brokerage costs, treasury transaction costs and payroll and compliance processing costs; • Information Technology Costs – savings may be generated through operating a single information technology platform and reducing the number of third party network and help desk service providers; • Building / Lease Costs – Integrated and Programmed will seek to optimise the use of office space to ensure any surplus space is either sold or sub-let at commercial rents; and

• Communication Costs – savings may be generated through increased purchasing power.

Programmed and Integrated have jointly established a dedicated integration team, which also includes independent consultants, to review the opportunities for synergies in the above areas. A comprehensive integration plan is being formulated to ensure the proper integration of the Integrated Group into the Programmed Group. This comprehensive plan will be finalised and actioned if the Scheme becomes Effective.

The realisation and timing of the above synergies are subject to certain risks which are further discussed in section 5 (Risk factors). e) Integrated Board

If the Scheme becomes Effective, Integrated will become a wholly owned subsidiary of Programmed and Programmed will procure that the Integrated Board is reconstituted so that it comprises persons nominated by Programmed. It is proposed that, shortly after the Scheme becomes Effective, the Integrated Board will comprise the same directors as the Programmed Board (as set out in section 3.5(a)).



f) ASX

If the Scheme becomes Effective, an application will be made to remove Integrated from the official list of ASX.

g) Business, assets and employees

Other than as set out in this section 4.5 and elsewhere in this Scheme Booklet, it is the present intention of Programmed:

• to continue the business of Integrated;

• not to make any major changes to the business of Integrated;

• not to redeploy any of the major fixed assets of Integrated; and

• to maintain the employment of Integrated’s existing employees.

4.6 Pro-Forma Financial Information

a) Introduction

This section 4.6 sets out the following pro-forma financial information of the Merged Group:

• a pro-forma income statement of the Merged Group for the 12 months ending 31 March 2007; and

• a pro-forma balance sheet of the Merged Group as at 31 December 2006,

in each case prepared on the basis and assumptions set out below.

The unaudited pro-forma Merged Group financial information presented in this section 4.6 is for illustrative purposes only. It is provided as a guide to assist Integrated Shareholders in considering the effect of the implementation of the Scheme on Programmed. The pro-forma balance sheet of the Merged Group assumes, amongst other things, that Programmed had acquired all of the Integrated Shares under the Scheme as at 31 December 2006. The pro-forma income statement of the Merged Group for the year ending 31 March 2007 assumes, amongst other things, that Programmed had acquired all of the Integrated Shares under the Scheme as at 1 April 2006. Further details of the applicable assumptions are set out in section 4.6(d).

It should be noted that the pro-forma income statement of the Merged Group set out in the table in section 4.6(c) does not purport to reflect the likely reported earnings of the Merged Group for the year ending 31 March 2007 or for any other period.

It should be further noted that no forecast information in relation to the financial performance of the Merged Group post acquisition is being provided, as Integrated and Programmed are not able to provide any such forecast information which is sufficiently meaningful and reliable to include in this Scheme Booklet. In this regard, the Merged Group’s performance in any period will reflect a number of factors that cannot, at this stage, be predicted with a high level of confidence and are outside its control. Section 5 sets out risks relevant to the performance of the Merged Group’s business.


b) Differing Financial Year Ends and Forecast Financial Performance

Programmed’s financial year end is 31 March whereas Integrated’s financial year end is 30 June. In compiling the pro-forma income statement of the Merged Group to cover the same 12 month period to 31 March 2007, Programmed has used its forecast income statement for the year ending 31 March 2007, while Integrated has compiled a pro-forma forecast income statement for the financial year ending 31 March 2007 by aggregating:

• one quarter of the normalised audited financial performance of Integrated for the year ended 30 June 2006; and

• three quarters of the forecast financial performance of Integrated for the year ending 30 June 2007 (included within this forecast for the year ending 30 June 2007 are the actual results for the seven month period 1 July 2006 to 31 January 2007, and a five month forecast (Integrated Forecast) for the period 1 February 2007 to 30 June 2007). Details of the assumptions and adjustments made by Integrated in normalising the audited financial performance of Integrated for the year ended 30 June 2006 and preparing the Integrated Forecast are set out below in section 4.6(d)(ii).

Programmed’s forecast income statement for the year ending 31 March 2007 has been compiled by aggregating:

• the actual unaudited financial performance of Programmed for the ten month period 1 April 2006 to 31 January 2007; and

• the forecast financial performance of Programmed for the two month period 1 February 2007 to 31 March 2007 (Programmed Two Month Forecast).

Details of the assumptions made by Programmed in preparing the Programmed Two Month Forecast are set out below in section 4.6(d)(iii).

c) Merged Group Pro-Forma Income Statement

This section sets out the pro-forma income statement of the Merged Group for the year ending 31 March 2007. As mentioned above, the Merged Group pro-forma income statement is compiled from an aggregation of the:

• pro-forma forecast income statement for Integrated for the financial year ending 31 March 2007; and

• forecast income statement for Programmed for the financial year ending 31 March 2007,

each of which have been compiled in the manner described above in section 4.6(b), having regard to relevant assumptions and adjustments required to present the Merged Group on an aggregated basis, details of which are set out below.

The pro-forma income statement of the Merged Group presented in this Scheme Booklet is unaudited and has been provided for illustrative purposes, and in summary form, only. The income statements for Integrated and Programmed in the table below do not record the actual financial performance of each entity for the year ending 31 March 2007. Further, the pro-forma income statement of the Merged Group summarised in this section does not purport to reflect the likely reported earnings of the Merged Group for the year ending 31 March 2007 or for any other period because, amongst other things, the profits of Integrated will only accrue to the Merged Group from the date of the acquisition of the Integrated Shares by Programmed.



Revenue 470.7 330.7 - 801.4EBITDA 24.0 50.2 - 74.2Depreciation & Amortisation (3.2) (11.7) - (14.9)EBIT 20.8 38.5 - 59.3Net Interest Expense (2.0) (5.9) - (7.9) Additional Interest Expense - - (7.1) (7.1) Profit from ordinary activities before income tax expense 18.8 32.6 (7.1) 44.3Income tax expense (5.9) (10.3) 2.3 (14.0)Net Profit after tax 12.9 22.3 (4.9) 30.3Shares on issue 70.5 71.2 18.8 90.0Fully diluted EPS ($) 0.18 0.31 - 0.34

Pro-formaForecast Income

Statement of Integrated

$m

Forecast Income

Statement of Programmed

$m

Adjustments

$m

Pro-formaIncome

Statement of Merged Group

$m

The pro-forma income statement of the Merged Group does not contain all of the disclosures that are usually provided in an annual report prepared in accordance with the Corporations Act and it does not include the notes to and forming part of the financial statements of Integrated and Programmed.

Note: Totals may not add due to the effects of rounding.

d) Basis of preparation of the Relevant Forecast Financial Information The Integrated Forecast and the Programmed Two Month Forecast have been prepared on the basis of the best estimate assumptions of Integrated and Programmed respectively in light of facts known when the respective forecast financial information was prepared. Additionally, in the case of Integrated, compilation of Integrated’s pro-forma income statement for the financial year ending 31 March 2007 has involved normalisation of Integrated’s audited financial performance for the year ended 30 June 2006.

All financial information relating to Programmed has been provided by, and is the sole responsibility of, Programmed. All financial information relating to Integrated has been provided by, and is the sole responsibility of, Integrated. Integrated and Programmed have taken due care in preparing and reviewing their respective forecast financial information. However, they can give no assurance or guarantee that their respective forecasts will be achieved, as forecasts, by their very nature, are subject to uncertainties and contingencies, many of which are outside the control of Integrated and Programmed and which may, amongst other things, result in the assumptions on which the forecasts are based being inaccurate. Additionally, the pro-forma Merged Group income statement relies, in part, on the unaudited financial performance of Integrated and Programmed, and the normalised financial performance of Integrated. Accordingly, no representation or warranty as to the accuracy of the Integrated Forecast or the Programmed Two Month Forecast or the pro-forma Merged Group income statement is expressed or implied by this Scheme Booklet. Integrated Shareholders are advised to carefully consider the risk factors in section 5 of this Scheme Booklet, the best estimate assumptions and normalisations used in preparing Integrated’s pro-forma forecast income statement for the financial year ending 31 March 2007 and the best estimate assumptions used in preparing Programmed’s forecast income statement for the year ending 31 March 2007 when considering the likely future financial performance of the Merged Group.

Pro-forma Income Statement of the Merged Group


Integrated Shareholders should also refer to the important notice regarding forward looking statements contained inside the front cover of this Scheme Booklet.

i) General assumptions underlying the Integrated Forecast and the Programmed Two Month Forecast

Integrated and Programmed have each made the following key general assumptions in relation to the forecast period which applies in respect of the Integrated Forecast and the Programmed Two Month Forecast, respectively.

• No impact on earnings of any acquisition (in particular Integrated’s proposed acquisitions referred to in section 2.4(d)), disposal or restructuring of the business of Integrated or Programmed which may occur during the forecast period.

• No significant change in the legislative regimes or regulatory environments (including taxation) in the jurisdictions in which Integrated or Programmed or their respective key customers or suppliers operate which will materially affect the forecasts, other than as contemplated in this Scheme Booklet.

• No changes in accounting standards or other mandatory professional reporting requirements or the Corporations Act that would have a material effect on Integrated’s or Programmed’s financial performance, cash flows or financial position, other than as contemplated in this Scheme Booklet.

• No material change in competitive activity in the markets in which either Integrated or Programmed operates.

• No material changes in industrial, political or economic conditions with respect to the industries within which Integrated or Programmed operate or in the Australian, New Zealand and United Kingdom economies generally.

• Retention of key personnel of each business.

• Total cost of salaries and wages for each of Integrated and Programmed is based on their respective estimated employee numbers and current salary and wage rates (including on-costs) applicable to such employees.

ii) Specific assumptions underlying the Integrated Forecast

In preparing the Integrated Forecast, Integrated has made the following specific assumptions in relation to the forecast period:

• Labour hire demand and margins for each of Workforce, Marine and Technical Maintenance are, on average, consistent with current trends. • Safety performance and associated workers compensation costs are consistent with current performance.

• The average effective tax rate for the forecast period is assumed to be 31.5%. The financial performance of Integrated for the year ended 30 June 2006 has been normalised by removing the losses associated with the discontinued training business ($9.745 million) and the net impact of the sale of all offshore vessels to Mermaid Marine and the purchase of its manning business and miscellaneous training business disposal costs ($0.751 million).



iii) Specific assumptions underlying the Programmed Forecast Income Statement

In preparing the Programmed Two Month Forecast, Programmed has made the following specific assumptions in relation to the forecast period:

• The Australian property maintenance division is projecting strong revenue and earnings growth led by the painting business; • The Industrial Services business continues to be impacted by drought conditions leading to lower utilisation of equipment;

• The results of the New Zealand business have been adversely impacted by poor weather over the ten months to 31 January 2007 as well as movements in the NZD exchange rate. February and March 2007 have forecast lower volumes than the previous few months, which is consistent with February and March of previous years; and • Given the distinct seasonality of the United Kingdom operations, the vast majority of earnings are made in the first half of the year. As such, forecasts for the full year to 31 March 2007 do not increase significantly from the first half results. Additionally, the average effective tax rate for the year ended 31 March 2007 is assumed to be 31.6% based on the expected taxable incomes and rates in Australia, New Zealand and the United Kingdom.

For the purpose of translating Programmed’s non-Australian earnings for the period 1 April 2006 to 31 March 2007 into Programmed’s reporting currency (Australian dollars), the following assumptions have been used:

• The average NZD/AUD exchange rate for the year ended 31 March 2007 being equal to A$0.862; and

• The average GBP/AUD exchange rate for the year ended 31 March 2007 being equal to A$2.439.

iv) Key assumptions underlying the Merged Group Pro-forma Income Statement

In preparing the Merged Group pro-forma income statement for the year ending 31 March 2007, Integrated and Programmed have made the following key assumptions:

• No revenue synergies from the Merger.

• No adjustment has been made to bring the accounting policies of Integrated into conformity with those of Programmed.

• No significant amendment to, or termination of, any material agreement or arrangement relating to the Merged Group’s business. It is assumed that the parties to those agreements and arrangements will continue to comply with the terms of those agreements and arrangements.

• No cost synergies from the Merger.

• Interest on the debt borrowed to fund the acquisition of Integrated (including associated transaction expenses of $6 million) is charged at a rate of 7.40% per annum.

• The tax rate assumed for the pro-forma adjusting items in relation to the Merger is 31.6%.


• No allocation of the purchase price has been made to identifiable intangible assets of Integrated on acquisition. To the extent that any new identifiable intangible assets of Integrated with finite useful lives are identified, these will need to be amortised over their useful lives which will adversely impact the future earnings of the Merged Group.

• No change to the estimated useful lives for assets acquired as a result of the Merger.

• No impairment charges under AASB 136 Impairment of Assets.

• The Merged Group’s significant accounting policies remain consistent with those disclosed in Integrated’s and Programmed’s Annual Report for financial year 2006. • No change in the Merged Group’s funding or capital structure, other than changes flowing directly from the Merger as set out in this Scheme Booklet.

e) Pro-Forma Balance Sheet

This section sets out the pro-forma balance sheet of the Merged Group as at 31 December 2006.

The pro-forma balance sheet is compiled from an aggregation of the:

• audit reviewed half year balance sheet of Programmed as at 30 September 2006; and • audit reviewed half year balance sheet of Integrated as at 31 December 2006,

having regard to relevant adjustments required to present the Merged Group on an aggregated basis, details of which are set out below.

The pro-forma balance sheet of the Merged Group presented in this Scheme Booklet is unaudited, has been provided for illustrative purposes, and is in summary form, only. It is not intended to reflect the actual financial position of the Merged Group as at a particular point in time. It does not contain all of the disclosures that are usually provided in an annual report prepared in accordance with the Corporations Act and it does not include the notes to and forming part of the financial statements of Integrated and Programmed.



Pro-forma Balance Sheet of the Merged Group

Note: Totals may not add due to the effects of rounding.

Cash and cash equivalents 1.8 9.0 - 10.8

Trade & other receivables 71.0 126.7 - 197.6

Inventories 0.4 18.2 - 18.6

Other - 4.6 - 4.6

Total Current Assets 73.1 158.4 - 231.6

Trade & other receivables - 93.5 - 93.5

Inventories - 8.3 - 8.3

Property, plant and equipment 10.6 41.5 - 52.1

Deferred tax assets 4.5 4.9 - 9.4

Goodwill and other intangible assets 30.7 11.5 146.5 188.7

Available-for-sale financial assets 1.0 - - 1.0

Total Non-Current Assets 46.9 159.7 146.5 353.0

Total Assets 120.0 318.1 146.5 584.6

Trade and other payables 37.0 34.1 - 71.1

Borrowings 24.1 15.0 96.5 135.6

Current tax liabilities 1.6 1.8 - 3.5

Provisions 1.2 9.3 - 10.5

Total Current Liabilities 64.0 60.3 96.5 220.8

Borrowings 3.7 76.6 - 80.3

Deferred tax liabilities 2.1 50.9 - 53.1

Provisions 3.4 2.5 - 5.9

Total Non-Current Liabilities 9.2 130.1 - 139.3

Total Liabilities 73.3 190.3 96.5 360.1

Net Assets 46.7 127.8 50.0 224.5

Issued Capital 37.0 27.3 59.7 124.0

Reserves 0.6 6.6 (0.6) 6.6

Retained Earnings 9.2 93.9 (9.2) 93.9

Total Equity 46.7 127.8 50.0 224.5

Gearing

Net Debt / (Net Debt plus Equity) 36% 39% 48%

Aud�t Rev�ewed Balance Sheet of

Integrated�� December �00�

$m

Aud�t Rev�ewed Balance Sheet of

Programmed�0 September �00�

$m

Adjustments

$m

Pro-forma Balance Sheet of Merged

Group�� December �00�

$m


f) Key assumptions underlying the pro-forma Balance Sheet

In preparing the Merged Group pro-forma balance sheet as at 31 December 2006, Integrated and Programmed have made the following key assumptions:

i) Programmed borrowing $90.5 million to fund the cash component of the Scheme Consideration to acquire 72,375,758 Integrated Shares, being the aggregate of the Integrated Shares on issue as at the date of this Scheme Booklet and the additional Integrated Shares to be issued to the Integrated Managing Director (as described in section 7.9(c) of this Scheme Booklet);

ii) Programmed borrowing approximately $6 million to fund transaction expenses relating to the Scheme, apart from the cash component referred to in sub-paragraph (i) above;

iii) Programmed issuing approximately 18.8 million New Programmed Shares, being the maximum number of New Programmed Shares which would be required to be issued in order to acquire all of the Integrated Shares referred to in paragraph (i) above. It is assumed that the New Programmed Shares are issued at $5.14, being the closing price of Programmed Shares on the last trading day immediately before the Merger was announced to the ASX;

iv) For the pro-forma financial information, goodwill on consolidation has been determined using the net tangible assets of Integrated as at 31 December 2006. Programmed will conduct an assessment of the fair value of the net assets acquired at the date that the Scheme is implemented. This assessment will separately determine the actual amounts of identifiable intangible assets and the goodwill on consolidation. Australian accounting standards require that the cost of the acquisition is allocated to the tangible assets and liabilities acquired. Any excess of cost over net tangible assets is to be allocated to identifiable intangible assets before any remaining balance is allocated to goodwill on consolidation. The rules for the allocation to identifiable intangibles are more definitive than previous standards. Any identifiable intangibles will be progressively amortised over their estimated useful lives. Goodwill on consolidation will not be amortised, but will be subjected to an annual impairment test.

At the time of preparation of this Scheme booklet, it is not possible to determine any values for identifiable intangibles. The amortisation of identifiable intangibles and the potential for impairment write-downs of goodwill may introduce volatility into the future reported earnings of the Merged Group. Furthermore, to the extent that identifiable intangible assets are recognised, consideration will need to be given to any tax impact on earnings arising from deferred tax balances that may be associated with the identifiable intangibles; v) The pro-forma balance sheet takes no account of the trading of Integrated since 31 December 2006 or Programmed since 30 September 2006. Programmed considers that there would be no material adverse change to the ratio of current assets to current liabilities and to the net assets as set out in the Merged Group pro forma balance sheet if the financial transactions for the three months ended 31 December 2006 for Programmed were brought to account; and

vi) No adjustment has been made to bring the accounting policies of Integrated into conformity with those of Programmed.

All financial information relating to Programmed has been provided by, and is the sole responsibility of, Programmed. All financial information relating to Integrated has been provided by, and is the sole responsibility of, Integrated.



4.7 Dividends and Dividend Policy

Programmed presently has a policy of paying dividends to shareholders which is equivalent to approximately 60% of the net profit after tax for the relevant financial year. For the financial year ended 31 March 2006, Programmed paid a fully franked dividend of 17 cents per share to Programmed Shareholders. This was equivalent to approximately 60% of Programmed’s net profit after tax for the financial year ended 31 March 2006.

Programmed’s dividend policy from time to time is determined by the Programmed Board based on the amount of operating profit after tax, the need to retain sufficient funds for the prudent development of the Programmed Group and other relevant factors such as any applicable financial covenants under the Programmed Group’s banking arrangements (as to which, see section 3.7(e)(ii)). However, no assurance can be given as to the timing and amount of any dividends payable by the Merged Group at any time in the future, as the payment of dividends will be dependent on profitability and the funding requirements of the Merged Group at the relevant time, which in turn may be affected by general economic conditions and specific conditions affecting the Merged Group’s operations.

Scheme Shareholders who receive New Programmed Shares prior to the Programmed Record Date will be entitled to receive any final dividend declared by Programmed in respect of the period ending 31 March 2007 (the Programmed Final Dividend). If the Programmed Final Dividend is declared but the Programmed Record Date falls before the date of the issue of the New Programmed Shares under the Scheme (so that Scheme Shareholders are not entitled to receive the Programmed Final Dividend), Integrated will pay to Scheme Shareholders the Integrated Final Dividend, being a dividend which is equivalent to the amount that Scheme Shareholders would have received had the New Programmed Shares been issued prior to the Programmed Dividend Record Date (or, should sufficient profits not be available for such a dividend, a dividend of such lesser amount as could be paid in accordance with the Corporations Act). At the date of this Scheme Booklet, Programmed does not anticipate that the financial covenants referred to in section 3.7(e)(ii), which will apply pursuant to the Loan Facility referred to in that section, will impact Programmed’s present dividend policy in respect of any final dividend for the financial year ending 31 March 2007. There is no guarantee that those financial covenants, or other factors referred to above, will not impact the timing and amount of any dividends payable by the Merged Group at any time in the future.


Section 5 Risk Factors


Section 5 – Risk Factors

5.1 Introduction

If the Scheme is implemented, New Programmed Shares will be issued to Scheme Shareholders (or to a nominee in the case of Ineligible Foreign Holders) as part of the Scheme Consideration for the transfer of their Scheme Shares to Programmed. Therefore, the value of the Scheme Consideration that Scheme Shareholders will receive is dependent, in part, on the value of Programmed Shares.

There are many factors that may influence the price of Programmed Shares and any future dividends paid in respect of Programmed Shares, including those that apply to investments generally, those that apply and will continue to apply specifically to the businesses of the Programmed Group, those that apply and will continue to apply specifically to the businesses of the Integrated Group and those that arise, or may arise, from a combination of the Programmed Group and the Integrated Group.

It is therefore important to be aware of the risks that may affect, and may have an adverse impact on, the future operating and financial performance of the Merged Group and the value of Programmed Shares, which include those set out in this section 5. The risk factors described below outline the key risks (but this is not, and cannot be, an exhaustive list) associated with an investment in Programmed Shares and the Merged Group. Additionally, this section does not take into account the investment objectives, financial situation, taxation position or particular needs of individual Scheme Shareholders.

Further, the Programmed Group derives a significant proportion of its earnings from operations to which Scheme Shareholders are not currently exposed. Section 3 provides further detail of Programmed’s businesses. Scheme Shareholders should be aware that the businesses of the companies within the Programmed Group have a different growth and risk profile compared to Integrated’s current businesses given their inherent nature, level of exposure to overseas markets (introducing geographical and currency risk) and capital expenditure requirements.

While, to some extent, Scheme Shareholders are already exposed to certain of the risks highlighted in this section 5 due to their ownership of Integrated Shares, the occurrence of any of the risk factors set out in this section 5 may have an adverse impact on the Merged Group’s future operating and financial performance and the value of Programmed Shares.

5.2 General risks

a) Share market conditions

As discussed in section 5.1 above, the value of the Scheme Consideration that Scheme Shareholders will receive is dependent, in part, on the value of Programmed Shares.

The market value of the Programmed Shares received by Scheme Shareholders under the Scheme will fluctuate depending on the price at which those shares are traded on ASX. Accordingly, the market value of Programmed Shares at the time at which they are received by Scheme Shareholders may vary from their market value at any other time.

There are general risks associated with any investment in the share market. The prices at which shares in Programmed trade may rise or fall in response to a number of factors affecting the market for equities in general. These factors are unpredictable and may be unrelated or disproportionate to the operating performance of the underlying assets of the Merged Group. Such factors include changes in the general economic outlook, global political and economic stability, interest and inflation rates, currency exchange rates, investor sentiment and the demand and supply of capital.


b) Economic and financial risks

Changes in the general economic climate in which the Merged Group will operate may adversely affect the future financial performance (that is, future costs and revenues) of the Merged Group. In particular, changes in economic factors such as economic growth, interest rates, inflation, employment levels, consumer demand, consumer and business sentiment, market volatility and monetary policy could have a substantial effect on the value of Programmed Shares and the Merged Group’s assets.

c) General regulatory risk The Merged Group will be exposed to any changes in the regulatory conditions under which it operates (both in Australia and also in New Zealand and the United Kingdom). Such regulatory changes can include, for instance, changes in:

• taxation laws and policies;

• accounting laws, policies, standards and practices;

• environmental regulations that may impact upon the operations and processes of the Merged Group; and

• employment laws and regulations, including laws and regulations relating to occupational health and safety.

5.3 Specific risks relating to Integrated

a) Increased or new competition

Integrated operates in markets where generally healthy competition exists. New competitors may enter the market and this might affect the earnings from the relevant local operation and hence impact the earnings of Integrated.

b) Occupational Health and Safety

Integrated manages, with its clients, certain risks associated with the occupational health and safety of its employees. Integrated takes out insurance to cover these risks within certain parameters, however, it is possible for injuries and/or incidents to occur which may result in expenses in excess of the amount insured or provided for with a resultant impact on the earnings of Integrated.

c) Loss of key personnel

The management and performance of Integrated could be impacted by the loss of key personnel until such time as the relevant person is adequately replaced.

d) Emerging internet technology

Use of internet based tools to recruit personnel is an emerging trend that presents both opportunities and threats for Integrated.



5.4 Specific risks relating to the Programmed Group

a) Increased or new competition

Programmed faces competition in its existing painting and non-painting businesses.

To the extent that there are new entrants or changes in strategy by existing competitors, the Merged Group may lose market share with consequent adverse effects upon operating and financial performance.

b) Exchange rate fluctuations

A portion of the Programmed Group’s earnings and assets are denominated in foreign currencies (being the New Zealand dollar and the British pound). Changes in foreign currency exchange rates may affect the book value of Programmed’s assets and revenues and increase its liabilities and costs. In the financial year ended 31 March 2006, earnings of the Programmed Group denominated in foreign currencies represented approximately 40% of the total earnings of the Programmed Group. While, following the Merger, the percentage of the Merged Group’s earnings denominated in foreign currency is expected to be less than that referred to above, a part of the Merged Group’s earnings will still be denominated in foreign currency. Programmed does not, currently, generally hedge against balance sheet changes due to exchange rate fluctuations. It is possible, therefore, that Programmed, and hence the Merged Group, might suffer negative movements in equity based solely on changes in foreign currency exchange rates.

c) Environmental risks

Extensive national and local environmental laws and regulations in Australia, New Zealand and the United Kingdom affect the operation of the Programmed Group. The laws and regulations set various standards which regulate certain aspects of health and environmental quality, provide penalties or other remedies for any violation of standards and, in certain circumstances, impose obligations to undertake remedial action in current or former locations where operations are or were conducted.

There is a risk that significant damages or penalties might be imposed on companies in the Programmed Group, including for certain discharges into the environment, effects on employees, sub-contractors or customers, or as clean up costs. The Programmed Group minimises these risks by having processes to manage compliance with environmental laws and regulations in Australia, New Zealand and the United Kingdom and, where appropriate, by carrying insurance.

d) Indexation and cash deferral under long term contracts

A portion of the Programmed Group’s revenue is dependent on the level of indexation under its long term contracts which is linked to increases in prices of labour, materials and overheads. In nearly all contracts, the indexation is based on publicly available indices for wage levels, paint prices and interest rates. Therefore there may be a difference between the increase in Programmed’s costs and the movement in the publicly available indices that may result in Programmed not being adequately covered for its cost increases.

Separately, the Programmed Group’s long term contracts are structured such that cash flows are delayed until the latter part of the term of the contract. Consequently the Programmed Group is exposed to the credit risk of the relevant customer.


e) Reliance on key personnel

The responsibility of overseeing day-to-day operations and the strategic management of the Programmed Group is concentrated amongst a small number of key employees. While it is not currently anticipated, one or a number of these key employees may cease employment with the Programmed Group. The loss of any such key employees by Programmed could have the potential to have a detrimental impact on the Programmed Group until the skills that are lost are adequately replaced.

5.5 Specific risks relating to the Merger

a) Integration risks

The long term success of the Merged Group, and, in particular, the ability to derive cost savings as a result of the Merger, will depend, to some extent, on the integration of the two corporate cultures and the common functions of the Integrated and Programmed businesses, and the establishment of efficient management and operational structures. As Integrated and Programmed operate different but complementary businesses, the Merger does not involve the combination of either party’s frontline operations, which reduces the level of integration risk without detracting from the key benefits of the Merger. While Programmed and Integrated have jointly established a dedicated integration team, which also includes independent consultants, to assist and lower the risks involved in the integration of the merged businesses, there is no guarantee that the Merged Group will be able to successfully integrate the merged businesses and derive the estimated cost savings referred to in this Scheme Booklet.

Specific areas of risk that might impact on any expected cost savings include any unforseen difficulties in effectively: • integrating accounting and financial systems;

• integrating information technology and support functions;

• integrating management (including human resource management) systems and styles; and

• implementing new strategic goals.

There is no guarantee that the estimated pre-tax cost savings referred to in this Scheme Booklet will be achieved, or that integration will not take longer than is presently anticipated. b) Selling of Programmed Shares after Implementation

Programmed will issue a maximum of approximately 18.8 million New Programmed Shares under the Scheme. Some Scheme Shareholders may not wish to continue to hold the Programmed Shares which they receive under the Scheme and may sell them on ASX. Additionally, a nominee will be issued any New Programmed Shares attributable under the Scheme to Ineligible Foreign Holders and will sell them on ASX (and at the risk of Ineligible Foreign Holders) as soon as practicable and remit the net proceeds of sale back to the relevant Ineligible Foreign Holders. If a significant number of Scheme Shareholders sell the Programmed Shares that they receive under the Scheme, the price at which Programmed Shares are traded on ASX may be adversely affected.



It is also possible that some existing Programmed Shareholders may not wish to hold Programmed Shares post-Merger and may sell them on ASX. These sales may also have an adverse affect on the market price of Programmed Shares. c) Loss of key personnel

It is possible that there may be some unintended loss of key employees of the Programmed Group and/or the Integrated Group following implementation of the Merger. The loss of one or more key personnel may have an adverse impact on the performance of the Merged Group until the skills that are lost are adequately replaced.

d) Termination of contracts It is possible that, because of the Merger, a counterparty could decide to terminate a material contract with Integrated or Programmed. While the directors of Integrated and Programmed are not aware of any counterparty who may wish to do so, should any such contracts be terminated the Merged Group would lose the benefit of the contract and may not be able to obtain similarly favourable terms upon entry into replacement arrangements (should such replacement arrangements be available).

e) Gearing

Following the Merger, the ratio of net interest bearing borrowings to the aggregate of such borrowings and the amount of shareholder equity in the Merged Group will be higher than that ratio currently is for the Programmed Group.

This increased level of gearing introduces a greater level of financial risk for Integrated Shareholders. Increased gearing may restrict the ability of the Merged Group to borrow further capital in the future and increases the sensitivity of the Merged Group’s earnings to changes in interest rates. An increased gearing ratio may also be relevant to Programmed’s ability to pay dividends in respect of future financial years in accordance with any applicable financial covenants contained in Programmed’s banking facilities (such as the financial covenants referred to in section 3.7(e)(ii)).


Section 6 Tax Implications


Section 6 – Tax Implications

6.1 Taxation outline – Scheme Shareholders

This outline contains a general overview of the main Australian taxation implications for Integrated Shareholders who are Australian tax resident individuals, companies and trustees of complying superannuation funds who receive cash and New Programmed Shares as Scheme Consideration under the Scheme.

It also contains broad comments in relation to taxation for non-residents and for Integrated Shareholders who hold their Integrated Shares on revenue account such as banks and share trading entities.

The information contained in this outline is of a general nature only. It does not constitute tax advice and should not be relied upon as such. All Integrated Shareholders should seek independent professional advice on the consequences of participating in the Scheme, based on their particular circumstances.

6.2 Australian tax consequences of participating in the Scheme

Integrated Shareholders who participate in the Scheme will receive consideration for the transfer of their Integrated Shares to Programmed in the form of cash and New Programmed Shares.

a) Shares held on capital account

The transfer of Integrated Shares to Programmed will be a CGT event for Integrated Shareholders. Integrated Shareholders will:

• make a capital gain if the capital proceeds for their Integrated Shares are greater than the cost base of their Integrated Shares subject to the application of CGT scrip-for-scrip roll-over relief (CGT partial rollover relief) (refer to 6.2(b) below); or

• make a capital loss if the capital proceeds for their Integrated Shares are less than the reduced cost base of their Integrated Shares. Capital losses may be used to offset any capital gains made in the current year or carried forward for offset against future capital gains, subject to certain carry forward loss tests being satisfied. Capital losses cannot be offset against ordinary income. CGT rollover relief is not available when capital losses apply.

The capital proceeds from the exchange will be the total of the cash consideration plus the market value of the New Programmed Shares.

The market value of the New Programmed Shares should be worked out at the time of the CGT event, which should be the day on which the Scheme is implemented.

The cost base of Integrated Shares will generally include their original or deemed cost of acquisition, plus incidental costs incurred in relation to their acquisition and disposal. b) CGT partial rollover relief

Conditions for rollover relief

The following conditions must be satisfied for CGT partial rollover relief to be available to Integrated Shareholders.

i) The Integrated Shareholder exchanges Integrated Shares for Programmed Shares;


ii) The exchange is in consequence of a single scheme of arrangement where:

• All owners of voting shares in Integrated could participate;

• Participation is available on substantially the same terms for all owners of interests of a particular type (i.e. ordinary shareholders) in Integrated; and

• As a result of the scheme, Programmed becomes the owner of 80% or more of the Integrated Shares. iii) The Integrated Shareholder acquired their Integrated Shares on or after 20 September 1985; iv) Apart from the rollover, the Integrated Shareholder would make a capital gain as a result of the exchange; and

v) The Integrated Shareholder chooses to obtain the CGT partial rollover relief.

On the basis that the Merger proceeds, it is anticipated conditions (i), (ii), (iii) and (iv) above should be satisfied. Further comments are provided below in relation to condition (ii). For condition (v), Integrated Shareholders will need to choose to obtain the CGT partial rollover relief. Participation on substantially the same terms

As outlined above, a condition for CGT rollover relief is that participation is available on substantially the same terms for all Integrated Shareholders.

In the case of Integrated Shareholders who are Ineligible Foreign Holders, the New Programmed Shares to which the Integrated Shareholder would otherwise be entitled will be sold by a Sale Agent and the Ineligible Foreign Holder will receive the net proceeds of the sale. Integrated Shareholders with their registered address overseas (in a jurisdiction which renders them an Ineligible Foreign Holder) will therefore only ultimately receive cash proceeds on sale, as opposed to an ongoing shareholding in Programmed.

Based on a number of Class Rulings issued by the Commissioner of Taxation dealing with similar scrip for scrip transactions, the Scheme will be eligible for CGT partial rollover relief. The process to provide a cash payment on the sale of Programmed Shares on behalf of Ineligible Foreign Holders does not prevent the Scheme being on substantially the same terms for all Integrated Shareholders. In particular, Ineligible Foreign Holders receive the same economic value as Australian resident Integrated Shareholders and the sale of Programmed Shares on their behalf is an event which occurs subsequent to the completion of the Scheme. Availability

Integrated Shareholders, who would otherwise make a capital gain in respect of the transfer of their Integrated Shares, should be eligible to choose CGT partial rollover relief for the transfer of their Integrated Shares to the extent the capital gain relates to New Programmed Shares received.

CGT partial rollover relief is not available to Integrated Shareholders who make a capital loss. Tax non-resident Integrated Shareholders are generally not subject to Australian tax (see below), provided the Scheme Shares are not held through a permanent establishment of the non-resident shareholder. Therefore rollover relief is not applicable in their circumstances.



Effect

A Scheme Shareholder who receives Scheme Consideration will be entitled to CGT partial rollover relief. It will be necessary to work out whether a capital gain arises in respect of the $1.25 cash portion of the Scheme Consideration by apportioning the cost base of the Scheme Shares over the New Programmed Share component and the cash component. An example is provided below. The capital gain that relates to the consideration received in the form of New Programmed Shares is disregarded.

How to choose CGT partial rollover relief

Integrated Shareholders will generally need to choose CGT partial rollover relief before lodging their income tax return for the income year in which the CGT event happens. For Integrated Shareholders who are individuals, this is expected to be the tax return for the year ending 30 June 2007. Choosing CGT partial rollover relief can simply be evidenced by excluding the relevant capital gain, in respect of which CGT partial rollover relief is chosen, from the Integrated Shareholder’s tax return. How to calculate a capital gain when CGT partial rollover relief is chosen

As discussed above, CGT partial rollover relief is not available to the extent that part of the exchange of an Integrated Share for a Programmed Share is cash. With respect to this part of the consideration, a capital gain will be included in the Integrated Shareholder’s tax return.

Example 1

i) Values given for illustrative purposes only.

Notional Integrated Share cost base $1.00

Notional Programmed Share market value on Implementation Date $5.40

ii) Scheme Consideration received for each Integrated Share

Cash consideration $1.25

Share consideration (0.26 x $5.40) $1.40

Total consideration $2.65

iii) Cost base attributable to Cash Consideration

Integrated Share cost base x (Cash consideration / total consideration)

1 x 1.25 / 2.65 = $0.47

iv) Capital gain on Cash Consideration portion of Integrated Share

Cash consideration – cost base attributable to cash consideration

1.25 – 0.47 = $0.78


c) CGT indexation

If the Integrated Shares were acquired after 20 September 1985 and before 21 September 1999, for the purpose of calculating a capital gain (but not a capital loss), Integrated Shareholders may choose that the cost base of those shares be indexed for inflation to 30 September 1999.

d) CGT discount

Individuals, trustees or complying superannuation entities that have held Integrated Shares for at least 12 months should be entitled to discount the amount of the capital gain (after the application of any current year or carry forward capital losses). The amount of this discount is 50% in the case of individuals and trustees and 33 % for complying superannuation entities. This is referred to as the “CGT discount”. The CGT discount is not available for Integrated Shareholders that are companies.

Where the Integrated Shareholder is a trustee of a trust, the CGT discount may flow through to the beneficiaries in that trust, other than beneficiaries which are companies. Integrated Shareholders that are trustees should seek specific advice regarding the tax consequences of distributions to beneficiaries which are attributable to discount capital gains.

e) CGT cost base of Programmed Shares

The cost base will be relevant in working out the CGT consequences of a future disposal of the New Programmed Shares. Where CGT partial rollover relief is chosen

Following the exchange of shares, the cost base for each 0.26 New Programmed Share will generally be worked out by apportioning the cost base of the Scheme Shares over the New Programmed Share component and the cash component. Each New Programmed Share received in exchange for Integrated Shares will be taken for CGT purposes to have the same acquisition date as the original acquisition date of the Integrated Shares.

Where CGT partial rollover relief is not chosen or is not available

The cost base of the New Programmed Shares received will be equal to their market value on the Implementation Date. In the above example this equates to $1.40 per 0.26 share, and $5.40 per share. On the above example the New Programmed Shares will be taken for CGT purposes to have been acquired at the time the Scheme is implemented.

Example 2 – Cost base of Programmed Shares when CGT partial rollover relief is chosen

Based on Example 1 above i) Cost base attributable to 0.26 New Programmed Shares

Integrated Share cost base x (Share consideration / total consideration)

1 x $1.40/$2.65 = $0.53

ii) Cost base attributable to 1 New Programmed Share $0.53/0.26 = $2.04



f) Shares held on revenue account (other than as trading stock)

If an Australian tax resident Scheme Shareholder holds Scheme Shares on revenue account (but not as trading stock), then any profit on sale will be included in the Scheme Shareholder’s assessable income or any loss should be an allowable deduction. The disposal of Scheme Shares under the Scheme will constitute a sale for these purposes. No rollover relief applies to the profit or loss. The CGT treatment will be as described above at 6.2(b); however any resulting capital gain or loss should be reduced to nil to avoid double counting.

g) Shares held as trading stock

If an Australian tax resident Integrated Shareholder holds Scheme Shares as trading stock, then the value of the Scheme Consideration will be included in the Scheme Shareholder’s assessable income. No rollover relief applies.

h) Non-residents for tax purposes

A tax non-resident holding Scheme Shares on revenue account or as trading stock may be liable to Australian income tax on disposal of their Scheme Shares. This will depend upon the particular circumstances of the tax non-resident (i.e. if the Scheme Shares are held through an Australian branch and/or the terms of any applicable double tax agreement). Such Scheme Shareholders are advised to seek their own advice in relation to this issue. A tax non-resident holding Scheme Shares on capital account generally will not be subject to Australian CGT. The capital gain or capital loss will generally be disregarded as the Integrated Shares are not taxable Australian property. Such Scheme Shareholders are advised to seek their own advice in relation to this issue.

6.3 Dividends

a) Residents for tax purposes

This section applies to Scheme Shareholders who are Australian residents for tax purposes. The Integrated Interim Dividend will be paid to Integrated Shareholders. As holders of New Programmed Shares, Integrated Shareholders will also be entitled to any Programmed Final Dividend provided they are the registered owner of the New Programmed Shares as at the Programmed Record Date. Individuals

Generally the value of any franked dividend received directly by Australian resident shareholders will be grossed up to take account of the franking credits attached to the dividend and will be included in the assessable income of the shareholder. A tax offset equal to the franking credits will be available to offset or reduce the resulting tax liability. Individuals are entitled to a refund of any excess tax offset amount.

There are specific anti-avoidance provisions which may apply to deny your entitlement to tax offsets attaching to dividends. The application of these provisions, known as the “45-day rule”, which potentially apply to all types of investors, are discussed further below.

We recommend that you seek independent tax advice if you think these anti-avoidance rules may apply to you.


Superannuation funds

Generally speaking, superannuation funds treat the receipt of a dividend in the same way as an individual. However, superannuation funds are subject to different tax rates to those of individuals. Where applicable, superannuation funds are also entitled to a refund of any excess tax offset amount in the same way as individuals.

The 45-day rule, which is discussed further below, can also apply to superannuation funds.

Companies

Companies must include in their assessable income dividends they receive. To the extent that the dividend is franked, the company will gross up the dividend in the same way as individuals and superannuation funds, and similarly be entitled to a tax offset for the franking credit paid by Integrated or Programmed in respect of the dividend. Accordingly, companies will generally pay no further tax on the dividend as the corporate tax rate and the tax offset are the same rate. However, companies are not entitled to receive a refund of any excess tax offset amounts (or to carry forward these amounts) if the tax offset exceeds the amount of tax that would otherwise be payable by the company in an income year.

Excess tax offsets attaching to dividends may be converted into a tax loss which may then be available to carry forward.

The 45-day rule, which is discussed further below, also applies to company shareholders.

Unfranked dividends

To the extent that any dividend received by an individual, trustee, superannuation fund or company is unfranked, it will also be fully assessable without any gross-up or tax offset.

b) 45-day rule

To qualify for the tax offsets on franked dividends received, the 45-day rule requires that, if you are an Australian resident shareholder, you must have held your Integrated Shares “at risk” for a period of at least 45 days (excluding the days of acquisition and disposal) within a period beginning on the day after those Integrated Shares were acquired.

The 45-day rule is complex. Generally, if you are subject to the 45-day rule and you acquired your Integrated Shares on or before the record date for the Integrated Interim Dividend of 4 April 2007, and you are still holding those shares at the record date for the Scheme, you would have held your shares for at least 45 clear days in respect of this dividend. This is on the assumption that the Implementation Date for the Scheme is 20 May 2007 or later (the Implementation Date is currently scheduled to be on 7 June 2007).

You can still fail the requirements of the 45-day rule even where you acquired Integrated Shares on or before 4 April 2007. This may arise where you have entered into other arrangements regarding the Integrated Shares which reduce the risk of loss or opportunity for gain on the Integrated Shares. For example, granting an option to another person to acquire the Integrated Shares would reduce that risk or opportunity.

Scheme Shareholders should carefully consider the 45-day rule if they receive any Programmed Final Dividend and they are considering disposing of their New Programmed Shares within 45 days of the Implementation Date.



Shareholders who are individuals and whose total franking credit entitlement for the income year does not exceed A$5000 will not be subject to the 45-day rule.

c) Non-residents for tax purposes

Tax non-resident Shareholders in receipt of a franked dividend have no further Australian tax to pay on the dividend, as franked dividends are exempt from withholding tax. Unfranked dividends paid to tax non-residents are liable to a final withholding tax, generally at 30%, but subject to any double tax agreement with Australia.

6.4 GST

No GST should generally be payable in respect of the exchange of Integrated Shares or the acquisition of the New Programmed Shares.

6.5 Tax file numbers

It is not compulsory for Integrated Shareholders to notify Programmed of their Australian Tax File Number (TFN) or Australian Business Number (ABN). However if a TFN or ABN notification is not provided to Programmed, tax at the top individual marginal tax rate plus the Medicare levy, currently totalling 46.5%, will be deducted from the unfranked component of any dividends paid. Shareholders are entitled to claim an income tax credit or refund (as applicable) in their income tax returns in respect of the tax withheld.

Section 7 Additional Information


Section 7 – Additional Information

7.1 Structure and effect of the Scheme

If the Scheme becomes Effective, the Merger will proceed and result in:

• each Scheme Shareholder ceasing to be a holder of, or having any interest in, their Integrated Shares;

• Programmed becoming the holder of all the Integrated Shares by the transfer to Programmed of all of the Scheme Shares;

• each Scheme Shareholder receiving the Scheme Consideration as described in section 7.5 (Scheme Consideration); and

• Integrated becoming a wholly-owned subsidiary of Programmed,

on the Implementation Date.

It is anticipated that Integrated Shares will cease trading on ASX from the close of trading on 28 May 2007. After the Implementation Date, Integrated Shares will be removed from quotation on the official list of ASX.

Programmed will remain a listed company on ASX following the Implementation Date. Programmed will apply to ASX for official quotation of the New Programmed Shares to be issued under the Scheme within 7 days after the date of this Scheme Booklet. The Scheme will not be implemented unless all of the conditions precedent have been satisfied, or where applicable, waived, in accordance with the Merger Implementation Agreement, as summarised in section 7.3.

7.2 Implementation of the Scheme

a) Overview of the Scheme and the Scheme Meeting

On 30 March 2007, Programmed executed a Deed Poll in favour of Scheme Shareholders pursuant to which:

• Programmed agreed to provide to each Integrated Shareholder who held Integrated Shares as at the Record Date, the Scheme Consideration for their Integrated Shares; and • Programmed agreed to perform its obligations under the Scheme, subject to the Scheme becoming Effective.

The Deed Poll is set out in Appendix 4.

On 2 April 2007, the Court ordered that Integrated convene a Scheme Meeting of Integrated Shareholders at 11.00am on 10 May 2007 at the Karri Room, the Parmelia Hilton Hotel, Perth, Western Australia, for the purposes of considering and, if thought fit, approving the Scheme.


At the Scheme Meeting, Integrated Shareholders will be asked to consider, and if thought fit, to pass the following resolution in relation to the Scheme:

“That, pursuant to and in accordance with section 411 of the Corporations Act, the scheme of arrangement (which is described in the Scheme Booklet of which the notice convening this meeting forms part) proposed to be entered into between the Company and its fully paid ordinary shareholders is approved and should be implemented (with or without modification as approved by the Federal Court of Australia).”

b) Steps to implement the Scheme

Integrated and/or Programmed will take, or procure the taking of, the following steps required to implement the Scheme:

• on 10 May 2007, Integrated Shareholders will vote at the Scheme Meeting on the Scheme;

• if the necessary Integrated Shareholder approvals are obtained and the relevant conditions precedent have been satisfied or, where applicable, waived, Integrated will apply to the Court for an order approving the Scheme;

• if the Court makes this order, Integrated will lodge with ASIC an office copy of the Court order under section 411 of the Corporations Act approving the Scheme;

• if the Scheme becomes Effective, on the Implementation Date, the Scheme Consideration will be paid to relevant Scheme Shareholders in accordance with the terms of the Scheme; and

• on the Implementation Date, all of the Scheme Shares will be transferred to Programmed and Integrated will enter the name of Programmed in the Integrated Share Register as the holder of all the Integrated Shares.

Both Integrated and Programmed will become entitled to terminate the Merger Implementation Agreement if the Scheme has not become Effective on or before the Sunset Date.

c) Entitlement to vote at the Scheme Meeting

Integrated Shareholders who hold Integrated Shares at 5.00 pm on 8 May 2007 are entitled to vote on the resolution to approve the Scheme. For further details on how to vote at the Scheme Meeting, see page 13 of this Scheme Booklet (How to vote).

d) Integrated Shareholder agreement to the Scheme

For the Scheme to proceed:

• a majority in number (i.e. more than 50%) of Integrated Shareholders who vote at the Scheme Meeting (in person or by proxy) must vote in favour of the resolution to approve the Scheme; and

• at least 75% of the total number of votes cast at the Scheme Meeting (whether in person or by proxy) must be cast in favour of the resolution to approve the Scheme.

If the Scheme is agreed to at the Scheme Meeting and becomes Effective, the Scheme will be binding on all Integrated Shareholders (including those who voted against the resolution to approve the Scheme or who did not vote at all).



e) Effective Date and Implementation Date

Subject to satisfaction or, where applicable, waiver of the conditions precedent, the Scheme will become Effective on the Effective Date, which is currently expected to be 28 May 2007. This is the date on which, if the Court approves the Scheme, the Court order approving the Scheme will be lodged with ASIC.

Once the Scheme becomes Effective, Integrated and the Scheme Shareholders will be bound to implement the Scheme in accordance with the terms of the Scheme. The Scheme will be implemented on the Implementation Date, which is currently expected to be 7 June 2007.

In any event, no securities will be issued on the basis of this Scheme Booklet after the date which is 13 months after the date of this Scheme Booklet.

7.3 Conditions precedent to the Scheme

The obligations of Programmed and Integrated to complete the Merger are subject to a number of conditions precedent.

All of the conditions precedent (other than the conditions precedent relating to Court approval of the Scheme and lodgement of the Court’s orders with ASIC) are required to be satisfied, or where applicable, waived, by 8.00am on the Second Court Date.

In summary, the conditions precedent are as follows:

• Integrated Shareholder approval;

• receipt of all required regulatory approvals and third party consents, approvals or waivers; • no temporary restraining order, preliminary or permanent injunction or other order issued by any court or other legal restraint or prohibition preventing the Implementation of the Scheme;

• the Independent Expert concluding that the Scheme is in the best interests of Integrated Shareholders and the Independent Expert not changing that conclusion or withdrawing its report prior to 8.00am on the Second Court Date;

• the approval of the Scheme by the Court and the lodgement of the Court’s orders with ASIC;

• ASX approving the New Programmed Shares for official quotation on ASX, conditional on Implementation of the Scheme;

• no “Prescribed Occurrences” or “Material Adverse Change” (each being defined in the Merger Implementation Agreement) occurring in relation to either Integrated or Programmed; • the warranties given by Integrated and Programmed being and remaining materially true and correct;

• neither the Merger Implementation Agreement nor Deed Poll having been terminated; and

• such other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to the Scheme having been satisfied.

7.4 Status of conditions precedent

Other than the conditions relating to Court approval (upon which Programmed and Integrated express no opinion), Programmed and Integrated are not aware of any reason why the conditions precedent will not be satisfied.


7.5 Scheme Consideration

Under the terms of the Scheme, Integrated Shareholders will receive a mix of cash and New Programmed Shares as consideration for the transfer of their Integrated Shares to Programmed. The number of New Programmed Shares to be issued as part of the Scheme Consideration is based on a formula agreed between Integrated and Programmed in the Merger Implementation Agreement.

On implementation of the Merger, Integrated Shareholders will receive:

• $1.25 cash; and

• 0.26 New Programmed Shares,

for each Integrated Share held at the Record Date.

If the number of Integrated Shares you hold at the Record Date means that your aggregate entitlement to New Programmed Shares is not a whole number, then any fractional entitlement will be rounded up or down to the nearest whole number, with fractions of 0.5 or more to be rounded up. If Programmed reasonably believes that an Integrated Shareholder has been a party to a shareholding splitting or division in an attempt to obtain an advantage by reference to the rounding provided for in the calculation of each Scheme Shareholder’s entitlement to the Scheme Consideration, then Programmed reserves the right to round the entitlement of such holdings so as to provide only the number of New Programmed Shares that would have been received but for the splitting or division.

If you are an Integrated Shareholder with a registered address outside Australia or New Zealand, the New Programmed Shares to which you would otherwise be entitled will not be issued to you, but will instead be sold and you will receive the net proceeds of sale. You should refer to section 7.6 (Shareholders outside Australia and New Zealand) for further details.

Integrated Shareholders registered as at 5.00pm on 4 April 2007 will be entitled to receive the Integrated Interim Dividend, being 5 cents per Integrated Share, payable on 11 April 2007. Those Integrated Shareholders will be entitled to the Integrated Interim Dividend regardless of whether the Scheme becomes Effective.

As holders of New Programmed Shares, Integrated Shareholders would also be entitled to receive any Programmed Final Dividend for the year ending 31 March 2007, provided that the Implementation Date occurs on or before the Programmed Record Date.

If Programmed declares the Programmed Final Dividend but the Scheme is not implemented until after the Programmed Record Date, then Scheme Shareholders will not be paid the Programmed Final Dividend, as they will not have been Programmed shareholders as at the Programmed Record Date. However, in these circumstances, Integrated will pay to Scheme Shareholders the Integrated Final Dividend.

7.6 Shareholders outside Australia and New Zealand

Programmed is not obliged to issue New Programmed Shares as consideration to any Foreign Holder (being an Integrated Shareholder whose address in the Integrated Share Register is in a jurisdiction other than Australia or its external territories or New Zealand), unless Programmed is satisfied that the laws of the Foreign Holder’s country of residence (as shown in the Integrated Share Register) would permit the issue and allotment of New Programmed Shares to the Foreign Holder, either unconditionally or after compliance with conditions which Programmed in its sole discretion regards as acceptable and not unduly onerous.

The New Programmed Shares that would have been issued to these Ineligible Foreign Holders will be issued to the Sale Agent on the Implementation Date. Under the Scheme, Ineligible Foreign Holders appoint Integrated as their agent to receive any financial services guide or other notice given by the Sale Agent.



Copies of any document Integrated receives from the Sale Agent as agent for the Ineligible Foreign Holders can be obtained by contacting the Integrated Company Secretary.

Programmed will:

a) procure that, as soon as reasonably practicable (and in any event not more than 15 Business Days after the Implementation Date), the Sale Agent sells or procures the sale on ASX of all of the New Programmed Shares issued to the Sale Agent in such manner, at such price and on such other terms as the Sale Agent determines in good faith; and

b) promptly pay to the Ineligible Foreign Holders their proportion of the net proceeds of sale received from the Sale Agent (after deduction of any applicable brokerage and other selling costs, taxes and charges).

Integrated, Programmed and the Sale Agent give no assurance as to the price that will be achieved for the sale of New Programmed Shares described above. The proceeds that Ineligible Foreign Holders will receive may be more or less than the current market value of Programmed Shares.

Integrated and Programmed currently expect that all Integrated Shareholders whose addresses in the Integrated Share Register are outside Australia or its external territories or New Zealand will be Ineligible Foreign Holders.

7.7 Interests in Integrated securities

The marketable securities of Integrated held by or on behalf of the Directors and key executive officers of Integrated or to which they are otherwise entitled as at the date of this Scheme Booklet are set out below. In aggregate, these interests represent approximately 11.7% of the Integrated Shares on issue.

Integrated also has incentive plans in place which could lead to the issue of additional Integrated Shares (and in particular, 1,904,000 Integrated Shares to the Integrated Managing Director, Mr Chris Sutherland). These are discussed further at sections 7.9(b) and (c) below.

7.8 Interests in Programmed securities

As at the date of this Scheme Booklet:

a) 5,000 Programmed Shares are held by or on behalf of N.D. Hamilton (a Director of Integrated); and

b) other than as set out at (a) above, no marketable securities of Programmed are held by or on behalf of any of the Directors.

Director/executive officer Fully Paid Ordinary Shares

N. D. Hamilton 997,863J. G. Whittle 7,056,371T. J. Clohessy 113,689V. A. Davies 40,000M. A. Gurry 50,000C. G. Sutherland NilS. M. Leach Nil


7.9 Agreements or arrangements with Integrated Directors and other executives

a) Agreements or arrangements with Integrated Directors

Except as set out in this Scheme Booklet, as at the date of this Scheme Booklet there are no agreements or arrangements made between any Director and any other person in connection with or conditional upon the outcome of the Scheme.

b) Integrated Senior Executive Incentivised Performance Plan

Integrated has adopted a Senior Executive Incentivised Performance Plan (Performance Plan) (the terms of which are set out in a policy statement adopted by the Integrated Board) with a view to providing a direct link between enhanced shareholder value and key employee remuneration and retention. The Performance Plan rules allow Integrated to determine that certain employees are eligible to participate in the Performance Plan and, assuming certain conditions are met, allows the Integrated Board (in its absolute discretion) to issue an invitation to an eligible employee which will, upon the acceptance of the invitation (and upon payment of the exercise price specified in that invitation), result in an issue of Integrated Shares to that employee. The Integrated Board may notify an employee that they have become an eligible employee, and therefore may be issued an invitation in the future should the Integrated Board determine to issue such an invitation. The Performance Plan rules make it clear that, unless and until an invitation is issued by the Integrated Board, no binding legal relations or rights are created. No invitations have yet been issued by the Integrated Board.

A number of employees of the Integrated Group are participating in the Performance Plan in that they have received eligibility notices, and a maximum number of 153,818 Integrated Shares could be issued in relation to the performance period from 1 July 2004 to 30 June 2009, and a further 448,598 Integrated Shares in relation to the performance period from 1 July 2006 to 30 June 2007, if:

• the relevant employees were all to remain employed by the Integrated Group;

• performance hurdles relating to Integrated’s total shareholder return were met;

• other conditions relevant to the Performance Plan were satisfied; and

• the Integrated Board determined to issue invitations to those employees under the Performance Plan.

The Performance Plan rules provide that, upon a change of control, the Integrated Board may determine the manner in which the Performance Plan rules are to be varied or otherwise dealt with to ensure that the Performance Plan applies in a consistent manner, including by arranging for any new holding company to adopt a policy statement along similar lines.

Integrated and Programmed have agreed, in the Merger Implementation Agreement, that Programmed will put in place, from the Implementation Date, a substitute long term incentive arrangement in which all current eligible employees under the Performance Plan will be eligible to participate, delivering to them similar opportunities and benefits as are currently available to them under the Performance Plan. Consequently, upon the Scheme becoming Effective, the Performance Plan will cease to operate and no invitations will be issued under it.

c) Arrangements with Integrated’s Managing Director

On 16 December 2005, Integrated entered into an Executive Service Agreement with its then Chief Executive Officer, Mr Chris Sutherland. Pursuant to that agreement, Integrated also put in place a Long Term Incentive Plan for Mr Sutherland. Both of these documents have been released publicly on ASX (on 1 May 2006).



The service agreement and Long Term Incentive Plan provide for the issue of up to a maximum of 2,000,000 Integrated Shares at no cost to the Managing Director. These shares are to be issued in various instalments between the third and sixth anniversaries of 1 February 2006, provided that:

• the Managing Director remains employed by Integrated;

• performance hurdles relating to total shareholder return are met; and

• other conditions contained in those documents are satisfied.

The Long Term Incentive Plan rules provide the Integrated Board with discretion in the event of a change of control to ensure the equity and integrity of the operation of the long term incentive arrangements. Integrated and Programmed have agreed in the Merger Implementation Agreement to apply these rules in the manner that would have been the case if the Merger had proceeded by way of a takeover bid by Programmed for all of the Integrated Shares. As a result (and having regard to the implied value of the Scheme Consideration and the Integrated Interim Dividend), if the Scheme becomes Effective, the Managing Director will be issued with 1,904,000 Integrated Shares pursuant to these incentive arrangements. The issue of these shares is conditional upon the Scheme becoming Effective and they will be issued on or after the Effective Date. Given that they will not be on issue at the date of the Scheme Meeting, they will not be voted by the Managing Director at that meeting. They will be issued before the Record Date for the Scheme, with the effect that the Managing Director will receive the same Scheme Consideration as would be received by other Scheme Shareholders in respect of each Scheme Share they hold. The Integrated Interim Dividend will not, however, be payable on any Integrated Shares to be issued to the Managing Director.

d) Other effects on material interests of directors

Other than as set out elsewhere in this Scheme Booklet, the Scheme will have no effect on the material interests of the Directors which is different from the effect on the like interests of other persons.

7.10 Other interests in Programmed

Except as disclosed in this Scheme Booklet, no Director nor any of his or her associates holds any interests in contracts of Programmed or has any other interests in Programmed.

7.11 Payments and benefits

As mentioned in section 4.3, Neil Hamilton and Jon Whittle will join the Board of Programmed (as non- executive directors) if the Scheme becomes Effective. As a result, Neil Hamilton and Jon Whittle are likely to receive benefits from Programmed (such as the payment of directors fees and directors and officers liability insurance premiums, as set out in section 3.9(b) of this Scheme Booklet under the heading “Remuneration”) consistent with their appointment as non-executive directors of Programmed (and of the same type and quantum as are received by other non-executive directors of Programmed).

Except as disclosed in this Scheme Booklet, there are no payments or benefits proposed to be made or given in connection with the Merger to any director, secretary or executive officer of Integrated or any related body corporate of Integrated as compensation for the loss of, or as consideration for or in connection with his or her retirement from office.

7.12 Intentions of the Integrated Board

If the Merger becomes Effective, it is a matter for the reconstituted Programmed Board to determine its intentions as to:

Integrated Group Limited Scheme Document �0�

• the continuation of the business of Integrated;

• any major changes to be made to the business of Integrated; and • the future employment of the present employees of Integrated.

The current intentions of Programmed in relation to these matters are set out in section 4.5.

If the Merger does not become Effective, the current Integrated Board intends to continue the business of Integrated in accordance with its stated strategy. In this event, the Integrated Board does not presently intend to make any major changes to the business of Integrated, whether in respect of the redeployment of its assets or the future employment of the present employees of Integrated or otherwise.

7.13 Material changes in the financial position of Integrated

To the best of the knowledge of the Directors, and other than as disclosed in this Scheme Booklet (in particular, in section 2 (Profile of Integrated)), the financial position of Integrated has not materially changed since the date of the last balance sheet laid before the company in general meeting or sent to Integrated Shareholders in accordance with the Corporations Act.

Integrated’s half year results to 31 December 2006 (announced on 27 February 2007) are available:

• from ASX or on its website www.asx.com.au; or

• on Integrated’s website (www.intgroup.com.au).

7.14 Consents and disclaimers

The following persons have given and have not, before the time of lodgement of this Scheme Booklet with ASIC, withdrawn their written consent to be named in this Scheme Booklet in the form and context in which they are named:

• Programmed (in respect of the Programmed Information only) and to the inclusion of the Programmed Information in the form and context in which it is included; • Caliburn Partnership Pty Ltd – as financial adviser to Integrated; • Cochrane Lishman – as legal adviser to Integrated; and • KPMG – as the Independent Expert and to the inclusion of the Independent Expert Report (and to all statements based on it, and references to it) in the form and context in which it is included.

Each of the above persons:

• does not make, or purport to make, any statement in this Scheme Booklet or any statement on which a statement in this Scheme Booklet is based other than, in the case of:

• Programmed, the Programmed Information; and

• KPMG, any statement or report included in this Scheme Booklet with the consent of that party; and

• to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Scheme Booklet, other than a reference to its name and in the case of:

Integrated Group Limited Scheme Document�0�


• Programmed, the Programmed Information; and

• KPMG, any statement or report included in this Scheme Booklet with the consent of that party.

7.15 Fees and other interests

Caliburn Partnership Pty Ltd is named in this Scheme Booklet as financial adviser to Integrated in relation to the Scheme. Caliburn Partnership Pty Ltd has received or will receive professional fees of approximately $2 million (plus GST and disbursements) for performing this function.

Cochrane Lishman is named in this Scheme Booklet as legal adviser to Integrated in relation to the Scheme. Cochrane Lishman has received or will receive legal fees of approximately $300,000 (plus GST and disbursements) for performing this function.

KPMG is named in this Scheme Booklet as the Independent Expert in relation to the Scheme. KPMG has received or will receive professional fees of approximately $180,000 (plus GST and disbursements) for performing this function. Entities associated with KPMG have also received professional fees for services rendered on other matters – these are set out in Appendix 1 to the Independent Expert Report (and include an amount of approximately $15,000 received by the KPMG Partnership for taxation advice in connection with the Scheme Booklet).

Other than as set out in this Scheme Booklet:

• no director or proposed director of Programmed or Integrated; and

• no person named in this Scheme Booklet as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Scheme Booklet, holds, or held at any time during the last two years before the date of this Scheme Booklet, any interest in:

• the formation or promotion of Programmed or Integrated;

• any property acquired or proposed to be acquired by Programmed or Integrated in connection with its formation or promotion or in connection with the Scheme; or

• the issue of Programmed securities or Integrated securities.

Other than as set out in this Scheme Booklet, no amounts have been paid or agreed to be paid and no value or other benefit has been given or agreed to be given to:

a) a director or proposed director of Programmed or Integrated, to induce them to become, or to qualify as, a director of Programmed or Integrated; or

b) any person named in this Scheme Booklet as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Scheme Booklet for services rendered by them in connection with the formation or promotion of Programmed or Integrated or in connection with the issue of Programmed or Integrated securities.

7.16 Other material information

Except as disclosed in this Scheme Booklet, there is no other material information that Integrated Shareholders would reasonably require to make a decision in relation to whether or not to vote in favour of the Scheme, being information that is within the knowledge of any Director, that has not previously been disclosed to Integrated Shareholders.

Section 8 Glossary


Section 8 – Glossary

In this Scheme Booklet (other than the Appendices), these meanings apply unless the contrary intention appears:

ASIC means the Australian Securities & Investments Commission. ASX means ASX Limited or, as the context requires, the financial market operated by it.

Business Day has the meaning given in the Listing Rules.

CGT means capital gains tax Corporations Act means the Corporations Act 2001 (Cwlth).

Court means the Federal Court of Australia.

Deed Poll means the deed poll dated 30 March 2007 executed by Programmed in favour of Scheme Shareholders.

Directors means the directors of Integrated.

EBITDA means earnings before interest, tax, depreciation and amortisation. Effective means the coming into effect, under section 411(10) of the Corporations Act, of the orders of the Court made under section 411(4)(b) (and, if applicable, section 411(6)) in relation to the Scheme.

Effective Date means the date on which the Scheme becomes Effective.

Foreign Holder means a Scheme Shareholder whose address as shown in the Integrated Share Register at the Record Date is in a jurisdiction other than Australia or its external territories or New Zealand.

GST means the goods and services tax as defined in the A New Tax System (Goods and Services Tax) Act 1999 (Cwlth) or any like tax.

Implementation means the implementation of the Scheme, upon it becoming Effective.

Implementation Date means the third Business Day after the Record Date.

Independent Expert or KPMG means KPMG Corporate Finance (Aust) Pty Ltd.

Independent Expert Report means the report prepared by the Independent Expert which is set out in Appendix 1 (Independent Expert Report).

Ineligible Foreign Holder means a Foreign Holder, other than one in respect of whom Programmed is satisfied that the laws of the Foreign Holder’s country of residence (as shown in the Integrated Share Register) would permit the issue and allotment of New Programmed Shares to the Foreign Holder, either unconditionally or after compliance with conditions which Programmed in its sole discretion regards as acceptable and not unduly onerous.

Integrated Board means the board of directors of Integrated.

Integrated Final Dividend means any final dividend declared by Integrated in respect of the financial year ending 30 June 2007, which:

a) is declared by Integrated prior to the Implementation Date;

b) is to be paid in cash in respect of each Scheme Share on issue at the Record Date;


c) shall, per Scheme Share, be an amount equal to 0.26 multiplied by the Programmed Final Dividend or, if that aggregate amount could not be paid by Integrated consistently with the Corporations Act, such lesser amount per Integrated Share as determined by Integrated which could be paid consistently with the Corporations Act; and

d) is to be paid after the Record Date and, where possible, no later than the Implementation Date,

and which may only be declared if the Programmed Record Date is prior to the Implementation Date. Integrated Group means Integrated and its Subsidiaries.

Integrated Information means the information in this Scheme Booklet, other than the Programmed Information and Appendix 1 (Independent Expert Report).

Integrated Interim Dividend means the interim dividend of 5 cents per Integrated Share declared by Integrated in respect of the 6 month period to 31 December 2006 and payable on 11 April 2007.

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

Integrated Shareholder means a person who is entered in the Integrated Share Register as a holder of Integrated Shares.

Integrated Share Register means the register of members of Integrated maintained by Computershare Investor Services Pty Limited and Integrated Share Registry has a corresponding meaning.

Listing Rules means the official listing rules of ASX.

Long Term Incentive Plan means the long term incentive plan described in section 7.9(c) (Arrangements with Integrated’s Managing Director).

Merged Group means Programmed and its Subsidiaries (including Integrated) following the Implementation Date.

Merger means the acquisition by Programmed of all the Scheme Shares through the Implementation of the Scheme together with the treatment of certain employee incentive performance rights in accordance with clause 4 of the Merger Implementation Agreement.

Merger Implementation Agreement means the Merger Implementation Agreement between Integrated and Programmed dated 12 February 2007, a copy of which is set out in Appendix 2.

New Programmed Shares means the Programmed Shares to be issued to, or in respect of, Scheme Shareholders in consideration for the transfer of their Scheme Shares pursuant to the Scheme.

NPAT means net profit after tax.

Performance Plan means the Integrated Group Limited Senior Executive Incentivised Performance Plan established by the Integrated Board and set out in a Board Policy Statement for the issue of invitations to acquire performance shares (referred to in section 7.9(b)).

Programmed Board means the board of directors of Programmed. Programmed Final Dividend means any final dividend declared by Programmed in respect of the financial year ending 31 March 2007.


Section 8 – Glossary

Programmed Group means Programmed and its Subsidiaries as at the date of this Scheme Booklet.

Programmed Information means the information in the Letter from the Chairman of Programmed, in section 3 (Profile of Programmed), and in sections 4 (Profile of the Merged Group) and 5 (Risk factors) to the extent those sections relate to Programmed or the Merged Group and do not rely upon information provided by Integrated.

Programmed Record Date means the date set by Programmed for determining the entitlement of the holders of Programmed Shares to receive the Programmed Final Dividend.

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

Record Date means 5.00pm on the date which is the fifth Business Day after the Effective Date or any other date agreed by Programmed and Integrated to be the record date to determine entitlements to receive Scheme Consideration under the Scheme.

Related Body Corporate has the meaning it has in the Corporations Act.

Sale Agent means such person nominated by Programmed and approved by Integrated, who will be appointed to sell the New Programmed Shares that are attributable to Ineligible Foreign Holders under the terms of the Scheme or any nominee of such person.

Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act to be proposed between Integrated and the Integrated Shareholders, as set out in Appendix 3 (Scheme of Arrangement), subject to any modifications or conditions made or required by the Court under section 411(6) of the Corporations Act.

Scheme Booklet means this booklet containing information about the Scheme. Scheme Consideration means the consideration to be provided under the Scheme to Scheme Shareholders for the transfer to Programmed of their Scheme Shares, ascertained in accordance with section 7.5.

Scheme Meeting means the meeting of Integrated Shareholders, to be convened pursuant to a Court order under section 411(1) of the Corporations Act, to consider the Scheme.

Scheme Meeting Date means the date of the Scheme Meeting.

Scheme Share means an Integrated Share on issue at the Record Date.

Scheme Shareholder means each person who is registered in the Integrated Share Register as the holder of Scheme Shares as at the Record Date.

Second Court Date means the first day on which the Court hears the application for an order approving the Scheme under section 411(4)(b) of the Corporations Act or, if the application is adjourned or subject to appeal for any reason, the first day on which the adjourned or appealed application is heard.

Subsidiary of an entity means another entity which is a subsidiary of the first within the meaning of Part 1.2 Division 6 of the Corporations Act, or is a subsidiary or otherwise controlled by the first within the meaning of any approved accounting standard.

Sunset Date means 12 June 2007 (or such other date as agreed by Integrated and Programmed).

VWAP means volume weighted average price.

Appendix 1 Independant Expert Report


KPMG Corporate Finance (Aust) Pty Ltd ABN: 43 007 363 215 Australian Financial Services Licence No. 246901 Central Park 152-158 St George’s Terrace Perth WA 6000

GPO Box A29 Perth WA 6837 Australia

Telephone: +61 8 9263 7171 Facsimile: +61 8 9263 7129 www.kpmg.com.au

KPMG, an Australian partnership, is part of the KPMG International network. KPMG International is a Swiss cooperative.

The Directors Integrated Group Limited 44A Kings Park Road West Perth WA 6005

12 March 2007

Dear Sirs

Independent expert report & Financial services guide

1 Introduction On 12 February 2007, Integrated Group Limited (Integrated or the Company) announced that it had entered into a Merger Implementation Agreement (the Implementation Agreement) with Programmed Maintenance Services Limited (Programmed) to merge the two companies. The merger is to be effected by way of a scheme of arrangement pursuant to section 411 of the Corporations Act (the Act), whereby Integrated will become a wholly owned subsidiary of Programmed (the Scheme).

The broad terms of the Implementation Agreement as they impact Integrated shareholders are that Integrated shareholders will be entitled both:

to receive $1.25 in cash and 0.26 new Programmed shares in consideration for each share in Integrated they currently hold

to retain the interim dividend declared by Integrated for the six months ended 31 December 2006 of $0.05 per share (together the Consideration).

Integrated shareholders will also be entitled to participate in any final dividend declared by Programmed for the year ending 31 March 2007.

The Scheme is subject to a number of conditions precedent including, amongst others:

all regulatory, shareholder and other approvals and consents necessary to implement the Scheme on the terms put forward being obtained

the independent expert concluding that the Scheme is in the best interests of Integrated shareholders

Australian Stock Exchange Limited (ASX) approving the new Programmed shares to be issued to Integrated shareholders for additional quotation


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there being no material adverse change (as defined in the Implementation Agreement) in respect of either Integrated or Programmed

various prescribed occurrences not occurring.

The Board of Integrated has unanimously recommended all Integrated shareholders vote in favour of the Scheme in the absence of a superior offer and subject to the independent expert concluding that the Scheme is in the best interests of Integrated shareholders. Further, subject to these same conditions, the Board intends to vote in favour of the Scheme.

The terms of the Scheme are discussed in further detail in Section 3 of this report and in depth in the Scheme Booklet to which this report is attached.

Integrated is an Australian public company listed on the Official List of ASX. As at 9 March 2007, Integrated had a market capitalisation of approximately $183 million1. Integrated’s principal activities comprise:

recruitment and supply of casual and permanent personnel to the industrial and commercial sectors

the provision of marine support and associated services to the oil and gas exploration, construction, development and maintenance industries and general harbour services

the provision of contract maintenance and facilities management services.

Programmed is an Australian public company listed on the Official List of ASX. As at 9 March 2007, Programmed had a market capitalisation of approximately $367 million. Programmed’s principal activities comprise the provision of property maintenance services to commerce, industry and government by way of:

programmed maintenance painting, grounds maintenance services, general property maintenance services, corporate signage, infrastructure maintenance and operations management

specialised industrial services, which include sewerage and drainage maintenance, high pressure cleaning, vacuum loading, non-destructive digging and water recycling.

There is no statutory requirement for Integrated to commission an independent expert report in the present circumstances. However, in order to ensure Integrated shareholders are fully informed in making any decision as to whether or not to support the Scheme, Integrated’s directors have requested KPMG Corporate Finance (Aust) Pty Ltd (KPMG) to complete an independent expert report as to whether the Scheme is in the best interests of Integrated shareholders.

Integrated is now seeking the approval of its shareholders for the Scheme. The specific terms of the resolution to be approved are set out in the Scheme Booklet to which this report is attached.

1 All amounts denominated in Australian dollars (“$”) unless specifically noted otherwise.

Integrated Group Limited Scheme Document��0

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2 Summary and Conclusion

In our opinion the Scheme is in the best interests of Integrated shareholders

In forming this opinion, our assessed value for a share in Integrated was the primary matter that needed to be considered. This value for an Integrated share determined whether the Consideration reflected a fair return for Integrated shareholders.

Our assessment of the key issues considered in forming our opinion, and the issues that Integrated shareholders should consider in deciding whether to accept the Scheme, are summarised below and discussed in more detail in the remainder of this report.

2.1 The Consideration is fair as it falls within our range of assessed fair values for an Integrated share

We have assessed the full underlying value of Integrated to lie in the range of $187 million to $214 million, or approximately $2.56 to $2.93 per fully diluted Integrated share.

Our range of assessed values has been undertaken on a sum of the parts basis, is cum dividend and includes a premium for control. It does not include other strategic or operational benefits unique to Programmed associated with control of Integrated. With respect to an offer for Integrated it is reasonable to expect there to be a premium to reflect the advantages associated with acquiring a pool of assets and other strategic and operational benefits, which has been included in our range of assessed fair values.

Accordingly, based on the terms of the Scheme, the fair value of a Programmed share determined on a similar basis but excluding any premium for control, needs to exceed a minimum value of $4.852, in order to ensure Integrated shareholders are not disadvantaged financially by accepting the Scheme.

We have assessed the fair value of a Programmed share to lie in the range of $5.08 to $5.78. As $4.85 lies below our range of assessed values for a Programmed share we consider the Consideration offered to be fair. We note however that, all other things being equal, there is a potential for greater volatility in Programmed’s share price immediately following completion of the Scheme, at least in the short term, as investors seek to rebalance their investment portfolios, than may otherwise be the case over the longer term.

We also note that the closing price for a Programmed share on the trading day prior to the date of this report was $5.15 per share, which based on the terms of the Scheme, implies a value for the Consideration of $2.64. This compares to our assessed range of full underlying values for an Integrated share of $2.56 to $2.93.

2.2 Other factors for consideration by Integrated shareholders We have also considered whether there are any significant factors relating to the Scheme which suggest that Integrated shareholders should accept the Scheme in the absence of a higher offer. The principal factors considered by us are detailed below.

2 Calculated by the low end of our range of full underlying values for an Integrated share less the cash and dividend elements of the Consideration, all divided by the share exchange ratio of 0.26 i.e. ($2.56 - $1.25 - $0.05) / 0.26.


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Integrated shareholders will be entitled to participate in any final dividend declared by Programmed in relation to the financial year ending 31 March 2007

In addition to their entitlement to the Consideration, Integrated shareholders will also be entitled to receive any final dividend declared by Programmed in respect of the financial year ending 31 March 2007. In the event that the Scheme is not implemented prior to the Programmed record date for payment of the Programmed dividend, the Implementation Agreement provides for Integrated, subject to any requirements of the Act, to pay to Integrated’s shareholders an equivalent replacement dividend.

Whilst not necessarily indicative of future dividend payments, we note that Programmed paid a final dividend of $0.095 per share, fully franked, in relation to the year ended 31 March 2006.

Given the level of dividend that may be payable, if any, is not known at this time, we have not factored this payment into our assessed value of the Consideration.

Based on the terms of the Scheme and the closing price for a Programmed share immediately prior to the announcement of the Scheme, Integrated shareholders are receiving a reasonable premium to the price at which Integrtaed shares traded prior to the announcement

Programmed shares closed at $5.14 on the last trading day immediately prior to the announcement of the Scheme on 12 February 2007. Based on the terms of the Scheme this implies a market consideration of approximately $2.64 per Integrated share on the date of the announcement, which represents a premium to the volume weighted average price (VWAP) for a Integrated share measured at various points in the three months prior to the announcement of the Scheme as set out in the table below.

Table 1: Comparison of implied consideration to Integrated VWAP

Period up to and including

9 February 2007

Integrated VWAP $

Implied consideration$

% premium

1 day 2.28 2.64 15.8 1 week 2.25 2.64 17.3 1 month 2.11 2.64 25.1 3 months 1.99 2.64 32.7

Source: Bloomberg

The closing price of a Programmed share on the trading day prior to the date of this report was $5.15, which implies a current value of the Consideration of approximately $2.64 per Integrated share. Based on a value of $2.64 for the Consideration, the implied premium over the one week VWAP is approximately 17.3 percent.

We note, however, that it can reasonably be expected that the current share price of Programmed will differ from the price at which Programmed shares are trading at the date Integrated shareholders meet to consider the Scheme. General market sentiment and conditions and reaction to future Programmed announcements could all impact upon Programmed’s share price. To the extent that this share price is not representative of the longer term trading prices for shares in Programmed, Integrated shareholders may be advantaged or disadvantaged.

Accordingly, Integrated shareholders will need to consider, inter alia, movements in the underlying Programmed share price subsequent to the date of this report and also form a view as to the future prospects of Programmed in deciding whether to support the Scheme.


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In the event the Scheme is unsuccessful, Integrated’s share price may fall

In the event the Scheme is unsuccessful and all other things being equal, there is a prospect of Integrated’s shares falling from their current levels reflecting the withdrawal of the premium over recent trading prices offered under the Scheme. In this regard we note that Integrated’s closing price increased from $2.26 on the last trading day prior to the announcement of the Scheme to $2.61 on the day of the announcement.

However it is also possible the Company’s shares may trade at above pre-announcement levels as a consequence of the additional information provided to the market, including information contained in this report and in the balance of the Scheme Booklet in relation to the prospects of the Company for the future.

There is a reasonable prospect that the market for shares in the expanded Programmed after implementation of the Scheme will be more liquid and may potentially be re-rated

As a result of the expanded Programmed having an expanded and more diversified range of business operations and investments and prospects for accelerated growth than either Programmed or Integrated as stand alone entities, there appears to be reasonable prospects that a greater number of investors will be attracted to the expanded Programmed than is currently the case in respect to Integrated alone, which should, all other things being equal, result in greater liquidity in share trading.

We also note that any increase in Programmed’s scale may also potentially translate into a positive re-rating of Programmed’s shares by the investment community.

There is also potential for Programmed to realise synergistic, strategic and other benefits should it be successful in acquiring Integrated over and above those synergies that would be generally available to a pool of purchasers.

In particular, through acquiring Integrated, Programmed may be able to:

facilitate faster penetration by Integrated’s workforce division of regional Australia and overseas markets through the use Programmed existing infrastructure in these areas

provide access to Integrated’s labour pool, enabling Programmed to better respond on a timely basis to seasonal and client’s needs for services at short notice

provide access to new customers for each business through the ability to leverage each other’s existing customer relationships to generate additional revenue.

There are various risks attaching to the final quantum of any cost savings and/or synergy benefits that may arise from the acquisition of Integrated, including integration risks. Accordingly, the final quantum of any benefit is uncertain and will not be known for some time. Integrated shareholders will be entitled to approximately 20.9 percent of the expanded capital base of Programmed after completion of the Scheme. As such they will effectively participate in a proportional entitlement of approximately 20.9 percent with respect to any synergies realised by the expanded Programmed.

We note that Programmed’s closing price increased from $5.14 on the last trading day prior to the announcement of the Scheme to $5.40 on the day of the announcement. This may indicate that the market has already factored in to Programmed’s trading price at least part of any benefit expected to be realised from the merger. We also note that Programmed has traded on higher price earnings multiples than Integrated in recent times.


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Integrated’s largest shareholder has already indicated it is his current intention to vote in favour of the Scheme

In his capacity as a Director of the Company, Mr Jonathan Whittle has recommended, in the absence of a superior offer emerging and given KPMG’s opinion that the Scheme is in the best interests of Integrated shareholders, that Integrated shareholders vote in favour of the Scheme and that, subject to the same qualification in relation to a competing bid emerging, he intends to vote in favour of the Scheme. Mr Whittle currently holds a relevant interest in approximately 10.0 percent of Integrated’s issued share capital.

We have also considered a number of other factors in reaching our conclusion, which are summarised below and discussed more fully in section 11 of this report:

Whilst historical performance is not necessarily indicative of future long-term movements in Programmed’s share price, we note that investors in Programmed enjoyed a comparatively more stable rate of return3 than Integrated shareholders on funds invested over the medium term period leading up to the announcement of the Scheme.

No allocation of the purchase price to identifiable intangible assets of Integrated on acquisition has been performed by Programmed. To the extent that any identifiable intangible assets of Integrated with finite lives are identified, these will be required to be amortised by the expanded Programmed over their useful lives, which will adversely impact upon the future earnings of the expanded Programmed. Depending upon the final quantum of any amortisation charge this may potentially on adversely impact upon the quantum of any dividends able to be paid.

Whilst no formal alternative offer has been received in respect of Integrated or its assets in the period subsequent to the announcement of the Scheme, we note that the Directors did not actively market the Company prior to entering into the Implementation Agreement.

Given the level of potential direct cost savings available to an existing operator in the workforce recruitment industry from an acquisition of Integrated, the prospect of an alternative offer emerging cannot be discounted. However, no such party has emerged to date, perhaps reflecting the potential for a leakage of clients in such a merger scenario.

Completion of the Scheme is subject to the satisfaction of a number of conditions precedent, including obtaining various consents and approvals. Whilst we do not consider the conditions precedent to be so restrictive as to jeopardise the completion of the Scheme, we do note that as at the date of this report, a number of these conditions are yet to be satisfied.

Given no competing bid for the Company has emerged and KPMG’s conclusion that the Scheme is in the best interests of Integrated shareholders, we are advised that, at the date of this report, each of the Directors of Integrated (who together own or control approximately 11.7 percent of Integrated issued capital) has, in the absence of a superior offer, recommended acceptance of the Scheme and has not withdrawn this recommendation.

Programmed has indicated that it is its current policy to pay dividends. Both Integrated and Programmed paid fully franked dividends in respect of the 2005/06 financial year. We note, however,

3 Calculated on the assumption that dividend payments were reinvested in the relevant company


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that this was the first dividend paid by Programmed that has been fully franked. Whilst we have been advised that there is no reason to expect that a final Programmed dividend (and the Intergrated replacement dividend if required) would not be paid, the payment of this dividend and quantum thereof may possibly be impacted by future events and therefore cannot be guaranteed.

Excluding any shares Integrated shareholders may already hold in Programmed, Integrated shareholders’ interest in the Company’s existing business and assets will be diluted to approximately 20.9 percent in the event that the Scheme proceeds. However, Integrated shareholders will receive a similar interest in the larger existing business and portfolio of assets of Programmed.

Integrated has estimated that the total costs of implementing the Scheme are likely to be in the order of $6 million. A portion of these costs will have been incurred by Integrated, or will be committed, prior to the date that the shareholders will vote on the Scheme. In event that the Scheme is not implemented, Integrated may, depending upon the reasons for the Scheme not being implemented, also be liable to pay a break fee of $1.9 million to Programmed.

Programmed will not be obliged to issue new Programmed shares to shareholders deemed to be ineligible foreign shareholders. In these circumstances, the shares that would otherwise have been issued to these parties will be issued to an approved nominee and disposed of as soon as practicable, with the proceeds, net of costs, being remitted to the relevant shareholders.

2.3 TaxationIn the event that the Scheme is approved, Integrated shareholders will receive 0.26 new Programmed shares for every Integrated share they hold at the record date, along with $1.25 in cash. In addition, Integrated shareholders are entitled to retain the benefit of the $0.05 dividend per share declared by Integrated in relation to the six months ended 31 December 2006. Integrated shareholders are strongly encouraged to read the outline of the taxation implications of accepting the Scheme prepared by Integrated, which is included in the Scheme Booklet at section 6 and, if in any doubt, should seek their own independent taxation advice regarding the taxation consequences of the Scheme.

2.4 General warning advice This letter is a summary of KPMG’s opinion as to the merits or otherwise of the Scheme. This opinion should be read in conjunction with, and not independently of, KPMG’s detailed report and appendices as attached.

In forming our opinion, we have considered the interests of Integrated’s shareholders as a whole. The advice does not consider the financial situation, objectives or needs of Integrated’s individual shareholders. It is not practical or possible to assess the implications of the Scheme on individual shareholders, as we do not know their specific financial circumstances.

The decision of Integrated’s shareholders as to whether or not to vote in favour of the Scheme is a matter for individual shareholders based on, amongst other things, their risk profile, liquidity preferences, investment strategy and tax position. Individual Integrated shareholders should therefore consider the appropriateness of our opinion to their specific circumstances before acting upon it.

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


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Our report has 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.

This report has been prepared solely for the purpose of assisting Integrated shareholders in considering the Scheme. We do not assume any responsibility or liability to any party as a result of reliance on this report for any other purpose, including but not limited to investment or lending decisions in relation to Integrated.

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 Scheme Booklet to be sent to Integrated shareholders in relation to the Scheme, without the prior written consent of KPMG as to the form and context in which it appears. KPMG consents to the inclusion of this report in the form and context in which it appears in the Scheme Booklet.

Yours faithfully

Duncan Calder Jason Hughes Executive director Director


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FINANCIAL SERVICES GUIDE

Dated 12 March 2007

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

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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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Except for the fees referred to above, neither KPMG, KPMG’s Australian professional advisory and accounting practice (the KPMG Partnership) nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

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From time to time KPMG, the KPMG Partnership and/or entities related to the KPMG Partnership may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business.

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As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to The Complaints Officer, KPMG, PO Box H67, Australia Square, Sydney NSW 1213.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Industry Complaints Service Limited (FICS). FICS is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

Further details about FICS are available at the FICS website www.fics.asn.au or by contacting them directly at Financial Industry Complaints Service Limited, PO Box 579, Collins Street West, Melbourne VIC 8007

Toll free: 1300 78 08 08 Facsimile: (03) 9621 2291


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Contents of the remainder of KPMG’s report

The remainder of this independent expert’s report is set out below under the following headings:

3. Background to the Scheme

4. Basis of assessment

5. Profile of the principal industries in which Integrated and Programmed operate

6. Profile of Integrated

7. Profile of Programmed

8. Impact of the Scheme

9. Valuation of Integrated

10. Valuation of the Consideration

11. Assessment of the Scheme

Appendix

1 Qualifications and declarations

2 Sources of information

3 Industry overviews

Employment placement services

Provision of contract staff

Painting and decorating services

4 Comparable transaction analysis

5 Comparable companies


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3 Background to the Scheme On 12 February 2007, Integrated announced that it had entered into the Implementation Agreement with Programmed, whereby Programmed will acquire all of the issued capital of Integrated in consideration for both the payment of $1.25 in cash and the issue of 0.26 new Programmed shares for each Integrated share currently on issue. Integrated shareholders will also be entitled to retain the benefit of the interim dividend of $0.05 per share declared by Integrated for the six months ended 31 December 2006.

In addition, Integrated shareholders will be entitled to receive any final dividend declared by Programmed for the financial year ending 31 March 2007. In the event that the Scheme is not implemented prior to the Programmed record date for payment of the Programmed dividend, the Implementation Agreement provides for Integrated, subject to any requirements of the Act, to pay to Integrated’s shareholders an equivalent replacement dividend.

New Programmed shares issued to Integrated shareholders will rank parri passu with existing Programmed shares.

If a fractional entitlement to Programmed shares arises as a result of the implementation of the Scheme, any such entitlement will be rounded:

up, where the fraction is 0.5 or more

down, where the fraction is less than 0.5.

3.1 ConditionsThe Scheme is subject to a number of conditions precedent including, inter alia:

Integrated shareholders’ approval of the Scheme

Court approval of the Scheme as required by the Act

all regulatory and other approvals and consents necessary to implement the Scheme on the terms put forward being obtained

ASX approving the Programmed shares to be issued under the Scheme for quotation on the Official List, conditional upon the implementation of the Scheme

there being no material adverse change (as defined in the Implementation Agreement) to either Integrated or Programmed

various prescribed occurrences not occurring.


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3.2 Foreign Shareholders Integrated shareholders whose address is shown in Integrated’s shareholder register as being a place outside of Australia or New Zealand will be deemed to be “Foreign Shareholders” for the purpose of the Scheme.

Programmed will not be obliged to issue new Programmed shares to Foreign Shareholders unless Programmed determines it is lawful and, if subject to any conditions, not unduly onerous or impractical to do so. In the event that new Programmed shares are not issued to relevant Foreign Shareholders, then the number of shares that otherwise would have been issued to these parties will be issued to an approved nominee. The nominee will be required to dispose of the shares as soon as practicable, with the proceeds, net of costs, remitted to the relevant Foreign Shareholders.

3.3 SolicitationThe Implementation Agreement provides that, subject to satisfaction of its fiduciary duties, the Company, its subsidiaries or representatives will not directly or indirectly approach, solicit inquiries from or initiate discussions with any party other than Programmed in relation to any competing offer or proposal.

This restriction is for the period commencing 12 February 2007 to the earliest of four months after that date, the date of any Court orders approving the Scheme becoming effective and the date the Implementation Agreement is terminated in accordance with its terms (the Restriction Period).

Similarly, during the Restriction Period, Integrated, its subsidiaries and their representatives are not to participate in any discussions or negotiations, or provide information or take any other action to facilitate a the making of a competing offer or proposal (no talk restriction).

The no talk restriction does not apply where the Board of Integrated receives a written proposal from a third party which it believes would be in the best interests of Integrated shareholders.

3.4 Break fee Integrated must pay Programmed a break fee of $1.9 million if:

a takeover bid or other merger proposal is initiated by a third party in respect of Integrated and that bid or proposal results in the bidder or proponent acquiring 50 percent or more of Integrated; or

Programmed terminates the Implementation Agreement due to a material unremedied breach of Integrated’s obligations under the agreement.

Programmed must pay Integrated a break fee of $1.9 million if Integrated terminates the Implementation Agreement due to a material unremedied breach of Programmed’s obligations under the agreement.


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3.5 Termination The Implementation Agreement may be terminated by either party if (amongst other things) any condition precedent is not satisfied or waived or either Integrated shareholders or the Court fails to approve the Scheme.

Programmed may terminate the Implementation Agreement where:

Integrated is in material breach of the agreement; or

the Board of Integrated or any Integrated Director withdraws or qualifies their support for the Scheme or otherwise acts in a manner which is inconsistent with obtaining approval for the transaction.

Integrated may terminate the Implementation Agreement where Programmed is in material breach of its terms or a competing proposal is announced which in the opinion of the Directors of Integrated is more favourable than the Scheme.

3.6 Sunset date There is a potential, albeit considered slim, that the Scheme may not be given effect even though Integrated shareholders may vote in favour of the Scheme. The Scheme will lapse and be of no further force or effect if the Scheme has not been given effect on or before 12 June 2007, or such other date as Integrated and Programmed may agree.

In the event the Scheme is not approved, Integrated shareholders will retain their direct interest in Integrated and the Company will continue to be listed on ASX.

4 Basis of assessment This report has been prepared by KPMG for inclusion in an Scheme Booklet to be sent to Integrated shareholders to convene a Court ordered meeting of Integrated shareholders on or about 10 May 2007 in accordance with Section 411 of the Act. The purpose of the meeting will be to seek approval of the Scheme.

4.1 Technical requirements Section 412(1) of the Act requires that an explanatory statement issued in relation to a proposed scheme of arrangement under Section 411 of the Act includes information that is material to the making of a decision by a creditor or member as to whether or not to agree with the relevant proposal.

Part 3 Schedule 8 of the Corporations Regulations specifies that the explanatory statement to be sent to shareholders must include a report prepared by an expert where either:

a party to the scheme of arrangement has a shareholding of not less than 30 percent of the voting shares in the company


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the parties to the proposed scheme have a common director(s).

The independent expert report must state whether, in the expert’s opinion, the proposed scheme of arrangement is in the best interests of the members of the body as a whole and set out the expert’s reason(s) for forming that opinion.

There is no legal requirement for an independent expert report to be prepared in relation to the Scheme as neither of the criteria above is satisfied. However, in order to ensure that Integrated shareholders are fully informed as to whether to support or reject the Scheme, the Board of Integrated has requested KPMG to prepare an independent expert report as though it was required under the Act.

Policy Statement 75 “Independent Expert Reports to Shareholders”, issued by the Australian Securities and Investments Commission (ASIC), indicates the principles and matters which it expects a person preparing an expert report for inclusion in an explanatory statement to consider in determining whether the scheme of arrangement is “in the best interests of the members”. With respect to determining the meaning of “in the best interests” paragraph 6 of Policy Statement 75 states:

“Fair and reasonable” should be taken as a reference to “in the best interests of the members”.

Whilst this does not indicate that ASIC considers “fair and reasonable” to have the same meaning as “in the best interests of members” we consider that an analysis undertaken under the concepts of “fair” and “reasonable” as expressed in Policy Statement 75 is consistent with determining whether a proposal is “in the best interests of members”.

Schemes of arrangement pursuant to Section 411 can encompass a wide range of transactions. Accordingly, “in the best interests” must be capable of a broad interpretation to meet the particular circumstances of each transaction.

In our opinion an assessment of whether a proposed transaction is in the best interests of Integrated shareholders should involve a comparison of the advantages and disadvantages likely to accrue to Integrated shareholders if the proposed transaction proceeds, with those if it does not. Accordingly, in the context of our report, the Scheme will be in the best interests of the Integrated shareholders, if the Integrated shareholders are assessed as being better off if the Scheme proceeds than if it does not.

4.2 Factors considered in determining our opinion In forming our opinion, we have considered in particular the following issues:

the assessed value of an ordinary share in Integrated compared with the consideration to be received under the Scheme

the extent of any control premium being paid by Programmed

the level of synergies and cost savings available to a pool of purchasers


16

the likely level of synergies and cost savings unique to Programmed

the liquidity of the market for Integrated and Programmed shares and the assessed value of an ordinary share in Programmed based on share trading on ASX

the likelihood of an alternative offer emerging for Integrated

any conditions associated with the Scheme

the consequences of not approving the Scheme

other advantages and disadvantages which may impact the holders if the Scheme proceeds.

4.3 Sources of information In preparing this report and arriving at our opinions, we have considered a number of sources of information as detailed in Appendix 2 to this report.

The statements and opinions expressed in this report are made in good faith and have been based on information believed to be reliable and accurate. We have relied upon the information set out in Appendix 2 and have no reason to believe that any material factors have been withheld from us. The preparation of this report does not imply that KPMG or any of its affiliates have carried out any form of audit on the accounting or other records of any entity within the Integrated or Programmed group of companies, their investments or associates.

The information provided to KPMG included financial and operational projections prepared by the management of Integrated and Programmed respectively. Prospective results are by their nature uncertain and are dependent on a number of future events, which cannot be guaranteed. Accordingly, achievement of these projections is not warranted or guaranteed by KPMG, Integrated or Programmed. Actual results may vary significantly from the prospective information relied on by KPMG. Any variations from prospective results may affect our opinion.

The opinion of KPMG is based on prevailing market, economic and other conditions at the date of this report. It should be noted that conditions can change over a relatively short period of time and that our findings should be considered in light of any such changes. Any subsequent changes in these conditions could impact upon our assessments, either positively or negatively.

It is not the role of the independent expert to undertake the commercial and legal due diligence that a company and its advisers may undertake. Integrated is responsible for conducting due diligence on Programmed. Similarly, Programmed is responsible for its enquiries in relation to the assets, liabilities and financial performance of Integrated. KPMG provides no warranty as to the adequacy, effectiveness or completeness of the due diligence process, which is outside our control and beyond the scope of this report. We have assumed that the due diligence process has been and is being conducted in an adequate and


17

appropriate manner. The directors have further advised us that their due diligence procedures have not, to date, identified any material issues not disclosed to KPMG.

5 Profile of the principal industries in which Integrated and Programmed operate Integrated’s principal business operations can be broadly categorised as comprising:

recruitment services in relation to casual and permanent employees

the provision of managed labour.

Programmed’s principal business operations can be broadly categorised as comprising:

the provision of contracted maintenance services

specialised industrial services.

To provide a context for assessing the position of Integrated and Programmed in the principal sectors in which they operate sector we have set out at Appendix 3 an overview of recent trends in:

Employment placement services.

Provision of contract staff.

Painting and decorating services.

6 Profile of Integrated

6.1 Corporate background Integrated was established in 1992 as a supplier of labour hire for all industry sectors throughout Australia. The Company was incorporated in Western Australia on 20 January 1999 as Integrated Workforce Ltd and admitted to the Official List of ASX on 6 October 1999.

The Company changed its name to Integrated Group Limited in October 2002 to better reflect the changing nature of its business to that of a diversified industrial services group.

Today, Integrated operates a national recruitment business in the industrial, contract maintenance, administrative and office support sectors. The Company is also a provider of managed labour and maritime personnel and services.


18

Integrated’s operations are currently split into three principal service offerings - Workforce Services and Marine Services and Technical Maintenance Services4, each of which is arranged around a common service delivery infrastructure. Integrated currently operates through a branch network, with over 45 offices in Australia and New Zealand, and employs up to seven thousand people daily for client companies across a broad range of industries.

In recent times, Integrated has implemented various initiatives to grow its presence in the buoyant mining and oil and gas sectors, including:

the establishment of a dedicated Mining and Resources team

opening new branch offices in strategic locations

the acquisition of various “bolt on” resource sector focussed businesses.

Workforce Services

Workforce Services provides skilled and semi-skilled industrial and commercial personnel on both a temporary and permanent basis as well as recruitment and training services to the resources, industrial and commercial sectors. Specific service offerings include: customised recruitment solutions; industry specific candidate training and tailored induction programmes; specialist on-site safety support and inspections; industrial relations consulting services and human resources services.

Workforce Services currently contributes approximately 70 percent of the Company’s revenue base.

Integrated’s strategy for the growth of this service offering is to pursue further organic growth through expansion into regional Australia and New Zealand and through bolt-on acquisitions as opportunities arise.

In the six months to 31 December 2006, Integrated opened regional branches in Geraldton and Port Hedland in Western Australia and in Port Augusta in South Australia. Integrated also opened new metropolitan branches in Hemmant in Brisbane and Ringwood in Victoria.

Managed Labour

Marine Services

Marine Services supplies manning and associated services to the Australian offshore oil and gas exploration, construction, development and maintenance industries. Its principal service lines include the provision of manning, catering and provedore to drilling and seismic vessels and production platforms, along with onshore support systems. In addition, Marine Services provides a full range of tug and barge services in the Port of Fremantle.

4 For the purpose of our report Marine Services and Technical Maintenance Services are collectively referred to as Managed Labour


19

In April 2006, Marine Services sold all of its offshore vessels to Mermaid Marine Australia (MMA) for $23.8 million and simultaneously acquired MMA's manning business for $4.8 million. As part of the transaction, Marine Services will supply exclusive marine manning services to the entire MMA fleet for an initial period of 7 years.

In September 2006, Integrated acquired 100 percent of the issued share capital of Wendell Offshore Services Limited and Wendell Catering Services Limited (together Wendell), New Zealand’s leading suppliers of labour and support services to the offshore oil and gas industry for $5.6 million (with an additional amount payable dependent upon future financial performance).

Marine Services contributes in the order of 26 percent of the Company’s revenue base.

Integrated expects its Marine Services business to continue to grow on the back of increasing levels of activity in the offshore oil exploration and production sectors, with new vessels and rigs expected to come to the market in the short term. Integrated believes that the repositioning of Marine Services as solely a provider of vessel management and manning services to all owners and operators, as partners, without the threat of competition from Integrated’s previously owned fleet, has placed the business in a strong position.

Integrated also intends seeking opportunities for growth through the development of an international business platform and expansion into all forms of offshore labour.

Technical Maintenance Services

Technical Maintenance Services is focused on the provision of contract and permanent project engineering staff, supplementary tradespeople, maintenance outsourcing, project resources and facilities management across a wide range of industries including the automotive, aviation, communications, manufacturing and heavy industry and public services and infrastructure.

Technical Maintenance Services contributes around 4 percent of the Company’s revenue base.

Integrated considers that Technical Maintenance Services currently lacks scale and as such its operating performance is lumpy in nature, with results varying considerably as timing and profitability of its small portfolio of projects varies in each period. Integrated’s strategy for the future includes focussing on building its managed labour and maintenance services in oil/gas and mining and leveraging Marine Services capabilities. Management considers that the Scheme will facilitate significant growth in the Technical Maintenance Services area.

6.2 Corporate structure Integrated has in excess of thirty subsidiaries incorporated in Australia and also a small number incorporated overseas. Each of these subsidiaries is held 100 percent by Integrated.


20

6.3 Financial performance Integrated’s historical audited consolidated financial results for each of the three years ended 30 June 2006 and forecast consolidated financial result for the year ending 30 June 2007 are summarised in the table below.

Table 2: Summary of Integrated’s historical and forecast consolidated financial performance

Audited Year ended 30 Jun 2004

$000


$000


$000

Forecast Year ending 30 Jun 2007

$000 Revenue Revenue from continuing operations1 331,184 387,134 445,470 479,192 Other revenue 2,359 - 915 -

333,543 387,134 446,385 479,192 Operating expenses (313,442) (365,982) (424,792) (454,505) Impairment of property, plant and equipment (PP&E) - (1,707) 168 -EBITDA 20,101 19,445 21,761 24,687 Depreciation and amortisation (4,626) (4,163) (3,237) (3,451)10

EBIT 15,475 15,282 18,524 21,236 Net financing expense (1,114) (1,731) (2,978) (1,874) Operating profit before income tax 14,361 13,551 15,546 19,362 Income tax expense (3,682) (4,477) (2,651) (6,230) Operating profit after income tax 10,679 9,074 12,895 13,132 Loss from discontinued operations - (1,257) (9,745) - Profit attributable to minority interests (311) (253) (133) - Net profit after tax attributable to members 10,368 7,564 3,017 13,132 Total revenue growth2- % 6.1 16.1 15.3 7.3 Gross margin3 - % 5.4 5.5 4.6 5.2 EBITDA margin4 - % 6.0 5.0 4.9 5.2 EBIT margin5- % 4.6 3.9 4.1 4.4 NPAT margin5- % 3.1 2.0 0.7 2.7 Interest cover – times6 18.0 11.2 7.3 13.2 Basic earnings per share – cents7 14.8 10.7 4.3 18.6 Basic earnings per share from continuing operation – cents7 14.8 12.5 18.1 18.6


21


$000


$000


$000

Forecast Year ending 30 Jun 2007

$000 Dividend per share11 – cents 10.0 11.0 11.0 Closing 30 June share price11 - $ 1.83 1.42 2.09 Dividend payout ratio8, 11 - % 67.6 102.8 255.8 Dividend yield9, 11- % 5.5 7.7 5.3 Amount of dividend franked11 - % 100.0 100.0 100.0 Notes1 Revenue excludes interest revenue 2 Total revenue is revenue from continuing operations plus other revenue less interest revenue 3 Gross margin is revenue from continuing operations less operating expenses divided by revenue from continuing

operations4 EBITDA is earnings from continuing operations before net interest, tax, depreciation and amortisation. EBITDA

margin is calculated as EBITDA divided by total revenue 5 EBIT is earnings from continuing operations before net interest and tax. NPAT is net profit after tax attributable

to members of Integrated. EBIT margin is calculated as EBIT divided by total revenue. NPAT margin is calculated as NPAT divided by total revenue

6 Interest cover is calculated as EBITDA divided by net financing expense 7 Basic earnings per share for the forecast year ending 30 June 2007 based on forecast earnings and the number

of shares on issue as at 9 March 2007 8 Dividend payout ratio is calculated as dividend per share divided by diluted earnings per share 9 The dividend yield has been calculated using the closing share price at the end of the financial period 10 Depreciation and amortisation includes, amongst other things, amortisation of performance rights 11 Details for the forecast year ending 30 June 2007 not available

Source: Integrated 2004, 2005 and 2006 annual reports and independently reviewed accounts for the 6 months ended 31 December 2006, Integrated prepared forecasts, KPMG analysis

Observations in relation to Integrated’s historical and forecast financial performance are set out below:

Year ended 30 June 2004

Due to an error in the calculation of fees associated with workers compensation premium provisions, costs associated with the provision of services were understated by $2.02 million for the year ended 30 June 2004. This error had the effect of overstating consolidated profit before income tax reported in Integrated’s 30 June 2004 financial statements by this amount and consolidated income tax expense by $606,000. We have adjusted Integrated’s 30 June 2004 reported results to reflect this error. The error in respect of the year ended 30 June 2005 was adjusted in the 2005 comparable figures included in Integrated’s 30 June 2006 financial statements and therefore did not require further adjustment.

The 2003/04 result included a non-recurring income tax benefit of $0.8 million from the adoption of the tax consolidation regime.


22

No contribution from Integrated’s then 50 percent interest in Technical Maintenance Services Pty Ltd was included in the Company’s results, reflecting a continuation of the policy of fully providing the profit from this investment against an outstanding trade receivable in respect of a significant contract with Saizeriya Australia (Saizeriya), which was the subject of legal proceedings.


An error in the calculation of the work in progress for Integrated Training was identified during the year ended 30 June 2006, however the Company advised in its 30 June 2006 financial statements that it was impracticable to determine the extent to which this impacted prior period revenues and earnings.

Integrated adopted Australian equivalents to International Financial Reporting Standards (AIFRS) for the first time in respect of the year ended 30 June 2006. The comparatives for the 12 months ended 30 June 2005 were restated by the Company accordingly and are reflected in the table above.

Integrated results were adversely impacted by:

Two underperforming vessel contracts, softer conditions in the marine manning market and an unexpected overseas taxation exposure, which resulted in Marine Services revenue falling from $102 million in 2004 to $92 million in 2005.

The disappointing performance of the Company’s newly acquired training division. In August 2004, Integrated completed the acquisition of Corpfit Holdings Pty Ltd (Corpfit) for a cash consideration of $3.45 million. Corpfit provided workplace training across a wide range of industries nationwide. This new business recorded a loss at the EBITDA level of $1.8 million on sales of $6.2 million for the period to 30 June 2005. The Company attributed this disappointing result to breaches of company revenue recognition policy and a failure in internal control systems to identify the relevant issue. This business was subsequently sold during the year ended 30 June 2006.

Reduced labour hire margins on various successful national contract tenders.

The remaining 50 percent interest in Integrated Maintenance Services was acquired with effect from 1 July 2004, resulting in this division’s earnings being fully recorded in the consolidated results for the first time. Technical Maintenance Services recorded a Segment Result of approximately $2.5 million on sales of $25.2 million. Included in the result was $0.9 million in respect of the successful settlement of the dispute with Saizeriya.


All of the entities comprising Integrated’s workplace training business were divested in April 2006. The training division recorded a net loss after tax of $9.7 million in the period prior to its disposal.

The sale of Integrated’s offshore fleet of vessels to MMA and a 7 year alliance style contract with that company to provide marine labour for its entire fleet of 23 vessels was concluded in April 2006. This


23

allowed the Company to release a significant level of capital from its balance sheet, which, amongst other things, was applied in the elimination of long term debt funding.

The results included one-off gains and expenses associated with the sale of the abovementioned vessels and training entities, representing a net gain of $0.75 million.

Integrated recognised a loss of $1.4 million in relation to bad and doubtful trade receivables during the year.

Forecast year ending 30 June 2007

Integrated has requested that KPMG limit the disclosure of financial information relating to Integrated’s budgeted operations and financial performance. This request has been made on the basis of:

the commercially sensitive nature of the operational and financial information for the various business units comprising Integrated’s operations

various agreements Integrated has in place with respect to a number of its clients.

However, in broad terms the budget and projections are based on:

Workforce sales in the order of $335 million, at an average EBITDA margin of 6.7 percent (before allocation of corporate and shared services costs). This compares to actual sales of $308 million at an average EBITDA margin of 6.6 percent for the year to 30 June 2006.

Workforce sales to external customers to 31 December 2006 totalled approximately $171 million, at an average EBITDA margin of approximately 6.2 percent (before allocation of corporate and shared services costs).

Integrated has initiated various actions that are expected to improve margins in the second half of 2006/07 including:

establishment of stronger protocols around price negotiations

a move away from competitive tendering for national supply contracts, which tend to be at lower margins

reduction in overheads.

Managed Labour sales in the order of $144 million, at an average EBITDA margin of 9.2 percent (before allocation of corporate and shared services costs), which compares to actual sales of $140 million at an average EBITDA margin of 11.0 percent in 2005/06.


24

Managed Labour sales to external customers to 31 December 2006 totalled approximately $62 million, at an average EBITDA margin of 10.6 percent (before allocation of corporate and shared services costs). The forecast lower margin reflects in part the change in Integrated’s business focus away from vessel ownership and operation and manning services to solely the provision of manning, catering and provedore.

Marine Services revenue for the six months to 31 December 2006 was $55 million, which compares to $51 million for the prior year corresponding period (pcp).

A decision was made and implemented to change Integrated’s business model during the period, away from the more capital intensive ownership of fleet vessels to the provision of lower margin manning services. In this regard, we note that Wendell was acquired during September 2006 and therefore Integrated’s results for the six months ended 31 December 2006 and projected results for the year ending 30 June 2007 do not include a full period’s trading for this business.

Technical Maintenance Services revenue for the six months to 31 December 2006 was $7.2 million, which compares to $16.9 million for the pcp. As noted previously, Technical Maintenance Services' performance can be lumpy and its first half performance was adversely impacted by timing differentials between the conclusion of existing contracts and the commencement of new contracts.

Corporate and shared services costs (before net finance charges, depreciation, amortisation and tax) in the order of $11 million, which compares to actual costs of $14 million in 2005/06.

We note the projected reduction in corporate and shared services costs during the current financial year largely reflects:

the elimination of legal and other costs associated with the divestment of the training division

the benefit of the already implemented restructure of Integrated’s operating model and management structure.

Actual corporate and shared services costs (before net finance charges, depreciation, amortisation and tax) totalled approximately $5.5 million to 31 December 2006, of which $2.7 million was allocated across the divisions and $0.2 million related to the write down of performance rights on issue in Integrated


25

Summary of divisional historical and forecast performance

Set out below is a summary of the recent historical and forecast performance of the Workforce division.

Figure 1: Workforce Revenue Figure 2: Workforce EBITDA1

0

50

100

150

200

250

300

350

400

2002 2003 2004 2005 2006 2007

$ m

illio

n

0%

3%

6%

9%

12%

15%

18%

21%

24%

Rev

enue

gro

wth

Revenue Revenue growth

0

5

10

15

20

25

2002 2003 2004 2005 2006 2007$

mill

ion

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

EBIT

DA

Mar

gin

EBITDA EBITDA margin

Source: Integrated results briefing August 2006

Note 1: EBITDA is before allocation of corporate and shared services costs

Managed Labour

Set out below is a summary of the recent historical and forecast performance of the Managed Labour division of Integrated, which includes both Marine Services and Technical Maintenance Services.

Figure 3: Managed Labour Revenue Figure 4: Managed Labour EBITDA1

0

20

40

60

80

100

120

140

160

180

2003 2004 2005 2006 2007

$ m

illio

n

-30%

-20%

-10%

0%

10%

20%

Rev

enue

gro

wth


0

2

4

6

8

10

12

14

16

18

2003 2004 2005 2006 2007

$ m

illio

n

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

EBIT

DA

Mar

gin


Source: Integrated results briefing August 2006

Note 1: EBITDA is before allocation of corporate and shared services costs

6.4 Financial position Integrated’s historical audited consolidated net assets as at each of 30 June 2004, 2005 and 2006 and its independently reviewed consolidated net assets as at 31 December 2006 are summarised below.


26

Table 3: Summary of Integrated’s historical consolidated financial position

Audited 30 Jun 2004

$000

Audited 30 Jun 2005

$000

Audited 30 Jun 2006

$000

Reviewed31 Dec 2006

$000 Cash assets 8,580 2,980 630 1,801 Receivables 39,962 57,629 59,861 70,954 Inventories 354 471 136 385 Other 5,133 - 2,990 - Total current assets 54,029 61,080 63,617 73,140 Receivables 6,400 49 49 - Available for sale financial assets - - 1,000 1,000 Property, plant and equipment 27,196 34,230 9,176 10,610 Deferred tax assets 2,849 4,854 3,982 4,504 Intangible assets 21,676 26,153 27,438 30,740 Other 195 2 - - Total non-current assets 58,316 65,288 41,645 46,854 TOTAL ASSETS 112,345 126,368 105,262 119,994 Payables 27,490 30,603 31,777 37,047 Interest-bearing liabilities 13,049 20,486 21,243 24,127 Current tax liabilities 1,014 1,896 - 1,638 Provisions 1,415 1,640 1,350 1,222 Total current liabilities 42,968 54,625 54,370 64,034 Interest-bearing liabilities 5,511 12,005 - 3,706 Deferred income tax liability 2,688 3,470 3,461 2,127 Provisions 6,821 3,014 3,081 3,395 Total non-current liabilities 15,020 18,489 6,542 9,228 TOTAL LIABILITIES 57,988 73,114 60,912 73,262 NET ASSETS 54,357 53,254 44,350 46,732 Number of shares on issue – 000s 70,222 70,472 70,472 70,472 Net assets per share - $ 0.77 0.76 0.63 0.66 Net tangible assets per share1 - $ 0.47 0.38 0.24 0.23 Gearing2 - times 0.18 0.55 0.46 0.56 Total tangible assets3/Total liabilities - times 1.6 1.4 1.3 1.2 Notes1 Net tangible assets is net assets less goodwill, brandnames and manning contract 2 Gearing is net borrowings divided by net assets. 3 Total tangible assets are total assets less goodwill, brand names and manning contract

Source: Integrated 2004, 2005 and 2006 annual reports and independently reviewed accounts for the 6 months ended 31 December 2006


27

We make the following observations in relation to Integrated’s historical financial position.

The historical financial position as at 30 June 2005 and 2006 and 31 December 2006 reflect the impact of AIFRS. The financial position as at 30 June 2004 was not restated to reflect AIFRS.

The error in the calculation of fees associated with workers compensation premium provisions discussed previously had the effect of understating total consolidated liabilities by $1.96 million as at 30 June 2005 and $1.41 million as at 30 June 2006. The financial position as at 30 June 2005 was corrected in Integrated’s 2006 financial statements as summarised above. As the financial position as at 30 June 2004 was not restated, we have adjusted the financial position as at 30 June 2004 to reflect an increase in provisions to ensure consistency of presentation for comparison purposes.

Included in receivables as at 30 June 2006 and 31 December 2006 is $1.5 million in respect of a convertible note (the Note) issued to Today Corp Pty Ltd (Today), the purchaser of the Integrated’s previous Training business. The note is due for repayment on 1 May 2007. The Note carries interest at a rate of 15 percent per annum, however Today has absolute discretion as to whether to repay the Note and accrued interest on or before 1 May 2007. In the event the Note is not repaid on or before 1 May 2007, the Note automatically converts into 777,202 “C” class shares in Today, at an issue price of $1.93 per “C” class share. “C” class shares in Today entitle the holder to participate equally with other classes of shares in any dividends paid by Today and also in the event of a winding up of Today but do not confer on the holder any right to vote at a meeting of Today members.

Available for sale financial assets as at 30 June 2006 and 31 December 2006 comprised 438,596 fully paid “C” class shares in Today, which were issued to Integrated at an effective issue price of $2.28 per share in part consideration for the sale of the Training business to Today.

The reduction in property plant and equipment in the year ended 30 June 2006 reflected principally the sale by Integrated of its offshore fleet of vessels to MMA.

Intangibles comprised principally goodwill arising upon business acquisitions

Interest bearing liabilities comprised principally a bank overdraft, which is secured by registered mortgage debentures over the assets of Integrated, Total Marine Services Pty Ltd and Integrated Maintenance Services Pty Ltd, a debtor finance facility and a guarantee and indemnity from Integrated.


28

6.5 Summary of cash flow statements Integrated’s audited consolidated cash flows for each of the three financial years ended 30 June 2006 and independently reviewed consolidated cash flows the six months ended 31 December 2006 are summarised below.

Table 4: Summary of Integrated’s Cash Flows Statements


$000

Audited Year ended30 Jun 2005

$000


$000

ReviewedSix months to31 Dec 2006

$000 Cash flows from operating activities Receipts from customers 347,358 383,958 485,930 246,492Payments to suppliers and employees (327,255) (372,111) (476,480) (240,921) Other income 89 1,178 915 698 Interest received 77 173 144 50 Income tax paid (8,613) (5,000) (4,596) (473) Interest paid (636) (1,904) (2,977) (941) Net cash inflow from operating activities 11,020 6,294 2,936 4,905 Cash flows from investing activities Payments for property, plant and equipment (2,644) (13,529) (3,049) (1,586) Payments on issue of convertible note - - (1,500) - Proceeds from sale of property, plant and equipment 48 103 12,342 145 Net cash outflow on acquisition of subsidiaries (2,003) (4,939) (4,268) (4,679) Repayment of loans to associates and related entities 1,684 - - -Proceeds from the sale of listed securities 58 - - -Net cash inflow (outflow) from investing activities (2,857) (18,365) 3,525 (6,120) Cash flows from financing activities Proceeds from exercise of options 1,130 287 - - Proceeds from borrowing 1,050 12,418 3,500 5,432 Repayment of loans by related parties - - 547 (122) Repayments of borrowing (6,441) (8,733) (5,443) - Dividends paid to shareholders (6,295) (7,748) (7,752) (4,228) Dividends paid to the minority interests in subsidiaries - - (2,418) -Payments of capital raising costs (1) - - - Repayment of loans to employees 20 - - -


29


$000

Audited Year ended30 Jun 2005

$000


$000

ReviewedSix months to31 Dec 2006

$000 Net cash (outflow) from financing activities (10,537) (3,776) (11,566) 1,082 Net (decrease) in cash held (2,374) (15,847) (5,105) (133) Cash and cash equivalents1 at the beginning of the year 2,770 396 (15,451) (20,556) Effects of exchange rate changes on cash - - - 150 Cash and cash equivalents1 at the end of the period 396 (15,451) (20,556) (20,539) Note1 Cash and cash equivalents comprise the net of cash and Integrated’s bank overdraft facility

Source: Integrated 2004, 2005 and 2006 annual reports and independently reviewed accounts for the 6 months ended 31 December 2006

Integrated recorded a significant reduction in its net cash position over the 3 ½ year period to 31 December 2006, principally as a result of:

a net cash outflow of approximately $16.0 million on the acquisition of various subsidiaries, including the previous training business and the remaining 50 percent of Integrated Maintenance Services Pty Ltd

the fall in the level of net cash inflows from operating activities, principally as a result of the poor trading results of Integrated’s previous training business and a softening in the market for Integrated marine services

the Company’s decision to maintain historical levels of dividend payments notwithstanding falling levels of profitability

a net investment in property, plant and equipment of $8.2 million.

This was partially offset by net cash proceeds from, inter alia, the sale Integrated’s offshore fleet of vessels to MMA.

Reflecting the nature of its restructured business Integrated now has relatively low capital expenditure requirements, with capital costs in recent times largely relating to funding the acquisition of capital equipment associated with bolt on business operations.

6.6 Hedging arrangements We are advised that the Company does not currently have any open hedging contracts, however forward exchange contracts have been utilised in the past.


30

6.7 TaxationIntegrated has advised KPMG that there are currently no unused tax losses available to it.

For the purposes of income taxation, the Company and its wholly owned Australian subsidiaries have formed a consolidated tax group as of 1 July 2002. Tax funding agreements have been entered into by the entities in the tax consolidated group for the financial year ending 30 June 2007. No tax sharing agreements have been entered into by the entities in the tax consolidated group.

6.8 Franking credits As at 30 June 2006, Integrated had approximately $13.5 million in franking credits available for subsequent years based on a tax rate of 30 percent. The consolidated amount included franking credits that would be available to the parent entity if distributable profits of subsidiaries were paid as dividends.

Integrated noted in its 30 June 2006 financial statements that, based on the dividend declared in respect of the year ended 30 June 2006, the balance of the franking account would be reduced by $1.8 million.

6.9 Contingent liabilities Integrated has provided a schedule detailing known contingent liabilities as at 31 December 2006, which totalled approximately $0.4 million. These contingent liabilities related principally to potential WorkCover and insurance excess claims.

Integrated has also received a claim from a statutory authority in relation to shortfalls in prior year premiums, including claims for interest and late payment penalties. Integrated considers it has strong grounds to overturn this portion of the claim and therefore has not raised any provision in relation to this.

In addition, the purchase agreement entered into to acquire Wendell requires the payment of an Earn out Component (EOC) to the vendors at the end of a three-year period to 31 March 2009. The EOC is to be based on the average EBIT over the three-year period and is not to exceed NZ$1.7 million. Integrated has determined that as at 31 December 2006, there is insufficient information to determine the probability of the EOC being paid. The EOC has therefore not been booked as a liability.

6.10 Share capital and ownership Integrated currently has on issue 70,471,758 ordinary fully paid shares, which are quoted on ASX. Integrated’s top 10 shareholders as at 28 February 2007 are set out below.


31

Table 5: Integrated’s top 10 shareholders

Number of shares held

000s

% of issued capital

Mr Jonathan Whittle & Mrs Linda Whittle 6,513 9.2 Citicorp Nominees Pty Ltd – Colonial First State Developing Companies 5,589 7.9 RBC Dexia Investor Services Australia – Goldman Sachs JB Were Asset Management 5,259 7.5 National Nominees Ltd 5,109 7.2 JP Morgan Nominees Australia Ltd 5,077 7.2 HSBC Custody Nominees (Australia) Limited 3,395 4.8 Mr Dean Clark 2,842 4.0 ANZ Nominees Limited – Cash Income 2,419 3.4 Zacharry Pty Ltd 2,291 3.2 RBC Dexia Investor Services Australia – MLCI Account 2,255 3.2 40,749 57.6 Other shareholders 29,723 42.4 70,472 100.0

Source: Integrated share registry as at 28 February 2007

Mr Jonathan Whittle is the founder and the former Managing Director of Integrated. Mr Whittle is currently a non-executive director of the Company. Mr Whittle’s shareholding can be considered to be a strategic holding and therefore unlikely to form part of the free-float of the Company. A substantial shareholder notice lodged with the Company indicates Mr Whittle has a total beneficial interest in 7.056 million Integrated shares, which represents approximately 10.0% of the Company’s issued capital.

Substantial shareholder notices have been received by the Company from the parties set out below.

Table 6: Substantial shareholders


000s

% of issued capital

Mr Jonathan Whittle and Mrs Linda Whittle 7,056 10.0 INVESCO Australia Limited 6,876 9.8 Goldman Sachs JB Were Holdings Pty Ltd 6,300 8.9 Commonwealth Bank of Australia Limited 5,661 8.0 Westpac Banking Corporation 3,541 5.0 29,434 41.7

Source: Substantial shareholder notices lodged with ASX


32

6.11 Share price history The chart below depicts Integrated’s daily closing share price since 1 July 2005 and the volume of shares traded expressed as a percentage of issued capital.

Figure 5: Integrated share price and volume trading history

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Jul-0

5

Aug

-05

Sep-

05

Oct

-05

Nov

-05

Dec

-05

Jan-

06

Feb-

06

Mar

-06

Apr

-06

May

-06

Jun-

06

Jul-0

6

Aug

-06

Sep-

06

Oct

-06

Nov

-06

Dec

-06

Jan-

07

Feb-

07

Mar

-07

Shar

e pr

ice

(A$)

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

Daily volum

e traded as a percentage of free-float

volume trade iwf au equity

Source: Bloomberg

Integrated’s share price exhibited an overall positive, albeit volatile, trend over the period between 1 July 2005 to the last trading day prior to the announcement of the Scheme, closing between a low of $1.33 on 20 February 2006 and a high of $2.30 on 28 September 2006. Integrated’s shares generally exhibited only modest liquidity over this period.

Integrated’s closing share price increased significantly in the month prior to the announcement of the Scheme, increasing from $1.90 on 12 January 2007 to $2.29 on 8 February 2007. Integrated’s shares closed at $2.26 on the last trading day prior to the announcement of the Scheme. Since that time, Integrated’s shares have closed between $2.53 and $2.62. The closing price of an Integrated share on the trading day prior to the date of this report was $2.60.

Significant announcements made by Integrated since 30 June 2006 that may have impacted its share price include:

31

Table 5: Integrated’s top 10 shareholders


000s

% of issued capital

Mr Jonathan Whittle & Mrs Linda Whittle 6,513 9.2 Citicorp Nominees Pty Ltd – Colonial First State Developing Companies 5,589 7.9 RBC Dexia Investor Services Australia – Goldman Sachs JB Were Asset Management 5,259 7.5 National Nominees Ltd 5,109 7.2 JP Morgan Nominees Australia Ltd 5,077 7.2 HSBC Custody Nominees (Australia) Limited 3,395 4.8 Mr Dean Clark 2,842 4.0 ANZ Nominees Limited – Cash Income 2,419 3.4 Zacharry Pty Ltd 2,291 3.2 RBC Dexia Investor Services Australia – MLCI Account 2,255 3.2 40,749 57.6 Other shareholders 29,723 42.4 70,472 100.0

Source: Integrated share registry as at 28 February 2007

Mr Jonathan Whittle is the founder and the former Managing Director of Integrated. Mr Whittle is currently a non-executive director of the Company. Mr Whittle’s shareholding can be considered to be a strategic holding and therefore unlikely to form part of the free-float of the Company. A substantial shareholder notice lodged with the Company indicates Mr Whittle has a total beneficial interest in 7.056 million Integrated shares, which represents approximately 10.0% of the Company’s issued capital.

Substantial shareholder notices have been received by the Company from the parties set out below.



000s

% of issued capital

Mr Jonathan Whittle and Mrs Linda Whittle 7,056 10.0 INVESCO Australia Limited 6,876 9.8 Goldman Sachs JB Were Holdings Pty Ltd 6,300 8.9 Commonwealth Bank of Australia Limited 5,661 8.0 Westpac Banking Corporation 3,541 5.0 29,434 41.7

Source: Substantial shareholder notices lodged with ASX


33

27 February 2007 – Integrated released its results and results briefing for the six months ended 31 December 2006.

12 February 2007 – Integrated Group announced agreement with Programmed to merge by way of the Scheme.

24 November 2006 – Integrated’s Chief Executive Officer (CEO), Mr Chris Sutherland, addressed the Annual General Meeting (AGM), discussing the MMA alliance, the opening of various new Workforce Services offices in regional Australia and other expansion plans for Western Australia and Queensland.

28 September 2006 – Integrated released its annual report. NPAT for the year to 30 June 2006 was $3.0 million, less than half of the profit of $7.6 million in the previous year.

14 September 2006 – Integrated announced continued expansion in its oil and gas services through the acquisition of Wendell for $5.6 million, plus an earn out, complementing Integrated’s existing Marine Services business.

25 August 2006 – Integrated released its preliminary final report, which reported increased revenues, but sharply lower net profit after tax as a result of a $9.7 million loss from the discontinued operations of the Training business.

6.12 Liquidity History An analysis of the volume of trading in Integrated’s shares in the 12-month period to the last trading day prior to the announcement of the Scheme on 12 February 2007 is set out below.

Table 7: Trading liquidity in Integrated shares pre-announcement


9 February 2007

Closing share price

(high) $

Closing share price

(low) $

VWAP

$

Cumulative volume

000s

As a % of issuedcapital

1 day 2.26 2.26 2.28 64 0.1 1 week 2.29 2.21 2.25 556 0.8 1 month 2.29 1.90 2.11 3,416 4.9 3 months 2.29 1.87 1.99 10,128 14.4 6 months 2.30 1.87 2.07 19,076 27.1 12 months 2.30 1.33 1.89 44,265 62.8

Source: Bloomberg

Integrated shares have exhibited only modest liquidity in recent times with only 27 percent of shares on issue being traded over the 6 months prior the announcement of the Scheme. We note, however, that the shareholding of Mr & Mrs Jonathan Whittle can be considered to be a strategic rather than traded holding. In the event these shares are excluded, Integrated’s percentage of “free-float” traded in the past six months increases to approximately 30 percent.


34

An analysis of the volume of trading in Integrated’s shares in the period from 12 February 2007 (inclusive) to the day prior to the date of this report is set out below.

Table 8: Trading liquidity in Integrated’s shares post announcement

Period from 12 February 2007 to

9 March 2007

Closing share price

(high) $

Closing share price

(low) $

VWAP

$

Cumulative volume

000s

As a % of free float

20 trading days 2.62 2.53 2.59 6,552 9.30

Source: Bloomberg

6.13 OptionsThe Company currently does not have on issue any options over unissued shares.

6.14 Performance rights Performance rights are granted under the rules of the Integrated Group Limited Senior Executive Incentivised Performance Plan (IGLSEIP) that was approved by shareholders at the 2003 AGM and the Long Term Incentive Plan (LTIP).

IGLSEIP

Employees eligible to participate in the IGLSEIP must hold a senior position within the group and must be invited to participate by the Board.

Performance rights are granted under the IGLSEIP for no consideration and assuming certain conditions are met, the Integrated Board is able, at its absolute discretion, to issue an invitation to an eligible employee which, upon acceptance by the employee and payment of any exercise price nominated by the Board, will result in the relevant performance rights being converted into Integrated shares. When exercised each performance right is convertible into one ordinary share.

Performance rights granted under the plans carry no dividend or voting rights and the Performance Plan rules make it clear that, unless and until an invitation is issued, no binding legal relations or rights are created. No formal invitations have yet been issued, however the Directors have advised us that the exercise price for the conversion of any performance rights to new Integrated shares will be set at $nil.

The Performance Plan rules provide that, upon a change of control, the Integrated Board may determine the manner in which the Performance Plan rules are to be varied or otherwise dealt with to ensure that the Performance Plan applies in a consistent manner, including by arranging for any new holding company to adopt a policy statement along similar lines.

It is currently proposed that Programmed will put in place a substitute long term incentive arrangement for all current participants in the Performance Plan delivering to them similar opportunities and benefits as are currently available to them under the Performance Plan.


35

As at the date of this report, Integrated has issued eligibility notices (but not invitations) in respect of approximately 0.59 million performance rights under the IGLSEIP.

LTIP

The LTIP was established to enable Mr Chris Sutherland, Integrated’s CEO and Managing Director, to participate in a long term incentive plan and provides, subject to the satisfaction of certain performance and other conditions, for the issue of up to a maximum of 2.0 million Integrated shares at no cost to Mr Sutherland.

The LTIP rules provide the Integrated Board with discretion in the event of a change of control to ensure the equity and integrity of the operation of the long term incentive arrangements. As a result, Integrated and Programmed have agreed that if the Scheme is approved by Integrated shareholders, the Managing Director will be issued with 1.904 million Integrated Shares pursuant to these incentive arrangements.

These shares would be issued after the date of the Scheme meeting (so would not be voted by Mr Sutherland at that meeting) but before the record date for the Scheme. The effect of this is that Mr Sutherland will receive the same consideration under the Scheme as other Integrated shareholders less the Integrated interim dividend (in respect of each of these newly issued Integrated shares).

7 Profile of Programmed

7.1 Corporate background Programmed was founded in 1951 as a commercial painting contractor and incorporated in New South Wales on 8 January 1992 as HPMS Pty Limited. The company changed its name to Programmed Maintenance Services Pty Ltd on 25 March 1992 before changing its status to a public company and adopting its current name on 6 September 1999. Programmed was admitted to the Official List of ASX on 1 October 1999.

Since foundation, the company has grown steadily after developing a unique financial strategy that gave customers the opportunity to evenly spread the cost of painting and subsequent painting maintenance over a period of typically six years. Programmed provides a range of property maintenance services to commercial, industrial and institutional property owners, offering long term contract services, including contract painting, building, grounds, corporate imaging and industrial maintenance and engineering services.

Today, Programmed is one of Australia’s major national maintenance companies and now services more than 60,000 premises, including schools, factories, resorts, goldmines and wineries. Programmed has also expanded its operations to New Zealand and the UK and employs over 2,500 staff and tradespeople. Programmed has 68 branches throughout Australia, 19 branches in New Zealand and 9 branches in the UK.

Programmed’s operations are currently split into seven principal service offerings – Painting Services, Building Services, Grounds Services, Corporate Imaging, Industrial Services, Infraserv and Tungsten.


36

Painting Services - Australia

Programmed operates the largest contract painting business in Australia. Programmed provides multiple painting services including long term maintenance programmes, emergency work, surface preparation (e.g. chemical cleaning and sand blasting), anti-graffiti, condition surveys and sign writing. Programmed’s industry coverage for painting services includes schools, hospitals, retail, recreational, manufacturing, mining and government sectors.

Programmed’s painting services are focussed on non-residential maintenance painting and are not provided to the construction industry.

Programmed’s Australian Painting Services division contributed approximately 30 percent of Programmed’s revenue in the six months ended 30 September 2006, as compared to approximately 41 percent for the 12 months ended 31 March 2006.

Building Services

Building Services provides total property maintenance solutions through consulting and contracting services to property owners who have simple or complex asset maintenance requirements. Programmed’s range of services is focused around three core property maintenance needs:

preventative maintenance, such as plumbing, electrical, carpentry, roofing and painting requirements

refurbishment, including capital upgrade, design and specification

responsive maintenance, including a 24 hour - seven day a week help desk and insurance and emergency repairs.

The Building Services division contributed approximately 13 percent of Programmed’s revenue in the six months ended 30 September 2006, consistent with the 12 months ended 31 March 2006.

Grounds Services

Grounds Services develops and maintains gardens and grounds using qualified staff and the latest mechanical equipment. Programmed’s range of services include:

regular and scheduled gardens and grounds maintenance

full design and landscaping capabilities

effective fertilisation and weed control through qualified licensed applicators

design and installation of water efficient irrigation systems

plant, tree and refuse removal


37

horticultural management planning and implementation.

The Grounds Services division contributed approximately 9 percent of Programmed’s revenue in the six months ended 30 September 2006, up marginally from the 8 percent for the 12 months ended 31 March 2006.

Corporate Imaging

Corporate Imaging provides multi-site customers with consistent brand imaging across their retail network by managing the design, supply and installation of signage for multi site re-imaging projects. Programmed’s range of services includes:

total project management of corporate imaging programmes

development of corporate identification manuals

site specific re-image artwork

web based image management

management of regulatory approvals

national installation and service teams.

The revenue of the Corporate Imaging division is incorporated in the revenue from the Australian painting services division.

Industrial Services

The Industrial Services division trades as Barry Bros. Specialised Services (Barry Bros), with the operations being focused across Victoria, New South Wales and Queensland. Barry Bros offer a complete range of industrial cleaning services which include sewerage and drainage maintenance, drain maintenance and management systems, automated high pressure cleaning, closed circuit television, non destructive digging, high pressure cleaning, vacuum loading and hydro demolition.

The Industrial Services division contributed approximately 10 percent of Programmed’s revenue in the six months ended 30 September 2006, consistent with the 12 months ended 31 March 2006.

Infraserv

The Infraserv division was created in July 2004 following the acquisition of four infrastructure services contracts from Serco Services Australia Pty Ltd (Serco), with an additional contract being purchased in September 2004. Infraserv provides government and industrial customers with a wide variety of facilities management and maintenance services, such as catering, cleaning, grounds, air conditioning, light earth moving and waste removal.


38

The Infraserv division contributed approximately 6 percent of Programmed’s revenue in the six months ended 30 September 2006, up marginally from the 5 percent for the 12 months ended 31 March 2006.

Tungsten

The Tungsten division provides a comprehensive range of business support and operations management services in the fields of asset and facilities management. The Tungsten business was acquired in October 2005. Tungsten has focussed on a strategy of creating facilities management opportunities from its traditional consultancy base. Historically, consultancy revenue contributed approximately 80 percent of Tungsten’s total revenue, however the revenue mix has changed over the past few years such that 80 percent of revenue is now derived from facilities management and 20 percent from consultancy.

In October 2006, Programmed announced the intention to merge Infraserv and Tungsten into a single business entity, with the intention of completing the restructure by 1 April 2007. The new business entity will be entitled “Tungsten” and the restructure is currently being finalised

The Tungsten division contributed approximately 12 percent of Programmed’s revenue in the six months ended 30 September 2006, as compared to approximately 2 percent for the 12 months ended 31 March 2006.

New Zealand and UK operations

Programmed operates the largest contract painting business in New Zealand, with a growing contract painting business in the UK. The Building Services business in New Zealand has continued to develop its refurbishment and maintenance services, specialising in the refurbishment of classrooms for schools.

The New Zealand and UK businesses contributed approximately 10 percent each to Programmed’s revenue in the six months ended 30 September 2006, as compared to approximately 13 percent and 8 percent respectively for the 12 months ended 31 March 2006.

7.2 Corporate structure Programmed has five subsidiaries incorporated in Australia, two subsidiaries incorporated in NZ and one subsidiary incorporated in the UK. Each of these subsidiaries is held 100 percent by Programmed.


39

Figure 6 - Programmed corporate structure

Programmed Maintenance

Services Limited

Australia


Services Pty Ltd

Australia


Services (NZ) Ltd.

NZ

PMS Share Schemes

Administration Pty Ltd

Australia


Australia


Services (UK) Ltd

UK

Tungsten Group Pty Ltd

Australia

Your Force Pty Ltd

Australia

Tungsten Group New Zealand Pty

Ltd

NZ


Services Limited

Australia


Services Pty Ltd

Australia


Services (NZ) Ltd.

NZ

PMS Share Schemes

Administration Pty Ltd

Australia


Australia


Services (UK) Ltd

UK

Tungsten Group Pty Ltd

Australia

Your Force Pty Ltd

Australia

Tungsten Group New Zealand Pty

Ltd

NZ

Source: Programmed Annual Report 2006

7.3 Financial performance Programmed’s historical audited consolidated financial results for each of the three years ended 31 March 2006 and its forecast results for the year ending 31 March 2007 are summarised below.

Table 9: Summary of Programmed’s historical consolidated financial performance

Audited Year ended 31 Mar 2004

$000


$000


$000

Forecast Year ending 31 Mar 2007

$000 Revenue Revenue from operations1,2 205,766 231,878 283,234 Other revenue1,2 - 410 251 Changes in inventories and WIP1 (128) 496 494 Total Revenue 205,638 232,784 283,979 330,664 Operating expenses (172,258) (194,750) (240,808) (280,471) EBITDA 33,380 38,034 43,171 50,193 Depreciation and amortisation (6,789) (7,965) (9,306) (11,739) EBIT 26,591 30,069 33,865 38,454 Net financing expense (2,566) (3,271) (4,138) (5,860) Operating profit before income tax 24,025 26,798 29,727 32,594


40


$000


$000


$000

Forecast Year ending 31 Mar 2007

$000 Income tax expense (7,734) (8,543) (9,556) (10,298) Operating profit after income tax 16,291 18,255 20,171 22,296 Decrease in foreign currency translation reserve (1,248) - - - Profit attributable to members 15,043 18,255 20,171 22,296 Total revenue growth - % 11.1% 13.2% 22.0% 16.4% EBITDA margin - % 16.2% 16.3% 15.2% 15.2% EBIT margin- % 12.9% 12.9% 11.9% 11.6% NPAT margin - % 7.3% 7.8% 7.1% 6.7% Interest cover – times 13.0 11.6 10.4 8.6 Diluted earnings per share1 – cents 23.9 26.3 28.4 Dividend per share1 – cents 12.0 15.0 17.0 Dividend payout ratio1 - % 50.2% 57.0% 59.9% Dividend yield1 - % 4.6% 4.7% 4.7% Amount of dividend franked1 50% 60-80% 100% Note1 Details for the forecast year enduing 31 March 2007 not available 2 Excludes interest revenue

Source: Programmed 2004, 2005 and 2006 annual reports, Programmed forecasts for the year ended 31 March 2007 and KPMG analysis

Observations in relation to Programmed’s historical and forecast financial performance are set out below:

Year ended 31 March 2004

Revenue for the year ended 31 March 2004 exceeded $200 million for the first time. Programmed achieved an increase in revenue across all business units, with Building Services performing particularly strongly achieving 38 percent growth in revenue.

The Industrial Services division achieved record growth due to business restructuring and a switch from largely reactive one-off contracts to an emphasis on planned activities that maximise equipment utilisation.

The UK business succeeded in having Programmed’s unique long term contract model accepted in the marketplace, with 140 maintenance contracts in place. The UK operations achieved revenue growth of 3.8 percent however EBIT declined approximately 77 percent primarily due to operating losses incurred at the Manchester branch.


41

Throughout the year, Programmed focussed on diversifying its range of services and developing the businesses that are good cash generators, to balance cash needs required to grow the UK business.


Programmed adopted AIFRS for the first time in respect of the year ended 31 March 2006. The comparatives for the 12 months ended 31 March 2005 have been restated by Programmed accordingly.

Programmed achieved record after tax profit of $18.3 million, up 12.1 percent from the year to 31 March 2004. The year ended 31 March 2005 marked Programmed’s seventh consecutive year of double digit growth in revenue and profit.

During the year ended 31 March 2005, Programmed established the Infraserv business by acquiring five contracts from Serco. As such, the results for the year ended 31 March 2005 do not include the benefit of the full year’s trading by this business unit.

Programmed continued strong growth in both the New Zealand and UK operations, with revenue contributions from the two divisions increasing to 14 percent and nine percent respectively.

Programmed increased its revenue diversification, with 58 percent of revenue derived from businesses other than the Australian painting business.

The increase in diversification resulted in an improvement in Programmed’s operational cash flow which subsequently led to an increase in income tax expense thereby improving Programmed’s ability to pay franked dividends. The franking percentage increased from 50 percent in 2004, to 60 percent and 80 percent for the interim and final dividends for 2005 respectively.


Programmed achieved revenue growth of 22.1 percent, to $283 million in the year ended 31 March 2006. Programmed attributed this strong growth to the continued strategic progression of the business, through the simultaneous expansion of both the range of services and its geographic coverage.

Programmed achieved record after tax profit of $20.2 million, up 10.5 percent from the year to 31 March 2005. The year ended 31 March 2006 also marked Programmed’s eighth consecutive year of double digit growth in revenue and profit.

Dividends increased to 17 cents per share fully franked for the year, up from 15 cents per share franked to approximately 70 percent.

EBITDA and EBIT margins decreased in the year ended 31 March 2006. Programmed attributed this to the growth in lower margin non-painting services and associated investment in additional resources to accelerate growth in new services.


42

The Tungsten business was acquired in October 2005 and made a minor contribution to second half earnings after absorbing integration costs and office rationalisation.

Year ending 31 March 2007

Programmed has requested that KPMG limit the disclosure of financial information relating to Programmed’s budgeted operations and financial performance. This request has been made on the basis of the commercially sensitive nature of the operational and financial information for the various business units comprising Programmed’s operations. However, in broad terms, the key factors underpinning the projections for the year ending 31 March 2007 are set out below.

The projections for the year ending 31 March 2007 were made using the actual results for the ten months to 31 January 2007 as a base. The anticipated work volume and expected revenues for the two months of February and March 2007 were projected by the financial teams in each business unit.

The Australian property maintenance division is projecting strong earnings growth led by the painting division.

The Industrial Services division continues to be impacted by drought conditions leading to lower utilisation of equipment.

The results of the New Zealand division have been adversely impacted by poor weather over the period as well as movements in the AUD:NZD exchange rate

Given the distinct seasonality of the UK operations, the vast majority of earnings are made in the first half of the year. As such, forecasts for the year to 31 March 2007 are not expected to increase significantly from the first half results.

Summary of divisional historical performance

The revenue and EBITDA contributions of the Property Maintenance Services division and the Industrial Services division are set out below. The Property Maintenance Services division comprises the Australian Painting business, Grounds Services, Building Services, Infraserv, Tungsten as well as the contributions from the New Zealand and UK property maintenance businesses. The Industrial Services division comprises the operations of the Barry Bros business.


43

Figure 7: Property Maintenance Revenue Figure 8: Property Maintenance EBITDA

050,000

100,000150,000200,000250,000300,000350,000

2002 2003 2004 2005 2006 2007

$ m

illio

n

0%

5%

10%

15%

20%

25%

Reve

nue

grow

thRevenue Revenue growth

0

10,000

20,000

30,000

40,000

50,000

2002 2003 2004 2005 2006 2007

$ m

illio

n

0%

5%

10%

15%

20%

EBIT

DA

mar

gin


Source: Programmed Management

Figure 9: Industrial Services Revenue Figure 10: Industrial Services EBITDA

05,000

10,00015,00020,00025,00030,00035,00040,000

2002 2003 2004 2005 2006 2007

$ m

illio

n

0%5%10%15%20%25%30%35%40%

Reve

nue

grow

th


01,0002,0003,0004,0005,0006,0007,0008,000

2002 2003 2004 2005 2006 2007

$ m

illio

n

-20%-10%0%10%20%30%40%50%

EBIT

DA

mar

gin



7.4 Financial position Programmed’s historical audited consolidated net assets as at each of 31 March 2004, 2005, 2006 and independently reviewed consolidated net assets as at 30 September 2006 are summarised below.


44

Table 10: Summary of Programmed’s historical consolidated financial position


$000


$000


$000

Reviewed6 months to 30 Sept 2006

$000 Cash assets 2,059 2,209 6,527 8,986 Receivables 96,754 109,303 131,313 126,692 Inventories 12,978 15,449 18,534 18,208 Current tax assets 245 - 459 - Other 3,794 3,107 3,903 4,556 Total current assets 115,830 130,068 160,736 158,442 Receivables 73,535 83,589 90,417 93,506 Inventories 7,300 7,782 7,681 8,306 Other financial assets 282 - - - Property, plant and equipment 20,802 25,924 32,945 41,496 Deferred tax assets 3,305 4,231 5,666 4,859 Goodwill 2,335 2,335 9,378 9,421 Other intangible assets - 2,762 2,297 2,113 Total non-current assets 107,559 126,623 148,384 159,701 TOTAL ASSETS 223,389 256,691 309,120 318,143 Payables 23,362 27,640 35,970 34,094 Interest-bearing liabilities 5,531 6,159 11,810 15,040 Current tax liabilities 2,845 2,546 2,363 1,846 Provisions 5,630 7,125 10,473 9,304 Total current liabilities 37,368 43,470 60,616 60,284 Interest-bearing liabilities 38,266 43,297 69,074 76,630 Deferred income tax liability 44,344 48,548 51,145 50,949 Provisions 804 2,854 2,241 2,480 Total non-current liabilities 83,414 94,699 122,460 130,059 TOTAL LIABILITIES 120,782 138,169 183,076 190,343 NET ASSETS 102,607 118,522 126,044 127,800 Number of shares on issue – 000s 68,800 70,806 71,160 71,160 Net assets per share - $ 1.49 1.67 1.77 1.80 Net tangible assets per share - $1 1.46 1.60 1.61 1.63 Gearing - times 0.41 0.40 0.59 0.65 Total liabilities/total tangible assets - %2 55% 55% 62% 62% Notes1 Net tangible assets is net assets less goodwill and tradenames 2 Total tangible assets is total assets less goodwill and tradenames

Source: Programmed 2004, 2005 and 2006 annual reports and independently reviewed accounts for the 6 months ended 30 September 2006


45

We make the following observations in relation to Programmed’s historical financial position.

The historical financial position as at 31 March 2005, 2006 and 30 September 2006 reflect the impact of AIFRS. The financial position as at 31 March 2004 was not restated by Programmed to reflect AIFRS.

Programmed’s receivables balance represents a significant proportion of net assets due to the high level of receivables from Programmed’s contract painting services. Programmed’s unique financial strategy that allows customers to evenly spread the cost of painting and subsequent maintenance over a period typically of six years results in a mismatch between revenue recognition and cash received. Whilst approximately 70 percent of workflow, and therefore revenue recognition, occurs in the first year, only a small portion of this is invoiced resulting in a substantial receivables balance being accumulated. This timing difference is reversed in the final years of each contract.

Programmed records a large provision for deferred tax due to the timing of tax incurred on contract painting revenue. Given that tax is paid on a cash rather than accrual basis for painting programmes, the mismatch between revenue recognition and cash received, as discussed above, results in a large provision for deferred tax being recorded.

The goodwill balance as at 31 March 2006 of $9.4 million has been allocated to the UK and Tungsten cash-generating units in the amounts $2.4 million and $7.0 million respectively.

Other intangible assets of $2.3 million comprises $2.2 million in long term contracts and $0.1 million in development software.

The balance of current provisions as at 31 March 2006 included an amount of $1.7 million in relation to anticipated legal settlement costs in respect of a legal dispute with a subcontractor. Subsequent to the financial year end, Programmed agreed, without admission of liability, to settle the legal dispute by making a payment of $1.7 million.

Total interest bearing liabilities of $80.9 million comprises $6.3 million in bank overdraft, $21.4 million in finance lease liability and $53.2 million in bank loans. The Westpac Banking Corporation holds a registered first party Equitable Mortgage over the assets of Programmed, Barry Bros and the New Zealand and UK subsidiaries as security for advances made and/or guarantees given by the Bank.


46

7.5 Summary of cash flow statements Programmed’s historical audited consolidated Statement of Cash Flows for each of the three financial years ended 31 March 2006 and historical independently reviewed cash flows for the six months ended 30 September 2006 are summarised below:

Table 11: Summary of Programmed’s Cash Flows Statements

Audited 31 Mar 2004

$000

Audited 31 Mar 2005

$000

Audited 31 Mar 2006

$000

Reviewed30 Sept 2006

$000 Cash flows from operating activities Receipts from customers 202,333 237,178 288,927 177,155 Payments to suppliers and employees (180,812) (215,581) (270,592) (158,715) Interest and other finance costs (2,668) (3,395) (4,283) (3,080) Income tax paid (2,996) (5,374) (7,641) (3,313) Net cash from operating activities 15,857 12,828 6,411 12,047 Cash flows from investing activities Interest received 102 124 145 117 Amount received from related parties 83 - - Payments for property, plant and equipment (PP&E) (3,616) (4,752) (4,588) (3,054) Proceeds from sale of PP&E 1,589 1,069 869 887 Payments for development software - (60) (108) (98) Payment for businesses - - (8,332) (40) Payment for acquisition of long term contracts - (2,080) - - Net cash (used in) investing activities (1,842) (5,699) (12,014) (2,188) Cash flows from financing activities Proceeds from share issues 1,472 2,552 979 93 Proceeds from borrowing - - 21,529 1,458 Repayments of borrowing (12,177) (2,747) (5,818) (3,309) Dividends paid (4,914) (6,458) (11,341) (6,760) Net cash provided by financing activities (15,619) (6,653) 5,349 (8,518) Net increase/(decrease) in cash held (1,604) 476 (254) 1,341 Cash at the beginning of the year 1,663 71 508 270 Exchange rate adjustments 12 (39) 16 (122) Cash at the end of the period 71 508 270 1,489

Source: Programmed 2004, 2005 and 2006 annual reports and independently reviewed accounts for the 6 months ended 30 September 2006


47

Observations in relation to Programmed’s cash flows are set out below:

During the year ended 31 March 2006, gross operating cash flow decreased by approximately 15 percent due to growth in new contracts, which result in a higher cash outflow in the early years of the contract. Net operating cash flow decreased by approximately 50 percent to $6.4 million over the same period.

Net operating cash flows were negatively impacted by larger income tax payments and higher interest charges. The increase in income tax payable was due to an increase in the proportion of “old” contracts which are cash flow positive, in conjunction with a shift in revenue mix towards non-painting services, where cash is received as jobs are completed.

Cash flow from investing activities was impacted by acquisitions occurring in the past two financial years. Payment for the acquisition of long term contracts incurred in the year ended 31 March 2005 relate to the acquisition of five long term contracts from Serco. Payment for businesses in the year ended 31 March 2006 related to the acquisition of the Tungsten business.

In the year ended 31 March 2005, Programmed’s strategy of diversifying its revenue base resulted in an improvement in cash flow and therefore their ability to pay franked dividends. As such, the franking percentage increased from 50 percent in 2004, to 60 percent and 80 percent for the interim and final dividends for 2005 respectively.

7.6 Hedging arrangements We are advised that Programmed does not currently have any open hedging contracts.

7.7 Tax losses With the purchase of Tungsten and its subsidiaries in October 2005, Programmed acquired approximately $0.93 million in tax losses. The Tungsten subsidiaries became part of the Programmed Australian tax consolidated group in October 2005. In the period to 31 March 2006, the Programmed Australian tax consolidated group utilised approximately $0.71 million of available tax losses. The remaining losses of approximately $0.22 million are expected to be utilised by the Programmed Australian tax consolidated group during the year ending 31 March 2007.

7.8 Contingent liabilities Whilst we have been advised by Programmed management that there are no material contingent liabilities outstanding, we note however that there is, at all times, a level of contingent liabilities arising from the business activities of the group.

To provide some customers with a level of comfort that the work performed has been professionally completed, Programmed either provides bank guarantees or the customers hold retentions for a period normally up to a year. In circumstances where the customer has issues with the quality of the work performed prior to paying the retention or letting the bank guarantee expire, Programmed will conduct any rectification required to meet the customers’ requirements, with Programmed bearing the cost of any


48

rectification. We have been advised that these costs are minor in relation to any contract with the customer, and are rarely incurred, however Programmed has a contingent liability to ensure that the customers’ requirements are met when the retention or bank guarantee becomes due.

Another class of contingent liabilities relates to litigation. Programmed regularly has a number of legal disputes on foot at any point in time; both in a capacity as plaintiff and defendant. Examples of such disputes include:

disputes with sub-contractors and/or landlords

recovering outstanding monies from debtors

claims by former employees

recovering monies due under insurance policies

In most cases, Programmed seeks to have commercial settlement without having the matters heard by a court or tribunal. Currently, all of the outstanding matters are immaterial and any costs incurred in resolving these disputes are expensed.

7.9 Share capital and ownership Programmed currently has on issue 71,195,705 ordinary fully paid shares, which are quoted on ASX. Programmed’s top 10 shareholders as at 9 March 2007 were:

Table 12: Programmed’s top 10 shareholders


000s

% of issued capital

National Nominees Limited 8,818 12.39% RBC Dexia Investor Services Aust (PI Pooled a/c) 4,150 5.83% JP Morgan Nominees Aust. Ltd. 3,907 5.49% HSBC Custody Nominees (Aust) Ltd 3,897 5.47% Citicorp Nominees 3,696 5.19% Citicorp Nominees (CFS Developing Companies Fund) 2,898 4.07% ANZ Nominees Limited (Cash Income A/c) 2,637 3.70% Citicorp Nominees (CFS Future Leaders Fund) 2,609 3.66% Westpac Custodian Nominees 2,337 3.28% Questor Financial Services (TPS RF a/c) 2,007 2.82% Total number of shares held by the top 10 shareholders 36,956 51.90% Other shareholders 34,240 48.10% Total number of shares on issue 71,196 100.00%



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Substantial shareholder notices have been received by Programmed from various parties as set out below.



000s

% of issued capital

Commonwealth Bank Group 6,558 9.21 Invesco Australia Investment Management Ltd 6,056 8.51 Perpetual Trustees Australia Limited 5,421 7.61 Westpac Banking Corporation 4,575 6.43 22,610 31.76

Source: Programmed management, announcements to ASX

7.10 Share price history The chart below depicts Programmed’s daily closing share price since 30 June 2005 and the volume of shares traded expressed as a percentage of issued capital.

Figure 11: Programmed share price and volume trading history

0.00

1.00

2.00

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(A$)

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4.50%

Daily volum


volume trade prg au equity

Source: Bloomberg


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The share price has exhibited an overall positive trend since June 2005. Programmed’s shares generally exhibited a modest level of liquidity over this period. Since the announcement of the Scheme, Programmed’s shares have closed between $5.08 on 6 March 2007 and $5.40 on 27 February 2007. The closing price of a Programmed share on the day prior to the date of this report was $5.15.

Programmed has made the following announcements since 30 June 2006 that may have had an impact on its share price:

12 February 2007 – Programmed announced agreement with Integrated Group to merge by a scheme of arrangement.

29 November 2006 – Programmed released its half year report and accounts. This showed a 22.3 percent increase in revenues to $156.3 million and an 8.2 percent increase in net profit after tax to $7.8 million for the period.

24 July 2006 – Programmed released its annual report, with net profit after tax up 10.5 percent to $20.2 million for the year.

7.11 Liquidity History An analysis of the volume of trading in Programmed’s shares in the 12-month period to the last trading day prior to the announcement of the Scheme on 12 February 2007 is set out below.

Table 14: Trading liquidity in Programmed shares pre-announcement


9 February 2007

Closing share price

(high) $

Closing share price

(low) $

VWAP

$

Cumulative volume

As a % of issuedcapital

1 week 5.14 5.00 5.08 2,337,330 3.28% 1 month 5.38 4.89 5.13 4,512,442 6.34% 3 months 5.38 4.55 5.02 8,484,681 11.92% 6 months 5.38 4.10 4.69 16,064,713 22.57% 12 months 5.38 3.49 4.17 36,158,731 50.82%

Source: Bloomberg

Programmed shares have exhibited only modest liquidity in recent times with approximately 23 percent of shares on issue being traded over the past six months before the announcement of the Scheme.

An analysis of the volume of trading in Programmed’s shares in the period from 12 February 2007 to the day prior to the date of this report is set out below.

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Substantial shareholder notices have been received by Programmed from various parties as set out below.



000s

% of issued capital

Commonwealth Bank Group 6,558 9.21 Invesco Australia Investment Management Ltd 6,056 8.51 Perpetual Trustees Australia Limited 5,421 7.61 Westpac Banking Corporation 4,575 6.43 22,610 31.76

Source: Programmed management, announcements to ASX

7.10 Share price history The chart below depicts Programmed’s daily closing share price since 30 June 2005 and the volume of shares traded expressed as a percentage of issued capital.

Figure 11: Programmed share price and volume trading history

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(A$)

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1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

Daily volum


volume trade prg au equity

Source: Bloomberg


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Table 15: Trading liquidity in Programmed’s shares post announcement

Period from 12 February 2007 to

9 March 2007

Closing share price

(high) $

Closing share price

(low) $

VWAP

$

Cumulative volume

000s

As a % of issued capital

20 trading days 5.40 5.08 5.30 3,288 4.62

Source: Bloomberg

7.12 OptionsProgrammed currently does not have any options over unissued shares on issue.

8 Impact of the Scheme The proposed acquisition of Integrated will potentially have a material impact on the business, assets, liabilities and earnings of the expanded Programmed. In particular, Integrated and Programmed expect the acquisition to, amongst other things:

enable faster penetration by Integrated’s workforce division of regional Australia and overseas markets through the use of Programmed’s existing infrastructure in these areas


provide access to new customers for each business through the ability to leverage each other’s existing customer relationships to generate additional revenue

deliver various operational cost savings through the economies of scale and the elimination of various duplicated financial and administrative functions

provide greater investor relevance through the creation of a much larger listed company.

8.1 Operating structure It is currently expected that Integrated’s business will be run as a separate division of Programmed and will be lead by Mr Chris Sutherland, Integrated’s current CEO. Programmed’s current Managing Director, Mr Max Findlay, will lead the expanded Programmed.


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The expected post Scheme operating structure is summarised diagrammatically below.

Figure 12: Expanded Programmed operating structure

Integrated CorporateAustralian Services

Workforce

TMS

Painting

Tungsten/Infraserv

Grounds

Building Services UK Painting


NZ Painting

Group Risk

IT

Marketing

Human Resources

Finance

Maintenance

International Services

Industrial Services

Expanded PMS

Source: Programmed “Proposal to merger with Integrated Group Ltd” presentation

8.2 Pro forma financial position of the expanded Programmed Section 4 of the Scheme Booklet sets out the pro forma financial position of the expanded Programmed as if the Scheme had been completed on 31 December 2006, which is summarised below.

Table 16: Expanded Programmed pro forma financial position

Pro forma 31 December 2006

$ million AssetsCash 10.8 Receivables 291.1 Inventories 26.9 Available for sale financial assets 1.0 Property, plant and equipment 52.1 Intangibles 188.7


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$ million Other assets 14.0 Total assets 584.6 Liabilities Payables 71.1 Provisions 16.4 Interest bearing liabilities 216.0 Current tax liabilities 3.5 Deferred tax liabilities 53.1 Total liabilities 360.1 Net assets 224.5 Number of shares on issue – million 90.0 Net assets per share - $ 2.49 Net tangible assets per share - $ 0.40 Gearing - times 0.91 Total tangible assets3/Total liabilities - times 1.1

Source: Scheme Booklet, KPMG analysis

We make the following observations in relation to the expanded Programmed’s pro forma financial position as at 31 December 2006:

The pro forma financial position has been prepared by Integrated from an aggregation of the:

Programmed’s independently reviewed statement of financial position as at 30 September 2006

the independently reviewed statement of financial position of Integrated as at 31 December 2006

relevant adjustments reflecting the terms of the Scheme.

The gearing of the expanded Programmed at approximately 0.91 times is significantly greater than that of Integrated as a standalone entity, which as at 31 December 2006 was approximately 0.56 times. This reflects in part that the cash element of the Consideration is to be funded entirely by new debt.

Programmed’s net tangible asset backing per share as a stand alone entity as at 30 September 2006 of $1.63 falls significantly to $0.40, principally as a result of the pre-existing level of goodwill being carried in the books of Integrated and the notional level of goodwill being paid under the Scheme. We note that Integrated’s net tangible asset per share as at 31 December 2006 was $0.23.

Programmed currently has approximately 71.2 million shares on issue. Following completion of the Scheme Integrated shareholders will hold approximately 18.8 million shares or 20.9 percent in the


54

expanded capital of the expanded Programmed (excluding any shares in Programmed that Integrated shareholders may already hold).

No cost savings and/or synergy benefits from the merger have been included.

No allocation of the purchase price has been made to identifiable intangible assets of Integrated on acquisition. To the extent that any identifiable intangible assets of Integrated with finite lives are identified, these will be required to be amortised over their useful lives, which will adversely impact upon the future earnings of the expanded Programmed and potentially on the quantum of any dividends able to be paid.

KPMG was not involved in the preparation of the expanded Programmed’s pro forma financial position

A more detailed discussion of the assumptions, limitations and adjustments incorporated in the pro forma financial position of Programmed prepared by Integrtaed is set out in section 4 of the Scheme Booklet.

8.3 Pro forma financial performance of the expanded Programmed The forecast pro forma consolidated profit and loss statement of the expanded Programmed for the year ending 31 March 2007, prepared as if the acquisition had occurred on 31 March 2006 is set out below.

Table 17: Expanded Programmed pro forma forecast financial performance

Pro forma year ending

31 March 2007 $ million

Total revenue 801.4

EBITDA 74.2 Depreciation & Amortisation 14.9 EBIT 59.3 Net interest expense 15.0 Operating profit before tax 44.3 Tax expense 14.0 Operating profit after tax 30.3 Number of shares on issue – 000s 90.0 EBITDA margin - % 9.3 EBIT margin - % 7.4 Interest cover - times 5.0 Basic earnings per share - cents 0.34


We make the following observations in relation to the pro forma financial performance of the expanded Programmed:

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$ million Other assets 14.0 Total assets 584.6 Liabilities Payables 71.1 Provisions 16.4 Interest bearing liabilities 216.0 Current tax liabilities 3.5 Deferred tax liabilities 53.1 Total liabilities 360.1 Net assets 224.5 Number of shares on issue – million 90.0 Net assets per share - $ 2.49 Net tangible assets per share - $ 0.40 Gearing - times 0.91 Total tangible assets3/Total liabilities - times 1.1


We make the following observations in relation to the expanded Programmed’s pro forma financial position as at 31 December 2006:

The pro forma financial position has been prepared by Integrated from an aggregation of the:

Programmed’s independently reviewed statement of financial position as at 30 September 2006

the independently reviewed statement of financial position of Integrated as at 31 December 2006


The gearing of the expanded Programmed at approximately 0.91 times is significantly greater than that of Integrated as a standalone entity, which as at 31 December 2006 was approximately 0.56 times. This reflects in part that the cash element of the Consideration is to be funded entirely by new debt.

Programmed’s net tangible asset backing per share as a stand alone entity as at 30 September 2006 of $1.63 falls significantly to $0.40, principally as a result of the pre-existing level of goodwill being carried in the books of Integrated and the notional level of goodwill being paid under the Scheme. We note that Integrated’s net tangible asset per share as at 31 December 2006 was $0.23.

Programmed currently has approximately 71.2 million shares on issue. Following completion of the Scheme Integrated shareholders will hold approximately 18.8 million shares or 20.9 percent in the


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The pro forma financial performance has been prepared by Integrated from an aggregation of:

one quarter of Integrated’s normalised financial performance for the year ended 30 June 2006. Normalisation adjustments made by Integrated are detailed in section 4.6(c) of the Scheme Booklet

three quarters of the forecast financial performance for Integrated for the 12 months ending 30 June 2007

the projected financial performance for Programmed for the financial year ending 31 March 2007


Integrated’s financial forecasts were based on internal management forecasts prepared by Integrated, which include eight months of actual results to 28 February 2007.

Programmed’s financial forecasts were based on internal management forecasts prepared by Programmed, which include ten months actual results to 31 January 2007

Transaction costs of $6.0 million have been assumed to be incurred in completing the Scheme

The acquisition of Integrated is earnings per share accretive to Programmed, prior to any allowance for amortisation charges arising upon implementation of the Scheme or the benefit of any synergies that may be realised

The interest cover of the expanded Programmed at 5.0 times is significantly less than Integrated’s forecast cover for the year ending 30 June 2007 of approximately 13.2 times

KPMG was not involved in the preparation of the expanded Programmed’s pro forma financial performance

A more detailed discussion of the assumptions, limitations and adjustments incorporated in the pro forma financial performance of Programmed prepared by Integrtaed is set out in section 4 of the Scheme Booklet.

8.4 ManagementThe Board of the merged entity is proposed to consist of the current directors of Programmed. In addition, two members of the Board of Integrated, Mr Neil Hamilton and Mr Jonathan Whittle, have indicated an intention to accept an invitation to join the Board of the expanded Programmed in the event the Scheme is successfully implemented. Further details in relation to each of the proposed directors of Programmed are set out in section 4 of the Scheme Booklet.


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8.5 SynergiesWe have been provided with a schedule prepared by Integrated that sets out the Company’s assessment of the cost savings likely to be available to Programmed in acquiring a 100% interest in Integrated. These potential cost savings total approximately $3.0 million per annum, with $2.1 million emerging in the first year following acquisition and once-off associated costs in realising these benefits of approximately $0.4 million.

Table 18: Assessment of direct cost savings available to Programmed

Annual value attributed by Integrated

$ million Direct synergies Costs of running a public company 1.1 General finance and support costs 1.9 Total annual direct synergy benefit to an acquirer 3.0

Source: Integrated management

Determination of the quantum of these synergies has been made having regard principally to the matters set out below:

Costs of running a public company

Wages, Salaries and On-costs - Integrated believes Programmed will realise wage and on-cost savings as a result of various corporate and head office functions being subsumed within the organisational structure of the acquirer. These costs include wages and salaries associated with maintaining the Integrated Executive team and the Company Secretariat.

Directors’ fees – Programmed will rationalise the Board of Integrated and appoint its own nominees as Directors.

ASX listing fees – Following completion of the Scheme, Programmed will seek to delist Integrated from the Official List of ASX and as a result will avoid some annual listing fees and charges.

Audit, share registry and compliance costs – Programmed is expected to realise economies of scale from consolidation in terms of statutory reporting and compliance requirements charged in respect of the expanded entity when compared to two stand-alone entities.

General finance and support costs

These costs relate to the provision of general finance and shared services support to the group, which through economies of scale and the elimination of duplicated of resources could be expected to result in potential cost savings to Programmed. Potential cost savings are expected to be realised from the integration of the information technology systems, marketing, payroll, accounting and finance and risk management functions, amongst others.


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In addition, Integrated expects Programmed will also be realise cost synergies in other areas such as travel, rental costs and bank charges.

Integrated has not prepared an assessment of synergies that may be available to a pool of purchasers but has indicated that it believes there is a number of parties, particularly those already currently providing workforce recruitment services, that could reasonably be expected to realise greater direct cost savings than Programmed. However, we also note that a merger of such like businesses may adversely impact the level of revenue synergies able to be extracted, with various clients and/or employees electing to cease their relationship with the expanded entity. Given the minimal operational overlap between Integrated and Programmed and the intention to continue to operate Integrated as a largely independent business unit of Programmed we do not consider client leakage to be a material risk to the expanded Programmed.

We have considered the quantum of the potential direct cost savings estimated by Integrated as being available to Programmed, along with their likelihood and cost of realisation, and the potential for additional cost synergies to be extracted by alternative acquirers of Integrated in our assessment of the full underlying value of Integrated.

Additional benefits unique to Programmed

Benefits and cost savings that Programmed, as a function of the expanded entity’s greater size, increased product suite and expanded distribution channels, may achieve are categorised as additional benefits and usually include a larger degree of subjectivity and may not be as easily quantifiable.

In the case of Integrated these benefits may include, amongst other things:

the ability to accelerate Integrated’s strategy for the expansion into regional Australia, New Zealand and the UK by leveraging Programmed’s existing infrastructure

the ability of Programmed to introduce its suite of services to Integrated’s customers and vice versa

Programmed’s ability to quickly and effectively mobilise an established pool of labour during peak periods of demand and at short notice to meet client demands

an enhanced ability to access equity and/or debt capital as a result of the expanded entity’s status as a much larger listed public company

the potential for Programmed to enhance the strength of its management base by “cherry picking” Integrated’s senior management.

It is important to note that whilst these benefits may not be easily quantifiable, they can often be key drivers of any transaction rather than availability of direct cost savings, which, given the minimal current operational overlap between Integrated and Programmed, Integrated’s management considers to be the case in the current circumstances.


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We have not factored these special benefits unique to Programmed into our determination of an appropriate premium for control to calculate the full underlying value of Integrated. We have however considered these benefits in our assessment of the reasonableness of the Scheme.

We also note that the ability of the expanded Programmed to derive cost savings and synergies across the merged group will depend to some extent upon the ability of Programmed to successfully integrate the common functions of the two entities and the establishment of efficient management and operational structures. Accordingly, the final quantum of any direct costs savings and/or other benefits realised, if any, is uncertain and, at best, will not be known from some time.

9 Valuation of Integrated

9.1 Valuation methodology The principal consideration in considering whether the Scheme is in the best interests of Integrated shareholders is to compare the underlying value of Integrated shares to the value of the consideration to be received from Programmed.

The value of Integrated has been assessed on the basis of fair market value, that is, the value agreed 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.

ASIC Practice Note 43 (PN 43) states that in completing a report under the Act it is appropriate for an independent expert to consider, amongst other methods of valuation, the application of earnings multiples, discounted cash flow (DCF) analysis and asset-based methodologies.

Each of the abovementioned methodologies is applicable in different circumstances. In selecting the appropriate methodology to value Integrated we have considered which of these methodologies a potential purchaser would most likely adopt.

In our experience, the most appropriate methodology for determining the value of companies similar to Integrated is by aggregating the estimated market value of any continuing businesses operations together with the realisable value of non-trading assets and deducting external borrowings and non-trading liabilities, with the principal operating businesses being valued using the capitalisation of earnings approach reflecting that:

the continuing Workforce and Managed Labour business units have established a record of relatively stable and profitable operations

both the Workforce and Managed Labour business units can, in the absence of the Scheme, reasonably be expected to continue for the foreseeable future

Integrated does not prepare long-term cash flow projections either at a consolidated or individual business unit level.


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Application of the capitalisation of earnings methodology involves capitalising the earnings of a business at a rate that reflects the risks of the business and the net income stream that it generates and requires the determination of three key factors:

future maintainable earnings (FME)

an appropriate range of capitalisation multiples

the level of other net assets, including non-trading assets and liabilities, including existing debt within the business.

We have used the independently reviewed net assets of the Company as at 31 December 2006 as set out in Section 6 of this report as the basis for our valuation.

Due to the various uncertainties inherent in the valuation process, we have determined a range of values within which we consider the value of the continuing business operations of Integrated to lie. Other non-trading assets and liabilities of Integrated have been incorporated in our valuation at assessed values or book values as discussed later in this section.

9.2 Summary of assessed values We have assessed the full underlying value of the diluted equity in Integrated to lie in the range of approximately $187 million to $214 million, cum dividend and inclusive of premium for control, which equates to an assessed fair value per diluted Integrated share of between approximately $2.56 to $2.93.

In assessing the value of Integrated we have considered the level of direct synergies that could reasonably be expected to be available to a pool of purchasers. We have not included any additional value in respect of the synergies and other strategic benefits that may be unique to Programmed. Accordingly, our valuation of a share in Integrated has been determined regardless of the acquirer.

Set out below is a summary of the range of fair market values at which Integrated’s shares have been assessed.

Table 19: Summary of assessed fair market value of Integrated

Assessed values Low $M

High$M

Workforce 198.0 220.0 Managed Labour 112.0 126.0 Less: Corporate and share services costs (97.8) (109.3) 212.2 236.7 Net borrowings (26.0) (26.0) Other net surplus assets 2.5 3.3


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Application of the capitalisation of earnings methodology involves capitalising the earnings of a business at a rate that reflects the risks of the business and the net income stream that it generates and requires the determination of three key factors:

future maintainable earnings (FME)

an appropriate range of capitalisation multiples

the level of other net assets, including non-trading assets and liabilities, including existing debt within the business.

We have used the independently reviewed net assets of the Company as at 31 December 2006 as set out in Section 6 of this report as the basis for our valuation.

Due to the various uncertainties inherent in the valuation process, we have determined a range of values within which we consider the value of the continuing business operations of Integrated to lie. Other non-trading assets and liabilities of Integrated have been incorporated in our valuation at assessed values or book values as discussed later in this section.

9.2 Summary of assessed values We have assessed the full underlying value of the diluted equity in Integrated to lie in the range of approximately $187 million to $214 million, cum dividend and inclusive of premium for control, which equates to an assessed fair value per diluted Integrated share of between approximately $2.56 to $2.93.

In assessing the value of Integrated we have considered the level of direct synergies that could reasonably be expected to be available to a pool of purchasers. We have not included any additional value in respect of the synergies and other strategic benefits that may be unique to Programmed. Accordingly, our valuation of a share in Integrated has been determined regardless of the acquirer.

Set out below is a summary of the range of fair market values at which Integrated’s shares have been assessed.

Table 19: Summary of assessed fair market value of Integrated


High$M

Workforce 198.0 220.0 Managed Labour 112.0 126.0 Less: Corporate and share services costs (97.8) (109.3) 212.2 236.7 Net borrowings (26.0) (26.0) Other net surplus assets 2.5 3.3

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High$M

Wendell earn out (1.6) - Total equity value (cum dividend) 187.1 214.0 Number of ordinary shares (000) 70.5 70.5 Add: Performance rights exercised (000)1 2.6 2.6 Diluted number of shares on issue (000) 73.1 73.1 Value per share (fully diluted) 2 - $ 2.56 2.93 Note1 Given there is no reason to expect at this time that the performance rights granted to various executives of the

Company would not vest in the ordinary course, we have included the dilutionary impact of the issue of attaching shares

2 Our range of values is cum the interim dividend $0.05 declared by Integrated in respect of the six months ended 31 December 2006

Source: KPMG analysis

Our range of values of $2.56 to $2.93 for an Integrated share represents a premium of between approximately 13 percent and 30 percent to Integrated’s last closing price on ASX immediately prior to the announcement of the Scheme of $2.26.

It is usual for the value of the whole of the Company to be at a premium to the value at which portfolio shareholdings trade, reflecting that a premium for control does not attach to portfolio shareholdings. 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.

Premia are typically paid to reflect the benefit the acquirer achieves through holding a controlling interest as opposed to a portfolio shareholding, which include:

full access to the cash flows of the business

control over dividend decisions

control over the future direction of the company.

In addition observed premiums will often include an element of synergistic, strategic and/or special value. Premiums paid 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. Where no operating synergies or special benefits will be realised in a transaction, the simple control premium is likely to be at or below the lower end of observed premia.


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The differential between our range of assessed values and the trading price for an Integrated share on ASX may also reflect, amongst other factors:

KPMG’s access to Integrated management and additional information not normally available to the market in relation to Integrated’s operations, strategies and plans for the future

Integrated’s decision to enter into non-core service offerings in previous years i.e. training, which, coupled with its disappointing results may have adversely impacted the market’s perception of the business, with investors taking a “wait and see” position as to the outcome of the recently completed restructuring of the Company’s business model.

9.3 Overview of valuation analysis FME

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.

In forming an opinion as to the FME of Integrated, it is important to look beyond the Company’s consolidated results for the financial years ended 30 June 2005 and 2006, which were adversely impacted by the underperformance of the Training business, now divested, which necessitated a large degree of management attention being diverted towards completion of restructuring initiatives.

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

The normalised actual earnings for the year ended 30 June 2006 in respect of the continuing Workforce Services and Managed Labour business units. Further details in relation to the various normalisation adjustments are set out below.

Integrated’s actual results for the six months ended 31 December 2006 and projected results for the year ending 30 June 2007.

The Company’s medium term strategy for the future operation of each business unit.

The level of robustness of the principal operating assumptions underpinning the prospective financial information prepared by the Company in respect of the year ending 30 June 2007.

The outlook for the industries in which the business units operate.

We have adopted EBITDA as the most appropriate earnings base for the valuation of the Workforce and Managed Labour business units after considering:


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The capitalisation of EBITDA is commonly used in assessing the fair market value of a company as a whole in the context of an offer to acquire 100% of a Company’s issued capital, where gearing will be in the control of the acquirer.

Our analysis of appropriate capitalisation multiples involves the consideration of both domestic and overseas evidence; use of EBITDA multiples ensures that the impact of any differences in the accounting and tax treatments by comparable overseas companies in terms of depreciation and amortisation policies and interest rate differentials are eliminated.

The different gearing levels adopted by participants in the industry and potential for differing market conditions in terms of domestic and overseas debt markets.

Due to the level of on-going consolidation that is taking place, various participants, including Integrated, have significant levels of intangibles recorded on their respective balance sheets, use of EBITDA eliminates the potential impact of any differences in measurement and/or amortisation policies.

Having regard to the above, we believe an appropriate FME for Integrated’s Workforce Services to be in the order of $22.0 million before allocation of corporate and shared services costs. We consider a FME in respect of continuing Managed Labour operations in the order of $14.0 million before allocation of corporate and shared services costs to be appropriate as set out below.

Table 20: Future maintainable EBITDA by business unit before allocation of corporate and share services costs

Business unit Future maintainable EBITDA $ million

Workforce 22.0Managed labour 14.0


In considering an appropriate FME for the continuing business units of Integrated normalisation adjustments were made to the Company’s audited EBITDA result for the year ended 30 June 2006 and projected EBITDA result for the year ending 30 June 2007 as set out below.


the write back of a benefit arising from the sale the Company’s fleet of offshore vessels, totalling $0.9 million

the add back of $0.8 million in respect of a provision raised in relation to a significant one-off receivables dispute and the over provision in respect of a bad and doubtful debt

an additional charge of $1.5 million to reflect the reallocation of various cost centres under the current operating model


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sundry other net add backs of $0.1 million.

Year ending 30 June 2007

a net positive adjustment of $0.3 million to reconcile forecast results to actual half year results to 31 December 2006

the elimination of the net benefit in respect of over/under provisions relating to prior year activities, totalling $0.2 million

other net sundry additions totalling $0.1 million

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 the 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.

The forecast EBITDA capitalisation multiples we have used in determining the value of the continuing operating businesses of Integrated are summarised below.


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Table 21: Capitalisation multiples selected

Range of forecast EBITDA multiples

Low HighWorkforce 9.0 10.0 Managed Labour 8.0 9.0


In assessing an appropriate capitalisation multiple for Integrated, we have had particular regard to, amongst other things:

multiples implied by recent completed transactions

the prevailing market rating of comparable companies

the quality and risk of the earnings being capitalised

the specific characteristics of Integrated’s individual business units

the potential level of direct synergies available to a pool of purchasers of Integrated.

Workforce Services

Transaction evidence

There have been a number of recent acquisitions in the Workforce Services industry in Australia. However, the majority of transactions identified as sufficiently comparable to Integrated to be meaningful have involved private companies, with little or no publicly available financial information. Notwithstanding, we have considered what information is available to provide a broad guide as to an appropriate range of earnings multiples for Integrated. The EBITDA/EBIT multiples implied by these transactions are summarised in the table below.

Table 22: Transaction multiples

Target Date Acquirer Value

$000

ImpliedhistoricalEBITDAmultiple1

times

Impliedforecast EBITDAmultiple1

times

Impliedhistorical

EBITmultiple1

times

Impliedforecast EBIT

multiple1

timesICE Personnel Ltd

Jan 07 Skilled Group Ltd (“Skilled”)

1,349 n/a n/a 3.0 n/a

Swan Contract Personnel

Jan 07 Skilled 44,000 n/a n/a n/a 6.0

Damstra Mining Services

Dec06

Skilled 7,000 n/a n/a 3.0 n/a


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$000


times


times

Impliedhistorical

EBITmultiple1

times


multiple1

timesWendell Group5 Sep 06 Integrated 5,000 3.56 n/a 4.0 n/a TESA Group Pty Ltd

Sep 06 Skilled 61,900 7.3 n/a n/a n/a

Extraman Jul 05 Skilled 20,000 n/a n/a 4.42 3.5 Origin Healthcare Holdings Pty Ltd

Feb 04 Skilled 57,000 n/a 7.2 n/a n/a

Catalyst Recruitment Systems

Nov06

Skilled 48,779 8.12 n/a n/a n/a

Chandler Macleod / Forstaff

May 05

NCML(Holdings) Ltd4

119,000 6.83 n/a n/a n/a

Corpfit Aug 04

Integrated 3,450 n/a n/a n/a 2.52

Integrated Maintenance Services Pty Ltd

Jul 04 Integrated 2,500 2.76 n/a 2.86 n/a

Notes1 From ASX announcement unless noted otherwise 2 From brokers report 3 From NCML (Holdings) Ltd’s Independent Expert Report 4 After acquisition NCML (Holdings) Ltd traded as Chandler Macleod Ltd 5 The consideration for Wendell includes a deferred component the final quantum of which is subject to future

trading results 6 Provided by Integrated management. Integrated held a pre-existing 50% ownership interest in IMS

Source: Bloomberg, announcements and brokers’ reports where available.

Each of these transactions is discussed in greater detail in Appendix 4. However we note the following with respect to the implied multiples set out above:

It is usual for forecast multiples to be at a discount to historical multiples reflecting expectations of growth in future levels of earnings.

Each of the transactions was to acquire a 100 percent interest in the target (in the case of IMS, the transaction involved Integrated acquiring the remaining 50 percent it did not already hold, bringing its relevant interest to 100 percent) and in almost all of the transactions considered, the acquirer had existing operations in the relevant industry and/or market. Accordingly, it is likely that the value of nearly all of the transactions considered would have included both:

a pure control premium


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a premium for potential synergies and cost savings available to the purchaser.

The final level of a premium paid in individual transactions is influenced by the successful purchaser’s assessment as to the potential level of synergies available and the amount the purchaser is prepared to pay to acquire those synergies, which will vary between individual transactions and also the pre-existing level of ownership in the target. In some transactions where there has been no logical alternative bidder to the offeror and/or the level of synergies available has been minimal, little or no premium has been realised.

With respect to an offer for Integrated, it is reasonable to expect there to be a premium to reflect the Integrated’s relative size, market position and advantages associated with acquiring a pool of assets, potential cost savings and other operational benefits.

Larger multiples were paid to acquire larger companies

Integrated’s market capitalisation is significantly larger than each of the target companies set out above. It is generally acknowledged that larger companies tend to be valued at higher earnings multiples, all other things being equal, reflecting, inter alia, the benefit of size in terms of economies of scale, bargaining power, depth of management etc.

Trading multiples of comparable listed companies

In an Australian context, the relatively small size of the market means that it can sometimes be difficult to find traded companies that are directly comparable to the subject company being valued. As such, valuers are often required to think broadly in selecting a sample of comparable companies.

Whilst no company currently listed on ASX or other overseas bourse is considered to be exactly comparable to Integrated, we believe that in assessing the fair market price of the Integrated business units, any purchaser would have regard to the share market ratings of domestic and overseas listed companies involved in the provision of workforce recruitment and managed labour services to industry.

In determining an appropriate range of capitalisation multiples for Integrated’s Workforce Services business we have had primary regard to the trading multiples of those selected listed companies set out in the table below.


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Table 23: Comparable company analysis

EBITDA multiple Company Market

capitalisation1, 2

$A million

Enterprise value3

$A million 2006

historical Times

2007 forecast4

TimesAustralian Skilled Group 619.5 772.4 16.6 11.52 Candle Australia 180.2 175.4 9.3 8.51 Chandler Macleod 143.9 215.1 14.0 n/a Ross Human Directions 55.4 61.1 8.1 5.59 Peoplebank Australia 44.9 47.0 6.9 7.84 Ambition Group 49.9 43.8 9.6 n/a Hamilton James & Bruce 19.8 25.7 4.3 5.35 HiTech Group6 2.1 1.6 259.3 n/a Average (excluding outlier) 9.8 7.8 Median (excluding outlier) 9.3 7.8 International Adecco SA 15,949.7 17,504.5 13.0 10.7 Robert Half International 8,329.6 7,766.9 12.0 11.6 Manpower 8,031.0 8,202.7 10.4 10.0 Resources Connection 1,990.8 1,863.6 14.7 16.3 MPS Group 1,862.6 1,643.4 9.9 10.7 Volt Information Services 1,018.9 992.8 9.3 9.2 CDI Corp 676.9 652.9 12.3 10.0 Spherion Corporation 637.0 573.3 8.3 7.4 Newcourt Group6 215.8 228.7 30.0 10.6 Average (excluding outlier) 11.2 9.7 Median (excluding outlier) 11.2 9.4 Notes1 Market capitalisation as at 1 March 2007 2 Market capitalisation converted to Australian dollars at the relevant prevailing spot rate on 1 March 2007 3 Enterprise value has been calculated based on each company’s net cash position as disclosed in the latest

publicly available financial accounts as at 1 March 2007. 4 Based on forecast EBITDA as reported on Bloomberg as at 1 March 2007 5 N/A means not available. 6 Considered to be an outlier

Source: Bloomberg, annual reports and announcements and brokers’ reports where available.

Profiles of the abovementioned companies are set in out in Appendix 5 to this report.


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General observations in relation to the implied multiples and operations of the abovementioned 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 “pure” control or potential synergies to acquirers.

None of the companies are exactly comparable to Integrated in terms of target market, market focus, competitive environment, strategy and stage of development.

Whilst Integrated competes directly against a number of the abovementioned companies, particularly in relation to those providing workforce recruitment services to the Australian domestic market, the earnings streams for a number of companies are principally derived from different geographic markets and market segments to Integrated.

Overseas Workforce Services companies tend to trade on higher multiples than Australian comparable companies

Several of the companies considered have a larger market capitalisation than Integrated and a number, particularly those domiciled outside of Australia, are significantly larger than Integrated. This scale difference is even more pronounced if Integrated’s Workforce Services and Managed Labour 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 been unable to determine the extent of surplus cash carried on the balance sheets of the respective companies we have deducted the full amount from market capitalisation to determine relevant EBITDA multiples. We note that this approach will understate relevant EBITDA multiples in the event current cash balances do not represent surplus cash.

Managed Labour


Marine Services is considered to be largely unique in terms of its service offering and we have not been able to identify any corporate transactions of a sufficiently comparable nature to draw any meaningful guidance as to appropriate capitalisation multiples. Similarly, there have been few acquisitions in the Technical Maintenance Services industry in Australia in the recent past considered to be sufficiently comparable to Integrated to be particularly meaningful, however, as a broad guide we have had regard to the multiples implied by the corporate transactions set out in the table below in determining an appropriate range of earnings multiples for the Managed Labour business.

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EBITDA multiple Company Market

capitalisation1, 2

$A million

Enterprise value3

$A million 2006

historical Times

2007 forecast4

TimesAustralian Skilled Group 619.5 772.4 16.6 11.52 Candle Australia 180.2 175.4 9.3 8.51 Chandler Macleod 143.9 215.1 14.0 n/a Ross Human Directions 55.4 61.1 8.1 5.59 Peoplebank Australia 44.9 47.0 6.9 7.84 Ambition Group 49.9 43.8 9.6 n/a Hamilton James & Bruce 19.8 25.7 4.3 5.35 HiTech Group6 2.1 1.6 259.3 n/a Average (excluding outlier) 9.8 7.8 Median (excluding outlier) 9.3 7.8 International Adecco SA 15,949.7 17,504.5 13.0 10.7 Robert Half International 8,329.6 7,766.9 12.0 11.6 Manpower 8,031.0 8,202.7 10.4 10.0 Resources Connection 1,990.8 1,863.6 14.7 16.3 MPS Group 1,862.6 1,643.4 9.9 10.7 Volt Information Services 1,018.9 992.8 9.3 9.2 CDI Corp 676.9 652.9 12.3 10.0 Spherion Corporation 637.0 573.3 8.3 7.4 Newcourt Group6 215.8 228.7 30.0 10.6 Average (excluding outlier) 11.2 9.7 Median (excluding outlier) 11.2 9.4 Notes1 Market capitalisation as at 1 March 2007 2 Market capitalisation converted to Australian dollars at the relevant prevailing spot rate on 1 March 2007 3 Enterprise value has been calculated based on each company’s net cash position as disclosed in the latest

publicly available financial accounts as at 1 March 2007. 4 Based on forecast EBITDA as reported on Bloomberg as at 1 March 2007 5 N/A means not available. 6 Considered to be an outlier




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Table 24: Transaction multiples


$000


times


times

Impliedhistorical

EBITmultiple1

times


multiple1

timesTIMECHoldings Inc (TIMEC)

Pending Transfield Services Ltd (Transfield)

129,000 7.2 n/a 9.52 n/a

USMaintenance Inc

Jul 06 Transfield 372,000 n/a 9.7 n/a n/a

TungstenGroup P/L

Oct 05 Programmed 9,956 n/a n/a n/a 5.0

Notes1 From ASX announcement unless noted otherwise 2 From brokers’ report

Source: Bloomberg, announcements and brokers’ reports where available.

Each of these transactions is discussed in greater detail in Appendix 4. However we note the following with respect to the implied multiples set out above:

It is usual for forecast multiples to be at a discount to historical multiples reflecting expectations of growth in future levels of earnings.

Both of Transfield’s recent transactions involve companies domiciled in the United States and are considered by that company to provide a platform for expansion of Transfield’s services into a significantly larger target market compared to Australia and New Zealand.

Transfield’s acquisition of TIMEC is not yet completed.

Each of transactions considered was for a 100% interest and therefore is likely to have incorporated an element of control premium.


As with Workforce Services, the relatively small size of the Australian market means that it is difficult to identify traded companies directly comparable to Integrated’s Managed Labour business. As such, in determining an appropriate range of capitalisation multiples for Managed Labour we have considered various Australian companies broadly involved in the provision of manning and maintenance services as set out in the table below.


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Company Market capitalisation1

Enterprisevalue2

EBITDA multiple

$A million $A million 2006 historical

Times

2007 forecast3

TimesWorleyParsons 5,830.3 5,912.6 29.8 20.4 Downer EDI4 2,301.9 2,985.2 66.3 7.6 Transfield Services 2,178.7 3,007.6 20.3 14.9 United Group 1,857.9 2,146.5 15.5 11.8 Spotless Group 1,045.8 1,319.3 8.0 7.6 Adsteam Marine 687.4 1,020.7 11.1 10.5 Programmed Maintenance 370.9 453.6 11.4 10.0 Average (excluding outlier) 14.8 11.6 Median (excluding outlier) 12.4 10.4 Notes1 Market capitalisation as at 1 March 2007 2 Enterprise value has been calculated based on each company’s net cash position as disclosed in the latest

publicly available financial accounts as at 1 March 2007. 3 Based on forecast EBITDA as reported on Bloomberg as at 1 March 2007 4 Considered to be an outlier




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 “pure” control or potential synergies to acquirers.

None of the companies are exactly comparable to Integrated in terms of target market, market focus, competitive environment, strategy and stage of development.

WorleyParsons Limited’s strong EBITDA multiples may reflect new contract wins and work pipeline in place, which are generally considered to form the basis for a strong outlook. The company’s exposure to the oil and gas industry appears to also be viewed favourably by market analysts. In addition, recent acquisitions of SEA Engineering Inc and Colt Engineering Corporation were well received.

Downer EDI Limited has a very high historical EBITDA multiple and has been excluded as an outlier. Downer EDI recorded as a net loss for the 2006 financial year. After tax, net interest expense,


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depreciation and amortisation were added back, EBITDA for the 2006 financial year was positive but a negligible amount.

Transfield Services Limited has strong EBITDA multiples which may reflect the strong positive reaction from market analysts on the development of the Suncor Energy Inc maintenance contract in Canada. Margins on this contract are expected to be double those currently being achieved on Australian operations. The acquisition of US oil refinery maintenance contractor TIMEC Company Inc was also well received.

Having regard to the each of the foregoing matters and reflecting:

Integrated has only recently completed the implementation of its new business model and market strategy following the divestment of its Training business.

Operationally, the Workforce Services and Managed Labour business units are largely independent

Workforce has a demonstrated track record of sustained growth at an EBITDA level and a relatively stable EBITDA margin in the order of 6.5 percent. In comparison, Managed Labour has recorded relatively flat earnings in recent and it is expected for this trend to continue in the current financial year albeit on a declining EBITDA margin.

Integrated’s TMS activities are now underpinned by a 7-year contract with MMA for the provision of manning to its entire offshore fleet

Marine Service is considered to hold unique position in the marine manning sector

Given its scale Technical Maintenance Services results can be lumpy from year to year. In addition, the scale of each of the comparable companies’ operations are significantly larger than that of Integrated’s Technical Maintenance Services division when considered on a stand alone basis,

Integrated has yet to fully penetrate the buoyant Australian oil and gas industry, with good prospects for growth in this area. In particular, Marine Services manning and managed labour model appear to be gaining traction in the market.

Integrated is yet to enjoy the full potential of its recent acquisition of Wendell, New Zealand’s leading suppliers of labour and support services to the offshore oil and gas industry

There appears to be scope for existing workforce recruitment providers to realise significant direct cost savings in the event of an acquisition of Integrated

The FME adopted in respect in respect of each of Workforce Services and Managed Labour is a forecast earnings

we have determined an appropriate forecast capitalisation multiple for:


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Workforce Services, inclusive of premium for control, to be in the range of 9 times to 10 times

Managed labour, inclusive of premium for control, to be in the range of 8 times to 9 times.

Corporate and unallocated cash

Integrated has estimated its total corporate and shared services costs (before net finance charges, depreciation, amortisation and tax) for the year ended 30 June 2007 at approximately $$11.0 million, which compares to actual costs of $14.1 million in the prior 2006 financial year.

In considering an appropriate level of corporate overheads and administration costs to include in the value of Integrated we have adjusted the actual result for the year ended 30 June 2006 to reflect:

the elimination of legal and other costs associated with the divestment of the training division, totalling $2.0 million

a net reduction in costs of $0.3 million to reflect the restructure of Integrated’s operating model

a net reduction in costs of $0.2 million in respect of sundry other adjustments.

We have adopted an amount of $11.5 million per annum in respect of long-term future pre-tax corporate and shared services costs at a multiple of between 8.5 times and 9.5 times.

Net borrowings

As we are valuing the diluted equity interest of Integrated shareholders in the Company, it is necessary to deduct the claims of debt holders from the enterprise value of Integrated calculated by application of the capitalisation of EBITDA. As at 31 December 2006 Integrated had borrowings, net of cash, of approximately $26.0 million recorded on its balance sheet. We have adopted this value for the purpose of our report.

Net surplus assets

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 and are discussed below:

Available for sale financial assets

These assets comprises 438,596 “C” class shares in unlisted Today at a notional issue price of $2.28, received by Integrated on the divestment of its Training business to that company. These shares carry no voting rights but rank equally with Today’s ordinary shares in all other respects. Today has not paid any dividends on these shares to date.

Today has advised Integrated that it has recently raised approximately $6.6 million from the issue of new ordinary shares to sophisticated investors at an issue price of $2.61.


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We have adopted the current book value for the assets at the high end of our range of values. At the low end of our range we have applied a 40 percent discount to the value implied by the recent issue price to sophisticated investors, reflecting that:

the shares do not carry any voting rights

no dividend has been declared or paid in relation to the shares to date

little financial information is available in relation Today

Convertible Note

Based on the terms of the Note, should Today elect to redeem this instrument, the amount repayable will be approximately $1.73 million, including accrued interest. In the event, Today elects to convert this instrument into equity, Integrated will receive 777,202 new “C” class shares.

Integrated has advised that it has not, to date, received any indication from Today as to its intentions in relation to the repayment or conversion of the Note.

At the high end of our range of values we have assumed Today elects to repay the face value of the Note and accrued interest thereon. Consistent with our valuation of available for sale financial assets, we have applied a 40 percent discount to the value implied for the new shares to be issued to Integrated by the outcome of the recent capital raising by Today.

Other net surplus assets

Have regard to the nature and materiality of other surplus net assets and liabilities, we have adopted the book value of these items.

Contingent liabilities

The directors of Integrated have 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.

At the low end of our range of values we have included an amount of $1.6 million5 in relation to the assessed present value of the potential payment of the EOC associated with the purchase of Wendell. We have not included any amount at the high end reflecting that the requirement to make payment of this earn out component is not certain at this time.

5 Calculated based on the maximum potential earn out payment of NZ$1.7 million on 31 March 2009, converted at a spot exchange rate of A$:NZ$ of 1.14, discounted back at a rate of 10 percent per annum


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Having regard to the quantum of other known claims and that the outcome of these matters is uncertain, we have not made any adjustment to our range of assessed values for outstanding litigation matters.

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.

Integrated estimates that the Company had approximately $11.7 million franking credits available to it after payment of the final dividend for the year ended 30 June 2006. 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. We have not included in any value in our assessed fair value of a fully diluted Integrated share, however, we have considered the benefit to Programmed of the availability of Integrated’s surplus franking credits in assessing the reasonableness of the Offer.

Performance rights

As discussed in Section 8, Integrated currently has on issue 2.0 million performance rights issued to its CEO under the LTIP and has also issued approximately 0.59 eligibility notices to certain other members of the Company’s senior management under the IGLSEIP. In the absence of information to the contrary, we have assumed that in the fullness of time 2.59 million ordinary shares would be issued pursuant to the terms of the LTIP and IGLSEIP.

We note that 2.0 million of the total performance rights on issue are, subject to the satisfaction of certain conditions, to be issued at no cost to the holder, whilst the balance of the performance rights are, subject to the satisfaction of certain conditions and the Board’s discretion, to be issued at a price to be set by the Board. We have been advised by the Company that the exercise price of all performance rights under the LTIP is $nil and that the exercise price in relation to any invitations to be issued under the IGLSEIP would be expected to be $nil.

10 Valuation of the Consideration

10.1 Valuation methodology Pursuant to the terms of the Scheme, Integrated shareholders will receive $1.25 cash and 0.26 new fully paid Programmed shares for each share in Integrated they currently hold. Integrated shareholders will also be entitled to retain the benefit of the interim dividend of $0.05 per share declared by Integrated in relation to the six months ended 31 December 2006. Accordingly, in assessing the value of the Consideration offered under the Scheme it is necessary to form a view as to the fair market value of a Programmed share.


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In our experience, the most appropriate methodology for determining the value of companies similar to Programmed is by aggregating the estimated market value of its businesses operations together with the realisable value of non-trading assets and deducting external borrowings and non-trading liabilities, with the principal operating business being valued using the capitalisation of earnings approach, reflecting:

Programmed has established a track record of consistently profitable operations

the business of Programmed can, in the absence of the Scheme, reasonably be expected to continue for the foreseeable future

Programmed does not prepare long-term cash flow projections.

Except as otherwise noted we have used the unaudited net assets of Programmed as at 30 September 2006 set out in Section 7 of this report as the basis for our valuation.

Due to the various uncertainties inherent in the valuation process, we have determined a range of values within which we consider the value of the continuing business operations of Programmed to lie. Other non-trading assets and liabilities of Programmed have been incorporated in our valuation at assessed values or book values as discussed later in this section.

10.2 Summary of assessed values We have assessed the underlying value of the equity in Programmed to lie in the range of $361.8 million to $411.8 million, which equates to an assessed fair value per Programmed share of between approximately $5.08 and $5.78.

As Integrated shareholders will hold a portfolio interest in the expanded capital of Programmed following completion of the Scheme, no premium for control has been included. As such, our range of assessed fair values represents the aggregate value of the combined portfolio interests in Programmed, in which individual Programmed shareholders hold a pro rata interest.

Set out below is a summary of the range of values at which Programmed’s shares have been assessed.

Table 26: Summary of assessed fair market value of Programmed


High$M

Enterprise Value 450.0 500.0 Less - Net borrowings 88.2 88.2 Add - surplus net assets - - Total equity value 361.8 411.8 Number of shares on issue (million) 71.2 71.2 Value per share 5.08 5.78



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Our range of values of $5.08 to $5.78 for a Programmed share represents a discount of 1.2 percent and a premium of 12.5 percent respectively to Programmed’s last closing price on ASX immediately prior to the announcement of the Scheme of $5.14.

The differential between our range of assessed values and the trading price for a Programmed share on ASX may reflect, amongst other factors, KPMG’s access to Programmed management and additional information not normally available to the market in relation to Programmed’s operations, strategies and plans for the future, including internal management forecasts for the year ended 31 March 2007.

Our range of assessed fair values implies a value for the scrip component of the Consideration, being 0.26 Programmed shares, of between $1.32 and $1.50 and, in turn, the fair market value of the Consideration to lie in the range of approximately $2.62 to $2.80 (being $1.32 to $1.50 plus the combined cash and dividend component of $1.30).

10.3 Overview of valuation analysis FME

In determining an appropriate level of FME for Programmed we have had primary regard to:

Programmed’s audited earnings for the year ended 31 March 2006 and unaudited financial performance for the nine months ended 31 December 2006

Programmed’s forecast earnings for the year ending 31 March 2007 (which includes ten months of actual results to 31 January 2007) and the level of robustness of the principal operating assumptions underpinning the prospective financial information

Programmed’s medium term strategy for the future operation of each business unit

the outlook for the industries in which the business units operate.

Consistent with the valuation approach adopted for Integrated we have adopted EBITDA as the most appropriate earnings base for the valuation of the company.

Having regard to the above, we believe an appropriate FME for Programmed’s continuing operations to be in the order of $50.0 million.

In considering an appropriate FME for Programmed, normalisation adjustments were made to the company’s audited EBITDA result for the year ending 31 March 2006 and projected EBITDA result for the year ended 31 March 2007 as set out below.


the add back of approximately $1.7 million in settlement costs and legal fees in relation to a one-off dispute with a subcontractor


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the elimination of a $0.35 million gain on the disposal of property, plant and equipment

an additional EBITDA contribution from Tungsten of $0.2 million based on an assumed full year of operations


No adjustment was made in respect of the forecast EBITDA for the year ending 31 March 2007.

Capitalisation multiples

We have adopted forecast EBITDA capitalisation multiples in the range of 9 times to 10 times in determining the value of the Programmed’s operating businesses.

In assessing an appropriate capitalisation multiple for Programmed, we have had particular regard to, amongst other things:

multiples implied by recent completed transactions

the prevailing market rating of comparable companies

the quality and risk of the earnings being capitalised

the specific characteristics of Programmed’s individual business units.


There have been few acquisitions of Australian companies in the recent past considered to be sufficiently comparable to Programmed to be meaningful, however, as a broad guide we have had regard to the multiples implied by those corporate transactions considered above as part of our consideration of capitalisation multiples for Integrated.


Whilst no company currently listed on ASX is considered to be exactly comparable to Programmed, we believe that in assessing the fair market price of Programmed’s business operations, a purchaser would have regard to the share market ratings of domestic and overseas listed companies involved in the provision of maintenance and facilities management services to industry.

In determining an appropriate range of capitalisation multiples we have had primary regard to the trading multiples of those selected listed companies set out in the table below.


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Company Market capitalisation1

Enterprisevalue2

EBITDAmultiple

$A million $A million 2006 historical

Times

2007 forecast3

TimesAustralian Transfield Services 2,178.7 3,007.6 19.0 13.8 United Group 1,857.9 2,146.5 14.3 10.9 Spotless Group 1,045.8 1,319.3 7.4 7.0 Monadelphous Group 899.9 854.6 17.5 13.9 Service Stream4 270.5 299.9 34.3 n/a Concept Hire 88.0 115.0 14.1 n/a Thomas & Coffey 58.8 58.8 9.2 n/a KLM Group 34.1 31.8 8.1 n/a Average (excluding outlier) 12.8 11.4 Median (excluding outlier) 14.1 12.4

International Babcock International Group 2,038.4 2,234.2 15.57 13.06 Mitie Group 1,758.3 1,813.4 12.75 10.74 ABM Industries 1,628.5 1,458.4 6.42 11.97 Interserve 1,311.6 1,373.5 9.18 6.81 Healthcare Services Group 983.0 890.4 18.40 14.28 FirstService Corporation 949.4 1,075.5 9.15 7.89 Connaught 743.1 755.1 19.57 16.88 Cape 568.4 604.1 18.56 9.46 Mears Group 530.6 510.3 16.95 12.52 Jarvis 294.4 400.9 10.57 11.43 GSH Group 189.7 169.6 8.60 8.50 Average 13.2 11.3 Median 12.7 11.4 Notes1 Market capitalisation as at 1 March 2007, converted to Australian dollars at the relevant prevailing spot rate

on 1 March 2007. 2 Enterprise value has been calculated based on each company’s net cash position as disclosed in the latest

publicly available financial accounts as at 1 March 2007. 3 Based on forecast EBITDA as reported on Bloomberg as at 1 March 2007 4 Excluded as outlier 5 n/a means not available



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The abovementioned multiples have been derived from share market prices which comprise trading in smaller, portfolio shareholdings.

Transfield Services and Spotless Group are considered to be the most comparable domestic companies due to the extent of their asset and infrastructure maintenance services. We note that these companies are both customers and competitors of Programmed in different domestic markets.

Whilst United Group is also comparable a significant portion of its revenue base and earnings is derived from its rail business (primarily construction and maintenance of locomotives and rolling stock).

Whilst the other domestic companies listed are all services companies, they have a much narrower sector focus than Programmed, which increases their exposure to economic cycles.

The observed average and median forecast multiples for Australian companies may be slightly inflated as forecasts were not available for Concept Hire, Thomas & Coffey and KLM Group, two of which had implied historical multiples below the historical average and median of the domestic companies considered

A number of the companies considered have a larger market capitalisation than Programmed and a number, particularly these domiciled outside of Australia, are significantly larger than Programmed. 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 been unable to determine the extent of surplus cash carried on the balance sheets of the respective companies we have deducted the full amount from market capitalisation to determine relevant EBITDA multiples. We note that this approach will understate relevant EBITDA multiples in the event current cash balances do not represent surplus cash.

Having regard to the each of the foregoing matters and reflecting:

Programmed has a demonstrated track record of sustained and consistent growth at an EBITDA level.

Programmed’s 31 March 2007 forecast earnings which formed the basis for our assessment of FME include 10 months of actual results. In contrast, each of the other Australian comparable companies considered have 30 June year end and therefore include an increased level of forecast risk

A significant portion of Programmed’s activities are underpinned by demonstrated long term customer relationships


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It is reasonable to expect an increased level of contribution from Barry Bros in the event of an improvement in rainfall levels

Programmed’s business operations in the UK are still in their relatively early growth stages

we have determined an appropriate capitalisation multiple for Programmed’s future maintainable EBITDA, excluding any premium for control, to be in the range of 9 times to 10 times.

Net Interest-bearing liabilities

Programmed had interest bearing borrowings as at 31 January 2007 in the order of $93.7 million, with cash holdings of $0.5 million. We have been advised by Programmed that its net debt position as at 31 January usually represents its highest absolute level of debt each year, due to:

the significant build-up in work in progress over the December/January period

invoicing being completed at the end of January as customers’ administrative staff return to work

Programmed traditionally paying an interim dividend during late January.

Accordingly, the net debt position as at 31 January is not considered to necessarily be representative of the average on-going financing position of the Company required to earn that level of FME determined by us. As such, we have included the average net debt position from the 30 September 2006 balance sheet and the 31 January 2007 management accounts as a proxy for a normalised net debt position.

Net surplus assets

We have been advised by Programmed that it currently does not have any assets or liabilities considered to be surplus to the business’ ongoing operational requirements.

Litigation

During the year ended 31 March 2006, a number of legal claims against Programmed were made by a sub-contractor regarding entitlement to provide services under a long term agreement. Programmed has agreed, without admission on liability, to settle the legal disputes with the subcontractor by paying $1.65 million. As discussed above, costs associated with settling this dispute, including legal fees and the settlement amount, have been backed out of EBITDA in our analysis of FME.

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.


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Programmed estimates that the company has approximately $3.2 million franking credits available to it after payment of the interim dividend on 25 January 2007. 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. We have not included in any value in our assessed fair value of a Programmed share.

Options

As discussed in Section 7.12, Programmed does not currently have on issue any options over unissued shares.

10.4 Other market measures In the absence of unusual circumstances, prices at which a company’s shares trade on a stock exchange are often considered to provide an objective measure of the value of that company 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 at any given point in time.

Although share prices reflect only marginal trades in portfolio holdings, the share price represents the cash equivalent Integrated shareholders could, all other things being equal, expect to realise if they sold the Programmed shares to be issued to them immediately upon receipt or in the short term thereafter.

As such, in considering the fairness of the Scheme, we have also considered whether there is any reason to expect that the market price for a Programmed share would lie below our range of assessed fair values for an Integrated share.

Consistent with usual practice, and to ensure that our analysis does not in itself incorporate the effects of the Scheme, we have primarily undertaken our analysis based on market values that existed prior to the announcement of the Scheme. However, as the final value of the Consideration will vary with Programmed’s share price subsequent to the date of announcement of the Scheme we have, where appropriate, also considered Programmed’s share price between the date of the announcement of the Scheme and the date of this report.

Accordingly, in assessing the reasonableness of the Consideration we have also had regard to:

the trading price for a Programmed share on ASX at various points in the 3 month period prior to the announcement of the Scheme

all broker reports available to us in relation to Programmed released in the three month period prior to the announcement of the Scheme

the trading price for a Programmed share on ASX subsequent to the announcement of the Scheme


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all broker reports available to us in relation to Programmed released in the period subsequent to the announcement of the Scheme

Pre-bid trading prices

Over the three month period to the last trading day prior to the announcement of the Scheme (inclusive), Programmed shares traded at a VWAP of $5.02 this figure increased to $5.08 in the week prior to the announcement as set out below, before closing on the last trading day prior to the announcement at $5.14.

Table 28: Volume of trading in Programmed’s shares up to and including 9 February 2007


9 February 2007

Closing share price

(high) $

Closing share price

(low) $

VWAP

$

Cumulative volume

000s

As a % of issued capital

1 week 5.14 5.00 5.08 2,337 3.3% 1 month 5.38 4.89 5.13 4,512 6.3% 3 months 5.38 4.55 5.02 8,485 11.9%

Source: Bloomberg

As noted in section 7.11 above, trading in Programmed’s shares have exhibited a modest level of liquidity, with no apparent impediments to trading, and therefore can reasonably be taken to be representative of the price that a portfolio shareholder could have realised their investment during the period.

We note that:

The closing price for a Programmed share on the last trading prior to the announcement of the Scheme of $5.14, implies a value for the Consideration of $2.64 per Integrated to be acquired, which represents a premium to $2.56, being the low end of our range of assessed fair values for an Integrated share cum dividend and already inclusive of premium for control.

The three month VWAP of $5.02 implies a value for the Consideration of $2.61 per Integrated share to be acquired, which represents a premium to $2.56.

The lowest closing price of $4.55 for a Programmed share in the three months prior to the announcement of the Scheme implies a value for the Consideration of $2.48 per Integrated share, which represents a discount to $2.56.

The highest closing price of $5.38 for a Programmed share in the three months prior to the announcement of the Scheme implies a value for the Consideration of $2.70 per Integrated share which represents a premium to $2.56.


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Brokers’ notes

Programmed has a reasonable level of following in the Australian broking community, with a number of broking houses releasing briefing papers in the period prior to the announcement of the Scheme. An overview of each of the papers available to us is set out below.

Table 29: Comparison of brokers’ stock recommendations for Programmed

Broker Date of report Share price (at date of report)

$

Pricetarget

$

Stock recommendation

1 1 December 2006 4.83 5.07 Hold 2 30 November 2006 4.76 4.90 Outperform 3 30 November 2006 4.76 4.65 Underperform 4 29 November 2006 4.75 4.82 Buy 5 29 November 2006 4.75 4.80 Neutral 1 6 29 November 2006 4.75 4.65 Neutral 7 29 November 2006 4.75 4.50 Hold Average 4.77 Median 4.80

Source: Various brokers’ reports on Programmed

In considering the above table we note that Programmed announced its Interim Results for the six months ended 30 September 2006 on 29 November 2006.

We note that the median of the brokers’ forecasts included in the table above for a Programmed share of $4.80 this implies a value for the Consideration of $2.55 per Integrated share, which compares to the low end of our range of assessed fair values for an Integrated share, inclusive of premium for control, of $2.56.

A review of each of the brokers’ notes available to us released subsequent to the announcement of the Scheme indicates that generally brokers consider there to be both commercial and strategic logic for the Scheme. A summary of briefing papers available to us released immediately after the announcement of the Scheme (incorporating the perceived impact of the Scheme) is set out below.


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Table 30: Comparison of brokers’ stock recommendations immediately subsequent to the announcement the Scheme

Broker Date of report Share price (day prior to

announcement of Scheme) $

Pricetarget

$


1 13 February 2007 5.03 6.35 Buy 2 12 February 2007 5.03 5.79 Neutral 3 12 February 2007 5.03 5.27 Hold 4 12 February 2007 5.03 6.50 Buy 5 12 February 2007 5.03 5.80 Neutral

Average 5.94 Median 5.80


Post bid trading prices

In the period since the announcement of the Scheme to 9 March 2007, Programmed shares closed in the range of $5.08 to $5.40. The closing price for a Programmed share on the day prior to the date of this report was $5.15, representing a slight premium to the closing price of $5.14 on the last trading day immediately prior to the announcement of the Scheme.

Having regard to each of the above considerations, we believe there are reasonable prospects that a Programmed share would trade at a price in the immediate future such that the implied value of the Consideration to be provided under the Scheme is at or greater than the low end of our assessed values for an Integrated share cum dividend and inclusive of premium for control. As noted in section 11, there is risk that immediately following completion of the Scheme, Programmed shares may experience a period of increased volatility than may necessarily be the case over the longer term as investors seek to rebalance their investment portfolios.

11 Assessment of the Scheme

In our opinion the Scheme is in the best interests of Integrated shareholders

The primary matter considered by us in forming this opinion was whether the Consideration offered under the Scheme for each fully paid ordinary Integrated share on issue, being $1.25 cash, 0.26 new fully paid ordinary Programmed shares and the right to retain the $0.05 interim dividend declared by Integrated, reflects a fair consideration for Integrated shareholders. However, a number of other issues were also considered in forming our opinion, which are discussed in detail below.

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Brokers’ notes

Programmed has a reasonable level of following in the Australian broking community, with a number of broking houses releasing briefing papers in the period prior to the announcement of the Scheme. An overview of each of the papers available to us is set out below.

Table 29: Comparison of brokers’ stock recommendations for Programmed

Broker Date of report Share price (at date of report)

$

Pricetarget

$


1 1 December 2006 4.83 5.07 Hold 2 30 November 2006 4.76 4.90 Outperform 3 30 November 2006 4.76 4.65 Underperform 4 29 November 2006 4.75 4.82 Buy 5 29 November 2006 4.75 4.80 Neutral 1 6 29 November 2006 4.75 4.65 Neutral 7 29 November 2006 4.75 4.50 Hold Average 4.77 Median 4.80


In considering the above table we note that Programmed announced its Interim Results for the six months ended 30 September 2006 on 29 November 2006.

We note that the median of the brokers’ forecasts included in the table above for a Programmed share of $4.80 this implies a value for the Consideration of $2.55 per Integrated share, which compares to the low end of our range of assessed fair values for an Integrated share, inclusive of premium for control, of $2.56.

A review of each of the brokers’ notes available to us released subsequent to the announcement of the Scheme indicates that generally brokers consider there to be both commercial and strategic logic for the Scheme. A summary of briefing papers available to us released immediately after the announcement of the Scheme (incorporating the perceived impact of the Scheme) is set out below.


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11.1 Assessment of the key issues The Consideration is fair as it falls within our range of assessed fair values for an Integrated share

We have assessed the full underlying value for an Integrated share cum dividend and including a premium for control, to lie in the range of $2.56 to $2.93.

As illustrated in the figure below, our range of assessed fair values for an Integrated share falls within our range of assessed fair values for the Consideration offered under the Scheme of between $2.62 and $2.80 comprising:

$1.25 in cash

$1.32 and $1.50 in respect of 0.26 new fully paid Programmed shares

the $0.05 dividend entitlement

Figure 13: Comparison of assessed fair value of one Integrated share against the Consideration

Assessed value comparison

2.5 2.6 2.7 2.8 2.9 3.0

C o nsiderat io n

Integrated

$


We note that our range of assessed fair values for the Consideration is relatively narrow in absolute terms reflecting that a significant portion of the Consideration is represented by a fixed cash and dividend component. Furthermore, as a result of the terms of the Scheme, being 0.26 Programmed shares for every one Integrated share, the range of assessed fair values for the scrip component of the Consideration is effectively narrowed in comparison to the range of values for each Programmed share.

Our assessment as to the range of values for an Integrated share has been undertaken on a sum of the parts basis, incorporates a premium for control and is cum dividend. It does not include unique strategic or operational benefits to Programmed associated with control of Integrated. We note that Integrated’s shareholders will be entitled to approximately 20.9 percent of the expanded capital base of Programmed after


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completion of the Scheme. Accordingly, they will effectively participate indirectly in a proportional entitlement of approximately 20.9 percent with respect to any cost savings and/or unique synergies realised by Programmed.

There is no reason to expect that a Programmed share would trade below $4.85 in the immediate future, all other things being equal

Having regard to:

the recent trading history in Programmed shares, both prior to and subsequent to the announcement of the Scheme

investment reports of various broking houses in relation to Programmed released prior to the announcement of the Scheme

we believe, on balance, it is reasonable to expect that a Programmed share would trade at or above $4.85 in the immediate future, all other things being equal, such that the implied value of the Consideration is at or greater than the low end of our assessed full underlying values for a share in Integrated as a stand alone entity. However, as noted below, there is a prospect of increased volatility in Programmed’s share price, at least in the short term, following completion of the Scheme as investors seek to rebalance their investment portfolios.

We note that the closing price for a Programmed share on the trading day prior to the date of this report was $5.15 per share, which based on the terms of the Scheme implies a value for the Consideration of $2.64.

Based on the terms of the Scheme and the closing price for a Programmed immediately prior to the announcement of the Scheme, Integrated shareholders are receiving a reasonable premium to the price at which Integrated shares traded prior to the announcement

Programmed shares closed at $5.14 on the last trading day immediately prior to the announcement of the Scheme on 12 February 2006. Based on the terms of the Scheme this implies a market consideration of approximately $2.64 per Integrated share on the date of the announcement, which represents a premium to the VWAP for an Integrated share measured at various points in the three months prior to the announcement of the Scheme.

Table 31: Comparison of implied consideration to Integrated VWAP


9 February 2007

Integrated VWAP $

Implied consideration$

% premium

1 day 2.28 2.64 15.8 1 week 2.25 2.64 17.3 1 month 2.11 2.64 25.1 3 months 1.99 2.64 32.7

Source: Bloomberg


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11.2 Implications if the Scheme is not approved It is likely that the share price of Integrated will fall

The Board of Integrated has advised that if the Scheme is not approved, Integrated will continue to be listed on ASX and the Company will pursue the stated operating strategy put in place prior to the receipt of the offer from Programmed.

On the last trading day prior to the announcement of the Scheme on 12 February 2007, Integrated shares closed at $2.26. The Company’s shares closed on 12 February 2007 at $2.61 on ASX and have subsequently traded in the range of $2.53 to $2.62 on ASX. Whilst this increase from pre-announcement levels may reflect factors in addition to the Scheme, including the release of Integrated results for the six months ended 31 December 2006 and general market movements, we consider it reasonable to expect that this increase can, at least in part, be attributed to the market’s perception as to the benefits of the Scheme to Integrated shareholders, including the implied premium being offered.

Accordingly, having regard to our range of assessed fair values for Integrated and other information contained in the Scheme Booklet, in the event the Scheme is not approved, it is likely that Integrated shares will fall from current trading levels.

However it is also possible the Company’s shares may trade at above pre-announcement levels as a consequence of the additional information provided to the market, in particular, information contained in this report and in the balance of the Scheme Booklet in relation to the prospects of the Company for the future.

In addition, the growth strategy of Integrated may not be achieved as expediently and the other benefits of the Scheme discussed above will not be realised, in these circumstances is may take a reasonable period of time for Integrated to return to the level of recent trading prices.

We note that having regard to nature and location of Programmed’s existing infrastructure around regional Australia, New Zealand and the UK, completion of the Scheme will, in effect, facilitate the strategic initiatives Integrated was pursuing prior the announcement of the Scheme within a much quicker timeframe than Integrtaed would be able to achieve as a stand-alone entity.

11.3 Other considerations Integrated shareholders will be entitled to participate in any dividend declared by Programmed in relation to the financial year ending 31 March 2007

In addition to their entitlement to the Consideration, Integrated shareholders will also be entitled to receive any final dividend declared by Programmed for the financial year ending 31 March 2007. In the event that the Scheme is not implemented prior to the Programmed record date for payment of the Programmed dividend, the Implementation Agreement provides for Integrated, subject to any requirements of the Act, to pay to Integrated’s shareholders an equivalent replacement dividend.

Whilst not necessarily indicative of future dividend payments, we note that Programmed paid a final dividend of $0.095 per share, fully franked, in relation to the year ended 31 March 2006.


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Given the level of dividend that may be payable, if any, is not known at this time, we have not factored this payment into our assessed value of the Consideration

There is a reasonable prospect that the market for shares in the expanded Programmed after implementation of the Scheme be more liquid and may potentially be re-rated

As a result of the expanded Programmed having an increased scale of operations, a more diversified suite of service offerings and prospects for accelerated growth than either Programmed or Integrated as independent entities, this may result in a greater number of investors being attracted to the expanded Programmed than would otherwise be the case, which should, all other things being equal, translate into a greater level of liquidity in share trading.

Based on the market capitalisation of Integrated and Programmed at the close of the last trading day before the announcement of the Scheme, the expanded Programmed’s market capitalisation would be in the order of $525 million, before any adjustment for the benefits of the merger. This level of capitalisation may result in the merged entity’s inclusion in the ASX 200 Industrials Index, which may in turn translate to an increased following by fund managers. As shareholders in the expanded Programmed, current Integrated shareholders would participate in any benefit resulting from this increased demand.

We note however that Programmed’s closing price increased from $5.14 on the last trading day prior to the announcement of the Scheme to $5.40 on the date of the announcement, this may indicate that the market has already factored in at least part of any benefits expected to be realised from the merger.

The value of an Integrated share to Programmed is likely to exceed our assessed fair value range

Whilst the level of direct cost synergies likely to be available to Programmed are not a significant driver of the merger, both Integrated and Programmed believe there is potential for Programmed to realise various revenue synergies. In particular, through acquiring Integrated, Programmed expects it may:

enable faster penetration by Integrated’s workforce division of regional Australia and overseas markets through the use Programmed existing infrastructure in these areas


provide access to new customers for each business through the ability to leverage each other’s existing customer relationships to generate additional revenue.

The final quantum of these benefits, if any, is uncertain and will not be known for some time. Based on the terms of the Scheme, Integrated’s shareholders will be entitled to approximately 20.9 percent of the expanded capital base of Programmed after completion of the Scheme. Accordingly, they will effectively participate indirectly in a proportional entitlement of approximately 20.9 percent with respect to any cost savings and/or other synergies realised by Programmed.


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Integrated’s largest shareholder has already indicated it is his current intention to vote in favour of the Scheme

Mr Jonathan Whittle holds a beneficial interest in approximately 10.0 percent of Integrated’s issued capital. In order for the Scheme to be approved this requires approval of at least 75 percent in value and 50 percent in number of shareholders voting at the meeting to consider the Scheme. Accordingly, the intentions of Mr Whittle in relation to the acceptance of the proposed terms for the Scheme are important to the success or otherwise of the Scheme. Mr Whittle has, as a Director of the Company, recommended, in the absence of a superior offer emerging and given KPMG’s opinion that the Scheme is in the best interests of Integrated shareholders, that Integrated shareholders vote in favour of the Scheme and that, subject to the same qualification, he intends to vote in favour of the Scheme.

Programmed shareholders have enjoyed a more stable relative rate return in recent times

Whilst historical performance is not necessarily indicative of future movements in Programmed’s share price, we note that investors in Programmed enjoyed a more stable comparative rate of return on funds invested over period leading to the announcement of the Scheme as shown in the table below.

Table 32: Comparative rate of return

Integrated Programmed Period up to and

including9 February 2007

Simple price appreciation

%

Total return1%

Simple price appreciation

%

Total return1%

1 week 16.00 16.00 8.00 8.00 1 month 37.37 37.37 6.30 6.30 3 months 38.83 38.83 18.68 20.78 6 months 21.40 24.62 28.57 30.85 1 year 76.95 87.47 52.54 59.03 2 years 2.76 15.47 61.19 76.17 Note1 Total return assumes the gross value of any dividends paid is reinvested in the company's shares

Source: Bloomberg

The volatility in the total rate of return for Integrated measured at various points in the two years prior to the announcement of the Scheme reflects the significantly underlying volatility in Integrated’s share price over this period.

Overall, the business risk profile of Programmed is relatively low, due to the nature of the company’s contracts and client base i.e. government, associated infrastructure and larger corporations, each of which has contributed to consistent and stable of earnings growth over an extended period.

The potential for a counter bid cannot be discounted.

Whilst the Directors of Integrated have informed us that they are not aware of any formal offers either for the Company as a whole or for individual assets subsequent to the announcement of the Scheme, given the


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Company’s assessment that other parties with reasonable scale already operating in the workforce recruitment sector may potentially be able to extract a significantly greater level of direct cost savings by acquiring Integrated than Programmed, the prospect of an alternative offer emerging can not be discounted.

The Scheme is subject to a number of conditions precedent that are yet to be satisfied

The Implementation Agreement sets out that completion of the Scheme is subject to the satisfaction of a number of conditions precedent, including the finalisation of various transaction documentation and obtaining various consents. As at the date of this report a number of these conditions are yet to be satisfied.

The Directors unanimously recommend, in the absence of a superior offer, acceptance of the Scheme

Given no competing bid for the Company has emerged and KPMG’s conclusion that the Scheme is in the best interests of Integrated shareholders, we are advised that at the date of this report that each of the Directors of Integrated has, in the absence of a superior offer, recommended acceptance of the Scheme and this recommendation has not been withdrawn.

Dividends

Both Integrated and Programmed have a history of paying dividends. Integrated has historically paid fully franked dividends. Integrated estimates that, based on the dividend declared in respect of the six months ended 31 December 2006, the remaining balance of the franking account would be approximately $9.9 million.

In contrast, Programmed’s dividends in respect of the year ended 31 March 2006 were the first dividends paid by Programmed that had been fully franked. Programmed estimates that it currently has approximately $3.2 million in franking credits available to it.

In the event the Scheme is successful, Programmed will have access to the balance of Integrated’s franking account.

Programmed has indicated that whilst it has a policy of paying dividends, no assurance can be given as to the amount or timing of any dividends payable by the expanded Programmed as they are dependent upon, amongst other things, future profitability and funding requirements and general economic conditions.

We also note that no allocation of the purchase price to identifiable intangible assets of Integrated on acquisition has been performed by Programmed. To the extent that any identifiable intangible assets of Integrated with finite lives are identified, these will be required to be amortised by the expanded Programmed over their useful lives, which will adversely impact upon the future earnings of the expanded Programmed. Depending upon the final quantum of any amortisation charge this may potentially adversely impact upon the quantum of any dividends able to be paid by the expanded Programmed.


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Integrated shareholders’ interests in the Company’s business and assets will be diluted

Excluding any shares Integrated shareholders may already hold in Programmed, Integrated shareholders’ interest in the Company’s existing business and assets will be diluted to approximately 20.9 percent in the event that the Scheme proceeds. However, Integrated shareholders will receive a similar interest in the larger existing business and portfolio of assets of Programmed.

Additional one off-costs

Integrated has estimated that the total costs of implementing the Scheme are likely to be in the order of $6.0 million. We note however that a significant portion of these costs will have been incurred, or will be committed, prior to the date that the shareholders will vote on the Scheme and will be payable whether or not the Scheme is successfully implemented. In event the Scheme is not implemented, Integrated may also be liable to pay a break fee of $1.9 million to Programmed depending upon the reason for the failure of the Scheme.

Involuntary disposal of shares

Programmed will not be obliged to issue new Programmed shares to Integrated shareholders whose address is shown in Integrated’s shareholder register as being a place outside of Australia or New Zealand unless Programmed determines it is lawful and not unduly onerous or impractical to do so.

In the event new Programmed shares are not issued to ineligible Integrated shareholders, then the shares that would otherwise have been issued to these parties will be issued to a nominee and sold as soon as practicable, with the proceeds, net of costs, remitted to the relevant shareholders, notwithstanding they may have desired to retain an interest in the expanded Programmed.

Transition risk

There is a potential that various Scheme shareholders will seek to realise their new portfolio holdings in the expanded Programmed in the period following the implementation of the Scheme to rebalance their investment portfolios and/or realise the shareholdings of ineligible foreign shareholders. In the these circumstances, until the shareholder base of the expanded Programmed is rebalanced, a risk exists of greater volatility in the company’s share price, at least in the short term, than would otherwise be the case over the longer term, all other things being equal.

Taxation

In the event the Scheme is approved, Integrated shareholders will receive cash and 0.26 new Programmed shares for every one Integrated share they hold. Integrated shareholders are strongly encouraged to read the outline of the taxation implications of accepting the Scheme prepared by Integrated, which is included in the Scheme Booklet at section 6 and, if in any doubt, should seek their own independent taxation advice regarding the taxation consequences of the Scheme.


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Other issues

The decision of Integrated shareholders as to whether or not to vote in favour of the Scheme is a matter for individual shareholders based on their risk profile, liquidity preference, investment strategy and tax position. In particular, the taxation consequences (specifically the extent to which CGT will be payable) will vary widely depending on the individual circumstances of each shareholder.


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Appendix 1

Qualifications and declarations

KPMG Corporate Finance (Aust) Pty Ltd (KPMG) is the holder of an Australian Financial Services Licence, No 246901, under the Corporations Act 2001 and is controlled by the partners of KPMG Chartered Accountants (the KPMG Partnership). The KPMG Partnership is a long established firm of chartered accountants which provides a full range of professional services, including advising on valuations, acquisitions, takeovers, restructuring proposals, reorganisations and related matters.

The following persons, whose qualifications and experience are stated below and which are appropriate to the tasks performed, were responsible for the preparation of this report.

Mr Duncan Calder is a partner of the KPMG Partnership and an executive director of KPMG. Duncan is an Associate of the Institute of Chartered Accountants in Australia and of the Institute of Chartered Accountants in England and Wales as well as an Associate of the Financial Services Institute of Australasia. Duncan has over 18 years experience in the preparation of independent expert reports and has been personally involved in a wide range of valuation assignments conducted by KPMG.

Mr Jason Hughes is a director of KPMG, an Associate of the Institute of Chartered Accountants in Australia and 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.

Mr Steve Scudamore is a partner of the KPMG Partnership, an executive director of KPMG, Chairman of the KPMG Partnership’s Perth practice and past National head of KPMG’s valuations practice. Steve is a Fellow of the Institute of Chartered Accountants in Australia as well as a Senior Fellow of the Financial Services Institute of Australasia. Steve has over 20 years experience in the preparation of independent expert reports and has been personally involved in a wide range of valuation assignments conducted by KPMG.

Messrs Calder, Hughes and Scudamore were assisted in the preparation of this report by other KPMG staff.

Declarations

The statements made in this report are given in good faith and have been derived from information believed to be reliable and accurate. We have examined this information and have no reason to believe that any material factors have been withheld from us.

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


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Interests

KPMG is entitled to receive a fee of $180,000 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 KPMG Partnership is entitled to receive time based fees of approximately $15,000 for the preparation of taxation advice in relation to implications of the Scheme for Integrated Shareholders.

The KPMG Partnership has also provided professional services to Integrated in the form of ad hoc taxation and accounting advice in the past, for which it has received time based fees. Fees received for the provision of these services over the past two years total, in aggregate, approximately $410,000. None of these services were related to the Scheme. Further, the KPMG Partnership is currently providing tax services to Integrated for which it will be entitled to receive fixed fees totalling approximately $15,000. None of these services were related to the Scheme

In addition to the abovementioned fees for the preparation of this report, KPMG Transactions Services has received time based fees totalling, in aggregate, approximately $170,000 in relation to the provision of due diligence services to Integrated in the two years prior to the date of this report. Further, KPMG Transaction Services is currently providing due diligence services to Integrated for which it will be entitled to receive fixed fees totalling approximately $115,000. None of these services were related to the Scheme.

The KPMG Partnership has provided taxation services on behalf of Programmed in the past. Fees for these services totalled, in aggregate approximately $180,000 over the past two years.

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 shares in Integrated and/or Programmed. However, no individual involved in the preparation of this report, or review thereof, holds a direct interest in either Integrated or Programmed shares.

With the exception of these matters, none of KPMG or the KPMG Partnership will receive any other benefits, whether directly or indirectly, for or in connection with the making of this report.

Consent

KPMG consents to the inclusion of this report in the form and context in which it is included with the Scheme Booklet to be issued to the shareholders of Integrated. Other than this report and the separate taxation advice, neither KPMG nor the KPMG Partnership has been involved in the preparation of the Scheme Booklet or any other document prepared in respect of the Scheme. Accordingly, we take no responsibility for the content of the Scheme Booklet as a whole or other documents prepared in respect of the Scheme.


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Reliance on information

The sources of information upon which this report has been based are set out in Appendix 2 to this report. Whilst KPMG, has no reason to believe that such information is anything but reliable and accurate, KPMG has not in any way caused such information to be independently verified or audited. We have no reason to believe that any information relied on by us is incomplete or incorrect.

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 value either positively or negatively.

We note that any forecasts and projections as supplied to us are based on assumptions about events and circumstances that have not yet transpired. Accordingly, KPMG cannot provide any assurance that the estimates will be representative of the results that will actually be achieved during the forecast period.

As this report has been prepared specifically for Scheme shareholders, none of KPMG, the KPMG Partnership, or any director, member or employee thereof undertakes responsibility to any other person in respect of this report, including any errors or omissions howsoever caused.

Indemnification

A condition of KPMG’s agreement to prepare this report was that Integrated indemnifies KPMG against any and all losses, claims, damages and liabilities arising out of or related to reliance on information provided by the Company.


96

Appendix 2

Sources of information

In preparing this report and arriving at our opinion, we have considered, amongst others, the following principal sources of information:

Integrated

audited consolidated financial statements for Integrated in relation to the years ended 30 June 2004, 2005 and 2006, including various supporting worksheets and calculations

independently reviewed consolidated financial statement for the six months ended 31 December 2006, including various supporting worksheets and calculations

internal management financial projections for the year ended 30 June 2007

draft Scheme Booklet dated March 2007

Merger Implementation Agreement dated February 2007

various announcements by Integrated to ASX

Integrated’s Top 10 Shareholder register as at 28 February 2007

various brokers’ notes in relation to Integrated and selected comparable companies

various economic analysis papers by market commentators

discussions with Integrated directors and management

Integrated website

various databases including:

Bloomberg

Datamonitor

IBISWorld Pty Ltd

OneSource Information Services

Programmed

audited consolidated financial statements for Programmed in relation to the years ended 31 March 2005 and 2006

Independently reviewed consolidated financial statements for the six months ended 30 September 2006

unaudited consolidated management accounts for Programmed in relation to the 9 months ended 31 December 2006, including various supporting worksheets and calculations

internal management financial projections for the year ended 31 March 2007

various announcements by Programmed to ASX

various brokers’ notes in relation to Programmed and selected comparable companies


97

various economic analysis papers by market commentators

discussions with Programmed directors and management

Programmed website

ASX websites

various databases including:

Bloomberg

OneSource Information Services

IBISWorld Pty Ltd


98

Appendix 3

Industry Overviews

Employment placement services The employment placement services industry includes companies involved in personnel search, selection, referral and placement in relation to employment in various fields. These services may be directed to the potential employer or prospective employee, and cover job descriptions, screening and testing of applicants, and investigation of references.

Some of the primary activities conducted by operators in this industry are outplacement service, executive search, employment office operation and employment agency operation.

Industry size

The employment placement industry has experienced significant change and strong growth in recent years. These changes have been largely driven by the Federal Government reforms to employment assistance. This move replaced the government operated employment service operation with a completely outsourced service, the Job Network.

Fees from services provided to Job Network make up the large majority of revenue in the employment placement services industry, with the next largest area being executive search and permanent placement services.

IBISWorld’s estimates of industry revenue in the years from 2001/2002 to 2005/2006 are shown in the chart below.

Figure A1: Employment placement revenue

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2002 2003 2004 2005 2006

Year ended 30 June

Rev

enue

($m

)

Source: IBISWorld


99

Demand

Demand for employment placement services largely follows the economic cycle. In times of strong growth and low unemployment, many businesses encounter trouble in filling skilled and unskilled positions and seek assistance from employment placement services operators.

Competition

The industry is highly price competitive, with many operators reducing fees to win contracts, particularly in times of low economic growth. Competition is also on the basis of quality of service and level of client satisfaction. An increasing trend has been the use of preferred supplier contracts, which result in a long term, discounted fee for service payment system.

The level of industry concentration is medium, with the four largest players making up approximately 65 percent of revenue in 2005. The industry is made up of many small businesses. We note that while initial barriers to entry are low, large amounts of capital is required to achieve a significant market presence.

Recent performance and outlook

In the five years to 2006/2007, IBISWorld estimated that the employment placement industry recorded average growth of 2.7 percent per year. This has been driven by stronger employment growth from 2004, outsourcing of employment services by government and business, and modification of the Job Network programme.

Over the five years to 2011/2012, industry revenue is forecast by IBISWorld to grow at an average rate of 3.8 percent per year. This growth is expected to be largely driven by continuing strong economic growth, and outsourcing of employment placement by business and government. IBISWorld’s forecasts of revenue and growth are shown in the figure below.

Figure A2: Forecast revenue and growth

0

500

1,000

1,500

2,000

2,500

2007 2008 2009 2010 2011 2012

Year ended 30 June

Rev

enue

($m

)

0.0%0.5%

1.0%1.5%

2.0%2.5%

3.0%3.5%

4.0%4.5%

Gro

wth

Revenue Growth

Source: IBISWorld


100

Provision of Contract Staff The contract staff services industry covers companies who supply their own employees to other business for a fee or on a contract basis.

Industry size

The market for contract staff is large and employs a large number of people. IBISWorld estimates that in 2005/2006, the industry generated $11,362.0 million in revenue. IBISWorld estimates that the industry has employed over 300,000 people since 2004, with current estimates at over 313,000 employees.

Figure A3: Contract staff revenue and employees

0

2,000

4,000

6,000

8,000

10,000

12,000

2002 2003 2004 2005 2006

Year ended 30 June

Rev

enue

($m

)

285,000

290,000

295,000

300,000

305,000

310,000

315,000

Em

ploy

ees

Revenue Employees

Source: IBISWorld

The vast majority of industry revenue is derived from the on-hiring of staff to other companies. This covers the hiring of apprentices, trainees, contract staff and temporary staff.

Strong growth has been experienced in the contract maintenance area. This involves services for preventative maintenance, plant performance monitoring and shut down, and general maintenance.

The division of income and employees by state for the contract staff industry approximate the general distribution of population. This division is shown in the charts below.


101

Figure A4: Division of income and employees by state

Employees

NT0.7%

Tas1.3%

ACT1.5%SA

6.6%

WA7.8%

Qld18.9%

Vic26.6%

NSW36.6%

Source: IBISWorld

Demand

Demand has been traditionally related to the economic cycle, in particular following the overall trend in employment growth.

Recent influences on demand have been:

increasing trend to provide labour for contract maintenance and project management, particularly in transport and utilities (including telecommunications)

increasing use by the public and private sector of contract staff for outsourcing of some activities.

Competition

Competition in the industry is high and increasing. Within the industry, there is a high level of price competition, with contract fees being reduced to win clients.

There are a large number of small operators, as barriers to entry are low. There are no significant barriers to entry except for appropriate skills and knowledge. Capital and regulatory requirements are very low, and net profit margins are typically small.

Industry concentration is low, with IBISWorld estimating that the largest four players in the contract staff industry accounted for less than 13 percent of revenue in 2006.

Aside from the competition to win customers, another aspect of industry competition is securing suitably qualified and experienced staff. It is therefore advantageous to be reputed and appropriately knowledgeable amongst potential clients as well as the labour force.

Income

NSW32.7%

Vic30.0%

Qld13.8%

WA10.1%

SA8.5%

ACT2.7%

Tas1.6%

NT0.5%


102

For some operators, the key to success has been the personal relationships developed with clients, maintenance of quality service, and ensuring the client's satisfaction.

There is also external competition with companies who have an in house human resources function. For these companies, the human resources function will handle employment and training requirements.

In addition, for large infrastructure, communications or other projects, large construction companies may offer the client a total package of designing, building, operating and maintaining the facilities. This provision of a wide range of services will reduce the possibility of involvement from contract staff.


The contract staff services industry is currently in a growth phase.

Drivers for growth in the current period include:

changing structure of the work force, and changing needs of both businesses and employees

outsourcing of some non-core activities by government and private sector entities.

More specifically, recent trends of note have been:

Employers seeking more flexibility in the employment of labour to cope with peaks and troughs in business levels, as well as any special requirements. This has been assisted by deregulation in the labour market.

Concentration by major companies on their core lines of business. As a result, these businesses have outsourced activities such as routine repairs and maintenance.

Outsourcing of routine maintenance work has also been more prevalent in certain industries or at certain times (e.g. during holidays).

Shortage of appropriately skilled and trained staff in certain occupations and industries.

Change in attitude of employees, no longer wanting to be in the same job for long periods of time.

Industry performance was strong in the 2004 financial year, in line with improved economic growth. For the 2005 and 2006 financial years, industry growth was still positive, but slowed, following the general trend in the economy. A key factor behind the level of growth recorded is the impact of general economic growth on residential construction.

Datamonitor reported that the Asia Pacific employment services market, which includes temporary staffing as its major component, grew at a compound annual growth rate of 7.8 percent for the five years from 2001


103

to 2005. This rate of growth was notably higher than for the European and American regions, although it was coming off a much smaller base.

For the 2007 financial year, growth in the contract staff services industry is again expected to be modest as a result of low economic growth. It is anticipated that as a result of this, price based competition within the industry will increase.

Growth is forecast to be strong in the 2008 and 2009 financial years, as a result of forecast stronger economic growth. Over the five years to 2011/2012, it is expected that industry revenue will consistently grow at fairly modest rates. This will be largely driven economic growth and the resultant increase in demand for labour. The chat below shows IBISWorld forecasts of revenue and growth rates in the contract staff industry.

Figure A5: Forecast revenue and growth

10,500

11,000

11,500

12,000

12,500

13,000

13,500

14,000

2007 2008 2009 2010 2011 2012

Year ended 30 June

Rev

enue

($m

)

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Gro

wth

Revenue Growth

Source: IBISWorld


104

Painting and decorating services This industry covers companies engaged in painting, decorating or wall papering houses, buildings and other structures.

Industry size

The market for painting and decorating services is largely derived from construction of residential and other buildings. However, as painting is a common project undertaken by homeowners themselves, many painting and decorating jobs are not undertaken by industry participants.

The chart below shows IBISWorld’s estimates of industry revenue in the years from 2001/2002 to 2005/2006.

Figure A6: Painting and decorating services revenue

0

500

1,000

1,500

2,000

2,500

2002 2003 2004 2005 2006

Year ended 30 June

Rev

enue

($m

)

Source: IBISWorld

Demand

Industry demand is mainly driven by the building market. Smaller amounts of work in terms of the total market are also sourced from the heavy industrial construction and equipment maintenance market.

IBISWorld estimates that approximately 60 percent of work in the painting and decorating industry by value is directed towards residential construction projects. Between 30 to 35 percent of work is for non-residential construction.

Competition

Competition between painters and decoraters is predominantly on the basis of price. Other considerations are the quality of workmanship and range of services provided.


105

Larger scale operators, including Programmed, Higgins Coatings and Faraday & Kent offer a wide range of maintenance and building services. These services include painting, corrosion maintenance, plumbing and cleaning and offer more comprehensive benefits to the customer. Another key to generating sales is to establish a relationship with a property insurance fund, this can lead to a flow of maintenance and repair work.

Competition in the industry is high, with a large number of small operators. Entry and exit is easy for painting and decorating operators, as capital requirements are low, and there is currently little regulation. However, operators are expected to comply with the Building Code and Standards Australia.

Industry concentration is low. IBISWorld estimates that the four largest market participants, which includes Programmed, will account for less than 10 percent of industry revenue in 2006/2007. We note however, the Programmed’s market share of the commercial/non-residential market would be considerably higher. Beyond the two largest players, no other operator accounts for 1 percent or more of annual industry revenue.


According to IBISWorld estimates, the painting and decorating industry will record growth at an average rate of 3.3 percent per year in the five years to 2006/2007, matching the estimated pace of Australia's GDP growth.

There was particularly strong growth in 2002/2003 and 2003/2004 as a result of growth in the building markets and a surge in road and bridge construction activity.

Growth in the years to 2011/2012 is expected to be driven by a cyclical recovery in housing construction, as well as the continuation of strong growth in non-residential building. The figure below shows IBISWorld’s forecasts for revenue and growth in the painting and decorating services.

Figure 14: Forecast revenue and growth

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2007 2008 2009 2010 2011 2012

Year ended 30 June

Rev

enue

($m

)

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

Gro

wth

Revenue Growth

Source: IBISWorld


106

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107

Transaction overview

On 31 January 2007, Skilled acquired Auckland business ICE Personnel Ltd (ICE). Skilled is a provider of labour hire and staffing services in Australia and New Zealand. ICE provides contract and permanent skilled and semi skilled labour to the industrial, engineering and commercial sectors. ICE operates from South Auckland and has annual revenue of NZ$5 million. The acquisition of ICE provided Skilled with deeper penetration of the Auckland market and builds Skilled’s profile and position in New Zealand.

On 17 January 2007, Skilled announced the expansion of its staffing services business through the acquisition of Swan Contract Personnel (Swan). Swan provides engineering and technical professionals to approximately 45 companies in the oil and gas and mineral and mining sectors throughout Western Australia and Queensland. The acquisition is consistent with Skilled’s strategy to acquire well managed staffing services businesses in new market sectors and provide exposure to the specialised onshore and offshore oil and gas sector.

The strategic rationale for this acquisition was to provide Skilled with exposure to front end project work in the mining and minerals sector. The acquisition also provides Skilled with increased penetration of the oil and gas sector and access to an employee base consisting predominantly of engineering and technical specialists. It was intended that Swan will continue to operate as a separate business and brand after the acquisition. The total purchase price is estimated at $44 million and consists of an initial cash payment of $19 million and an 18 month earn-out arrangement structured based on a multiple of 6.0 times EBIT for the 2007 (25% weighting) and 2008 (25% weighting) financial years.

Skilled acquired Damstra Mining Services (Damstra) on 21 December 2006. Damstra specialises in the provision and training of skilled and semi skilled labour to black coal mining companies in New South Wales and Queensland. Skilled believe this is an excellent bolt on acquisition to the TESA mining business they acquired in September 2006. The strategic rationale for this acquisition was to increase Skilled’s capacity in black coal mining and provide Skilled with access to wider employee and client base and finger scan technology.

On 14 September 2006, Integrated acquired New Zealand business Wendell Group for $5 million, with an additional earn out amount available dependent upon future financial performance. Details in relation to Wendell have been set out previously in section 6 above.

Skilled completed its acquisition of labour hire firm, TESA Group Pty Ltd, on 1 September 2006 for $61.9 million. TESA operates in 18 locations throughout Australia and generated normalised revenue in 2006 of $163 million. The acquisition is consistent with Skilled’s strategic direction and focus to continue growing in the staffing services sector. The addition of the TESA business will increase Skilled’s market share in the blue collar sector while providing significant exposure to the black coal mining industry in New South Wales and Queensland. Skilled expects to realise synergy benefits of the acquisition of around $1 million by the end of the second year.

On 5 July 2005, Skilled acquired Extraman, a Perth based staffing services business for an estimated $20 million, which is based on an earn out arrangement of a multiple of 3.5 times average EBIT for


108

the 2005, 2006 and 2007 financial years and includes the assumption of Extraman’s debt. Extraman specialises in the provision of staff to the mining and resources and engineering industries. The acquisition provided Skilled with a significant addition to Skilled’s existing capabilities in the mining and resources sector. Subsequent to the acquisition Extraman was to continue to operate as a stand alone business and separate brand.

Skilled acquired Australia’s largest nursing agency network, Origin Healthcare Holdings Pty Ltd (Origin), on 17 February 2004 for a total acquisition cost of $57 million. The acquisition price also includes an additional performance-linked component depending on future EBITDA achieved by Origin. The rationale for the acquisition was to extend Skilled’s core staffing services business and deliver Skilled a new growth platform in an essential, non cyclical, high growth industry. With the ageing population structure and an ongoing shortage of nursing staff the healthcare sector is experiencing strong demand.

The acquisition also provided Skilled with access the Origin’s state-of-the-art technology platform and businesses processes that enable it to be the most efficient and lowest cost supplier in the Australian nursing agency market. As Origin’s technology platform is highly scalable and designed to facilitate the straightforward integration of bolt-on acquisition this acquisition provides Skilled with other potential acquisition opportunities in the nursing agency market.

On 17 August 2006, Skilled launched an offer to acquire listed national recruitment provider Catalyst Recruitment Systems Ltd (Catalyst). On 2 October 2006, Skilled declared the offer unconditional and effective control passed to Skilled on this date. On 15 November 2006, Skilled completed its compulsory acquisition of the remaining shareholding and become entitled to 100% ownership of Catalyst. The strategic rationale for this acquisition consisted of a number of reasons including strategic fit, access to the wine industry workforce sector, good cultural fit, consistent with Skilled’s growth strategy, low operational risk, positive financial impact and expected synergy benefits. Skilled expects to realise synergy benefits of the acquisition of around $2 million by the end of the second year.

On 30 May 2005, NCML (Holdings) Ltd acquired Forstaff and Chandler Macleod Group human resources outsourcing and recruitment businesses. After the acquisition the combined group commenced trading as Chandler Macleod Ltd. The rationale for the acquisition is that the merged group’s size and access to funds and management capabilities would position it ideally in a competitive market.

Integrated acquired Corpfit effective from 4 August 2004 for cash consideration of $3.45 million. Corpfit is a government registered training organisation providing workplace training across a range of industries on a national basis.

Integrated announced on 18 October 2004 that, with effect from 1 July 2004, it had completed the acquisition of the remaining 50 percent of Integrated Maintenance Services Pty Ltd (IMS) for $2.5 million. Established as a joint venture in 2001, IMS provides labour hire, contract maintenance, facilities management and project management services. Although it services a wide range of industries it has a focus on the aviation and communications sectors. Integrated considered that significant opportunities existed in the areas of contract maintenance and facilities management and moving to full ownership of IMS would enable the group to focus on realising these opportunities.


109

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110

Transaction overview

The acquisition of TIMEC Holdings Inc (TIMEC) by Transfield Services Ltd (Transfield) was announced on 22 February 2007 and is expected to be concluded by the end of March 2007. Transfield is an international provider of operations, maintenance, asset and project management services. It addition, Transfield owns, operates and maintains major infrastructure assets. TIMEC is a leading provider of industrial maintenance services to the United States oil and gas industry and provides services to 39 of the 150 refineries across the United States. TIMEC’s industry and skill set is the foundation stone of Transfield’s core business. The acquisition of TIMEC allows Transfield to continue their international expansion in the hydrocarbons industry by providing a strong growth platform in the United States.

On 8 June 2006 Transfield announced an agreement to acquire US Maintenance Inc (US Maintenance), a leading provider of outsourced contractor management services in the United States and which has a representation in 50 US states. The acquisition was completed during July 2006. The $372 million purchase price represented a 2007 financial year multiple of 9.7 times based on the company’s forecast earnings. This acquisition was to advance Transfield’s growth strategy of expanding its geographic footprint, industry and skill base to provide growth platforms which were immediately earnings accretive. US Maintenance manages more than 9,000 subcontractor entities which provide scheduled electrical, lighting and sign services, repair and disaster restoration services, as well as facility interior and exterior services across North America.

Programmed acquired Tungsten Group Pty Ltd on 10 October 2005 for almost $10 million. Tungsten is a facilities maintenance operator with a number of operations around Australia. The rationale for the acquisition was to further enhance Programmed’s existing capabilities and continue Programmed’s strategic progression to being able to offer a fully integrated range of property and infrastructure services to its clients.


111

Appendix 5

Comparable company analysis - Integrated

Profiles of the selected companies covered above are set out in the table below.

Comparable staffing company profiles Company Financial year

endCompany description

AustralianSkilled Group June Provides contract labour services to various

industries, commerce and government agencies. Supplies skilled tradesmen and professionals in engineering, drafting, nursing and maintenance.

Candle Australia June Provides contract personnel services and recruitment of permanent personnel to IT, banking, finance and communications industries.

Chandler Macleod June Recruitment and human resources consulting service company providing services to blue collar, white collar and executive clients.

Ross Human Directions June International recruitment agency providing clerical and administrative staff, secretaries, personal assistants, receptionists, desktop publishers, HR admin, marketing assistants, data entry operators and accounts staff.

Peoplebank Australia June Offers human resources services, recruiting IT personnel for Australian companies.

Ambition Group June (adjusted) Selects and recruits permanent and temporary employees in accounting, finance and IT sectors.

Hamilton James & Bruce June Group of Australian recruitment businesses which offer temporary, permanent and contracting services to banking and finance, accounting, IT, marketing, communications and law sectors.

HiTech Group June Provides recruitment and consulting services on a contract and permanent basis to the IT and telecommunications industries.

International Adecco SA December Personnel and temporary employment company.

Supplies personnel and temporary help, and offers permanent placements for professionals and specialists. Operates internationally.

Robert Half International December Provides temporary and permanent staffing services in the US, Canada and Europe.

Manpower December Provides non-governmental employment services through offices located around the world. Offers temporary staffing services, contract services, and training and testing of workers.

Resources Connection May Professional services firm providing accounting and finance, HR management, and IT professionals on a project-by-project basis.


112

Company Financial year end

Company description

MPS Group December Provides consulting, solutions and staffing services to businesses in the US, UK, Canada and Europe. Covers IT, accounting and finance, law, e-business, engineering and HR management.

Volt Information Services October Provides temporary and permanent staffing services, telecommunications and information solutions, and electronic publication.

CDI Corp December Provides staffing and outsourcing services to large companies in technical, IT, professional and administrative areas.

Spherion Corporation December Provides workforce management services. Provides talent assessment, search and recruitment, career consulting, human capital measurement and outsourcing.

Newcourt Group December Group operates in the outsourced service industry, covering security and recruitment.

Source: Bloomberg

Comparable maintenance and services company profiles


Company description

WorleyParsons June Provides professional services through alliance and integrated service contracts to the energy, resource and complex process industries.

Downer EDI June Provides engineering and infrastructure management services to the public and private rail, road, power, telecoms, mining and resources sectors in Australia and Asia Pacific.

Transfield Services June Provides operations and maintenance outsourcing services, covering structural, mechanical, instrumentation, civil and electrical maintenance.

United Group June Diversified engineering, construction and maintenance company. Operations include railway manufacturing, maintenance and engineering, as well as design, construction, operation and maintenance in mining, property, water, defence and petrochemicals industries.

Spotless Group June Provides a number of services including food, facilities management, cleaning, maintenance, laundry and print management.

Adsteam Marine June Provides marine support services for the Australian international shipping industry. Services include marine towage and lines, work boat and offshore services, marine salvage, and agency services at ports around the world.

Programmed Maintenance March Provides property maintenance services, primarily commercial painting as well as plumbing, grounds, landscaping and engineering.

Source: Bloomberg


113

Comparable company analysis - Programmed

Profiles of the selected companies covered above are set out in the table below.

Comparable maintenance and services company profiles


Company description

Australian Transfield Services June Provides a variety of operations and maintenance

outsourcing services, covering structural, mechanical, instrumentation, civil and electrical maintenance.

United Group June Diversified engineering, construction and maintenance company. Operations include railway manufacturing, maintenance and engineering, as well as design, construction, operation and maintenance in mining, property, water, defence and petrochemicals industries.

Spotless Group June Provides a number of services including food, facilities management, cleaning, maintenance, laundry and print management.

Monadelphous Group June Provides engineering and construction services to resources industries. Services include maintenance of machinery and equipment.

Service Stream June Specialised fixed, wireless and broadband telecommunications provider. Acquires property, plans, installs and maintains wireless communications facilities. Also does installation, construction and maintenance for the telecom industry.

Concept Hire June Provides plant hire services for the construction and building industry. Also provides commercial and construction management services and sale of scaffolding equipment.

Thomas & Coffey June Building contractor who provides construction design and management services. Also provides services for the upgrade, repair and maintenance for industrial and mining companies, and building services for property management industries.

KLM Group June Provides installation and maintenance of structured electrical, voice and data cabling in Australia. Services include design and construction of data centres, cabling, installation of conduits and pits, installing communications equipment and testing services.

International Babcock International Group March Offers support services such as facilities

management, training and support services to public sector institutions.

Mitie Group March Provides a variety of services for commercial and industrial properties. Operations cover air conditioning, painting, engineering services, catering, cleaning, security and waste services.


114


Company description

ABM Industries October Facility services contractor providing air conditioning, engineering, janitorial, lighting, parking, security and other outsourced facility services in North America.

Interserve December Group provides support, engineering, construction and equipment services in the UK and overseas. These include scaffolding, propping, painting, industrial cleaning, and electrical services.

Healthcare Services Group December Provides housekeeping, laundry, linen, facility maintenance and food services to the health care industry.

FirstService Corporation March Provides specialised property and business services in North America. Services include community association management, security, lawn car, business outsourcing etc.

Connaught August Provides facilities management and property services for commercial and residential buildings in the UK.

Cape December Supplies, manages and maintains industrial scaffolding, insulation, cleaning, painting and related services to major industrial groups.

Mears Group December Provides mechanical and building maintenance support services such as building, gas and air conditioning maintenance, and electrical servicing.

Jarvis March Group of international facilities management businesses. Services include rail maintenance, signalling, highway and airport maintenance, property and construction management, and education facilities outsourcing.

GSH Group July Offers facilities management services in Europe and the US.

Source: Bloomberg and company websites.

Appendix 2 Merger ImplementationAgreement


CONFORMED COPY

Merger Implementation AgreementDated

Integrated Group Limited (ABN 29 085 701 962) (“Integrated”)Programmed Maintenance Services Limited (ABN 61 054 742 264) (“Programmed”)

Cochrane Lishman Level 12 London House 216 St Georges Terrace Perth WA 6000 AustraliaT + 61 8 9262 5555 F + 61 8 9262 5522 www.cochranelishman.com.au


Merger Implementation Agreement Contents

© Cochrane Lishman 9405_14

Merger Implementation Agreement 12 February 2007

i

Details 1General terms 21 Agreement to proceed 21.1 Agreement to proceed with Scheme 2

1.2 Implementation of Merger 2

1.3 Timetable 2

2 Conditions Precedent 22.1 Conditions Precedent 2

2.2 Benefit of Conditions Precedent 4

2.3 Waiver of Conditions Precedent 4

2.4 Fulfilment of each Condition Precedent 5

2.5 Regulatory Approval 5

2.6 Notification 5

2.7 Consultation on failure of Conditions Precedent 5

2.8 Failure to agree 6

3 Scheme 63.1 Scheme 6

3.2 Amount of Scheme Consideration 6

3.3 Integrated dividends 7

3.4 Fractional entitlements 7

3.5 Foreign Holdings 8

3.6 Conditions 8

4 Employment and incentive arrangements 84.1 Integrated Managing Director 8

4.2 Integrated executives 8

5 Scheme Booklet 95.1 Preparation of Scheme Booklet 9

5.2 Programmed Information 9

5.3 Integrated Information 10

5.4 Consultation 10





ii

5.5 Programmed supplementary information 10

5.6 Updating the Scheme Booklet 10

5.7 Verification 11

6 Implementation 116.1 Board recommendation 11

6.2 Integrated’s obligations 11

6.3 Programmed’s obligations 14

6.4 Court representation 15

6.5 Court refusal 15

6.6 Costs of an appeal 16

6.7 Appointment of directors 16

6.8 Programmed to execute deed poll 16

6.9 Assistance of officers and advisors 16

6.10 Conduct of Business 16

7 Representations, warranties and covenants 177.1 Integrated’s representations and warranties 17

7.2 Programmed’s representations and warranties 20

7.3 Integrated’s indemnity 23

7.4 Programmed Indemnity 23

7.5 Information on representations and warranties 23

7.6 Reliance on representations and warranties 23

7.7 When warranties are given 23

8 Access, confidentiality and privacy 248.1 Access to information 24

8.2 Confidential information 24

8.3 Privacy obligations 25

9 Announcements 259.1 Public announcements 25

9.2 Public announcements required by law 25

10 Issue and trading of New Programmed Shares 26





iii

10.1 Issue 26

10.2 Quotation 26

10.3 Programmed Final Dividend 26

11 Costs and stamp duty 2612 Termination 2612.1 Right to terminate – Programmed 26

12.2 Right to terminate – Integrated 27

12.3 Right to terminate – either party 27

12.4 Notice 27

12.5 Effect of termination 28

12.6 Limitation 28

13 No-shop and no-talk obligations 2813.1 No-shop 28

13.2 No-talk 28

13.3 Notification and warranty and representation 28

13.4 Fiduciary duties carve out 29

14 Break fee 2914.1 Rationale 29

14.2 Programmed’s break fee 30

14.3 Integrated’s break fee 30

14.4 Compliance with law 31

14.5 Payment 31

15 Notices 3215.1 Form 32

15.2 Delivery 32

15.3 When effective 32

15.4 Receipt - post 32

15.5 Receipt - fax 32

15.6 Receipt - general 33

16 Assignment 33





iv

17 Severability 3318 Entire agreement 3319 No representations or warranties 3320 General 3320.1 Discretion in exercising rights 33

20.2 Partial exercising of rights 34

20.3 No liability for loss 34

20.4 Approvals and consents 34

20.5 Conflict of interest 34

20.6 Remedies cumulative 34

20.7 Rights and obligations are unaffected 34

20.8 Variation and waiver 34

20.9 No merger 34

20.10 Indemnities 35

20.11 Survival of representations 35

20.12 Further steps 35

20.13 Prompt performance 35

20.14 Time of the essence 35

20.15 Construction 35

20.16 Inconsistent law 35

20.17 Supervening legislation 36

20.18 Counterparts 36

20.19 GST 36

21 Governing Law 3622 Interpretation 3722.1 Definitions 37

22.2 References to certain general terms 48

22.3 Headings 49

Schedule 1 – Timetable 50Schedule 2 – Integrated securities 51





v

Schedule 3 – Programmed securities 52Signing page 53


Merger Implementation Agreement



1

Details

Interpretation – definitions are located at the end of the General terms

Parties Integrated and Programmed

Integrated Name Integrated Group Limited

ABN 29 085 701 962

Address Levels 1-3, 44A Kings Park Road, West Perth, WA 6005

Telephone +618 9216 2111

Fax +618 9216 2198

Attention Chief Executive Officer

Programmed Name Programmed Maintenance Services Limited

ABN 61 054 742 264

Address 52 Ricketts Road, Mt Waverley, VIC, 3149

Telephone +613 9562 8033

Fax +613 9562 8413

Attention Chief Executive Officer

Recitals A Integrated and Programmed have agreed to effect a transaction by means of a scheme of arrangement under Part 5.1 of the Corporations Act between Integrated and the Shareholders, pursuant to which Programmed will acquire all of the Scheme Shares (and Integrated will become a wholly-owned subsidiary of Programmed), in accordance with the terms of this Agreement.

B Integrated intends to propose the Scheme to the Shareholders and issue the Scheme Booklet.

C Integrated and Programmed have agreed in good faith to implement the Scheme upon the terms and conditions of this Agreement.

Governing Law Western Australia

Date of agreement

See Signing Page





2

General terms

1 Agreement to proceed 1.1 Agreement to proceed with Scheme

Integrated agrees to propose the Scheme in accordance with this Agreement and the Corporations Act, under which (subject to the Scheme becoming Effective) all of the Shares are transferred to Programmed, and Scheme Shareholders become entitled to receive the Scheme Consideration for each Scheme Share.

1.2 Implementation of Merger

Each party agrees to execute all documents and do all acts and things within its power as may be necessary or desirable for the implementation and performance of the Merger substantially in accordance with this Agreement, and, in particular, must comply with its obligations pursuant to this Agreement.

1.3 Timetable

Each party agrees to use its best endeavours to complete its obligations in this Agreement substantially in accordance with the Timetable.

2 Conditions Precedent 2.1 Conditions Precedent

The Scheme will not become Effective unless each of the following conditions is satisfied or waived in accordance with clause 2.3:

(ASIC & ASX) prior to 8.00am on the Second Court Date, ASIC and the ASX issue or provide such consents, waivers or approvals, or do such other acts as are necessary, to permit the Merger;

a)

b) (Regulatory Approvals) prior to 8.00am on the Second Court Date, all Regulatory Approvals are obtained and no Regulatory Approval is withdrawn, cancelled or revoked;





3

(third party consents) prior to 8.00am on the Second Court Date, any consents, approvals or waivers from third parties which are necessary to implement the Merger are obtained;

c)

d)

e)

f)

g)

h)

i)

j)

k)

l)

(orders and injunctions) no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the Implementation of the Scheme is in effect at 8.00am on the Second Court Date;

(Independent Expert’s Report) the Independent Expert’s Report concludes that the Scheme is in the best interests of Shareholders and the Independent Expert does not change that conclusion or withdraw its report prior to 8.00am on the Second Court Date;

(Shareholder approval) a resolution in favour of the Scheme is passed by the requisite majority of Shareholders at the Scheme Meeting under section 411(4)(a)(ii) of the Corporations Act;

(Court approval of the Scheme) the Court makes orders under section 411(4)(b) of the Corporations Act approving the Scheme;

(orders lodged with ASIC) an office copy of the Court orders approving the Scheme is lodged with ASIC under section 411(10) of the Corporations Act;

(quotation) prior to 8.00am on the Second Court Date, the ASX approves the New Programmed Shares for official quotation on the ASX, conditional on Implementation of the Scheme;

(Integrated Material Adverse Change) from the date of this Agreement until 8:00am on the Second Court Date, no Integrated Material Adverse Change occurs;

(Integrated Prescribed Occurrence) from the date of this Agreement until 8.00am on the Second Court Date, no Prescribed Occurrence occurs in relation to Integrated;

(Integrated Warranties) the Integrated Warranties that are qualified as to materiality are true and correct, and the Integrated Warranties that are not so qualified are true and correct in all material respects, in each case as at the date of this Agreement and as at 8.00am on the Second Court Date as though made on and as of that time, except to the extent that any representation or warranty expressly relates to an earlier date (in which case as of such date);





4

(Programmed Material Adverse Change) from the date of this Agreement until 8:00am on the Second Court Date, no Programmed Material Adverse Change occurs;

m)

n)

o)

a)

b)

c)

a)

b)

c)

d)

(Programmed Prescribed Occurrence) from the date of this Agreement until 8.00am on the Second Court Date, no Prescribed Occurrence occurs in relation to Programmed; and

(Programmed Warranties) the Programmed Warranties that are qualified as to materiality are true and correct, and the Programmed Warranties that are not so qualified are true and correct in all material respects, in each case as at the date of this Agreement and as at 8.00am on the Second Court Date as though made on and as of that time, except to the extent that any representation or warranty expressly relates to an earlier date (in which case as of such date).

2.2 Benefit of Conditions Precedent

The Conditions Precedent in:

clauses 2.1(a), (b), (c), (d), (f), (g), (h) and (i) are for the benefit of both parties;

clauses 2.1(j), (k) and (l) are for the benefit of Programmed; and

clauses 2.1(e), (m), (n) and (o) are for the benefit of Integrated.

2.3 Waiver of Conditions Precedent

If a Condition Precedent is for the benefit of one party only, only that party may, in its sole and absolute discretion, waive the breach or non-fulfilment of that Condition Precedent.

If a Condition Precedent is for the benefit of both parties, the breach or non-fulfilment of that Condition Precedent may be waived only by the consent of both parties.

If a waiver by a party of a Condition Precedent is itself made subject to a condition and the other party accepts that condition, the terms of that condition apply accordingly. If the other party does not accept a conditional waiver of a Condition Precedent, that Condition Precedent has not been waived.

If a party waives the breach or non-fulfilment of a Condition Precedent, that waiver precludes that party from suing the other party for any breach of this Agreement that resulted in the breach or non-fulfilment of the Condition.





5

e)

f)

a)

b)

a)

b)

Unless specified in the waiver, a waiver of the breach or non-fulfilment of any Condition Precedent will not constitute:

i) a waiver of breach or non-fulfilment of any other Condition Precedent resulting from events or circumstances giving rise to the breach or non-fulfilment of the first Condition Precedent; or

ii) a waiver of breach or non-fulfilment of that Condition Precedent resulting from any other event or circumstance.

Any waiver must be in writing.

2.4 Fulfilment of each Condition Precedent

Each party must use its best endeavours to procure that each of the Conditions Precedent is satisfied as soon as practicable after the date of this Agreement in accordance with the Timetable, and/or continues to be satisfied until the last time it is to be satisfied (as the case may require).

2.5 Regulatory Approval

A Regulatory Approval will be regarded as having been obtained notwithstanding that a condition or conditions may have been attached to that Regulatory Approval if Programmed and Integrated agree that the condition is reasonably satisfactory to them.

2.6 Notification

Each party must:

promptly notify the other party of the fulfilment of a Condition Precedent; and

keep the other party informed of any material developments of which it becomes aware in relation to a Condition Precedent, including any circumstances which may result in any Condition Precedent not being satisfied in accordance with its terms.

2.7 Consultation on failure of Conditions Precedent

If a Condition Precedent has not been fulfilled or waived by the Relevant Date or there is an occurrence that will prevent a Condition Precedent being satisfied by the Sunset Date, the parties:

must consult in good faith to determine whether the Merger may proceed by alternative means; and

may agree to extend the Relevant Date or the Sunset Date, or both.





6

2.8 Failure to agree

Either party may terminate this Agreement at any time with immediate effect by written notice to the other party if:

a)

b)

a Condition Precedent is not satisfied or waived in accordance with clause 2.3, or becomes incapable of being satisfied and is not waived in accordance with clause 2.3, on or by the Sunset Date; and

the parties do not agree to waive the Condition Precedent under clause 2.3,

provided that the party seeking to terminate this Agreement has complied with its obligations under this Agreement.

3 Scheme3.1 Scheme

Integrated must propose the Scheme in accordance with this Agreement and the Corporations Act under which, subject to the Scheme becoming Effective:

a)

b)

a)

b)

all of the Scheme Shares held by Scheme Shareholders will be transferred to Programmed on the Implementation Date; and

in exchange for the transfer of their Scheme Shares, the Scheme Shareholders will be entitled to receive the Scheme Consideration, for each Scheme Share held on the Record Date.

3.2 Amount of Scheme Consideration

Subject to clauses 3.3b), 3.4 and 3.5, in consideration of each Scheme Shareholder transferring their Scheme Shares to Programmed, Programmed covenants in favour of Integrated that on the Implementation of the Scheme, and subject to the terms of the Scheme, Programmed will:

pay to that Scheme Shareholder the amount of $1.25 in cash (the Cash Consideration); and

issue to that Scheme Shareholder 0.26 New Programmed Shares (the Scrip Consideration),

for each Scheme Share held by that Scheme Shareholder on the Record Date.





7

3.3 Integrated dividends

a)

b)

a)

b)

The parties agree and acknowledge that Integrated will pay the Integrated Interim Dividend to Shareholders, that it may pay the Integrated Final Dividend to Shareholders if the Programmed Record Date is before the Implementation Date, and that, subject to clause 3.3b), the Scheme Consideration will not be adjusted on account of such payments.

In the event that Integrated pays or declares:

i) any dividend in respect of the 6 month period to 31 December 2006 in excess of the Integrated Interim Dividend (being up to $0.05 per Share), without prejudice to any of Programmed’s rights under this Agreement (including its rights of termination under this Agreement), the Cash Consideration will be reduced by any such excess;

ii) where the Programmed Record Date is before the Implementation Date, any dividend (other than the Integrated Interim Dividend) in respect of the financial year to 30 June 2007 in excess of the Integrated Final Dividend, without prejudice to any of Programmed’s rights under this Agreement (including its rights of termination under this Agreement), the Cash Consideration will be reduced by any such excess; and

iii) any dividend in respect of any other period, without prejudice to any of Programmed’s rights under this Agreement (including its rights of termination under this Agreement), the Cash Consideration will be reduced by any such dividend.

3.4 Fractional entitlements

If a fractional entitlement to part of a New Programmed Share arises from the calculation of the total number of New Programmed Shares to be issued to a Scheme Shareholder after aggregating all holdings to which a Scheme Shareholder is entitled (in a manner which avoids manipulation of holdings of Shares, including by splitting or division, to take advantage of the rounding up entitlement), then any such fractional entitlement will be rounded:

where the fraction is 0.5 or more, up; and

where the fraction is less than 0.5, down,

to the nearest whole number of New Programmed Shares, as applicable.





8

3.5 Foreign Holdings

Where a Scheme Shareholder is an Ineligible Foreign Holder, the number of New Programmed Shares to which the Scheme Shareholder would otherwise be entitled under the Scheme will be issued to a nominee approved by Programmed, Integrated and (if necessary) ASIC, who will sell those New Programmed Shares as soon as practicable (at the risk of that Ineligible Foreign Holder) and pay the proceeds received, after deducting any applicable brokerage, stamp duty and other taxes, charges and selling costs, to that Ineligible Foreign Holder in full satisfaction of that Ineligible Foreign Holder’s rights under the Scheme in relation to the Scrip Consideration.

3.6 Conditions

a)

b)

Except as ordered by the Court pursuant to section 411(6), the Scheme will not be conditional upon any matters other than those stated in clause 2.1.

Integrated must not consent to any modification of, or amendment to, or the making or imposition by the Court of any condition in respect of, the Scheme without the prior written consent of Programmed (which consent will not be unreasonably withheld or delayed).

4 Employment and incentive arrangements 4.1 Integrated Managing Director

The parties acknowledge and agree that the Scheme will be regarded as a “takeover bid” under and for the purposes of clause 7.3 of the executive service agreement between Integrated and Chris Sutherland (the managing director of Integrated) dated 16 December 2005, and the provisions of that clause (and of the long term incentive plan adopted in accordance with clause 7.1(b) of that executive service agreement) shall be applied with the appropriate modifications as if they referred to an acquisition of shares by way of a scheme of arrangement (and on the basis that any Shares issued as contemplated by this clause 4.1 will be issued prior to the Record Date), and Integrated agrees that it will do all things reasonably necessary to give effect to this clause 4.1.

4.2 Integrated executives

Programmed agrees that, with effect from the Implementation Date, it must put in place long term incentive arrangements for all Integrated employees who currently participate in the Performance Plan, delivering to such participants similar opportunities and benefits as are currently





9

available to them under the Performance Plan, with such long term incentive plan of Programmed replacing and extinguishing the Performance Plan and the opportunities and benefits available under it, and Integrated agrees that it will assist in implementing such long term incentive plan of Programmed in respect of such Integrated employees and the parties agree to do all things as are necessary or desirable to give effect to this clause 4.2.

5 Scheme Booklet 5.1 Preparation of Scheme Booklet

As soon as practicable after the date of this Agreement, Integrated must prepare the Scheme Booklet in accordance with all applicable laws (including the Corporations Act and Corporations Regulations 2001 (Cwlth), ASIC policy statements 60 and 142 and the Listing Rules) and containing:

a)

b)

c)

d)

e)

a)

b)

the explanatory statement pursuant to section 412 of the Corporations Act;

the Independent Expert’s Report;

the Scheme;

a notice of meeting and proxy form; and

a statement that the Integrated Board unanimously recommends the approval of the Scheme (in the absence of a superior proposal).

5.2 Programmed Information

Programmed must prepare and provide to Integrated:

the Programmed Information for inclusion in the Scheme Booklet (including, subject to compliance by Integrated with its obligations under clause 5.4, consenting to the form and context in which the Programmed Information appears in the Scheme Booklet); and

any information about Programmed and Programmed Shares which Integrated reasonably requests,

in reasonable time to enable Integrated to prepare the final form of the Scheme Booklet in accordance with this Agreement.





10

5.3 Integrated Information

Integrated must prepare and provide to Programmed such information as Programmed reasonably requires to prepare the Programmed Information for inclusion in the Scheme Booklet.

5.4 Consultation

Integrated agrees to consult with Programmed as to the content of the Scheme Booklet including providing drafts of the Scheme Booklet to Programmed, until the Scheme Booklet is in a final and agreed form (except that Integrated will determine the final form and content of the Scheme Booklet in so far as it relates to information or commentary on Integrated and its Business and the interests and recommendations of its directors, and neither Integrated nor Programmed will have any right to determine the form or content of the Independent Expert’s Report).Programmed agrees to review those drafts and provide comments on them promptly and in good faith.

5.5 Programmed supplementary information

Programmed must provide Integrated any further or new information which may arise after the Scheme Booklet has been dispatched which may be necessary to ensure that, so far as Programmed is aware (after having made reasonable enquiries), the Scheme Booklet does not contain any Programmed Information which is false or misleading including because of an omission.

5.6 Updating the Scheme Booklet

Integrated must provide Shareholders with any further or new information which may arise after the Scheme Booklet has been despatched until the Scheme Meeting Date which is material to Shareholders in deciding whether to approve the Scheme or may be necessary to ensure that, so far as Integrated is aware (after having made reasonable enquiries), the Scheme Booklet:

a)

b)

does not contain any material statement which is false or misleading including because of an omission; and

complies with all applicable laws (including the Corporations Act),

provided that, prior to providing any such information to Shareholders, it provides such information to Programmed and consults with Programmed in relation to the information consistently with clause 5.4, having regard to the fact that such information is in effect to update the Scheme Booklet.





11

5.7 Verification

Each party agrees to undertake appropriate verification processes for the information supplied by that party for inclusion in the Scheme Booklet.

6 Implementation6.1 Board recommendation

Integrated confirms that the Integrated Board has (immediately prior to the execution of this Agreement) unanimously resolved, subject to the conclusions of the Independent Expert and in the absence of a bona fide Competing Proposal which in the view of the Integrated Board must be recommended in preference to the Scheme or another reason which in law requires the directors to alter their recommendation, that they will:

a)

b)

a)

recommend to Shareholders that they vote in favour of and approve the Scheme; and

not make any public statement or take any other action which would suggest that the Scheme is not recommended by the Integrated Board.

6.2 Integrated’s obligations

Integrated must take all necessary steps to propose and Implement the Scheme as soon as reasonably practicable substantially in accordance with the Timetable, including executing all documents and doing all acts and things within its power as may be necessary or desirable for the Implementation of the Scheme, and in particular:

(announcement) following execution of this Agreement, making an announcement, in a form agreed between Programmed and Integrated that, in the absence of:

i) a bona fide Competing Proposal which in the view of the Integrated Board must be recommended in preference to the Scheme or another reason which in law requires the directors to alter their recommendation; or

ii) the Independent Expert giving an opinion that the Scheme is not in the best interests of the Shareholders,

each director of Integrated:

iii) considers the Scheme to be in the best interests of Shareholders and recommends to Shareholders that the Scheme be approved;





12

iv) who holds Shares intends to vote his or her Shares in favour of the Scheme;

(Court documents) preparing drafts of all documents which are required to be filed with the Court in connection with the Scheme or are otherwise necessary for the Court proceedings relating to the Scheme (including originating process, affidavits, submissions and draft minutes of Court orders) in accordance with all applicable laws and considering in good faith, for the purpose of amending those drafts, comments from Programmed and its Representatives on those drafts;

b)

c)

d)

e)

f)

(Independent Expert) appointing the Independent Expert to advise on whether the Scheme is in the best interests of Scheme Shareholders and providing all assistance and information reasonably requested by the Independent Expert in connection with the preparation of the Independent Expert’s Report for inclusion in the Scheme Booklet;

(lodge draft) as soon as practicable after the preparation of an advanced draft of the Scheme Booklet suitable for review by ASIC, lodging a draft Scheme Booklet with ASIC in accordance with section 411(2) of the Corporations Act;

(liaison with ASIC) following the lodgement of the draft of the Scheme Booklet with ASIC:

i) liaising with ASIC during the period of its consideration of that draft of the Scheme Booklet;

ii) keeping Programmed informed of any material matters raised by ASIC in relation to the Scheme Booklet (and of any resolution of those matters), and using all reasonable endeavours to resolve any such matters; and

iii) to the extent that Integrated is itself unable to resolve any matters raised by ASIC in relation to the Scheme Booklet, or a matter raised by ASIC in relation to the Scheme Booklet concerns the Programmed Information, allowing Programmed to participate (including by attending meetings and being involved in discussions) in Integrated’s liaisons with ASIC;

(approval of Scheme Booklet) as soon as practicable after the conclusion of the review by ASIC of the draft Scheme Booklet, procuring that a meeting of the Integrated Board, or of a committee of the Integrated Board appointed for the purpose, is convened to approve the Scheme Booklet for dispatch to Shareholders, subject to approval of the Court;





13

(Regulatory Approvals)g)

h)

i)

j)

k)

l)

m)

n)

o)

i) taking all steps for which it is responsible as part of obtaining the Regulatory Approvals, including responding to requests for information at the earliest practicable time and attending meetings with any Government Agency; and

ii) providing Programmed with all information reasonably requested by it in connection with any applications for the Regulatory Approvals;

(first Court hearing) promptly after, and provided that the approvals in clause 6.2f) have been received, applying to the Court for orders directing Integrated to convene the Scheme Meeting;

(411(17)(b) statement) applying to ASIC for a statement under section 411(17)(b) of the Corporations Act stating that ASIC has no objections to the Scheme;

(Scheme Meeting) convening the Scheme Meeting in accordance with the Court orders pursuant to section 411(1) of the Corporations Act;

(register explanatory statement) taking all reasonable measures necessary to cause ASIC to register the explanatory statement relating to the Scheme;

(dispatch of materials) dispatching the completed Scheme Booklet to Scheme Shareholders to satisfy any notice period for the Scheme Meeting;

(Court approval) subject to the satisfaction or waiver of all Conditions Precedent (other than clauses 2.1g) and h)), as soon as practicable after Shareholders have approved the Scheme at the Scheme Meeting, applying to the Court for orders approving the Scheme under section 411(4) of the Corporations Act substantially in accordance with the Timetable;

(notify ASX) if the Court makes orders approving the Scheme under section 411(4) of the Corporations Act, as soon as practicable after those orders are made, notifying the ASX of those orders;

(lodge copy of Court order) if the Court makes orders approving the Scheme under section 411(4) of the Corporations Act, as soon as practicable after those orders are made, lodging an office copy of those orders with ASIC;





14

(information) promptly providing all information about Scheme Shareholders to Programmed which Programmed reasonably requires to provide the New Programmed Shares as part of the Scheme Consideration, in such form as Programmed reasonably requires, including details of the names, registered addresses and holdings of Shares of every Shareholder as shown in the Register on the Record Date; and

p)

q)

r)

s)

t)

a)

b)

c)

d)

(determine Scheme Shareholders and entitlements) determining who are the Scheme Shareholders and their entitlements to the Scheme Consideration on the Record Date;

(transfers) executing proper instruments of transfer of and effecting and registering all transfers of Scheme Shares on the Implementation Date in accordance with the Scheme;

(all things necessary) doing all other things within its power contemplated by or necessary to give effect to the Scheme and any orders of the Court approving the Scheme; and

(compliance with laws) doing everything reasonably within its power to ensure that the Merger is effected in accordance with all applicable laws.

6.3 Programmed’s obligations

Programmed must take all necessary steps to Implement the Scheme as soon as reasonably practicable, including:

(apply for Regulatory Approval) as expeditiously as practicable, preparing, and consulting with Integrated in relation to the preparation of, a draft application for any Regulatory Approvals and considering in good faith, for the purpose of amending that draft, comments from Integrated and its Representatives on that draft and submitting such application to the relevant Government Agency, and taking all steps for which it is responsible in the approval process;

(New Programmed Shares) approving the issue of the New Programmed Shares in relation to the Scheme and not making any public statement or taking any other action which would suggest that the Implementation of the Scheme is not fully supported by the Programmed Board;

(Scheme Consideration) paying the Cash Consideration and issuing the Scrip Consideration in accordance with clause 3.2;

(general) doing all things within its power and executing all agreements, deeds and other documents as may be necessary or





15

expedient on its part to Implement the Scheme (including obtaining any regulatory or contractual approvals which are necessary in connection with the Scheme);

(compliance with laws) doing everything reasonably within its power to ensure that the Merger is effected in accordance with all applicable laws;

e)

f)

g)

a)

b)

c)

(Independent Expert) providing all assistance and information reasonably requested by the Independent Expert in connection with the preparation of the Independent Expert’s Report for inclusion in the Scheme Booklet; and

(meeting with Shareholders) participating in efforts reasonably required by Integrated to promote the Scheme, including procuring Programmed directors to attend meetings with Shareholders if requested by Integrated.

6.4 Court representation

Programmed must, if requested by Integrated, procure that it is represented at the hearings held by the Court in relation to the Scheme at which, through its counsel, Programmed will undertake (if requested by the Court) to do all such things and take all such steps within its power as may be reasonably necessary in order to ensure the fulfilment of its obligations under this Agreement and the Scheme.

Programmed is entitled to separate representation at all Court proceedings relating to the Scheme at its own cost.

Integrated must support any application by Programmed for leave of the Court to be represented, or the separate representation of Programmed, at any hearing held by the Court in relation to the Scheme, whether following a request by Integrated pursuant to clause 6.4a) or otherwise.

6.5 Court refusal

If the Court refuses to make an order pursuant to section 411(1) of the Corporations Act for the convening of the Scheme Meeting to consider the Scheme or refuses to make an order pursuant to section 411(4) of the Corporations Act approving the Scheme, Integrated and Programmed will consult together in good faith to determine whether to appeal the Court’s decision and in making any such determination, the parties may have due regard to the advice of their legal counsel (and, in the case of Integrated, whether there is a bona fide Competing Proposal which in the view of the Integrated board must be recommended in preference to the Scheme).





16

6.6 Costs of an appeal

Integrated and Programmed will each pay for half of the costs of any appeal referred to in clause 6.5.

6.7 Appointment of directors

Integrated agrees, as soon as practicable after the Effective Date to use its best endeavours to:

a)

b)

a)

b)

c)

a)

procure the resignation of all of its directors; and

appoint 4 individuals nominated by Programmed to the Integrated Board.

6.8 Programmed to execute deed poll

Programmed must execute a deed poll on or before the First Court Date (or at such other time as the parties may agree), in such form agreed by the parties, pursuant to which Programmed will covenant in favour of the Scheme Shareholders to perform its obligations under the Scheme.

6.9 Assistance of officers and advisors

Each party must procure that its Representatives work (including by attending meetings and providing information) in good faith and in a timely and co-operative fashion with the other party to satisfy that party’s obligations under this Agreement in relation to the:

satisfaction of the Conditions Precedent;

implementation of the Merger; and

preparation of all documents required relating to the Merger.

6.10 Conduct of Business

During the period from the date of this Agreement until the Implementation Date, Programmed and Integrated must carry on their respective Businesses, and must procure that each of their Subsidiaries carries on their respective Businesses, in the ordinary course and at arm’s length and on usual commercial terms, substantially consistent (subject to any applicable laws, regulations and licence conditions) with the manner in which their respective Businesses have been carried on in the 2 year period prior to the date of this Agreement. Without limiting the foregoing, each of Programmed and Integrated must:

comply in all material respects with all applicable laws, regulations, licences, permits and approvals; and





17

b)

c)

to the extent not inconsistent with subclause (a), make all reasonable efforts to:

i) preserve intact its current business organisation;

ii) keep available the services of its current officers;

iii) maintain all of its (and its Subsidiaries) assets in good working order as necessary to operate all aspects of its Business;

iv) have in place and maintain until the Implementation Date, insurance over its (and its Subsidiaries) assets and Business at least to the same extent as that in place at the date of this Agreement; and

v) preserve its relationships with customers, suppliers, licensors, licensees, regulators and others with whom they have business dealings, and retain all key employees; and

where reasonably requested, consult with the other and provide updates as to the progress of its Business and activities.

Notwithstanding the above, each of Integrated and Programmed may make an acquisition of a business or assets if such acquisition has been fully disclosed by that party to the other party for the purposes of this clause prior to the execution of this Agreement, together with the proposed terms of that acquisition and provided that the acquisition proceeds substantially in accordance with those terms.

Without limiting the generality of the foregoing, and except to the extent otherwise permitted or contemplated by this Agreement, during the period from the date of this Agreement to the Implementation Date, each party must ensure, to the extent within the control of that party or any of its Subsidiaries, that a Prescribed Occurrence does not occur in relation to that party without the prior consent of the other party.

7 Representations, warranties and covenants 7.1 Integrated’s representations and warranties

Integrated represents and warrants to Programmed that:

(validly existing) it (and each of its Related Bodies Corporate) is a corporation validly existing under the laws of its place of incorporation;

a)

b) (power) it has the corporate power to:





18

i) enter into and perform its obligations under this Agreement and carry out the transactions contemplated by this Agreement; and

ii) own assets and carry on its Business as it is now being conducted;

(authorisations) it has taken all necessary corporate action to authorise entry into this Agreement and has taken or will take all necessary corporate action to authorise the performance of this Agreement and to carry out the transactions contemplated by this Agreement;

c)

d)

e)

f)

g)

h)

i)

j)

(binding obligations) this Agreement is its legal, valid and binding obligations, enforceable against it in accordance with its terms and neither its execution of this Agreement nor the carrying out by it of the transactions that it contemplates does or will:

i) contravene any law to which it or any of its property is subject or any order of any Government Agency that is binding on it or any of its property; or

ii) contravene its constitution;

(securities) other than the arrangements with the Integrated managing director referred to in clause 4.1, schedule 2 accurately records the total number and details of Shares, securities convertible into Shares, options, notes or other securities issued by Integrated at the date of this Agreement and neither Integrated nor any of its Subsidiaries is subject to any actual or contingent obligation to issue, convert or cancel any securities;

(no Encumbrances) there is no material Encumbrance over all or any of its or its Subsidiaries present or future assets or revenues, except for the Charges;

(compliance with laws) it and its Subsidiaries have complied in all material respects with all applicable laws, regulations and orders of Government Agencies having jurisdiction over it or its Subsidiaries;

(no Insolvency) neither it nor any of its Subsidiaries is Insolvent;

(not representative or trustee) it is not entering into this Agreement in a representative capacity or as trustee of any trust or settlement;

(continuous disclosure) it has complied in all material respects with the continuous disclosure obligations of the Listing Rules and





19

is not withholding any information under the carve-out in Listing Rule 3.1A (except the discussions which have resulted in the execution of this Agreement);

(no default) neither it nor any of its Subsidiaries is in material default under any material document or agreement binding on it or its assets (including any Material Contract) nor has anything occurred which is or would with the giving of notice and/or lapse of time constitute an event of default, prepayment event or similar event (whatever called) under any such document or agreement with such an effect;

k)

l)

m)

n)

o)

(convertible securities) it has fully and fairly disclosed in writing to Programmed the complete set of terms and conditions that apply to any securities convertible into Shares and in relation to any actual or contingent obligation to issue, convert or cancel any securities;

(Scheme Booklet) the Scheme Booklet (other than in respect of the Programmed Information) will:

i) be prepared in good faith;

ii) not, so far as it is aware (after having made reasonable enquiries), contain any material statement which is false or misleading including because of any material omission from that statement; and

iii) so far as it is aware (after having made reasonable enquiries), comply with all applicable laws and regulatory requirements;

(update of Scheme Booklet) any further or new information provided to Shareholders after the Scheme Booklet has been dispatched until the Scheme Meeting Date will:

i) be provided in good faith;



(provision of due diligence information) to the best of the knowledge and belief of Integrated after having made reasonable





20

enquiry, except as fully and fairly disclosed to Programmed in writing, all information relating to the Business, assets, liabilities, operations, historical profits and losses of Integrated provided by Integrated:

i) to Programmed in writing; or

ii) in connection with the due diligence exercise conducted by Programmed,

(the Integrated Due Diligence Information),

is accurate in all material respects (other than inadvertent errors), provided in good faith, and Integrated has not deliberately:

iii) omitted anything from the Integrated Due Diligence Information provided such as to make it materially misleading;

iv) included anything materially misleading in the Integrated Due Diligence Information provided; or

v) denied access to requested information with the intention of misleading Programmed; and

(effect of the Scheme) the entry into this Agreement and the implementation of the Scheme and the Merger will not:

p)

a)

i) cause any Material Contract to terminate, or cause any material obligation of Integrated under a Material Contract to be accelerated;

ii) give any counterparty a right to terminate or vary any Material Contract, or a right to accelerate or vary the performance of any material obligation of Integrated under a Material Contract; or

iii) give any counterparty to a Material Contract the right to acquire, or require the disposal of, any material assets of Integrated.

7.2 Programmed’s representations and warranties

Programmed represents and warrants to Integrated that:

(validly existing) it (and each of its Related Bodies Corporate) is a corporation validly existing under the laws of its place of incorporation;





21

(power) it has the corporate power to: b)

c)

d)

e)

f)

g)

h)

i) enter into and perform its obligations under this Agreement and carry out the transactions contemplated by this Agreement;

ii) own assets and carry on its Business as it is now being conducted;

(authorisations) it has taken all necessary corporate action to authorise entry into this Agreement and has taken or will take all necessary corporate action to authorise the performance of this Agreement and to carry out the transactions contemplated by this Agreement;

(binding obligations) this Agreement is its legal, valid and binding obligations, enforceable against it in accordance with its terms and neither its execution of this Agreement nor the carrying out by it of the transactions that it contemplates does or will:

i) contravene any law to which it or any of its property is subject or any order of any Government Agency that is binding on it or any of its property; or

ii) contravene its constitution;

(securities) schedule 3 accurately records the total number and details of Programmed Shares, securities convertible into Programmed Shares, options, notes or other securities issued by Programmed at the date of this Agreement and, other than as fully and fairly disclosed in schedule 3, neither Programmed nor any of its Subsidiaries is subject to any actual or contingent obligation to issue, convert or cancel any securities;

(no Encumbrances) there is no material Encumbrance over all or any of its or its Subsidiaries’ present or future assets or revenues other than any ASIC registered charges securing advances under any of Programmed’s existing banking facilities or any new banking facilities needed to fund the payment of the Cash Consideration and/or the refinancing of any existing Integrated banking facility;

(compliance with laws) it and its Subsidiaries have complied in all material respects with all applicable laws, regulations and orders of Government Agencies having jurisdiction over it or its Subsidiaries;

(no Insolvency) neither it nor any of its Subsidiaries is Insolvent;





22

(not representative or trustee) it is not entering into this Agreement in a representative capacity or as trustee of any trust or settlement;

i)

j)

k)

l)

m)

(continuous disclosure) it has complied in all material respects with the continuous disclosure obligations of the Listing Rules and is not withholding any information under the carve-out in Listing Rule 3.1A (except the discussions which have resulted in the execution of this Agreement);

(no default) neither it not any of its Subsidiaries is in material default under any material document or agreement binding on it or its assets (including any Material Contract) nor has anything occurred which is or would with the giving of notice and/or lapse of time constitute an event of default, prepayment event or similar event (whatever called) under any such document or agreement with such an effect; and

(Programmed Information) the Programmed Information to be provided to Integrated for inclusion in the Scheme Booklet and any further or new information provided by Programmed to Integrated which may arise after the Scheme Booklet has been dispatched will:

i) be provided in good faith;



(provision of due diligence information) to the best of the knowledge and belief of Programmed after having made reasonable enquiry, except as fully and fairly disclosed to Integrated in writing, all information relating to the Business, assets, liabilities, operations, historical profits and losses of Programmed provided by Programmed:

i) to Integrated in writing; or

ii) in connection with the due diligence exercise conducted by Integrated,

(the Programmed Due Diligence Information),





23

is accurate in all material respects (other than inadvertent errors), provided in good faith, and Programmed has not deliberately:

iii) omitted anything from the Programmed Due Diligence Information provided such as to make it materially misleading;

iv) included anything materially misleading in the Programmed Due Diligence Information provided; or

v) denied access to requested information with the intention of misleading Integrated.

7.3 Integrated’s indemnity

Integrated agrees with Programmed (in its own right and separately as trustee or nominee for each other Programmed Indemnified Party) to indemnify and keep indemnified the Programmed Indemnified Parties against all Losses or Claims arising directly or indirectly as a result of or in connection with any breach of any Integrated Warranties.

7.4 Programmed Indemnity

Programmed agrees with Integrated (in its own right and separately as trustee or nominee for each other Integrated Indemnified Party) to indemnify and keep indemnified the Integrated Indemnified Parties against all Losses or Claims arising directly or indirectly as a result of or in connection with any breach of any Programmed Warranties.

7.5 Information on representations and warranties

Except as otherwise provided or contemplated by this Agreement, from the date of this Agreement up to and including the Implementation Date, each party must, and must procure each of its Subsidiaries to, promptly give to the other party details of any matter or occurrence which will make any representations and warranties given by that party under this Agreement inaccurate in a material respect.

7.6 Reliance on representations and warranties

Each party acknowledges that the other party has executed this Agreement and agreed to take part in the transactions that this Agreement contemplates in reliance on the representations and warranties that are made by that party in this clause 7.

7.7 When warranties are given

Each representation and warranty made under this clause 7 is made:





24

a)

b)

as at the date of this Agreement; and

as at 8.00am on the Second Court Date.

8 Access, confidentiality and privacy 8.1 Access to information

From the date of this Agreement up to and including the Implementation Date, Integrated must, and must procure each of its Subsidiaries to, respond to reasonable requests from Programmed for information concerning Integrated’s Business (subject to any existing confidentiality obligations owed to third parties), and provide reasonable co-operation for the purpose of:

a)

b)

c)

a)

b)

c)

Implementation of the Scheme;

Programmed better understanding the operations of Integrated’s Business in order to allow and facilitate the smooth implementation of the plans of Programmed for the Business following Implementation of the Scheme; and

any other purpose which is agreed in writing between the parties,

subject to the proper performance by Integrated’s officers of their fiduciary duties.

The obligation in clause 8.1a) does not require Integrated to provide information to Programmed concerning the consideration of the Scheme by Integrated’s directors and management or to breach an obligation of confidentiality owed to any person.

8.2 Confidential information

Subject to clause 8.1(c), the parties refer to the Confidentiality Agreement between them and reaffirm their commitment to the terms of that agreement.

Notwithstanding anything in the Confidentiality Agreement, each party agrees that all information provided to the other party or its Representatives pursuant to this Agreement is Confidential Information (as defined in the Confidentiality Agreement) and is accordingly subject to the terms of the Confidentiality Agreement.

The parties acknowledge that:

i) pursuant to this Agreement, each party makes certain representations and warranties to the other party; and





25

ii) nothing in the Confidentiality Agreement limits, restricts or otherwise derogates from those representations and warranties, which operate with full force and effect according to their terms.

8.3 Privacy obligations

Each party agrees to comply with its obligations under any privacy law by which it is bound in respect of all Personal Information collected, used or disclosed under this Agreement or otherwise in connection with the Merger.

9 Announcements9.1 Public announcements

Subject to clause 9.2 (“Public announcements required by law”), no party may, before the Implementation Date, make or send a public announcement, communication, press release or circular concerning the transactions referred to in this Agreement unless it has first obtained the written consent of the other party which consent is not to be unreasonably withheld or delayed. After announcement of the Merger, Programmed and Integrated will discuss and agree the content of any further public announcements concerning the proposed Merger and will co-operate and coordinate their efforts in the preparation and presentation of public announcements in regard to the Merger.

9.2 Public announcements required by law

Clause 9.1 (“Public announcements”) does not apply to a public announcement, communication, press release or circular required by law or a regulation of a stock exchange, if the party required to make or send it has, to the extent practicable without breaching any applicable law:

a)

b)

c)

provided the other party with such notice as is reasonable in the circumstances of its intention to make the announcement, communication, press release or circular;

provided the other party with a draft of the announcement, communication, press release or circular and an opportunity, which is reasonable in the circumstances, to comment on the contents of the draft; and

considered in good faith, for the purposes of amending the announcement, communication, press release or circular, any comments provided by the other party.





26

10 Issue and trading of New Programmed Shares 10.1 Issue

The New Programmed Shares will be validly issued in accordance with the Corporations Act, fully paid and of the same class as other Programmed Shares then issued and outstanding.

10.2 Quotation

Programmed will use its best endeavours to procure that the New Programmed Shares are quoted on the ASX with effect from the Business Day following the Implementation Date and issue holding statements to holders of the New Programmed Shares.

10.3 Programmed Final Dividend

If the Implementation Date is on or before the Programmed Record Date then the Programmed Final Dividend will be payable to holders of the New Programmed Shares. If the Implementation Date is after the Programmed Record Date, then Programmed agrees that Integrated shall be entitled to pay the Integrated Final Dividend to Shareholders after the Record Date and on or before the Implementation Date.

11 Costs and stamp duty Except as otherwise provided in the Transaction Documents:

a)

b)

Programmed and Integrated will each pay all of their own costs associated with the Merger; and

Programmed will pay all stamp duty (including any fines and penalties) in respect of this Agreement, the performance of this Agreement and each transaction effected by or made under or pursuant to this Agreement.

12 Termination12.1 Right to terminate – Programmed

Programmed may terminate this Agreement by notice in writing to Integrated if the Integrated Board or any Integrated director:

a)

b)

withdraws or qualifies its or his support for the Merger; or

otherwise acts in a manner which is inconsistent with obtaining approval for the Merger or the Scheme.





27

12.2 Right to terminate – Integrated

Integrated may terminate this Agreement by notice in writing to Programmed if a Competing Proposal is announced in respect of Integrated which in the opinion of the directors of Integrated is more favourable than the Scheme.

12.3 Right to terminate – either party

Either party has the right to terminate this Agreement by notice in writing to the other party if:

a)

b)

the other party becomes Insolvent; or

provided that the party giving the notice has complied with its obligations under this Agreement:

i) the other party commits a breach of this Agreement (including a breach of a representation or warranty) and:

A) the breach is material and not capable of being cured; or

B) the breach is capable of being cured and the defaulting party fails to cure the breach within 10 Business Days of being notified in writing of the breach by the party giving the notice;

ii) the Independent Expert’s Report does not conclude that the Scheme is in the best interests of Shareholders or the Independent Expert changes that conclusion or withdraws its report prior to 8.00am on the Second Court Date;

iii) the requisite majority of Shareholders does not approve the Scheme;

iv) the Effective Date has not occurred by the Sunset Date;

v) the Court fails to approve the Scheme in accordance with section 411(4) of the Corporations Act; or

vi) the Court fails to make orders in accordance with section 411(1) of the Corporations Act for Integrated to convene the Scheme Meeting.

12.4 Notice

A notice given under clause 12.1, 12.2 or 12.3 (“Right to terminate”) must specify the event or events in relation to which the notice is given.





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12.5 Effect of termination

a)

b)

If this Agreement is terminated (including under this clause 12), the Agreement and the parties’ obligations under it cease with the exception of this clause 12.5 and clauses 7.3, 7.4, 8.2, 8.3, 11, 14,15, 20.3, 20.10, 20.11, 20.19 and 21 which survive termination; and

termination does not affect any accrued rights of a party in respect of any breach prior to termination.

12.6 Limitation

Any right to terminate this Agreement ceases on the Effective Date.

13 No-shop and no-talk obligations 13.1 No-shop

During the Restriction Period, Integrated must not, and must ensure that its Related Entities and Representatives do not, directly or indirectly approach, solicit inquiries from or initiate discussions, expression of interests, offers or proposals by any person other than Programmed and its Related Entities in relation to any takeover offer, scheme of arrangement, capital reconstruction, purchase of main undertaking or similar reorganisation for or in relation to Integrated or any of its Subsidiaries, or any proposal which would have a similar effect, whether directly or indirectly (though nothing in the foregoing prevents Integrated from making presentations to brokers, portfolio investors and analysts in the ordinary course).

13.2 No-talk

During the Restriction Period (and subject to the carve-out in clause 13.4), Integrated must not, and must ensure that its Subsidiaries and Representatives do not, participate in any discussions or negotiations, provide any information, or take any other action to facilitate any such person making such a proposal as referred to in clause 13.1 above.

13.3 Notification and warranty and representation

a)

b)

During the Restriction Period, if any proposal of the kind referred to in clause 13.1 is put to Integrated, Integrated must immediately inform Programmed of that fact, except where the Integrated Board forms the view that the Integrated directors are, by virtue of their fiduciary or other duties, unable to inform Programmed.

Integrated represents and warrants to Programmed that:





29

i) as at the date of this Agreement and having made due enquiries (including of its Representatives) it is not aware of any current discussions or negotiations or of any current expression of interest, offer or proposal of a kind referred to in clause 13.1; and

ii) any such discussions or negotiations (if any) that may have taken place have ended and no confidential information (if any) provided to Integrated in connection with those discussions or negotiations has been retained.

13.4 Fiduciary duties carve out

During the Restriction Period, Integrated, its Related Entities and Representatives may engage in the conduct of the kind referred to in clause 13.2 (“No-talk”), if the directors of Integrated receive a written proposal from a third party and, acting in good faith and in accordance with their fiduciary and other duties to Shareholders and after having taken legal and financial advice, form the view that to do so in respect of that proposal would be in the best interests of Shareholders.

14 Break fee 14.1 Rationale

Each of Programmed and Integrated acknowledges and agrees, for the purposes of this clause 14, as follows.

a)

b)

c)

Each of Programmed and Integrated has required the inclusion of this clause 14, in the absence of which it would not have entered into this Agreement or otherwise agreed to implement the Merger.

Each of Programmed and Integrated (and the Programmed Board and the Integrated Board) believe that the Merger will provide significant benefits to it and its members and that it is reasonable and appropriate that it agrees to the inclusion of this clause 14, in order to secure the other party’s execution of this Agreement and its agreement to implement the Merger.

The amount payable by Integrated to Programmed pursuant to clause 14.2, and the amount payable by Programmed to Integrated pursuant to clause 14.3, is an amount to compensate the party entitled to receive the payment (in this clause 14, the Payee) for the following costs and expenses incurred, directly or indirectly, by the Payee and its Related Entities as a result of the Merger not being implemented in accordance with this Agreement and all costs and expenses incurred by the Payee and its Related Entities in connection with the investigation and assessment of the other





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party (in this clause 14, the Payer) and the investigation, assessment, negotiation, documentation and pursuit of approval and implementation of the Merger, and the performance of the Payee’s obligations and the enforcement of its rights under this Agreement, including the following:

i) advisory costs (including costs of Representatives other than success fees);

ii) costs of management time;

iii) out of pocket expenses including air fares and hotel accommodation;

iv) commitment fees and other financing costs; and

v) reasonable opportunity costs incurred by the Payee in pursuing the Merger or in not pursuing other alternative acquisitions or strategic initiatives.

14.2 Programmed’s break fee

Subject to clause 14.4, if:

a)

b)

a Competing Proposal is announced and the proponent of that Competing Proposal acquires (together with its associates) a Relevant Interest in at least 50% of the shares of Integrated or a Subsidiary of Integrated; or

Programmed terminates this Agreement in accordance with clause 12.3(b)(i) as a result of a material breach by Integrated of its obligations under this Agreement,

then Integrated must pay to Programmed the amount of $1,900,000 (being an amount equal to 1% of the implied equity value of Programmed’s offer) (“Programmed’s Break Fee”) inclusive of GST.

14.3 Integrated’s break fee

Subject to clause 14.4, if Integrated terminates this agreement in accordance with clause 12.3(b)(i) as a result of a material breach by Programmed of its obligations under this Agreement, then Programmed must pay to Integrated the amount of $1,900,000 (being an amount equal to 1% of the implied equity value of Programmed’s offer) (“Integrated’s Break Fee”) inclusive of GST.





31

14.4 Compliance with law

a)

b)

c)

d)

If it is finally determined following the exhaustion of all reasonable avenues of appeal to the Takeovers Panel or a court that any part of either Programmed’s Break Fee or Integrated’s Break Fee (“Challenged Amount”):

i) is unlawful;

ii) involves a breach of directors’ duties; or

iii) constitutes unacceptable circumstances,

then the requirement to pay the relevant break fee does not apply to the Challenged Amount and if a party has received the Challenged Amount, it must refund it within 10 Business Days of such final determination being made.

To the extent reasonably possible, the Payer must submit in any relevant proceedings that no such determination should be made or that if any such determination is to be made, it should apply only to the extent that the Challenged Amount constitutes a payment made or to be made in excess of the amount of the actual costs incurred, directly or indirectly, by the Payer and its Related Entities as a result of the Merger not being implemented in accordance with this Agreement (including those described in clause 14.1c)).

If in Takeovers Panel proceedings of a kind referred to in paragraph a), the Takeovers Panel indicates to the parties or either of them that in the absence of a written undertaking pursuant to section 201A of the Australian Securities and Investments Commission Act 2001 it will make a declaration of unacceptable circumstances, each of the parties may give that undertaking on their own behalf and must give reasonable consideration to giving that undertaking if requested by the other party. Where such undertakings are given, this clause 14 will operate in a manner consistent with the terms of such undertakings.

Each party must not make, nor may it cause or permit to be made, any application to a court, arbitral tribunal or the Australian Takeovers Panel for or in relation to a determination referred to in paragraph a).

14.5 Payment

Any break fee payable under this clause 14 must be paid within 5 Business Days of written demand and the provision of a valid tax invoice (though where payable under clause 14.2(a), may only be demanded once the





32

proponent of the Competing Proposal has acquired (together with its associates) a relevant interest in at least 50% of the shares in Integrated or a Subsidiary of Integrated).

15 Notices15.1 Form

Unless expressly stated otherwise in this Agreement, all notices, certificates, consents, approvals, waivers and other communications in connection with this Agreement must be in writing, signed by the sender (if an individual) or an Authorised Officer of the sender and marked for the attention of the person identified in the Details or, if the recipient has notified otherwise, then marked for attention in the way last notified.

15.2 Delivery

They must be:

a)

b)

c)

d)

left at the address set out or referred to in the Details;

sent by prepaid ordinary post (airmail if appropriate) to the address set out or referred to in the Details;

sent by fax to the fax number set out or referred to in the Details; or

given in any other way permitted by law.

However, if the intended recipient has notified a changed postal address or changed fax number, then the communication must be to that address or number.

15.3 When effective

They take effect from the time they are received unless a later time is specified.

15.4 Receipt - post

If sent by post, they are taken to be received three days after posting (or seven days after posting if sent to or from a place outside Australia).

15.5 Receipt - fax

If sent by fax, they are taken to be received at the time shown in the transmission report as the time that the whole fax was sent.





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15.6 Receipt - general

Despite clauses 15.4 (“Receipt – post”) and 15.5 (“Receipt – fax”), if they are received after 5.00pm in the place of receipt or on a non-business day in that place, they are to be taken to be received at 9.00am on the next business day in that place.

16 AssignmentA party may not assign or otherwise deal with its rights under this Agreement or allow any interest in them to arise or be varied in each case, without the consent of the other party.

17 SeverabilityIf the whole or any part of a provision of this Agreement is void, unenforceable or illegal in a jurisdiction it is severed for that jurisdiction.The remainder of this Agreement has full force and effect and the validity or enforceability of that provision in any other jurisdiction is not affected. This clause has no effect if the severance alters the basic nature of this Agreement or is contrary to public policy.

18 Entire agreement This Agreement constitutes the entire agreement of the parties about its subject matter and, except for the Transaction Documents, supersedes all previous agreements, understandings and negotiations on that subject matter.

19 No representations or warranties Each party acknowledges that in entering into this Agreement it has not relied on any representations or warranties about its subject matter except as expressly provided by the written terms of this Agreement.

20 General20.1 Discretion in exercising rights

A party may exercise a right or remedy or give or refuse its consent in any way it considers appropriate (including by imposing conditions), unless this Agreement expressly states otherwise.





34

20.2 Partial exercising of rights

If a party does not exercise a right or remedy fully or at a given time, the party may still exercise it later.

20.3 No liability for loss

A party is not liable for loss caused to the other party by the first party’s exercise or attempted exercise of, failure to exercise, or delay in exercising a right or remedy under this Agreement.

20.4 Approvals and consents

By giving its approval or consent a party does not make or give any warranty or representation as to any circumstance relating to the subject matter of the consent or approval.

20.5 Conflict of interest

The parties’ rights and remedies under this Agreement may be exercised even if this involves a conflict of duty or a party has a personal interest in their exercise.

20.6 Remedies cumulative

The rights and remedies provided in this Agreement are in addition to other rights and remedies given by law independently of this Agreement.

20.7 Rights and obligations are unaffected

Rights given to the parties under this Agreement and the parties’ liabilities under it are not affected by anything which might otherwise affect them by law.

20.8 Variation and waiver

A provision of this Agreement or a right created under it, may not be waived or varied except in writing, signed by the party or parties to be bound.

20.9 No merger

The warranties, undertakings and indemnities in this Agreement do not merge on the Implementation Date.





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20.10 Indemnities

The indemnities in this Agreement are continuing obligations, independent from the other obligations of the parties under this Agreement and continue after this Agreement ends. It is not necessary for a party to incur expense or make payment before enforcing a right of indemnity under this Agreement.

20.11 Survival of representations

Each representation and warranty in this Agreement is severable, survives the termination of this Agreement and is given with the intention that liability under it is not confined to breaches which are discovered before the date of termination of this Agreement.

20.12 Further steps

Each party agrees, at its own expense, to do anything the other party asks (such as obtaining consents, signing and producing documents and getting documents completed and signed):

a)

b)

to bind the party and any other person intended to be bound under this Agreement; and

to show whether the party is complying with this Agreement.

20.13 Prompt performance

If a Transaction Document specifies when a party to it agrees to perform an obligation, that party agrees to perform it by the time specified. Each party agrees to perform all other obligations promptly.

20.14 Time of the essence

Time is of the essence in this Agreement.

20.15 Construction

No rule of construction applies to the disadvantage of a party because that party was responsible for the preparation of, or seeks to rely on, this Agreement or any part of it.

20.16 Inconsistent law

To the extent permitted by law, each Transaction Document prevails to the extent it is inconsistent with any law.





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20.17 Supervening legislation

Any present or future legislation which operates to vary the obligations of a party in connection with this Agreement with the result that the other party’s rights, powers or remedies are adversely affected (including, by way of delay or postponement) is excluded except to the extent that its exclusion is prohibited or rendered ineffective by law.

20.18 Counterparts

This Agreement may be executed in counterparts. All counterparts when taken together are to be taken to constitute the one instrument.

20.19 GST

a)

b)

c)

d)

Unless expressly included, the consideration for any supply under or in connection with this agreement does not include GST.

To the extent that any supply made by a party to another party under or in connection with this Agreement is a taxable supply and a tax invoice has been provided to the recipient of the supply, the recipient must pay, in addition to the consideration to be provided under this Agreement for that supply (unless it expressly includes GST), an amount equal to the amount of that consideration (or its GST exclusive market value) multiplied by the rate at which GST is imposed in respect of the supply.

The amount of GST payable in accordance with this clause will be paid at the same time and in the same manner as the consideration otherwise payable for the supply is provided.

Where this Agreement provides for the payment of an amount which is inclusive of GST, prior to the payment being made the intended recipient of the payment must, where relevant and upon demand, issue a valid tax invoice.

21 Governing Law This Agreement is governed by the law in force in the place specified in the Details. Each party submits to the non-exclusive jurisdiction of the courts of that place, and any court that may hear appeals from any of those courts, for any proceedings in connection with this Agreement, and waives any right it might have to claim that those courts are an inconvenient forum.





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22 Interpretation22.1 Definitions

These meanings apply unless the contrary intention appears:

Accounting Standards means:

a)

b)

a)

b)

accounting standards as that term is defined in the Corporations Act;

to the extent not inconsistent with paragraph (a) generally accepted Australian accounting principles which are consistently applied.

Agreement means this merger implementation agreement.

ASIC means the Australian Securities & Investments Commission.

ASX means ASX Limited or, as the context requires, the financial market operated by it.

Authorised Officer means a person appointed by a party to act as an Authorised Officer for the purposes of this Agreement.

Business means:

in relation to Integrated and its Subsidiaries, the business of the supply of recruitment, labour hire and managed labour services across all sectors of industry and commerce presently carried on by Integrated and its Subsidiaries; and

in relation to Programmed and its Subsidiaries, the business of property maintenance services presently carried on by Programmed and its Subsidiaries.

Business Day means a day other than a Saturday, Sunday or public holiday in Perth, Western Australia.

Cash Consideration means the Cash Consideration as defined in clause 3.2a).

Charges means fixed and floating charges numbered 703732 and 1053867 in favour of National Australia Bank Limited registered on 9 July 1999 and 22 June 2004 respectively.

Claim includes any allegation, debt, cause of action, liability, claim, proceeding, suit or demand of any nature whatsoever however arising and whether present or future, fixed or unascertained, actual or contingent, whether at law, in equity, under statute or otherwise.





38

Competing Proposal means any proposal or offer with respect to any transaction by purchase, merger, amalgamation, scheme of arrangement, business combination, liquidation, dissolution, recapitalisation, take-over bid or otherwise that would, if completed substantially in accordance with its terms, result in any person or persons (other than Programmed or any of its associates) acquiring 50% or more of the Integrated voting shares or the voting shares of a Subsidiary of Integrated.

Conditions Precedent means the conditions precedent set out in clause 2.1.

Confidentiality Agreement means the mutual confidentiality agreement between the parties dated 5 February 2007.

Controller has the meaning it has in the Corporations Act.

Corporations Act means the Corporations Act 2001 (Cwlth).

Court means the Federal Court of Australia or such other court agreed by the parties.

Details means the section of this Agreement headed “Details”.

Effective means the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) (and, if applicable, section 411(6)) in relation to the Scheme.


Encumbrance means any mortgage, lien, charge, pledge, assignment by way of security, security interest, title retention, preferential right or trust arrangement, Claim, covenant, profit a prendre, easement or any other security arrangement or any other arrangement having the same effect.

Excluded Shares means any Shares held by, or by any person on behalf of or for the benefit of, Programmed or its Subsidiaries.

First Court Date means the date of the hearing by the Court of the application to order the convening of the Scheme Meeting pursuant to section 411(1) of the Corporations Act.

Foreign Holder means a Scheme Shareholder whose address in the Register is a place outside Australia or New Zealand.

Government Agency means any governmental, semi-governmental, administrative, fiscal, judicial or quasi-judicial body, department, commission, authority, tribunal, agency or entity.





39

GST means the goods and services tax as defined in the A New Tax System (Goods and Services Tax) Act 1999 or any like tax.

Implementation means the implementation of the Scheme, upon it becoming Effective.

Implementation Date means the date that is the third Business Day after the Record Date.

Independent Expert means KPMG Corporate Finance (Aust) Pty Ltd or, failing their ability or preparedness to act as independent expert, such other reputable and qualified expert nominated by Integrated.

Independent Expert’s Report means a report prepared by the Independent Expert, stating whether or not in its opinion the Scheme is in the best interests of Shareholders and setting out the Independent Expert’s reasons for that opinion.

Ineligible Foreign Holder means a Foreign Holder, other than one in respect of whom Programmed is satisfied that the laws of the Foreign Holder’s country of residence (as shown in the Register) would permit the issue and allotment of New Programmed Shares to the Foreign Holder, either unconditionally or after compliance with conditions which Programmed in its sole discretion regards as acceptable and not unduly onerous.

A person is Insolvent if

a) it is (or states that it is) an insolvent under administration or insolvent (each as defined in the Corporations Act); or

b) it has had a Controller appointed or is in liquidation, in provisional liquidation, under administration or wound up or has had a Receiver appointed to any part of its property; or

c) it is subject to any arrangement, assignment, moratorium or composition, protected from creditors under any statute or dissolved (in each case, other than to carry out a reconstruction or amalgamation while solvent on terms approved by the other parties to this Agreement); or

d) an application or order has been made (and in the case of an application, it is not stayed, withdrawn or dismissed within 30 days), resolution passed, proposal put forward, or any other action taken, in each case in connection with that person, which is preparatory to or could result in any of (a), (b) or (c) above; or

e) it is taken (under section 459F(1) of the Corporations Act) to have failed to comply with a statutory demand; or





40

f) it is the subject of an event described in section 459C(2)(b) or section 585 of the Corporations Act (or it makes a statement from which another party to this Agreement reasonably deduces it is so subject); or

g) it is otherwise unable to pay its debts when they fall due; or

h) something having a substantially similar effect to (a) to (g) happens in connection with that person under the law of any jurisdiction.

Integrated Board means the board of directors of Integrated.

Integrated Due Diligence Information has the meaning set out in clause 7.1o).

Integrated Final Dividend means any final dividend declared by Integrated in respect of the financial year ending 30 June 2007, which:

a) shall, in aggregate, be equal to the amount that would have been received by Scheme Shareholders if the Implementation Date had occurred on or prior to the Programmed Record Date and the New Programmed Shares had been issued on or prior to the Programmed Record Date (and such Scheme Shareholders had therefore been entitled to receive the Programmed Final Dividend); and

b) is to be paid after the Record Date and no later than the Implementation Date.

Integrated Indemnified Parties means Integrated, each Related Body Corporate of Integrated, the directors and employees of Integrated and the directors and employees of each Related Body Corporate of Integrated.

Integrated Interim Dividend means any interim dividend (not to exceed $0.05 per Share) declared by Integrated in respect of the 6 month period to 31 December 2006 payable on or about 11 April 2007.

Integrated Material Adverse Change means an objectively determined downward movement in Integrated’s forecast net profit after tax (for the financial year ending 30 June 2007 and after the amortisation of the cost of the rights under the Performance Plan and excluding any costs and expenses incurred in connection with the Merger) of:

a) more than $1 million solely in respect of the underlying profitability of Integrated (that is, so called ‘recurring items’ determined by reference to generally accepted Australian accounting standards); or





41

b) more than $2 million taking all ‘recurring’ and ‘non-recurring’ items into account.

Integrated Warranties means the representations and warranties of Integrated given under this Agreement.

Listing Rules means the Listing Rules of the ASX.

Loss means all damage, loss, cost, and expense (including legal costs and expenses) of whatsoever nature or description but excluding any consequential or indirect losses, economic losses or loss of profits.

Material Contract means, in relation to a party, any contract to which that party or any Subsidiary of that party is a party with sales per annum greater than 5% of forecast revenue for the current financial year (for that party).

Merged Entity means Programmed and its Subsidiaries (including Integrated) following the Implementation Date.

Merger means the acquisition by Programmed of all the Scheme Shares through the Implementation of the Scheme together with the treatment of certain employee incentive performance rights in accordance with clause 4.

New Programmed Shares means those Programmed Shares to be issued to Scheme Shareholders in consideration for their Scheme Shares pursuant to the Scheme.

Performance Plan means the Integrated Limited Senior Executive Incentivised Performance Plan established by the Integrated Board and set out in a Board Policy Statement for the issue of invitations to acquire performance shares.

Personal Information means information or an opinion (including information or an opinion forming part of a database), whether true or not, and whether recorded in a material form or not, about an individual whose identity is apparent, or can reasonably be ascertained, from the information or opinion.

Prescribed Occurrence means, in relation to a party, the occurrence of any of the following events (other than as required or contemplated by this Agreement or the Scheme, or with the prior written consent of the other party):

a) that party or a Subsidiary of that party converts all or any of its shares into a larger or smaller number of shares or reconstructs or changes its capital structure;





42

b) that party declares, pays or distributes any dividend other than:

i) in the case of Integrated, the Integrated Interim Dividend and the Integrated Final Dividend; and

ii) in the case of Programmed, the Programmed Final Dividend,

or any bonus or other share of its profits or returns or agrees to return any capital or makes any other equity distribution to its members;

c) that party or a Subsidiary of that party resolves to reduce its share capital in any way or reclassifies, combines, splits or redeems or repurchases directly or indirectly any of its shares;

d) that party or a Subsidiary of that party:

i) enters into a buy-back agreement; or

ii) resolves to approve the terms of a buy-back agreement under subsection 257C(1) or 257D(1) of the Corporations Act;

e) that party or a Subsidiary of that party issues shares, or grants an option over any of its shares, or agrees to make such an issue or grant such an option;

f) that party or a Subsidiary of that party issues, agrees to issue or grants an option to subscribe for convertible notes or other securities convertible into shares or debt securities;

g) that party or a Subsidiary of that party issues, agrees to issue or grants an option to subscribe for debentures (as defined in section 9 of the Corporations Act);

h) that party or a Subsidiary of that party disposes, or agrees to dispose, of the whole, or a substantial part, of its Business or property;

i) that party or a Subsidiary of that party charges, or agrees to charge, the whole or a substantial part, of its Business or property, or creates or alters, or agrees to create or alter, any mortgage, charge lien, security interest or other encumbrance over the whole or a substantial part of its Business or property (other than, in the case of Programmed, as may be necessary in connection with funding arrangements for the Cash Consideration and/or the refinancing of any Integrated banking facilities); or





43

j) that party or a Subsidiary of that party resolves to be wound up;

k) a liquidator or provisional liquidator of that party or a Subsidiary of that party is appointed;

l) a court makes an order for the winding up of that party or a Subsidiary of that party;

m) an administrator of that party or a Subsidiary of that party is appointed under sections 436A, 436B or 436C of the Corporations Act;

n) that party or a Subsidiary of that party executes a deed of company arrangement;

o) a receiver or receiver and manager is appointed in relation to the whole, or a substantial part, or the property of that party or a Subsidiary of that party;

p) that party or a Subsidiary of that party makes any material change or amendment to its constitution;

q) that party or a Subsidiary of that party disposes, or agrees to dispose, of shares in a Subsidiary of that party;

r) that party or a Subsidiary of that party:

i) changes the terms of any Material Contract to the detriment of that party;

ii) terminates any Material Contract;

iii) pays, discharges or satisfies any claims, liabilities or obligations under any Material Contract other than in accordance with past practice and consistent with the contract terms; or

iv) waives any material claims or rights under or waives the benefit of any provisions of any Material Contract;

s) that party or a Subsidiary of that party enters into:

i) any onerous contract or commitment; or

ii) any long term contract or commitment (including any joint venture or partnership agreement) other than in the ordinary course of business;

t) except in the ordinary course of its Business, that party or a Subsidiary of that party exercises any material contractual right or





44

other option to renew or extend an existing agreement (including under any lease);

u) that party or a Subsidiary of that party makes any change to its accounting practices or policies, other than to comply with generally accepted Australian accounting standards and any domestically accepted international accounting standards, or elects to form a consolidated group for the purposes of the Income Tax Assessment Act 1997 (Cth);

v) that party or a Subsidiary of that party becomes a party to any material litigation;

w) other than in the ordinary course of its Business and (in the case of Programmed) putting in place or extending such facility as is needed to fund the payment of the Cash Consideration and/or the refinancing of any existing Integrated banking facility, that party or a Subsidiary of that party incurs any financial indebtedness or issues any debt securities of more than $100,000 in aggregate other than advances under credit facilities in existence as at the date of this Agreement and, in the case of Integrated, fully and fairly disclosed in the Integrated Due Diligence Information;

x) except in the ordinary course of its Business, that party or a Subsidiary of that party makes any loans, advances or capital contributions to, or investments in, any other person, other than to or in that party or any wholly-owned Subsidiary of that party;

y) except in the ordinary course of its Business, that party or a Subsidiary of that party:

i) acquires, leases, or disposes of; or

ii) agrees to acquire, lease or dispose of; or

iii) offers, proposes, announces a bid or tenders for; or

iv) makes an announcement in relation to the acquisition, lease or disposal of,

any business, assets (or interest in such assets), entity or undertaking where the value of such business, assets (or interest), entity or undertaking exceeds $750,000;

z) except as otherwise provided by this Agreement, that party or a Subsidiary of that party:

i) pays any bonus to, or increases the compensation of, any executive officer or director;





45

ii) grants to any executive officer or director any increase in severance or termination pay or superannuation entitlements; or

iii) amends or agrees to amend in any material respect, or waives any claims or rights under, or waives the benefit of any provisions of, the terms of employment of any executive officer,

provided that an acquisition of any business, assets (or interest in such assets), entity or undertaking by a party or a Subsidiary of that party will not be a Prescribed Occurrence if it has been fully and fairly disclosed by that party to the other party for the purposes of this proviso immediately prior to the execution of this Agreement, together with the proposed terms of that acquisition, and that acquisition proceeds substantially in accordance with those terms.

Programmed Board means the board of directors of Programmed.

Programmed Due Diligence Information has the meaning set out in clause 7.2m).

Programmed Final Dividend means any final dividend declared by Programmed in respect of the financial year ending 31 March 2007.

Programmed Indemnified Parties means Programmed, each Related Body Corporate of Programmed, the directors and employees of Programmed and the directors and employees of each Related Body Corporate of Programmed.

Programmed Information means such information within the knowledge of Programmed (after making reasonable inquiry) regarding Programmed, its Related Bodies Corporate, the Merged Entity and Programmed Shares (including the New Programmed Shares) required by law and by Regulatory Authorities to enable the Scheme Booklet to be prepared and completed in accordance with all applicable laws.

Programmed Material Adverse Change means an objectively determined downward movement in Programmed’s forecast net profit after tax (for the financial year ending 31 March 2007 excluding costs and expenses incurred in connection with the Merger and earnings attributable to Integrated) of:

a) more than $1.7 million solely in respect of the underlying profitability of Programmed (that is, so called ‘recurring items’ determined by reference to generally accepted Australian accounting standards); or





46

b) more than $3.4 million taking all ‘recurring’ and ‘non-recurring’ items into account.

Programmed Record Date means the date set by Programmed for determining the entitlement of the holders of Programmed Shares to receive the Programmed Final Dividend.

Programmed Shares means fully paid ordinary shares in the capital of Programmed.

Programmed Warranties means the representations and warranties of Programmed given under this Agreement.

Receiver includes a receiver or receiver and manager.

Record Date means 5:00pm on the date that is the fifth Business Day after the Effective Date or any other date agreed by the parties.

Register means the register of members of Integrated.

Regulatory Approvals means such consents, approvals, authorisations or other acts by a Regulatory Authority necessary or desirable to implement the Merger.

Regulatory Authority includes:

a)

a)

b)

a Government Agency;

any regulatory organisation established under statute; and

the ASX.

Related Body Corporate has the meaning it has in the Corporations Act.

Related Entity has the meaning it has in the Corporations Act.

Relevant Date means, in relation to a Condition Precedent, the date or time specified in this Agreement for its fulfilment or, if no date or time is specified, 8.00am on the Second Court Date, subject, in either case, to extension under clause 2.7.

Relevant Interest has the meaning given in the Corporations Act.

Representative of a party includes an employee, agent, officer, director, auditor, advisor, partner, consultant, joint venturer, contractor or sub-contractor of that party.

Restriction Period means the period commencing on the date of this Agreement and ending on the earlier of:





47

a) the Effective Date;

b) the Sunset Date; and

c) the date this Agreement is terminated in accordance with its terms.

Scheme means a scheme of arrangement under Part 5.1 of the Corporations Act to be proposed between Integrated and the Shareholders in such form agreed by the parties, consistent with clause 3.

Scheme Booklet means a booklet containing information about the Scheme to be approved by the Court and sent to Shareholders, and includes the Scheme, an explanatory statement under section 412 of the Corporations Act, the Independent Expert’s Report, and a notice of meeting and proxy form.

Scheme Consideration means the consideration to be provided by Programmed to the Scheme Shareholders for the transfer of each Scheme Share under the terms of the Scheme as described in clause 3.2.

Scheme Meeting means the meeting of Shareholders, to be convened pursuant to a Court order under section 411(1) of the Corporations Act, to consider the Scheme.

Scheme Meeting Date means the date of the Scheme Meeting.

Scheme Share means a Share on issue at the Record Date other than any Excluded Shares.

Scheme Shareholder means each person who is registered in the Register as a holder of a Scheme Share as at the Record Date.

Scrip Consideration means the Scrip Consideration as defined in clause 3.2b).

Second Court Date means the first day on which the Court hears the application for its approval of the Scheme under section 411(4)(b) of the Corporations Act or, if the application is adjourned or subject to appeal for any reason, the first day on which the adjourned or appealed application is heard.

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

Shareholder means a person who is entered in the Register as a holder of Shares other than any Excluded Shares.

Subsidiary of an entity means another entity which is a subsidiary of the first within the meaning of part 1.2 division 6 of the Corporations Act, or





48

is a subsidiary or otherwise controlled by the first within the meaning of any approved accounting standard.

Sunset Date means the date which is four months after the date of this Agreement (or such other date as the parties may agree).

Timetable means the timetable set out in schedule 1, subject to any modification agreed in writing by the parties.

Transaction Documents means this Agreement, the Confidentiality Agreement, the Scheme, the deed poll described in clause 6.8 and the Scheme Booklet.

22.2 References to certain general terms

Unless the contrary intention appears, a reference in this Agreement to:

(variations or replacement) a document (including this Agreement) includes any variation or replacement of it;

a)

b)

c)

d)

e)

f)

g)

h)

(clauses, annexures and schedules) a clause, annexure or schedule is a reference to a clause in or annexure or schedule to this Agreement;

(reference to statutes) except in the definitions of Related Entity and Subsidiary a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;

(singular includes plural) the singular includes the plural and vice versa;

(person) the word “person” includes an individual, a firm, a body corporate, a partnership, a joint venture, an unincorporated body or association, or any Government Agency;

(executors, administrators, successors) a particular person includes a reference to the person’s executors, administrators, successors, substitutes (including persons taking by novation) and assigns;

(two or more persons) an agreement, representation or warranty in favour of two or more persons is for the benefit of them jointly and each of them individually;

(reference to a group of persons) a group of persons or things is a reference to any two or more of them jointly and to each of them individually;





49

(dollars) Australian dollars, dollars, A$ or $ is a reference to the lawful currency of Australia;

i)

j)

k)

l)

m)

n)

o)

p)

(calculation of time) if a period of time dates from a given day or the day of an act or event, it is to be calculated exclusive of that day;

(reference to a day) a day is to be interpreted as the period of time commencing at midnight and ending 24 hours later;

(time) a reference to time is a reference to time in Perth;

(accounting terms) an accounting term is a reference to that term as it is used in accounting standards under the Corporations Act, or, if not inconsistent with those standards, in accounting principles and practices generally accepted in Australia;

(meaning not limited) the words “include”, “including”, “for example” or “such as” are not used as, nor are they to be interpreted as, words of limitation, and, when introducing an example, do not limit the meaning of the words to which the example relates to that example or examples of a similar kind;

(next Business Day) if an event under this Agreement must occur on a stipulated day which is not a Business Day then the stipulated day will be taken to be the next Business Day; and

(best endeavours) a reference to a party using its best endeavours does not include a reference to that party paying money (except immaterial amounts payable to advisers and similar expenses) or providing other valuable consideration to or for the benefit of any person and an obligation on a party to use its best endeavours does not oblige that party to pay money (except immaterial amounts payable to advisers and similar expenses) or provide other valuable consideration to or for the benefit of any person.

22.3 Headings

Headings (including those in brackets at the beginning of paragraphs) are for convenience only and do not affect the interpretation of this Agreement.





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Schedule 1 – Timetable

Date (2007) Event12 March Lodge Scheme Booklet with ASIC and ASX 29 March First Court Date 3 April Printing and despatch of Scheme Booklet 11 April Payment of Integrated Interim Dividend 3 May Scheme Meeting Date 14 May Second Court Date 15 May Lodge Court order with ASIC (Effective Date) 22 May Record Date (fifth Business Day after Effective

Date)25 May Implementation Date (third Business Day after

Record Date)





51

Schedule 2 – Integrated securities

70,471,758 Shares





52

Schedule 3 – Programmed securities

71,195,705 Programmed Shares





53

Signing page

DATED: 12 FEBRUARY 2007

EXECUTED by INTEGRATED GROUP LIMITED in accordance with section 127(1) of the Corporations Act 2001 (Cwlth) by authority of its directors:

C. Sutherland ......................................................... Signature of director

CHRIS SUTHERLAND ......................................................... Name of director (block letters)

))))))))))))))

S Leach ......................................................... Signature of director/company secretary* *delete whichever is not applicable

STEPHEN LEACH ......................................................... Name of director/company secretary* (block letters) *delete whichever is not applicable

EXECUTED by PROGRAMMEDMAINTENANCE SERVICES LIMITED in accordance with section 127(1) of the Corporations Act 2001 (Cwlth) by authority of its directors:

M Findlay ......................................................... Signature of director

M.J. FINDLAY ......................................................... Name of director (block letters)

))))))))))))))

Ian H. Jones ......................................................... Signature of director/company secretary* *delete whichever is not applicable

I.H JONES ......................................................... Name of director/company secretary* (block letters) *delete whichever is not applicable


Appendix 3 Scheme of Arrangement


9603_12

Scheme of Arrangement

pursuant to section 411 of the Corporations Act

between

INTEGRATED GROUP LIMITED (ABN 29 085 701 962)

and

EACH INTEGRATED SHAREHOLDER

1 Preliminary1.1 Integrated

a) Integrated is a public company limited by shares and incorporated in Australia (having been registered in Western Australia).

b) On 2 April 2007, 70,471,758 Shares were on issue.

c) Integrated has been admitted to the official list of ASX and its shares have been granted official quotation.

1.2 Programmed

a) Programmed is a public company limited by shares and incorporated in Australia (having been registered in New South Wales).

b) On 2 April 2007, 71,195,705 Programmed Shares were on issue.

c) Programmed has been admitted to the official list of ASX and its shares have been granted official quotation.

1.3 Scheme summary

If this Scheme becomes Effective, then:

a) in consideration for the transfer of each Scheme Share to Programmed, Programmed will be obliged to provide the Scheme Consideration to each Scheme Shareholder;

b) each Scheme Shareholder will be bound to transfer their Scheme Shares to Programmed and Integrated will enter Programmed’s name and address in the Share Register as the holder of all Scheme Shares; and

c) on the transfer of all Scheme Shares to Programmed, Integrated will become a wholly owned Subsidiary of Programmed.


9603_12

1.4 Implementation

Programmed has entered into the Deed Poll pursuant to which it has, among other things, covenanted to carry out its obligations (including its obligation to provide the Scheme Consideration to Scheme Shareholders) as contemplated by this Scheme. Integrated and Programmed have also entered into the Merger Implementation Agreement, which sets out the terms on which Integrated and Programmed have agreed to implement the Scheme.

2 Conditions precedent and effectiveness 2.1 Conditions precedent

The conditions precedent to this Scheme are:

a) (Scheme approval) this Scheme being approved, in accordance with section 411(4)(a) of the Corporations Act, at the Scheme Meeting;

b) (Conditions precedent) all of the conditions set out in clause 2.1 of the Merger Implementation Agreement being satisfied or waived in accordance with the terms of the Merger Implementation Agreement by the times indicated in the Merger Implementation Agreement;

c) (No termination) the Merger Implementation Agreement or Deed Poll not being terminated prior to 8.00am on the Second Court Date;

d) (Court approval) the approval by the Court of this Scheme, pursuant to section 411(4)(b) of the Corporations Act, being given; and

e) (Court conditions) such other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to the Scheme as are acceptable to Programmed and Integrated being satisfied.

The satisfaction of each of paragraphs (a) to (e) of this clause 2.1 is a condition precedent to the operation of this Scheme and this Scheme will be of no effect unless the conditions precedent in this clause 2.1 are satisfied.

2.2 Certificate

Programmed and Integrated will provide to the Court at the Second Court Hearing a certificate confirming whether or not all of the conditions in clause 2.1 of the Merger Implementation Agreement (other than those set out in clauses 2.1(g) and (h) of the Merger Implementation Agreement) have been satisfied or waived in accordance with the terms of the Merger Implementation Agreement.


9603_12

2.3 Merger Implementation Agreement

If the Merger Implementation Agreement is terminated in accordance with its terms prior to 8.00am on the Second Court Date, Programmed and Integrated are each immediately released from any further obligation to take steps to implement the Scheme.

2.4 Sunset Date

This Scheme will lapse and be of no further force or effect if the Effective Date has not occurred on or before the Sunset Date.

3 Implementation of the Scheme 3.1 Court order

This Scheme will become binding on Integrated and each Scheme Shareholder if and only if the Court makes an order under section 411(4)(b) of the Corporations Act approving this Scheme and that order becomes effective under section 411(10) of the Corporations Act.

3.2 Lodgement with ASIC

Integrated will lodge with ASIC an office copy of the order of the Court made under section 411(4)(b) of the Corporations Act approving this Scheme as soon as practicable, and in any event by 5.00pm on the first Business Day, after:

a) the Court approves the Scheme; or

b) the date of satisfaction of the conditions precedent referred to in clause 2.1 of this Scheme,

whichever is the later.

3.3 Transfer of Scheme Shares

All of the Scheme Shares (together with all rights and entitlements attaching to the Scheme Shares, other than any entitlement to the Interim Dividend or Final Dividend) will be transferred to Programmed on the Implementation Date (without the need for any further act by a Scheme Shareholder) by Integrated effecting a valid transfer or transfers under section 1074D of the Corporations Act or, if that procedure is not available for any reason, by:

a) Integrated executing and delivering to Programmed, pursuant to the authority in clause 3.10, a valid share transfer form or forms (which may be a master transfer) to transfer all of the Scheme Shares to Programmed;

b) Programmed executing and delivering that share transfer form or those forms to Integrated; and


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c) Integrated, immediately upon receipt of the executed share transfer form or forms, entering the name and address of Programmed in the Share Register as the holder of all Scheme Shares.

3.4 Consideration under this Scheme

Subject to and in accordance with the other terms and conditions of this Scheme (including clauses 3.6, 3.7 and 3.9), in consideration for the transfer of each Scheme Share to Programmed, Programmed will on the Implementation Date:

a) pay to each Scheme Shareholder the amount of cash due to that Scheme Shareholder as Cash Consideration; and

b) issue to each Scheme Shareholder the number of New Programmed Shares as are due to that Scheme Shareholder as Scrip Consideration.

3.5 Joint holders

In the case of Scheme Shares held in joint names:

a) any cheque required to be paid to Scheme Shareholders will be payable to the joint holders; and

b) any uncertificated holding statements for New Programmed Shares to be issued to Scheme Shareholders will be issued in the names of the joint holders,

and will be forwarded to the holder whose name appears first in the Share Register on the Record Date.

3.6 Fractional entitlements

Where the calculation of the total number of New Programmed Shares to be issued to (or in respect of) a particular Scheme Shareholder would result in a fractional entitlement to a New Programmed Share, then, any such fractional entitlement:

a) if to less than 0.5 of a New Programmed Share, will be rounded down to the nearest whole number of New Programmed Shares; and

b) if to 0.5 or more of a New Programmed Share, will be rounded up to the nearest whole number of New Programmed Shares.

3.7 Shareholding splitting or division

If Programmed is of the reasonable opinion that two or more Scheme Shareholders (each of whom holds a number of Scheme Shares which results in rounding in accordance with clause 3.6) have, before the Record Date, been party to shareholding splitting or division in an attempt to


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obtain unfair advantage by reference to such rounding, Programmed may give notice to those Scheme Shareholders:

a) setting out their names and Registered Addresses;

b) stating that opinion; and

c) attributing to one of them specifically identified in the notice the Scheme Shares held by all of them,

and, after such notice has been given, the Scheme Shareholder specifically identified in the notice as the deemed holder of all the specified Scheme Shares will, for the purposes of the other provisions of this Scheme, be taken to hold all of those Scheme Shares and each of the other Scheme Shareholders whose names and Registered Addresses are set out in the notice will, for the purposes of the other provisions of this Scheme, be taken to hold no Scheme Shares. Programmed, in complying with the other provisions of this Scheme relating to it in respect of the Scheme Shareholder specifically identified in the notice as the deemed holder of all the specified Scheme Shares, will be taken to have satisfied and discharged its obligations to the other Scheme Shareholders named in the notice under the terms of this Scheme.

3.8 Scheme Shareholders bound

Each Scheme Shareholder who is to receive New Programmed Shares under this Scheme agrees (for all purposes including section 231 of the Corporations Act) to:

a) become a member of Programmed and to accept the New Programmed Shares issued to them under this Scheme subject to, and to be bound by, Programmed’s constitution and other constituent documents; and

b) have their name and address entered into the Programmed Register.

3.9 Ineligible Foreign Holders

a) Programmed will be under no obligation under this Scheme to issue, and will not issue, any New Programmed Shares to an Ineligible Foreign Holder, and instead:

i) all the New Programmed Shares which would otherwise be required to be issued to any Ineligible Foreign Holder under the Scheme, if they were eligible to receive them, will be issued to the Sale Agent;

ii) Programmed will procure that, as soon as reasonably practicable (and in any event not more than 15 Business Days after the Implementation Date), the Sale Agent sells on ASX all of the New Programmed Shares issued to the


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Sale Agent pursuant to clause 3.9(a)(i) in such manner, at such price and on such other terms as the Sale Agent determines in good faith (and at the risk of the Ineligible Foreign Holder), and remits to Programmed the proceeds of sale (after deducting any applicable brokerage and other selling costs, taxes and charges) (the Proceeds); and

iii) Programmed will pay to each Ineligible Foreign Holder such fraction of the Proceeds as is equal to the number of New Programmed Shares which would have been issued to that Ineligible Foreign Holder (if they were eligible to receive New Programmed Shares) divided by the total number of New Programmed Shares issued to the Sale Agent under clause 3.9(a)(i), promptly after the last sale of New Programmed Shares by the Sale Agent,

in full satisfaction of Programmed’s obligations to that Ineligible Foreign Holder under the Scheme in respect of the Scrip Consideration.

b) Programmed will pay the relevant fraction of the Proceeds to each Ineligible Foreign Holder by either:

i) dispatching, or procuring the dispatch, to that Ineligible Foreign Holder by prepaid post to that Ineligible Foreign Holder’s Registered Address (at the Record Date), a cheque in the name of that Ineligible Foreign Holder; or

ii) making a deposit in an account with any ADI (as defined in the Banking Act 1959 (Cwlth)) in Australia notified by that Ineligible Foreign Holder to Integrated (or the Share Registry) and recorded in or for the purposes of the Share Register at the Record Date,

for the relevant amount, with that amount being denominated in Australian dollars.

c) Each Ineligible Foreign Holder appoints Integrated as its agent to receive on its behalf any financial services guide or other notices (including any updates of those documents) that the Sale Agent is required to provide to Ineligible Foreign Holders under the Corporations Act.

3.10 Authority given to Integrated

Each Scheme Shareholder will be deemed (without the need for any further act) to have irrevocably authorised Integrated (and each of its directors and officers, jointly and severally) as agent and attorney to do and execute all acts, matters, things and documents on the part of each Scheme Shareholder necessary to implement and give full effect to this Scheme and the transactions contemplated by it, including (without limitation):


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a) executing a proper instrument of transfer (including for the purposes of section 1071B of the Corporations Act) of their Scheme Shares in favour of Programmed, which may be a master transfer of some or all Scheme Shares; and

b) where Scheme Shares are held in a CHESS holding, causing a message to be transmitted to ASTC in accordance with the ASTC Settlement Rules to transfer the Scheme Shares held by the Scheme Shareholder from the CHESS sub-register to the issuer sponsored sub-register operated by Integrated and subsequently completing a proper instrument of transfer under paragraph (a) above.

4 Programmed’s obligations and ancillary matters

4.1 Integrated notice and shareholder consent

a) As soon as practicable after the Record Date, and in any event at least 2 Business Days before the Implementation Date, Integrated will give to Programmed (or procure that Programmed be given) details of the names and addresses shown in the Share Register of all Scheme Shareholders and the number of Scheme Shares held by each of them at the Record Date (in such form as may be reasonably requested by Programmed).

b) Scheme Shareholders agree that any information referred to in clause 4.1(a) may be disclosed to Programmed, Programmed’s advisors, Integrated’s advisors and other service providers (including the Programmed Registry) to the extent necessary to effect the Scheme.

4.2 Provision of Cash Consideration

On the Implementation Date, Programmed will provide to each Scheme Shareholder the Cash Consideration to which that Scheme Shareholder is entitled by either:

a) dispatching, or procuring the dispatch, to that Scheme Shareholder by prepaid post to that Scheme Shareholder’s Registered Address (at the Record Date), a cheque in the name of that Scheme Shareholder; or

b) making a deposit in an account with any ADI (as defined in the Banking Act 1959 (Cwlth)) in Australia notified by that Scheme Shareholder to Integrated (or the Share Registry) and recorded in or for the purposes of the Share Register at the Record Date,

for an amount equal to the number of Scheme Shares registered in the name of that Scheme Shareholder in the Share Register at the Record Date multiplied by the Cash Amount.


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4.3 Provision of Scrip Consideration

Subject to clauses 3.6, 3.7 and 3.9, Programmed will provide to each Scheme Shareholder the Scrip Consideration to which that Scheme Shareholder is entitled by:

a) on the Implementation Date, issuing to that Scheme Shareholder the number of New Programmed Shares equal to the number of Scheme Shares registered in the name of that Scheme Shareholder in the Share Register at the Record Date multiplied by 0.26, which obligation will be satisfied by causing the name and Registered Address (at the Record Date) of that Scheme Shareholder to be entered into the Programmed Register as the holder of the New Programmed Shares issued to that Scheme Shareholder; and

b) within 5 Business Days after the Implementation Date, procuring the dispatch to that Scheme Shareholder, if their New Programmed Shares are held on the issuer sponsored subregister of Programmed, by pre-paid post to their Registered Address (at the Record Date), of an uncertificated holding statement in the name of that Scheme Shareholder relating to the number of New Programmed Shares issued to that Scheme Shareholder.

4.4 Status of New Programmed Shares

The New Programmed Shares to be issued in accordance with this Scheme will:

a) be validly issued;

b) be fully paid; and

c) rank equally in all respects with all other Programmed Shares then on issue (other than in respect of any dividend already declared and not yet paid by Programmed, where the record date for entitlement to that dividend occurred prior to the Implementation Date).

4.5 Deferred Settlement trading

Programmed will use its best endeavours to ensure that the New Programmed Shares are quoted on ASX as soon as practicable after the Effective Date, initially on a deferred settlement basis and thereafter on an ordinary settlement basis.

4.6 Appointment of Programmed as attorney and agent

Each Scheme Shareholder, without need for any further act, irrevocably appoints Programmed and each of its directors and officers, jointly and severally, as that Scheme Shareholder’s attorney and agent for the purpose of executing any form of application required for New Programmed Shares to be issued to that Scheme Shareholder under the Scheme.


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5 Dealings in Shares 5.1 No allotment or issue

No Shares will be allotted or issued by Integrated after the Effective Date and before the Implementation Date except for 1,904,000 Shares to be issued by Integrated prior to the Record Date under the Long Term Incentive Plan.

5.2 No dealings after Record Date

Where this Scheme becomes binding as provided by clause 3.1, for the purposes of determining who are Scheme Shareholders, dealings in Shares will only be recognised if:

a) in the case of dealings of a type to be effected using CHESS, the transferee is registered in the Share Register as the holder of the Shares by the Record Date; and

b) in all other cases, registrable transfers or transmission applications in respect of those dealings are received by the Share Registry by the Record Date.

Integrated will register registrable transfers or transmission applications of the kind referred to in clause 5.2(b) above by the Record Date.

5.3 No registration of transfers

Integrated will not accept for registration nor recognise for any purpose any transmission application, transfer or other dealing in respect of Scheme Shares received after the Record Date, other than a transfer to Programmed in accordance with this Scheme.

5.4 Statements of holding

All statements of holdings (or certificates) for Scheme Shares will cease to have any effect from the Record Date as documents of title in respect of such Shares. As from the Record Date, each entry current at that date on the Share Register relating to Scheme Shares will cease to be of any effect other than as evidence of entitlement to the Scheme Consideration and other interests pursuant to this Scheme in respect of the Scheme Shares relating to that entry.

5.5 Maintenance of Share Register

In order to determine entitlements to the Scheme Consideration, Integrated will maintain, or procure the maintenance of, the Share Register in accordance with this clause 5 until the Scheme Consideration has been provided to Scheme Shareholders, and the Share Register in this form will solely determine entitlements to the Scheme Consideration.


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6 Quotation of Shares 6.1 Suspension of trading

Integrated will apply to ASX for suspension of trading of Shares on ASX after the close of trading on ASX on the Effective Date. It is expected that suspension of trading in Shares will occur from the commencement of the Business Day following the day on which Integrated notifies ASX of the Scheme becoming Effective.

6.2 Termination of quotation

After the Implementation Date, Integrated will apply for termination of the official quotation of Shares and to have itself removed from the official list of ASX.

7 Payment of Final Dividend If, and only if, the Programmed Dividend Record Date is prior to the Implementation Date, Integrated will:

a) take such steps as are necessary to approve the declaration and payment by Integrated of the Final Dividend, on the basis that the record date for the Final Dividend is the Record Date; and

b) pay to each Scheme Shareholder a cash amount by way of the Final Dividend in respect of each of their Scheme Shares.

8 General8.1 Scheme binding

Each Scheme Shareholder will transfer their Scheme Shares to Programmed (together with all rights and entitlements attaching to those Scheme Shares, other than any entitlement to the Interim Dividend or the Final Dividend) in accordance with the terms of this Scheme and this Scheme binds Integrated and all Scheme Shareholders (including those who do not attend the Scheme Meeting, do not vote at the Scheme Meeting, or vote against the Scheme at the Scheme Meeting).

8.2 Enforcement of Deed Poll

a) Each Scheme Shareholder appoints Integrated as its agent and attorney to enforce the Deed Poll against Programmed.

b) Integrated undertakes in favour of each Scheme Shareholder to enforce the Deed Poll against Programmed on behalf of, and as agent and attorney for, the Scheme Shareholders.


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8.3 Modifications and amendments

Integrated may by its counsel or solicitors (but only with the prior consent of Programmed, which consent may not be unreasonably withheld or delayed) consent on behalf of all persons concerned (including the Scheme Shareholders) to any modification of, or amendment to, or the making or imposition by the Court of any condition in respect of this Scheme.

8.4 Accidental omissions and non-receipt of notice

The accidental omission to give notice of the Scheme Meeting to any holder of Shares or the non-receipt of such a notice by any holder of Shares will not, unless so ordered by the Court, invalidate the Scheme Meeting or the proceedings at the Scheme Meeting.

8.5 Status of Scheme Shares

a) Each Scheme Shareholder is deemed to have warranted to Programmed that all their Scheme Shares (including any rights and entitlements attaching to those shares) will, as at the time of the transfer of them to Programmed, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and interests of third parties of any kind, whether legal or otherwise, and from any restrictions on transfer of any kind, and that they have full power and capacity to sell and to transfer their Scheme Shares (including any rights and entitlements attaching to those shares) to Programmed under the Scheme.

b) Programmed will be beneficially entitled to the Scheme Shares transferred to it under this Scheme (other than any entitlement to the Interim Dividend or the Final Dividend which shall remain with the Scheme Shareholders) pending registration by Integrated of the name and address of Programmed in the Share Register as the holder of the Scheme Shares.

8.6 Binding instruction or notification

Except for a Scheme Shareholder’s tax file number, any binding instruction or notification from a Scheme Shareholder to Integrated relating to Scheme Shares at the Record Date (including any instructions relating to the payment of dividends or communications) will, from the Record Date, be deemed (except to the extent inconsistent with the other provisions of this Scheme or as determined otherwise by Programmed in its sole discretion) to be a similarly binding instruction or notification to Programmed in respect of the New Programmed Shares issued to the Scheme Shareholder until such time as it is revoked or amended in writing addressed to Programmed at the Programmed Registry.

8.7 Notices to Integrated

Where a notice, transfer, transmission application, direction or other communication referred to in the Scheme is sent by post to Integrated, it


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will not be deemed to be received in the ordinary course of post or on a day other than the date (if any) on which it was actually received at Integrated’s registered office or the Share Registry.

8.8 Integrated obligations

Integrated must execute all deeds and other documents (including transfers) and do all acts and things as may be necessary or expedient on its part to implement and give full effect to this Scheme in accordance with its terms.

8.9 No liability

Neither Integrated nor Programmed, nor any of their respective officers, is liable to Scheme Shareholders for anything done or for anything omitted to be done in performance of this Scheme in good faith.

8.10 Costs and stamp duty

Integrated will pay the costs of the Scheme other than stamp duty. All stamp duty (if any) payable in connection with the transfer of the Scheme Shares to Programmed will be payable by Programmed.

8.11 Governing law

The Scheme is governed by the laws of Western Australia.

9 Definitions and Interpretation 9.1 Definitions

In this Scheme, unless the context otherwise requires:

ASIC means the Australian Securities and Investments Commission.

ASTC means ASX Settlement and Transfer Corporation Pty Ltd ABN 49 008 504 532.

ASX means ASX Limited ABN 98 008 624 691 or, as the context requires, the financial market operated by it.

Business Day has the meaning given in the Listing Rules.

Cash Amount means $1.25 less the amount (on a per Share basis) of any dividend declared, paid or determined by Integrated prior to the Implementation Date other than the Interim Dividend or the Final Dividend.

Cash Consideration means, in respect of each Scheme Share, the Cash Amount.


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CHESS means the Clearing House Electronic Subregister System, for the electronic transfer of securities, operated by ASTC.

Corporations Act means the Corporations Act 2001 (Cwlth).

Court means the Federal Court of Australia.

Deed Poll means the deed poll executed by Programmed on 30 March 2007 in favour of each Scheme Shareholder.

Effective means the coming into effect, under section 411(10) of the Corporations Act, of the orders of the Court made under section 411(4)(b) (and, if applicable, section 411(6)) in relation to the Scheme.


Final Dividend means any final dividend declared by Integrated in respect of the financial year ending 30 June 2007, which:

a) is declared by Integrated prior to the Implementation Date;

b) is to be paid in cash in respect of each Scheme Share on issue at the Record Date;

c) shall, per Scheme Share, be an amount equal to 0.26 multiplied by the Programmed Final Dividend, or any such lesser amount as determined by Integrated which can be paid consistently with the Corporations Act; and

d) is to be paid after the Record Date and, where possible, no later than the Implementation Date,

and may only be declared if the Programmed Dividend Record Date is prior to the Implementation Date.

Foreign Holder means a Scheme Shareholder whose address as shown on the Share Register at the Record Date is in a jurisdiction other than Australia or its external territories or New Zealand.

Implementation Date means the third Business Day after the Record Date.

Ineligible Foreign Holder means a Foreign Holder other than one in respect of whom Programmed is satisfied that the laws of the Foreign Holder’s country of residence (as shown in the Share Register) would permit the issue of New Programmed Shares to the Foreign Holder, either unconditionally or after compliance with conditions which Programmed in its sole discretion regards as acceptable and not unduly onerous.

Integrated means Integrated Group Limited ABN 29 085 701 962.

Interim Dividend means the interim dividend (of $0.05 per Share) declared by Integrated in respect of the 6 month period to 31 December


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2006 payable on 11 April 2007 to Shareholders on the Share Register on 4 April 2007.

Listing Rules means the official listing rules of ASX.

Long Term Incentive Plan means the long term incentive plan between Integrated and Christopher Sutherland dated 28 April 2006 established pursuant to clause 7.1 of the Executive Service Agreement dated 16 December 2005 between Integrated and Christopher Sutherland.

Merger Implementation Agreement means the Merger Implementation Agreement dated 12 February 2007 between Integrated and Programmed as amended or restated from time to time.

New Programmed Shares means those Programmed Shares to be issued (as Scrip Consideration) to (or in respect of) Scheme Shareholders as part of the consideration for their Scheme Shares.

Programmed means Programmed Maintenance Services Limited ABN 61 054 742 264.

Programmed Dividend Record Date means the date set by Programmed for determining the entitlement of the holders of Programmed Shares to receive the Programmed Final Dividend.

Programmed Final Dividend means any final dividend declared by Programmed in respect of the financial year ending 31 March 2007.

Programmed Register means the register of members of Programmed maintained by Computershare Investor Services Pty Ltd and Programmed Registry has a corresponding meaning.

Programmed Share means a fully paid ordinary share in Programmed.

Record Date means 5.00pm on the fifth Business Day after the Effective Date, or any other date agreed by Integrated and Programmed.

Registered Address means, in relation to a Shareholder, the address of the Shareholder shown in the Share Register.

Sale Agent means the person chosen by Integrated and Programmed to sell the New Programmed Shares that are attributable to Ineligible Foreign Holders under the terms of this Scheme (or any nominee of such person).

Scheme or Scheme of Arrangement means the scheme of arrangement under Part 5.1 of the Corporations Act recorded in this document subject to any modifications or conditions made or required by the Court under section 411(6) of the Corporations Act.

Scheme Consideration means the consideration to be provided by Programmed to Scheme Shareholders for the transfer of their Scheme Shares under the terms of the Scheme determined in accordance with clause 3.


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Scheme Meeting means the meeting of Shareholders, to be convened by the Court pursuant to section 411(1) of the Corporations Act, to consider and vote on the Scheme.

Scheme Shares means the Shares on issue as at the Record Date.

Scheme Shareholder means each person who is registered in the Share Register as the holder of Scheme Shares as at the Record Date.

Scrip Consideration means, in respect of each Scheme Share, 0.26 New Programmed Shares.

Second Court Date means the first day of the Second Court Hearing, or if the application at such hearing is adjourned or subject to an appeal for any reason, the first day on which the adjourned or appealed application is heard.

Second Court Hearing means the hearing of the Court of the application for an order pursuant to section 411(4)(b) of the Corporations Act approving this Scheme.

Share means a fully paid ordinary share in Integrated.

Shareholder means a person entered in the Share Register as a holder of Shares.

Share Register means the register of Integrated members maintained by Computershare Investor Services Pty Ltd and Share Registry has a corresponding meaning.

Subsidiary of an entity means another entity which is a subsidiary of the first within the meaning of part 1.2 division 6 of the Corporations Act or is a subsidiary or otherwise controlled by the first within the meaning of any approved accounting standard.

Sunset Date means 12 June 2007 or any other date agreed by Integrated and Programmed.

9.2 Interpretation

In this Scheme, unless the context otherwise requires:

a) headings are for convenience and do not affect interpretation;

b) the singular includes the plural and vice versa;

c) each gender includes every other gender;

d) the word “person” includes a body corporate, a partnership, a joint venture, an unincorporated body or association, or any government agency;


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e) a reference to a person includes a reference to the person’s executors, administrators, successors, substitutes and assigns;

f) words and phrases not specifically defined have the same meaning (if any) given to them in the Corporations Act;

g) references to any legislation or regulations include any statutory modification of or substitution for such legislation or regulations;

h) references to agreements, deeds or documents (including this Scheme) are to agreements, deeds or documents as amended, novated or replaced from time to time;

i) a reference to a clause, party, annexure, exhibit or schedule is a reference to a clause of, and a party, annexure, exhibit and schedule to, this Scheme and a reference to this Scheme includes any annexure, exhibit and schedule;

j) a reference to a holder includes a joint holder;

k) the words “include”, “including”, “for example” or “such as” are not used as, nor are they to be interpreted as, words of limitation, and, when introducing an example, do not limit the meaning of the words to which the example relates to that example or examples of a similar kind;

l) references to a currency are to Australian currency; and

m) a reference to time is a reference to the time in Perth, Western Australia.


Appendix 4 Deed Poll


CONFORMED COPY

Deed Poll Dated

Programmed Maintenance Services Limited (ABN 61 054 742 264)

Cochrane Lishman Level 12 London House 216 St Georges Terrace Perth WA 6000 AustraliaT + 61 8 9262 5555 F + 61 8 9262 5522 www.cochranelishman.com.au


Deed Poll Contents


Deed Poll 29 March 2007

i

Details 1General terms 21 Condition precedent and termination 21.1 Condition precedent 2 1.2 Termination 2 1.3 Consequences of termination 2 2 Scheme Consideration 22.1 Payment obligation 2 2.2 Provision of Cash Consideration 3 2.3 Provision of Scrip Consideration 3 2.4 Joint holders 5 2.5 Binding instruction or notifications 5 2.6 Status of Programmed Shares 5 3 Warranties 64 Continuing obligations 65 Stamp Duty 66 Notices 66.1 Notice details 6 6.2 Delivery 7 7 General 77.1 Cumulative rights 7 7.2 Waiver 7 7.3 Variation 8 7.4 Severance 8 7.5 Further assurances 8 8 Governing law and jurisdiction 89 Assignment 810 Definitions and interpretations 910.1 Definitions 9 10.2 Interpretation 9 10.3 Nature of Deed Poll 10 Signing page 11Annexure A – Scheme 12


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Details

Interpretation – definitions are located at the end of the General terms

By Programmed Maintenance Services Limited (ABN 61 054 742 264) of 52 Ricketts Road, Mount Waverley, Victoria 3149 (“Programmed”)

In favour of Each Scheme Shareholder

Recitals A The board of Integrated Group Limited (ABN 29 085 701 962) (“Integrated”) has resolved that Integrated should propose the Scheme, the effect of which will be that all Scheme Shares will be transferred to Programmed (such that Programmed will then hold all of the Shares in Integrated).

B Programmed and Integrated entered into a Merger Implementation Agreement on 12 February 2007 (“Merger Implementation Agreement”) whereby Programmed agreed to do all things as may be necessary or expedient on its part to implement the Scheme and, in particular, subject to satisfaction of certain conditions, to provide the Scheme Consideration to the Scheme Shareholders.

C Programmed is entering into this Deed Poll for the purpose of covenanting in favour of Scheme Shareholders that it will perform its obligations under the Scheme in so far as they relate to the Scheme Shareholders.

Governing Law Western Australia

Date of Deed Poll

See Signing Page


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2

General terms

1 Condition precedent and termination 1.1 Condition precedent

Programmed’s obligations under clause 2 are subject to the Scheme becoming Effective.

1.2 Termination

The obligations of Programmed under this Deed Poll will automatically terminate (and the terms of this Deed Poll will be of no further force or effect) if the Merger Implementation Agreement is terminated in accordance with its terms prior to the Effective Date.

1.3 Consequences of termination

If this Deed Poll terminates under clause 1.2 then, in addition and without prejudice to any other rights, powers or remedies available to it:

a) Programmed is released from its obligations under this Deed Poll except those obligations contained in clause 5; and

b) Scheme Shareholders retain the rights they have against Programmed in respect of any breach of this Deed Poll by Programmed which occurred before termination of this Deed Poll.

2 Scheme Consideration 2.1 Payment obligation

Subject to clause 1, in consideration for the transfer to Programmed of each Scheme Share in accordance with the Scheme, Programmed will, in accordance with the provisions of the Scheme:

a) pay to each Scheme Shareholder such amount of cash as is due to that Scheme Shareholder under the terms of the Scheme as Cash Consideration;

b) subject to clause 3.9 of the Scheme and clause 2.3(b) of this Deed Poll, issue to each Scheme Shareholder such number of New


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3

Programmed Shares as are due to that Scheme Shareholder under the terms of the Scheme as Scrip Consideration;

c) issue to the Sale Agent such number of New Programmed Shares as are attributable to Ineligible Foreign Holders under the terms of the Scheme as Scrip Consideration; and

d) use its best endeavours to ensure that the New Programmed Shares are quoted on ASX as soon as practicable after the Effective Date, initially on a deferred settlement basis and thereafter on an ordinary settlement basis.

2.2 Provision of Cash Consideration

The obligation of Programmed to pay the Cash Consideration to Scheme Shareholders will be satisfied by Programmed, in relation to each Scheme Shareholder, either:

a) dispatching, or procuring the dispatch of, a cheque to that Scheme Shareholder by prepaid post to their Registered Address (at the Record Date), such cheque being drawn in the name of that Scheme Shareholder; or

b) making a deposit in an account with any ADI (as defined in the Banking Act 1959 (Cwlth)) in Australia notified by that Scheme Shareholder to Integrated (or the Share Registry) and recorded in or for the purposes of the Share Register at the Record Date,

on the Implementation Date, for the relevant amount, with that amount being denominated in Australian dollars.

2.3 Provision of Scrip Consideration

a) The obligations of Programmed (subject to clause 3.9 of the Scheme and clause 2.3(b) of this Deed Poll) to issue the New Programmed Shares to Scheme Shareholders under the terms of the Scheme will be satisfied by Programmed, in relation to each Scheme Shareholder other than Ineligible Foreign Holders:

i) on the Implementation Date, causing the name and Registered Address (at the Record Date) of that Scheme Shareholder to be entered on the Programmed Register as the holder of the New Programmed Shares issued to that Scheme Shareholder under the Scheme; and

ii) within 5 Business Days after the Implementation Date, procuring the dispatch to that Scheme Shareholder (if their New Programmed Shares are held on the issuer sponsored subregister of Programmed), by pre-paid post to their


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4

Registered Address (at the Record Date), of an uncertificated holding statement in the name of that Scheme Shareholder relating to the number of New Programmed Shares issued to that Scheme Shareholder.

b) In accordance with clause 3.9 of the Scheme, Programmed will be under no obligation to issue, and will not issue, any New Programmed Shares to an Ineligible Foreign Holder, and instead:

i) all the New Programmed Shares which would be required to be issued to any Ineligible Foreign Holder under the Scheme, if they were eligible to receive them, will be issued to the Sale Agent;

ii) Programmed will procure that, as soon as reasonably practicable (and in any event not more than 15 Business Days after the Implementation Date), the Sale Agent sells on ASX all of the New Programmed Shares issued to the Sale Agent pursuant to clause 3.9(a)(i) of the Scheme in such manner, at such price and on such other terms as the Sale Agent determines in good faith (and at the risk of the Ineligible Foreign Holder), and remits to Programmed the proceeds of sale (after deduction of any applicable brokerage and other selling costs, taxes and charges) (the “Proceeds”); and

iii) Programmed will pay to each Ineligible Foreign Holder such fraction of the Proceeds as is equal to the number of New Programmed Shares which would have been issued to that Ineligible Foreign Holder (if they were eligible to receive New Programmed Shares) divided by the total number of New Programmed Shares issued to the Sale Agent under clause 3.9(a)(i) of the Scheme, promptly after the last sale of New Programmed Shares by the Sale Agent,

in full satisfaction of Programmed’s obligations to that Ineligible Foreign Holder under the Scheme in respect of the Scrip Consideration.

c) Programmed will pay the relevant fraction of the Proceeds to each Ineligible Foreign Holder by either:

i) dispatching, or procuring the dispatch, to that Ineligible Foreign Holder by prepaid post to that Ineligible Foreign Holder’s Registered Address (at the Record Date), a cheque in the name of that Ineligible Foreign Holder; or

ii) making a deposit in an account with any ADI (as defined in the Banking Act 1959 (Cwlth)) in Australia notified by the


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Ineligible Foreign Holder to Integrated (or the Share Registry) and recorded in or for the purposes of the Share Register at the Record Date,

for the relevant amount, with that amount being denominated in Australian dollars.

2.4 Joint holders

In the case of Scheme Shares held in joint names:

a) any uncertificated holding statements for New Programmed Shares to be issued to Scheme Shareholders will be issued in the names of the joint holders; and

b) any cheque required to be paid to Scheme Shareholders will be payable to the joint holders,

and will be forwarded to the holder whose name appears first in the Share Register at the Record Date.

2.5 Binding instruction or notifications

Programmed must ensure that, except for a Scheme Shareholder’s tax file number, any binding instruction or notification from a Scheme Shareholder to Integrated relating to Scheme Shares at the Record Date (including any instructions relating to payment of dividends or communications) will, from the Record Date, be deemed (except to the extent inconsistent with any provisions of the Scheme or as determined otherwise by Programmed in its sole discretion) to be a similarly binding instruction or notification to Programmed in respect of the New Programmed Shares issued to the Scheme Shareholder until such time as it is revoked or amended in writing addressed to Programmed at the Programmed Registry.

2.6 Status of Programmed Shares

Programmed must procure that the New Programmed Shares which are issued to Scheme Shareholders in accordance with the Scheme will be:

a) validly issued;

b) fully paid; and

c) rank equally in all respects with all other Programmed Shares then on issue (other than in respect of any dividend already declared and not yet paid by Programmed, where the record date for entitlement to that dividend occurred prior to the Implementation Date).


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3 WarrantiesProgrammed represents and warrants that:

a) it is a company validly existing under the laws of Australia;

b) it has the corporate power to enter into and perform its obligations under this Deed Poll and to carry out the transactions contemplated by this Deed Poll;

c) it has taken all necessary corporate action to authorise the entry into this Deed Poll and has taken or will take all necessary corporate action to authorise the performance of this Deed Poll and to carry out the transactions contemplated by this Deed Poll; and

d) this Deed Poll is valid and binding upon it and enforceable against it in accordance with its terms, subject to any necessary stamping.

4 Continuing obligations This Deed Poll is irrevocable and, subject to clause 1, remains in full force and effect until the earlier of:

a) Programmed having completely performed its obligations under this Deed Poll; and

b) the termination of this Deed Poll under clause 1.2.

5 Stamp Duty Programmed must pay all stamp duty (if any), including fines, penalties and interest, imposed on or payable on or in connection with this Deed Poll and any instrument or other document executed under this Deed Poll, and on or in connection with the transfer of the Scheme Shares to Programmed.

6 Notices6.1 Notice details

A notice, consent, request or any other communication to Programmed under this Deed Poll:

a) must be in writing and signed by the person giving it (or a person duly authorised by the person giving it); and


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b) must be delivered to Programmed by pre-paid post (or registered airmail if posted to or from a place outside Australia) or by hand or by facsimile to the address or facsimile number of Programmed specified below or any other address or facsimile number that Programmed requests in writing.

Programmed Maintenance Services Limited

Attention: Company Secretary

Address: 52 Ricketts Road Mount Waverley VIC 3149

Fax No: +61 3 9562 8006

6.2 Delivery

A notice, consent, request or any other communication (“Notice”) given under or in connection with this Deed Poll is taken to be received:

a) if delivered in person, when it is delivered;

b) if delivered by pre-paid post, three business days after the date of posting (or seven business days after the date of posting, if posted to or from a place outside Australia); and

c) if sent by facsimile, on receipt by the sender of a transmission report from the dispatching machine which confirms that the facsimile was sent in its entirety and without error to the facsimile number of the recipient,

but if the result is that a Notice would be taken to be received on a day that is not a business day in the place to which the Notice is delivered or sent or is later than 5.00pm (local time) it will be taken to be received at 9.00am on the next business day in that place.

7 General7.1 Cumulative rights

The rights, powers and remedies of Programmed and Scheme Shareholders under this Deed Poll are in addition to any rights, powers or remedies provided by law independently of this Deed Poll.

7.2 Waiver

A provision or a right under this Deed Poll may not be waived except in writing signed by the person granting the waiver.


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7.3 Variation

a) A provision in this Deed Poll may only be amended or varied if the amendment or variation is:

i) before the Second Court Date, and the amendment or variation is agreed to by Integrated, which agreement Integrated may give or withhold in its absolute discretion and without reference to or approval by any Scheme Shareholder; or

ii) on or after the Second Court Date, and the amendment or variation is agreed to by Integrated, and is approved by the Court.

b) Programmed will enter into a further deed poll in favour of Scheme Shareholders giving effect to any such amendment or variation.

7.4 Severance

Any provision of this Deed Poll which is unenforceable or partly unenforceable is, where possible, to be severed to the extent necessary to make this document enforceable, unless this would materially change the intended effect of this document.

7.5 Further assurances

Programmed will do all things and execute all deeds, instruments, transfers or other documents as may be necessary or desirable to give full effect to the provisions of this Deed Poll and the transactions contemplated by it.

8 Governing law and jurisdiction a) This Deed Poll is governed by the laws of Western Australia.

b) Programmed irrevocably submits to the non-exclusive jurisdiction of the courts of Western Australia and to courts competent to hear appeals from those courts with respect to any proceedings which may be brought at any time relating in any way to this Deed Poll and waives any right it may now or in the future have to claim that those courts are an inconvenient forum.

9 AssignmentThe rights and obligations of Programmed and of each Scheme Shareholder under this Deed Poll are personal. They cannot be assigned,


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charged or otherwise dealt with and no person may attempt or purport to do so without the prior written consent of Programmed and Integrated.

10 Definitions and interpretations 10.1 Definitions

In this Deed Poll:

a) Scheme means the proposed scheme of arrangement between Integrated and its shareholders, a copy of which is annexed to this Deed Poll; and

b) words and phrases defined in the Scheme have the same meaning when used in this Deed Poll, unless the context requires otherwise.

10.2 Interpretation

In this Deed Poll (including the Recitals), unless the context otherwise requires:

a) headings are for convenience and do not affect interpretation;

b) the singular includes the plural and vice versa;

c) each gender includes every other gender;

d) the word “person” includes a body corporate, a partnership, a joint venture, an unincorporated body or association, or any government agency;

e) a reference to a person includes a reference to the person’s executors, administrators, successors, substitutes and assigns;

f) words and phrases not specifically defined have the same meaning (if any) given to them in the Corporations Act;

g) references to any legislation or regulations include any statutory modification of or substitution for such legislation or regulations;

h) references to agreements, deeds or documents (including a reference to this Deed Poll) are to agreements, deeds or documents as amended, varied, supplemented or replaced from time to time;

i) a reference to a clause or party or annexure is a reference to a clause of, and a party or annexure to, this Deed Poll;

j) a reference to a holder includes a joint holder;


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k) the words “include”, “including”, “for example” or “such as” are not used as, nor are they to be interpreted as, words of limitation, and, when introducing an example, do not limit the meaning of the words to which the example relates to that example or examples of a similar kind;

l) references to a currency are to Australian currency; and

m) a reference to time is a reference to the time in Perth, Western Australia.

10.3 Nature of Deed Poll

Programmed acknowledges that:

a) this Deed Poll may be relied on and enforced by any Scheme Shareholder in accordance with its terms even though the Scheme Shareholders are not party to it; and

b) under the Scheme, each Scheme Shareholder appoints Integrated as its agent and attorney to, among other things, enforce this Deed Poll against Programmed.

EXECUTED as a deed poll in Melbourne, Victoria


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Signing page

DATED: 30 MARCH 2007

EXECUTED by PROGRAMMEDMAINTENANCE SERVICES LIMITED in accordance with section 127(1) of the Corporations Act 2001 (Cwlth) by authority of its directors:

M Findlay ......................................................... Signature of director

M.J. FINDLAY ......................................................... Name of director (block letters)

))))))))))))))

Ian H. Jones ......................................................... Signature of director/company secretary* *delete whichever is not applicable

I.H JONES ......................................................... Name of director/company secretary* (block letters) *delete whichever is not applicable


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Annexure A – Scheme

See Appendix 3 of Scheme Booklet


Appendix 5 Notice of Scheme Meeting


Notice of Court Ordered Scheme Meeting of Integrated Group Limited Shareholders

Notice is hereby given that, by an order of the Federal Court of Australia pursuant to section 411(1) of the CorporationsAct 2001 (Cth), a meeting of ordinary shareholders of Integrated Group Limited will be held at 11.00am (Perth time) on 10 May 2007 at the Karri Room, the Parmelia Hilton Hotel, Perth, Western Australia.

The purpose of the meeting is to consider and, if thought fit, to pass the following resolution:

“That, pursuant to and in accordance with section 411 of the Corporations Act, the scheme of arrangement (which is described in the Scheme Booklet of which the notice convening this meeting forms part) proposed to be entered into between the Company and its fully paid ordinary shareholders is approved and should be implemented (with or without modification as approved by the Federal Court of Australia).”

Scheme Booklet

A copy of the proposed Scheme and the Explanatory Statement required by section 412 of the Corporations Act are contained in the Scheme Booklet of which this Notice forms part.

Terms used in this Notice have the same meaning as set out in the glossary contained in the Scheme Booklet.

Majority Required

In accordance with section 411(4)(a) of the Corporations Act, for the Scheme to be effective, the resolution must be passed by: • a majority in number of holders of ordinary shares present and voting (either in person or by proxy); and • at least 75% of the votes cast on the resolution.

Voting Entitlement

For the purposes of this meeting, shares will be taken to be held by the persons who are the registered holders at 5.00pm (Perth time) on 8 May 2007. Accordingly, share transfers registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

Proxies

If you are a member entitled to attend and vote at the meeting, you are entitled to appoint a person as your proxy to attend and vote at the meeting instead of you.

The proxy does not need to be a member of the Company. If you are entitled to cast two or more votes, you may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If no proportion or number is specified, each proxy may exercise half of your votes.

To be effective, a completed proxy form must be received at the Share Registry of the Company (GPO Box D182, Perth, WA, 6840; or by facsimile at + 618 9323 2033), or the Company’s registered office (Levels 1 -3, 44A Kings Park Road, West Perth, WA 6005; or by facsimile at + 618 9562 8413) by no later than 11.00am on 8 May 2007.

A personalised proxy form accompanies this notice of meeting.

Appendix 5 – Notice of Scheme Meeting


Voting by attorney

If you appoint an attorney to attend the Scheme Meeting, you should lodge the original or a certified copy of the power of attorney under which they have been authorised to attend and vote at the Scheme Meeting with Integrated or the Integrated Share Register by 11.00am on Tuesday, 8 May, being 48 hours before the start of the Scheme Meeting or, if the Scheme Meeting is adjourned, at least 48 hours before the resumption of the Scheme Meeting in relation to the resumed part of the Scheme Meeting.

Voting by corporate representative

If you are a corporation, your authorised corporate representative may attend and vote at the Scheme Meeting. You should ensure that your authorised corporate representative brings evidence of his or her appointment as a corporate representative to the meeting unless evidence has already been provided to the Integrated Share Registry.

Court approval

The Scheme (with or without modification) is subject to the approval of the Federal Court of Australia. If the resolution set out in this notice of meeting is approved by the required majorities and the conditions precedent set out in the Scheme are satisfied or waived, the Company will apply to the Court for the necessary orders to give effect to the Scheme.

By order of the Company Board

Stephen LeachCompany SecretaryDated 2 April 2007


Appendix 6 Sample Proxy Form


Note – this form is provided as a sample only. If you wish to lodge a proxy form, please use the personalised form that accompanied this Scheme Booklet.

Appendix 6 – Sample Proxy Form


Appendix 6 – Sample Proxy Form Appendix 6 – Sample Proxy Form


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