ALS LIMITED — M&A Activity 2009

Nov 9, 2009

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10 November 2009

The Manager Company Announcements Office ASX Limited

By electronic lodgement

Dear Sir / Madam

PearlStreet Limited (ASX: PST) – takeover bid by Australian Laboratory Services Pty Ltd Target’s Statement

We attach, by way of service pursuant to item 14 of section 633(1) of the Corporations Act 2001 (Cth) ( Act ), a copy of the target’s statement of PearlStreet Limited ( PearlStreet ) in response to the off-market takeover bid by Australian Laboratory Services Pty Ltd ( ALS ) for all the fully paid ordinary shares in PearlStreet.

In addition, we confirm that, pursuant to item 6 of section 633(1) of the Act, the directors of PearlStreet have agreed that the offers by ALS and accompanying documents may be sent earlier than the prescribed date.

Yours faithfully

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Josie Pane Company Secretary PearlStreet Limited

PearlStreet Limited ABN 97 107 329 224

TEL +61 (0)3 9674 6100 FAX +61 (0)3 9699 5020 Melbourne Corporate Office – HWT Tower, Level 19, 40 City Road, Southbank VIC 3006

www.pearlstreet.com.au

This is an important document and requires your immediate attention.

If you are in any doubt about how to deal with this document, you should contact your broker, financial adviser or legal adviser immediately.

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PearlStreet Limited

ABN 97 107 329 224

Target’s Statement

This Target’s Statement has been issued in response to the off-market takeover bid made by Australian Laboratory Services Pty Ltd ABN 84 009 936 029 (a wholly owned subsidiary of Campbell Brothers Limited ABN 92 009 657 489) for all the ordinary shares in PearlStreet Limited.

The Directors of PearlStreet Limited unanimously recommend that you ACCEPT the takeover offer from Australian Laboratory Services Pty Ltd (in the absence of a superior proposal)

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Corporate Adviser

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Australian Legal Adviser

Important notices

Nature of this document

This document is a Target’s Statement issued by PearlStreet Limited ABN 97 107 329 224 under Part 6.5 Division 3 of the Corporations Act in response to the off-market takeover bid made by Australian Laboratory Services Pty Ltd ABN 84 009 936 029, a wholly-owned subsidiary of Campbell Brothers Limited ABN 92 009 657 489, for all the ordinary shares in PearlStreet.

A copy of this Target’s Statement was lodged with ASIC and given to ASX on 10 November 2009. Neither ASIC nor ASX nor any of their respective officers take any responsibility for the content of this Target’s Statement.

Key dates

Date of ALS’s Offer [ ] November 2009

Date of this Target’s Statement 10 November 2009

Close of ALS’s Offer Period (unless extended or 4.00pm (AWST) on [ ] December 2009 withdrawn)

PearlStreet Shareholder information

PearlStreet has established a shareholder information line which PearlStreet Shareholders may call if they have any queries in relation to ALS’s Offer. The telephone number for the shareholder information line is 1300 131 678 (for calls made from within Australia) or +61 (0)2 8280 7173 (for calls made from outside Australia). Calls to the shareholder information line may be recorded.

Further information relating to ALS’s Offer can be obtained from PearlStreet’s website at

www.pearlstreet.com.au.

Defined terms

A number of defined terms are used in this Target’s Statement. These terms are explained in section 10 of this Target’s Statement. In addition, unless the contrary intention appears or the context requires otherwise, words and phrases used in this Target’s Statement and defined in the Corporations Act have the same meaning and interpretation as in the Corporations Act.

No account of personal circumstances

This Target’s Statement does not take into account your individual objectives, financial situation or particular needs. It does not contain personal advice. Your directors encourage you to seek independent financial and taxation advice before making a decision as to whether or not to accept the Offer.

Disclaimer as to forward looking statements

Some of the statements appearing in this Target’s Statement may be in the nature of forward looking statements. You should be aware that such statements are only predictions and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors and risks specific to the industry in which PearlStreet operates as well as general economic conditions, prevailing exchange rates and interest

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rates and conditions in the financial markets. Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement. None of PearlStreet, PearlStreet’s officers and employees, any persons named in this Target’s Statement with their consent or any person involved in the preparation of this Target’s Statement, makes any representation or warranty (express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law. You are cautioned not to place undue reliance on any forward looking statement. The forward looking statements in this Target’s Statement reflect views held only as at the date of this Target’s Statement.

Foreign jurisdictions

The release, publication or distribution of this Target’s Statement in jurisdictions other than Australia may be restricted by law or regulation in such other jurisdictions and persons who come into possession of it should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable laws or regulations. This Target’s Statement has been prepared in accordance with Australian law and the information contained in this Target’s Statement may not be the same as that which would have been disclosed if this Target’s Statement had been prepared in accordance with the laws and regulations outside Australia.

Maps and diagrams

Any diagrams, charts, maps, graphs and tables appearing in this Target’s Statement are illustrative only and may not be drawn to scale. Unless stated otherwise, all data contained in diagrams, charts, maps, graphs and tables is based on information available at the date of this Target’s Statement.

Privacy

PearlStreet has collected your information from the PearlStreet register of shareholders and option holders for the purpose of providing you with this Target’s Statement. The type of information PearlStreet has collected about you includes your name, contact details and information on your shareholding or option holding (as applicable) in PearlStreet. Without this information, PearlStreet would be hindered in its ability to issue this Target’s Statement. The Corporations Act requires the name and address of shareholders and option holders to be held in a public register. Your information may be disclosed on a confidential basis to PearlStreet’s related bodies corporate and external service providers (such as the share registry of PearlStreet and print and mail service providers) and may be required to be disclosed to regulators such as ASIC. If you would like details of information about you held by PearlStreet, please contact Link Market Services Limited at Locked Bag A14, Sydney South, NSW 1235 or on 1300 554 474 (within Australia) or +61 (0)2 8280 7111 (from outside Australia). The registered address of PearlStreet is the HWT Tower, Level 19, 40 City Road, Southbank Victoria 3006.

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[ ] November 2009

Dear Shareholders (and, for information purposes only, persons holding Options)

Takeover bid by Australian Laboratory Services Pty Ltd

I am pleased to present the offer by Australian Laboratory Services Pty Ltd ( ALS ), a wholly-owned subsidiary of Campbell Brothers Limited ( Campbell Brothers ), to acquire all of your ordinary shares in PearlStreet Limited at a cash price of $0.75 per share ( Offer ). Your Board unanimously recommends that shareholders ACCEPT the Offer in the absence of a superior proposal.

The price offers shareholders a 142% premium based on the 5-day VWAP of PearlStreet shares prior to close of trade on ASX on 28 September 2009 (being the last trading day before the recapitalisation proposal with Catalyst Investment Managers Pty Limited ( Catalyst ) was announced).

This Target’s Statement contains your directors’ formal response to the offer and sets out in detail the directors’ reasons for recommending that you accept the Offer, in the absence of a superior proposal.

The Board has decided to withdraw its recommendation of the previously announced recapitalisation proposal with Catalyst, as the Board believes that the Offer represents better value for PearlStreet shareholders. The Board has formed this view having regard to a number of factors, including the following:

• The Offer represents a substantial premium to PearlStreet’s recent share price and Catalyst’s recapitalisation proposal.

• The Offer values PearlStreet at a significant premium relative to its peers, based on FY2009 earnings.

• The Offer provides shareholders with the certainty of all cash consideration.

• PearlStreet’s major shareholder and Managing Director, Mr Anthony Wooles, intends to accept the Offer, in the absence of a superior proposal.

More details of the Board’s reasons are set out in section 2 of this Target’s Statement.

Each of your directors intends to accept the Offer in respect of the shares they own or control, in the absence of a superior proposal.

The Board encourages shareholders to read this Target’s Statement and the Bidder’s Statement in their entirety, and to consider the Offer having regard to their own personal risk profile, investment strategy and tax position.

The Offer is scheduled to close at 4.00pm (AWST) on [ ] December 2009. To accept the Offer, simply follow the instructions set out in section 8.4 of the Bidder’s Statement. If you have any further queries in relation to the Offer, you can call 1300 131 678 (for calls made from inside Australia) or +61 (0)2 8280 7173 (for calls made from outside Australia).

Your Board will continue to keep you informed of all material developments relating to the Offer.

Yours sincerely

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D R Eiszele Chairman PearlStreet Limited

PearlStreet Limited ABN 97 107 329 224

TEL +61 (0)3 9674 6100 FAX +61 (0)3 9699 5020 Melbourne Corporate Office – HWT Tower, Level 19, 40 City Road, Southbank VIC 3006

www.pearlstreet.com.au

Contents of this Target’s Statement

1	Frequently asked questions	1
2	Why you should accept the Offer	4
3	Directors’ recommendation	8
4	Important matters for PearlStreet Shareholders to consider	9
5	Your choices as a PearlStreet Shareholder	13
6	Key features of ALS’s Offer	14
7	Financial information and related matters	16
8	Information relating to your directors	18
9	Additional information	20
10	Glossary and interpretation	25
11	Authorisation of Target’s Statement	29
	Annexure A – Joint announcement of Offer

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1 Frequently asked questions

This section answers some commonly asked questions about the Offer. It is not intended to address all relevant issues for PearlStreet Shareholders. This section should be read together with all other parts of this Target’s Statement.

Question	Answer
What is ALS’s Offer for my	ALS is offering $0.75 cash for each PearlStreet Share
PearlStreet Shares?	held by you.
What choices do I have as a	As a PearlStreet Shareholder, you have the following
PearlStreet Shareholder?	choices in respect of your Shares:
	• accept the Offer;
	• sell your shares on ASX (unless you have
	previously accepted the Offer and you have not
	validly withdrawn your acceptance); or
	• do nothing.
	There are several implications in relation to each of the
	above choices. A summary of these implications is set
	out in section 5 of this Target’s Statement.
What are the directors of PearlStreet	Each director recommends that you accept the Offer
recommending?	(in the absence of a superior proposal).
What do the directors of PearlStreet	Each director intends to accept the Offer in respect of
intend to do with their Shares?	Shares they own or control (in the absence of a
	superior proposal).
How do I accept the Offer?	Details of how to accept the Offer are set out in
	section 8.4 of the Bidder’s Statement.
Can I participate in the Offer in	If you hold any PearlStreet Options, then, in order to
respect of my PearlStreet Options?	accept ALS’s Offer, you will need to exercise your
	PearlStreet Options on or before the expiry date of 30
	November 2009 and accept the Offer in respect of the
	Shares you are issued on exercise of the PearlStreet
	Options.
	You should have recently received a form to complete
	and return to PearlStreet to exercise your PearlStreet
	Options.

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1 Frequently asked questions

Question	Answer
What are the consequences of	If you accept the Offer, unless withdrawal rights are
accepting the Offer now?	available (see below), you will give up your right to sell
	your Shares on the ASX or otherwise deal with your
	Shares while the Offer remains open.
If I accept the Offer, can I withdraw	You may only withdraw your acceptance if ALS varies
my acceptance?	the Offer in a way that postpones the time when ALS is
	required to satisfy its obligations by more than one
	month. (See section 6.8 of this Target’s Statement for
	further details.)
When does the Offer close?	The Offer is presently scheduled to close at 4.00pm
	(AWST) on [ ] December 2009, but the Offer Period
	can be extended in certain circumstances.
	(See section 6.5 of this Target’s Statement for details
	of the circumstances in which the Offer Period can be
	extended.)
What are the conditions to the Offer?	The conditions to the Offer are:
	• Before the end of the Offer Period, ALS and its
	associates together have interests in at least 90%
	(by number) of PearlStreet Shares;
	• During the Offer Period, there is no material
	adverse change in relation to PearlStreet; and
	• From the date on which the Offer was announced
	until the end of the Offer Period, there is no
	Prescribed Occurrence.
	(See section 6.2 of this Target’s Statement for further
	details.)
What happens if the conditions of the	If the conditions are not satisfied or waived before the
Offer are not satisfied or waived?	Offer closes, the Offer will lapse. You would then be
	free to deal with PearlStreet Shares even if you had
	accepted the Offer.
When will I be sent my consideration if	If you accept the Offer, you will have to wait for the
I accept the Offer?	Offer to become unconditional before you will be sent
	your consideration from ALS.
	(See section 6.9 of this Target’s Statement for further
	details on when you will be sent your consideration.)

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1 Frequently asked questions

Question	Answer
What are the tax implications of	A general outline of the tax implications of accepting
accepting the Offer?	the Offer is set out in section 7 of the Bidder’s
	Statement.
	As the outline is a general outline only, Shareholders
	are encouraged to seek their own specific professional
	advice as to the taxation implications applicable to their
	circumstances.
Is there a number that I can call if I	If you have any further queries in relation to the Offer,
have further queries in relation to the	you can call 1300 131 678 (for calls made from inside
Offer?	Australia) or +61 (0)2 8280 7173 (for calls made from
	outside Australia).
	Calls to these numbers may be recorded.

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2 Why you should accept the Offer

2 Why you should accept the Offer

Your directors have carefully considered the Offer from ALS and unanimously recommend that, in the absence of a superior proposal, Shareholders accept the Offer for the following reasons.

2.1 The Offer represents a substantial premium to PearlStreet’s recent Share price and the Recapitalisation Proposal

Offer Price relative to recent Share price and the Recapitalisation Proposal

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----- Start of picture text -----

$0.80
ALS Offer - $0.75
$0.70 27 Oct 09
ALS $0.75
recommended
$0.60 cash offer
announced
$0.50 29 Sept 09
Catalyst
recapitalisation
$0.40 5 day VWAP (Pre-Catalyst Recapitalisation Proposal) - $0.31 announced
$0.30
$0.20
$0.10
$0.00
Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09
----- End of picture text -----

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2 Why you should accept the Offer

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----- Start of picture text -----

$0.80
$0.75
$0.70
34% 50% 142%
$0.60 premium premium premium
$0.50
$0.40
$0.75
$0.30
$0.56
$0.50
$0.20
$0.31
$0.10
$0.00
ALS Offer ($0.75) Previous ALS Offer Catalyst Proposal ($0.50) 5 Day VWAP (Pre-
($0.56) Catalyst Proposal)
----- End of picture text -----

At $0.75 per PearlStreet Share (on a fully diluted basis), the Offer represents a:

• 142% premium to PearlStreet’s pre-transaction 5-day VWAP of $0.31,[1] which the Board considers to be well in excess of typical public company takeovers;

• 50% premium to the price offered under the Recapitalisation Proposal of $0.50 per Share; and

• 34% premium to ALS’s previous offer of $0.56 per Share.

In addition, Shareholders will still receive the announced final ordinary dividend for the year ended 30 June 2009 of 1 cent per Share.

1 As at 28 September 2009, being the last trading day before the Recapitalisation Proposal was announced. Source: IRESS.

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2 Why you should accept the Offer

• 2.2 The Offer values PearlStreet at a significant premium relative to its peers, based on historic earnings

FY2009 price earnings multiple

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----- Start of picture text -----

25x 23.4x
20x 17.5x
14.7x
15x
10x 7.8x
5x
0x
1. At Pre-Catalyst Proposal 5 Day VWAP ($0.31)
Note: Peer market capitalisations adjusted to include in-the-money options
Peers identified by their ASX codes
MAH MIN PST (ALS $0.75) NMS PST (ALS $0.56) MND CPB SXE ANG RCR CLO NWH AAX LYL ASL PST (Pre-Catalyst Proposal)
----- End of picture text -----

ALS’s offer for PearlStreet values PearlStreet on a P/E Ratio of 23.4x FY2009 earnings.[2] This multiple is significantly higher than:

• the peer group average P/E Ratio of 14.7x for FY2009 earnings;[2, 3]

• ALS’s previous offer of $0.56 per Share which valued PearlStreet on a P/E Ratio of 17.5x FY2009 earnings;[2] and

• PearlStreet’s P/E Ratio of 7.8x FY2009 earnings based upon the 5-day VWAP prior to the Recapitalisation Proposal of $0.31 per Share.[4]

At $0.75 per PearlStreet share, the Offer attributes PearlStreet with a P/E Ratio that compares favourably with the majority of its peers and some of the largest ASX listed companies in its sector.

2.3 The Offer represents better value for Shareholders than Catalyst’s Recapitalisation Proposal and is for entirely cash consideration

The Board believes that, in light of the substantial premium on the original offer price from ALS, the Offer represents better value for PearlStreet Shareholders than the Recapitalisation Proposal as:

• it offers PearlStreet Shareholders a higher price for their Shares;

• the Offer Price represents a larger implied enterprise value for PearlStreet;[5] and

2 Market capitalisation for the purpose of determining the P/E Ratio has been calculated on a partially diluted basis to include ‘in the money’ options.

3 The peer group consists of selected ASX listed services companies that provide services to the resources sector. All P/E Ratios are based on FY2009 NPAT sourced from Bloomberg and closing prices sourced from IRESS as at 9 November 2009.

4 As PearlStreet Options were ‘out of the money’ at the 5-day VWAP prior to the Catalyst Recapitalisation Proposal of $0.31, market capitalisation for the purpose of determining this P/E Ratio has been calculated on an undiluted basis (i.e. assuming 75.1 million Shares on issue).

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2 Why you should accept the Offer

• it provides greater deal certainty to Shareholders: it offers all cash consideration and, unlike the Recapitalisation Proposal, is not subject to satisfaction of conditions such as completion of due diligence.

For more information on the Board’s assessment of the Recapitalisation Proposal, see section 4.7 of this Target’s Statement.

2.4 PearlStreet’s major Shareholder intends to accept the Offer

Mr Anthony Wooles, who, as at the date of this Target’s Statement, holds 46.2% of PearlStreet’s Shares (and would hold 50.7% on a fully diluted basis if he were to exercise his PearlStreet Options), has indicated that, in the absence of a superior proposal, he will accept the Offer. Mr Wooles has also granted Campbell Brothers call options over 19.9% of PearlStreet’s issued ordinary shares on 27 October 2009 plus up to 19.9% of subsequently issued Shares.

As a consequence, if no superior proposal emerges during the Offer Period, ALS’s relevant interest in PearlStreet Shares may increase to up to 50.7% (depending on the number of PearlStreet Options exercised by Mr Wooles), giving it a controlling interest.

2.5

Risk of being a minority Shareholder

If you do not accept the Offer and ALS declares the Offer unconditional, gains effective control of PearlStreet but does not obtain sufficient acceptances to proceed to compulsory acquisition, you will continue to be a minority Shareholder in PearlStreet. If PearlStreet remains listed, it is unlikely that the Share price would sustain the current takeover premium and so would likely fall below the Offer Price. In addition, there is a risk that the market for your Shares would become less liquid, making it more difficult to sell your Shares in the future.

2.6 PearlStreet’s Share price is likely to fall if the Offer is not successful

While there are many factors that influence the market price of PearlStreet Shares, it is likely that the market price of PearlStreet Shares may fall if ALS’s Offer is unsuccessful.

2.7 No brokerage payable

PearlStreet Shareholders will not be required to pay brokerage or any other costs in relation to the sale of their Shares under the Offer.

5 Implied enterprise value is calculated as the market capitalisation of PearlStreet based on the price per PearlStreet Share applied to all PearlStreet Shares under the respective proposals on a fully diluted basis plus pro-forma FY2009 net debt on a post transaction basis. Under the Recapitalisation Proposal, it is assumed that PearlStreet would have 138.9 million Shares on issue post transaction (fully diluted) and that PearlStreet will have pro-forma net debt of $15.4 million on a fully diluted basis post transaction. The implied enterprise value of PearlStreet under the Recapitalisation Proposal is $84.8 million. Under ALS’s Offer, it is assumed that PearlStreet has 93.9 million Shares on issue (fully diluted) and that PearlStreet will have pro-forma net debt of $37.9 million on a fully diluted basis post transaction. The implied enterprise value of PearlStreet under ALS’s Offer is $108.3 million.

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3 Directors’ recommendation

3 Directors’ recommendation

3.1 Summary of Offer

The consideration being offered by ALS under its takeover bid is $0.75 for each PearlStreet Share.

The Offer is subject to a number of conditions; those conditions are summarised in section 6.2 of this Target’s Statement.

3.2 Directors of PearlStreet

As at the date of this Target’s Statement, the directors of PearlStreet are:

Name	Position
David Eiszele	Independent Non-Executive Chairman
Anthony Wooles	Managing Director and Chief Executive
	Officer
Alan Fisher	Non-Executive Director
John Atkins	Non-Executive Director
Phillip Campbell	Non-Executive Director

3.3 Directors’ recommendations

After taking into account each of the matters in this Target’s Statement and in the Bidder’s Statement, each of your directors recommends that you accept the Offer (in the absence of a superior proposal).

In considering whether to accept the Offer, your directors encourage you to:

• read the whole of this Target’s Statement and the Bidder’s Statement;

• have regard to your individual risk profile, portfolio strategy, tax position and financial circumstances;

• consider the alternatives noted in section 5 of this Target’s Statement; and

• obtain financial advice from your broker or financial adviser upon the Offer and obtain taxation advice on the effect of accepting the Offer.

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4 Important matters for PearlStreet Shareholders to consider

3.4 Your directors’ reasons for their recommendation

Your directors’ reasons for their recommendation are set out in section 2 of this Target’s Statement.

3.5 Intentions of your directors in relation to the Offer

Each director of PearlStreet who owns or controls PearlStreet Shares presently intends to accept the Offer in relation to those Shares, in the absence of a superior proposal.

Details of the relevant interests of each PearlStreet director in PearlStreet Shares are set out in section 8.1 of this Target’s Statement.

4 Important matters for PearlStreet Shareholders to consider

4.1 The ALS Offer

Campbell Brothers first announced its intention to make its takeover bid for PearlStreet on 1 October 2009. The terms of the Offer the subject of this Target’s Statement were subsequently agreed by Campbell Brothers and PearlStreet in the Bid Implementation Agreement and were announced on 27 October 2009. (A copy of the joint announcement by Campbell Brothers and PearlStreet is contained in Annexure A to this Target’s Statement.) A summary of the Offer is contained in section 6 of this Target’s Statement.

ALS’s Offer is open for acceptance until 4.00pm (AWST) on [ ] December 2009, unless it is extended or withdrawn (sections 6.5 and 6.6 of this Target’s Statement describe the circumstances in which ALS can extend or withdraw its Offer).

4.2 Background information on PearlStreet

Founded in December 2003 by PearlStreet’s Managing Director, Anthony Wooles, PearlStreet provides the energy, resources and infrastructure sectors with nondestructive testing, inspection and asset care services. It listed on ASX in February 2007.

4.3 Current business activities of PearlStreet

PearlStreet’s regional operating structure includes three testing and inspection business units, with one unit servicing each of: Queensland; New South Wales, Victoria and South Australia; and Western Australia. These regional centres allow a focus on retaining and expanding established clients, and also serve as technical hubs to support project locations and smaller branches as required. PearlStreet has specialist competencies in inspecting, testing and analysing energy and resources plant and components across a broad range of industries. PearlStreet is accredited by the National Association of Testing Authorities in the field of non-destructive testing.

PearlStreet also has specialist competencies in operating and maintaining cogeneration power plants and coal handling infrastructure plus laboratory-based coal and minerals analysis. PearlStreet supplements this capability with specific engineering services, allowing the asset owner to access the full complement of O&M services from PearlStreet.

PearlStreet’s key locations and projects are set out below.

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4 Important matters for PearlStreet Shareholders to consider

Testing and inspection

• (a) Western Australia

PearlStreet has a significant contract with Alcoa of Australia Limited, which includes an onsite presence at the Kwinana, Pinjarra and Wagerup refineries. In addition, a new three-year contract commenced in September 2009 for non-destructive testing, condition monitoring and inspection services.

PearlStreet’s Western Australian business also provides ongoing condition monitoring services to companies such as:

• Rio Tinto Iron Ore in the Pilbara;

• Iluka Resources;

• Vale Inco’s Goro Nickel mine in New Caledonia;

• BHP Billiton Nickel West in Kalgoorlie; and

• Newmont for its Boddington gold mine.

It also provides non-destructive testing services to the Worsley Alumina expansion project.

(b) New South Wales, Victoria and South Australia

PearlStreet provides non-destructive testing and inspection services to Esso Australia at their Longford, Long Island Point and offshore facilities in Victoria, and has done now for nearly 30 years.

Its Hunter Valley, South Eastern Victoria and Adelaide branches work extensively with local power stations, such as Eraring Energy, TRUenergy Yallourn, International Power Hazelwood and AGL Torrens Island. PearlStreet also has a contract with Rio Tinto Coal Australia’s Hunter Valley operations to deliver condition monitoring services.

(c) Queensland

PearlStreet’s Queensland operations include providing maintenance non-destructive testing and condition monitoring services to mining customers across central Queensland, including Curragh Queensland Mining, Xstrata, BHP Billiton Mitsubishi Alliance, Rio Tinto Coal Australia and Sedgman.

PearlStreet also has major contracts for work on:

• Rio Tinto Alcan’s Yarwun refinery expansion in Gladstone; and

• Santos’ South Eastern Queensland coal seam gas assets.

Asset Management

(a) Collie Basin Coal Infrastructure ( CBCI )

Initially secured in October 1999 following a competitive tender, the contract was renewed in June 2004 as part of PearlStreet’s acquisition of PearlStreet Energy Services Pty Ltd. The CBCI contract now extends to June 2010.

Under the CBCI contract, PearlStreet supports Verve Energy by operating and maintaining the CBCI plant at the Muja power station.

(b) KMK Cogeneration Facility ( KMK )

PearlStreet Energy Services Pty Ltd was initially awarded the contract in September 1998 for a five year period. The contract was renegotiated in February 2004 and extended to February 2009. This contract has recently been re-negotiated for a further five year term.

Under the contract, PearlStreet supports Verve Energy by operating and maintaining the 38MW cogeneration plant at the KMK pigment plant at Kwinana.

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4 Important matters for PearlStreet Shareholders to consider

(c) Other operations

The Analytical Services business provides fly-ash testing, physical ore testing and other associated services, with PearlStreet’s largest customers including Wesfarmers Premier Coal and Griffin Coal Mining.

4.4 Value of ALS’s Offer

At $0.75 per PearlStreet Share (on a fully diluted basis), the Offer values PearlStreet at a:

• 142% premium to PearlStreet’s pre-transaction 5-day VWAP of $0.31,[6] which the Board considers to be well in excess of typical public company takeovers;

• 50% premium to the price offered under Catalyst’s Recapitalisation Proposal of $0.50 per Share; and

• 34% premium to ALS’s previous offer of $0.56 per Share.

The certainty of the ALS Offer and indicative endorsement by the market is reflected in the current price of PearlStreet Shares. At the date of this Target’s Statement, PearlStreet Shares last traded at $0.73,[7] a very small discount to the Offer Price.

For further information on the value of ALS’s Offer, see section 2 of this Target’s Statement.

4.5 Minority ownership consequences

ALS’s Offer is presently subject to a 90% minimum acceptance condition which, if fulfilled (and all the other conditions are fulfilled or freed), will entitle it to compulsorily acquire all outstanding PearlStreet shares. ALS has the right to free its Offer from the 90% Minimum Acceptance Condition.

If ALS frees the Offer from the 90% minimum acceptance condition and acquires more than 50% but less than 90% of the PearlStreet Shares then, assuming all other conditions to the Offer are fulfilled or freed, ALS will acquire a majority shareholding in PearlStreet.

Accordingly, Shareholders who do not accept the Offer will become minority Shareholders in PearlStreet. This has a number of possible implications, including:

• ALS will be in a position to cast the majority of votes at a general meeting of PearlStreet. This will enable it to control the composition of PearlStreet’s board of directors and senior management, determine PearlStreet’s dividend policy and control the strategic direction of the businesses of PearlStreet and its subsidiaries;

• the PearlStreet share price may fall immediately following the end of the Offer Period and it is unlikely that PearlStreet’s share price will contain any takeover premium;

• liquidity of PearlStreet shares may be lower than at present, and there is a risk that PearlStreet could be fully or partially removed from certain S&P/ASX market indices due to lack of free float and/or liquidity;

• if the number of PearlStreet Shareholders is less than that required by the Listing Rules of ASX to maintain an ASX listing then ALS may seek to have PearlStreet removed from the official list of the ASX. If this occurs, PearlStreet Shares will not be able to be bought or sold on the ASX;

6 As at 28 September 2009, being the last trading day before the Recapitalisation Proposal was announced. Source: IRESS.

7 Source: IRESS.

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4 Important matters for PearlStreet Shareholders to consider

• future PearlStreet dividend policy under the management of ALS may vary significantly from current PearlStreet dividend policy;

• a proportion of the synergies referred to by ALS in the Bidder’s Statement may not be achieved; and

• if ALS acquires 75% or more of the PearlStreet Shares it will be able to pass a special resolution of PearlStreet. This will enable ALS to, among other things, change PearlStreet’s constitution.

4.6 Dividend issues for PearlStreet Shareholders

Since listing in 2007, PearlStreet has paid the following dividends to Shareholders:

• Final ordinary dividend for the year ended 30 June 2007 of 1.6 cents per Share paid on 28 September 2007;

• Interim ordinary dividend for the year ended 30 June 2008 of 0.6 cents per Share paid on 3 April 2008;

• Final ordinary dividend for the year ended 30 June 2008 of 1.05 cents per Share paid on 26 September 2008; and

• Interim ordinary dividend for the year ended 30 June 2009 of 1.6 cents per Share paid on 31 March 2009.

As previously announced, PearlStreet will still pay a final ordinary dividend for the year ended 30 June 2009 of 1 cent per Share. The dividend will be paid during the Offer Period.

The Offer Price agreed between PearlStreet and ALS takes account of the intended payment of this dividend, and so PearlStreet Shareholders will be entitled to retain the dividend without a corresponding reduction in the Offer Price.

4.7 Other alternatives to the Offer

Before reaching agreement on the terms of the Offer with ALS in the Bid Implementation Agreement, PearlStreet had previously announced that it was pursuing a recapitalisation proposal with Catalyst. At the original price offered by ALS on 1 October 2009 of $0.56, the Board considered that the Recapitalisation Proposal was in the best interests of PearlStreet Shareholders and so rejected the offer from ALS.

However, the Board now believes that, in light of the substantial premium on the original offer price from ALS, the Offer represents a better outcome for PearlStreet Shareholders and so is recommending that Shareholders accept the Offer, in the absence of a superior proposal. The Board’s reasons include:

• the Offer will give PearlStreet Shareholders a price for their Shares that is higher than the proposed price under the Recapitalisation Proposal;

• the Offer Price represents a larger implied enterprise value for PearlStreet;[8]

8 Implied enterprise value is calculated as the market capitalisation of PearlStreet based on the price per PearlStreet Share applied to all PearlStreet Shares under the respective proposals on a fully diluted basis plus pro-forma FY2009 net debt on a post transaction basis. Under the Recapitalisation Proposal, it is assumed that PearlStreet would have 138.9 million Shares on issue post transaction (fully diluted) and that PearlStreet will have pro-forma net debt of $15.4 million on a fully diluted basis post transaction. The implied enterprise value of PearlStreet under the Recapitalisation Proposal is $84.8 million. Under ALS’s Offer, it is assumed that PearlStreet has 93.9 million Shares on issue (fully diluted) and that PearlStreet will have pro-forma net debt of $37.9 million on a fully diluted basis post transaction. The implied enterprise value of PearlStreet under ALS’s Offer is $108.3 million.

Target's statement PearlStreet Limited

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5 Your choices as a PearlStreet Shareholder

• the Offer provides greater deal certainty to Shareholders: it offers all cash consideration and, unlike the Recapitalisation Proposal, is not subject to satisfaction of outstanding conditions such as completion of due diligence and final approval from Catalyst’s investment committee; and

• the Offer provides Shareholders with the certainty of $0.75 in cash per Share, while the Recapitalisation Proposal would have resulted in a change of control of PearlStreet but left Shareholders subject to PearlStreet’s ongoing performance and exposed to the accompanying uncertainties and risks.

At this stage, the Board is not aware of any other alternative transactions. The Board will of course keep Shareholders informed of any material developments. PearlStreet remains subject to the notification and matching right obligations owed to Campbell Brothers with respect to alternative transactions under the Bid Implementation Agreement (see further section 9.2 of this Target’s Statement).

4.8 PearlStreet Share price absent the Offer

While there are many factors that influence the market price of PearlStreet Shares, your directors anticipate that, following the close of the Offer, the market price of PearlStreet Shares may fall if ALS’s Offer fails, or if ALS acquires more than 50% (but less than 90%) of the PearlStreet Shares.

4.9 Taxation consequences of a change in control in PearlStreet

The taxation consequences of accepting the Offer depend on a number of factors and will vary depending on your particular circumstances. A general outline of the Australian taxation considerations of accepting the Offer are set out in section 7 of the Bidder’s Statement.

You should carefully read and consider the taxation consequences of accepting the Offer. The outline provided in the Bidder’s Statement is of a general nature only and you should seek your own specific professional advice as to the taxation implications applicable to your circumstances.

5 Your choices as a PearlStreet Shareholder

Your directors recommend that you accept the Offer (in the absence of a superior proposal).

However, as a PearlStreet Shareholder you have three choices currently available to you:

(a) Accept the Offer

PearlStreet Shareholders may elect to accept the Offer. Details of the consideration that will be received by PearlStreet Shareholders who accept the Offer are set out in section 6.1 of this Target’s Statement and in the Bidder’s Statement.

Shareholders who accept the Offer may be liable for CGT on the disposal of their shares (see section 7 of the Bidder’s Statement). However, they will not incur any brokerage charge.

The Bidder’s Statement contains details of how to accept the Offer in section 8.4.

(b)

Sell your Shares on market

During a takeover, shareholders of a target company who have not already accepted the Bidder’s Offer can still sell their shares on market for cash.

Target's statement PearlStreet Limited

page 13

6 Key features of ALS’s Offer

On 9 November 2009, PearlStreet’s share price closed at $0.73 per Share, a 2.7% discount to ALS’s offer price of $0.75 per Share. The latest price for PearlStreet Shares may be obtained from the ASX website www.asx.com.au.

Shareholders who sell their Shares on market may be liable for CGT on the sale (see section 7 of the Bidder’s Statement) and may incur a brokerage charge.

PearlStreet Shareholders who wish to sell their Shares on market should contact their broker for information on how to effect that sale.

• (c)

Do not accept the Offer or sell their Shares on market

Shareholders who do not wish to accept the Offer or sell their Shares on market should do nothing.

Shareholders should note that if ALS and its associates have a relevant interest in at least 90% of the Shares during or at the end of the Offer Period, ALS will be entitled to compulsorily acquire the Shares that it does not already own (see section 6.12 of this Target’s Statement for further details).

6 Key features of ALS’s Offer

6.1 Consideration payable to Shareholders who accept the Offer

The consideration being offered by ALS is $0.75 for each PearlStreet Share.

6.2 Conditions to the Offer

ALS’s Offer is subject to a number of conditions. Those conditions are set out in full in section 8.8(a) of the Bidder’s Statement.

By way of broad overview, the outstanding conditions to the Offer as at the date of this Target’s Statement are:

• (a) Before the end of the Offer Period, ALS and its associates together have interests in at least 90% (by number) of PearlStreet Shares;

• (b) During the Offer Period, there is no material adverse change in relation to PearlStreet; and

• (c) From the date on which the Offer was announced until the end of the Offer Period, there is no Prescribed Occurrence.

6.3 Notice of Status of Conditions

Section 8.8(e) of the Bidder’s Statement indicates that ALS will give a Notice of Status of Conditions to the ASX and PearlStreet on [ ] December 2009.

ALS is required to set out in its Notice of Status of Conditions:

• whether the Offer is free of any or all of the conditions;

• whether, so far as ALS knows, any of the conditions have been fulfilled; and

• ALS’s voting power in PearlStreet.

If the Offer Period is extended by a period before the time by which the Notice of Status of Conditions is to be given, the date for giving the Notice of Status of Conditions will be taken to be postponed for the same period. In the event of such an extension, ALS is required, as soon as practicable after the extension, to give a notice to the ASX and PearlStreet that states the new date for the giving of the Notice of Status of Conditions.

Target's statement PearlStreet Limited

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6 Key features of ALS’s Offer

If a condition is fulfilled (so that the Offer becomes free of that condition) during the bid period but before the date on which the Notice of Status of Conditions is required to be given, ALS must, as soon as practicable, give the ASX and PearlStreet a notice that states that the particular condition has been fulfilled.

6.4

Offer Period

Unless ALS’s Offer is extended or withdrawn, it is open for acceptance from [ ] November 2009 until 4.00pm (AWST) on [ ] December 2009.

The circumstances in which ALS may extend or withdraw its Offer are set out in section 6.5 and section 6.6 respectively of this Target’s Statement.

6.5

Extension of the Offer Period

ALS may extend the Offer Period at any time before giving the Notice of Status of Conditions (referred to in section 6.3 in this Target’s Statement) while the Offer is subject to conditions. However, if the Offer is unconditional (that is, all the conditions are fulfilled or freed), ALS may extend the Offer Period at any time before the end of the Offer Period. In addition, there will be an automatic extension of the Offer Period if, within the last 7 days of the Offer Period:

• ALS improves the consideration offered under the Offer; or

• ALS’s voting power in PearlStreet increases to more than 50%.

If either of these 2 events occurs, the Offer Period is automatically extended so that it ends 14 days after the relevant event occurs.

Under the Bid Implementation Agreement, PearlStreet and Campbell Brothers have agreed that the maximum aggregate length of the Offer Period will be 6 months.

6.6

Withdrawal of Offer

ALS may not withdraw the Offer if you have already accepted it. Before you accept the Offer, ALS may withdraw the Offer with the written consent of ASIC and subject to the conditions (if any) specified in such consent.

6.7

Effect of acceptance

The effect of acceptance of the Offer is set out in section 8.6 of the Bidder’s Statement. PearlStreet Shareholders should read these provisions in full to understand the effect that acceptance will have on their ability to exercise the Rights attaching to their Shares and the representations and warranties which they give by accepting of the Offer.

6.8

Your ability to withdraw your acceptance

You only have limited rights to withdraw your acceptance of the Offer.

You may only withdraw your acceptance of the Offer if ALS varies the Offer in a way that postpones, for more than one month, the time when ALS needs to meet its obligations under the Offer. This will occur if ALS extends the Offer Period by more than one month and the Offer is still subject to conditions.

6.9

When you will receive your consideration if you accept the Offer

In the usual case, you will be issued your consideration on or before the later of:

• one month after the date the Offer becomes or is declared unconditional; and

Target's statement PearlStreet Limited

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7 Financial information and related matters

• one month after the date you accept the Offer if the Offer is, at the time of acceptance, unconditional,

but, in any event (assuming the Offer becomes or is declared unconditional), no later than 21 days after the end of the Offer Period.

However, there are certain exceptions to the above timetable for the issuing of consideration. Full details of when you will be issued your consideration are set out in section 8.2 of the Bidder’s Statement.

6.10 Effect of an improvement in consideration on Shareholders who have already accepted the Offer

If ALS improves the consideration offered under its takeover bid, all PearlStreet Shareholders, whether or not they have accepted the Offer before that improvement in consideration, will be entitled to the benefit of that improved consideration.

6.11

Lapse of Offer

The Offer will lapse if the Offer conditions are not freed or fulfilled by the end of the Offer Period; in which case, all contracts resulting from acceptance of the Offer and all acceptances that have not resulted in binding contracts are void. In that situation, you will be free to deal with your PearlStreet Shares as you see fit.

6.12

Compulsory acquisition

ALS has indicated in section 5.4 of its Bidder’s Statement that if it satisfies the required thresholds it intends to compulsorily acquire any outstanding PearlStreet Shares.

ALS will be entitled to compulsorily acquire any PearlStreet Shares in respect of which it has not received an acceptance of its Offer on the same terms as the Offer if, during or at the end of the Offer Period, ALS and its associates have a relevant interest in at least 90% (by number) of the PearlStreet Shares.

If this threshold is met, ALS will have one month after the end of the Offer Period within which to give compulsory acquisition notices to PearlStreet Shareholders who have not accepted the Offer. PearlStreet Shareholders have statutory rights to challenge the compulsory acquisition, but a successful challenge will require the relevant Shareholder to establish to the satisfaction of a court that the terms of the Offer do not represent ‘fair value’ for their PearlStreet Shares. If compulsory acquisition occurs, PearlStreet Shareholders who have their PearlStreet Shares compulsorily acquired are likely to be issued their consideration approximately 5 to 6 weeks after the compulsory acquisition notices are dispatched to them.

It is also possible that ALS will, at some time after the end of the Offer Period, become the beneficial holder of 90% of the Shares. ALS would then have rights to compulsorily acquire Shares not owned by it within 6 months of becoming the holder of 90%. ALS’s price for compulsory acquisition under this procedure would have to be considered in a report of an independent expert.

PearlStreet’s full year statutory accounts for FY2009 were recently released to ASX and sent to Shareholders as part of PearlStreet’s 2009 Annual Report. Copies of the accounts are available on PearlStreet’s website at www.pearlstreet.com.au and on ASX’s website at www.asx.com.au (ASX code: PST).

7 Financial information and related matters

Target's statement PearlStreet Limited

page 16

7 Financial information and related matters

7.1 Highlights of FY2009 financial results

The final revenue result for FY2009 of $94.9m reflects the robust nature of the business in what has been one of the most volatile periods of economic activity for many years. After adjusting for only 11 months of PearlStreet Metlabs Pty Ltd’s contribution for the year ended 30 June 2008, the business has grown organically by approximately 9% during FY2009, and 13% on an unadjusted basis.

The reported EBITDA for the group for FY2009 is $10.686m, which is 11.3% of revenue and a 17.8% increase over the previous period.

The underlying EBITDA of $11.283m is 11.9% of revenues, after allowing for the addback of one-off restructuring costs of $272,000 and an adverse revenue adjustment of $325,000.

The reported net profit after tax result of $3.003m (EPS of 4.04 cents per Share) includes the items above, resulting in an underlying NPAT of $3.890m after adding back those items and the amortisation of customer intangibles of $671,000. This results in an adjusted EPS of 5.23 cents per Share.

During FY2009, strong revenue growth was achieved against the backdrop of economic uncertainty resulting in a solid achievement for the year.

The strength of PearlStreet’s revenue growth, and overall maintenance of EBITDA margin guidance, represents a pleasing result.

For FY2009 a very strong operating cash flow of $6.5 million was achieved. Debt was reduced, dividends paid to Shareholders, and there was no impairment of asset values required.

Directors declared a final fully franked dividend of 1.0 cent per fully paid Share representing a full year dividend of 2.60 cents, an increase of 57% on the full previous year.

As at 30 June 2009, the consolidated entity had net assets of $17,852,000 and a net tangible asset deficiency (excluding intangible assets of $43,158,000) of $25,306,000. The consolidated entity also had a net current asset deficiency of $8,967,000. This deficiency is largely attributable to the bank loan principal repayments of $10,500,000 due in the next 12 months, including $6,800,000 payable in December 2009.

The results achieved in FY2009 highlight the strength of PearlStreet’s market leadership position, long term blue chip customer contracts and the sustainability of its cash flows.

7.2 FY2010 earnings guidance

During the first four months of FY2010, PearlStreet has continued to experience very strong demand for its services, courtesy of its exposure to buoyant industry sectors. PearlStreet remains focused on driving core business growth and, as previously advised to the market, is confident of achieving high single digit revenue growth whilst achieving an EBITDA margin of 12%.

7.3 Material post-30 June 2009 events

(a) PearlStreet Options

As at 30 June 2009, PearlStreet had 18,776,132 PearlStreet Options on issue. Given the recent proposals announced to the market – initially the Recapitalisation Proposal and then the Offer from ALS – the PearlStreet Options began to reflect an in the money proposition and, if exercised, will now generate a gain for those Shareholders who choose to exercise their PearlStreet Options (based on the Offer Price of $0.75 per Share).

Target's statement PearlStreet Limited

page 17

8 Information relating to your directors

If all PearlStreet Options are exercised, PearlStreet will receive approximately $6.76 million on payment of the exercise price by PearlStreet Option holders.

(b) Catalyst break fee costs

PearlStreet agreed to reimburse the externally invoiced costs incurred by Catalyst in pursuing the Recapitalisation Proposal (payable not later than 7 days from the date of invoice by Catalyst), up to a maximum of $910,000, if Catalyst commenced due diligence in relation to the Recapitalisation Proposal and, after the date of commencement of that due diligence, the Board failed to recommend or withdrew a recommendation for the proposal.

As Catalyst commenced due diligence and the Board has withdrawn its recommendation, PearlStreet will be liable to pay the break fee to Catalyst.

8 Information relating to your directors

8.1 Interests and dealings in PearlStreet securities

(a) Interests in PearlStreet Shares and Options

As at the date of this Target’s Statement, your directors had the following relevant interests in Shares and Options:

Director	Number of	Number of
	PearlStreet Shares	PearlStreet Options
D Eiszele	3,678,884	-
A Wooles	38,080,747	9,520,188
P Campbell	629,535	-
J Atkins	271,372	-
A Fisher	-	-
TOTAL	42,660,538	9,520,188

(b) Dealings in PearlStreet Shares and Options

No director of PearlStreet has acquired or disposed of a relevant interest in any Shares or Options in the 4 month period ending on the date immediately before the date of this Target’s Statement.

Target's statement PearlStreet Limited

page 18

8 Information relating to your directors

8.2 Interests and dealings in ALS securities

(a) Interests in ALS securities

As at the date immediately before the date of this Target’s Statement, no PearlStreet director had a relevant interest in any ALS securities.

(b) Dealings in ALS securities

No director of PearlStreet acquired or disposed of a relevant interest in any ALS securities in the 4 month period ending on the date immediately before the date of this Target’s Statement.

8.3 Benefits and agreements

• (a) Benefits in connection with retirement from office

As a result of the Offer, no person has been or will be given any benefit (other than a benefit which can be given without member approval under the Corporations Act) in connection with the retirement of that person, or someone else, from a board or managerial office of PearlStreet or related body corporate of PearlStreet.

• (b) Agreements connected with or conditional on the Offer

There are no agreements made between any director of PearlStreet and any other person in connection with, or conditional upon, the outcome of the Offer other than in their capacity as a holder of Shares or Options.

(c) Benefits from ALS

None of the directors of PearlStreet has agreed to receive, or is entitled to receive, any benefit from ALS which is conditional on, or is related to, the Offer, other than in their capacity as a holder of Shares or Options.

• (d) Interests of Directors in contracts with ALS

None of the directors of PearlStreet has any interest in any contract entered into by ALS.

8.4 Pre-bid option agreements with Mr Anthony Wooles

Campbell Brothers has entered into binding call option agreements with PearlStreet’s major Shareholder and Managing Director, Mr Anthony Wooles, in respect of, in total, 19.9% of PearlStreet’s Shares on 27 October 2009 plus up to 19.9% of subsequently issued Shares.

The call options are exercisable at the Offer Price. Campbell Brothers’ rights under the call options will not be affected by a subsequent rival or higher bid. Mr Wooles is prohibited from dealing in the Shares the subject of the call options during the Offer Period, though he remains able to accept into the Offer in relation to 9.95% of those Shares.

If the call options are exercised and Campbell Brothers then sells the Shares received from Mr Wooles into a Competing Proposal, Campbell Brothers must pay Mr Wooles 50% of the difference between the Offer Price and the value per Share received under the Competing Proposal.

Target's statement PearlStreet Limited

page 19

9 Additional information

9 Additional information

9.1 Effect of the takeover on PearlStreet’s material contracts

PearlStreet has identified several material contracts with its key customers, including its contracts with Alcoa of Australia Ltd, BP Refinery (Kwinana) Pty Ltd, Verve Energy and Esso Australia Limited, as containing change of control provisions which may be triggered as a result of, or as a result of acceptances of, the Offer. These contracts will require the written consent of the counterparty to a change of control event (such as the Offer) if the relevant ownership threshold is reached by ALS.

9.2 Bid Implementation Agreement

In the Bid Implementation Agreement, Campbell Brothers and PearlStreet agreed to the following:

(a)

Conduct of the business

PearlStreet has agreed to conduct its business in the usual and ordinary course during the Offer Period, and to consult with Campbell Brothers before entering into, materially amending or terminating any material contracts. PearlStreet must also keep Campbell Brothers informed of any major decisions taken during the Offer Period.

(b)

Break fee

When payable

PearlStreet must pay Campbell Brothers a break fee of $700,000 (excluding GST) if at any time after the date of the announcement of the Offer:

• (1) any PearlStreet director withdraws or changes their recommendation that Shareholders accept the Offer, including due to the directors or any of them recommending a superior proposal;

• (2) a condition of the Offer is breached or not fulfilled and this is materially contributed to by any action or inaction of PearlStreet;

• (3) PearlStreet is in breach of any of its material obligations under the Bid Implementation Agreement and, to the extent that the breach is capable of remedy, that breach is not remedied by PearlStreet within 10 business days of receiving written notice from Campbell Brothers identifying the breach;

• (4) PearlStreet is in material breach of any of the representations and warranties provided by it under the Bid Implementation Agreement; or

• (5) the proponent of a competing proposal acquires voting power of more than 10% in PearlStreet including some or all of the shares owned or controlled by a PearlStreet director.

Payment

If PearlStreet is obliged to pay the break fee to the other party, it must do so within 5 business days of receipt of a demand from Campbell Brothers for the payment of that fee.

Exceptions

To the extent that a court or the Takeovers Panel determines that any obligation of PearlStreet:

• (1) constituted, constitutes or would constitute, a breach of the fiduciary duties or statutory duties of a PearlStreet director; or

• (2) constituted, constitutes or would constitute, unacceptable circumstances within the meaning of the Corporations Act; or

Target's statement PearlStreet Limited

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9 Additional information

(3) was, is or would be, unlawful for any other reason,

PearlStreet will not be required to pay the break fee.

• (c) Exclusivity

Prohibitions

PearlStreet must not and must use its best endeavours to ensure that its directors and representatives do not, directly or indirectly:

• (1) solicit or initiate any proposal or discussions by any person to make a Competing Proposal or communicate an intention to do any such things;

• (2) knowingly encourage any proposal or discussions by any person to make a Competing Proposal;

• (3) participate in any negotiations or discussions or provide any information to any person with respect to any offer or proposal to make a Competing Proposal;

• (4) accept or enter into, or offer to accept or enter into, any agreement, arrangement or understanding regarding a Competing Proposal; or

• (5) disclose any information about the business or affairs of PearlStreet to a third party (other than a government agency) other than:

• in the ordinary course of ordinary business; or

• as required by law; or

• under PearlStreet's existing contractual obligations; or

• in the ordinary course of making normal presentations to brokers, portfolio investors and analysts.

However, paragraphs (3), (4) and (5) do not apply if compliance with the relevant clause would, in the opinion of the PearlStreet board reasonably formed in good faith, be likely to constitute a breach of any of the duties of the PearlStreet directors and provided that PearlStreet gives Campbell Brothers not less than 72 hours to match any Competing Proposal.

Ceasing existing discussions

PearlStreet and its directors and representatives must cease any existing discussions or negotiations relating to:

• (1) any Competing Proposal (including the proposal by Catalyst); or

• (2) any transaction that may reduce the likelihood of the success of the Offer (including the previously announced Recapitalisation Proposal).

PearlStreet agrees that it will release Campbell Brothers from its standstill and other restrictions to the extent necessary to allow Campbell Brothers to make the Offer.

Obligations to notify

PearlStreet must immediately notify Campbell Brothers in writing of:

• (1) any approach, inquiry or proposal made to PearlStreet or its directors or representatives, regarding a potential Competing Proposal; and

• (2) any request for information relating to PearlStreet or any of its businesses or operations which PearlStreet has reasonable grounds to suspect may relate to a Competing Proposal,

unless to do so would, in the opinion of the PearlStreet board reasonably formed in good faith, be likely to constitute a breach of any of the duties of the PearlStreet directors.

Target's statement PearlStreet Limited

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9 Additional information

Exceptions from complying with exclusivity arrangements

PearlStreet will not be obliged to comply with the exclusivity arrangements to the extent that a court or the Takeovers Panel determines that they:

• (1) constitute a breach of duty by the PearlStreet board or PearlStreet; or

• (2) constitute unacceptable circumstances within the meaning of the Corporations Act; or

• (3) would be unlawful for any other reason.

End of solicitation period

PearlStreet's obligations under the exclusivity arrangements cease if:

• (1) Campbell Brothers fails to make offers pursuant to an off market takeover bid under Chapter 6 of the Corporations Act to acquire all PearlStreet Shares on terms not less favourable to PearlStreet Shareholders than the announced terms; or

• (2) Campbell Brothers withdraws the Offer; or

• (3) the Offer closes without satisfying any defeating conditions.

• (d)

Extension of Offer Period

The parties have agreed that the length of the Offer Period will be a maximum, in aggregate, of 6 months.

• (e)

Warranties

The Bid Implementation Agreement contains representations and warranties by PearlStreet and Campbell Brothers that are typical for an agreement of its nature. These include general corporate warranties by both parties, and:

• (1) a warranty by PearlStreet in relation to the accuracy of due diligence information given to Campbell Brothers; and

• (2) a warranty by Campbell Brothers in relation to its capacity to pay consideration under the Offer.

9.3

Issued capital

As at the date of this Target’s Statement, PearlStreet’s issued capital consisted of:

• 82,485,455 fully paid ordinary shares; and

• 11,398,133 PearlStreet Options (expiring on 30 November 2009 and exercisable at $0.36 per PearlStreet Option).

9.4 Substantial holders

As at the date of this Target’s Statement, PearlStreet has the following registered Shareholders holding over 5% of PearlStreet Shares:

Shareholder	Number of	Percentage
	PearlStreet	of Shares
	Shares	on issue
A Wooles (through the Wooles Family account and A&A	38,080,747	46.2%

Target's statement PearlStreet Limited

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9 Additional information

Shareholder

Number of Percentage PearlStreet of Shares Shares on issue

Super Fund account)

Zero Nominees Pty Ltd 8,439,751 10.2%

Note: Mr Wooles’ percentage holding would be 50.7% on a fully diluted basis if he were to exercise all his PearlStreet Options.

9.5 Effect of Offer on PearlStreet’s Options, and employee incentive schemes

(a)

Options

ALS is not offering to acquire PearlStreet Options. However, the Offer extends to any new PearlStreet Shares that are issued during the Offer Period as a result of the exercise of PearlStreet Options. Accordingly, PearlStreet Option holders may elect to exercise their Options before the expiry date of 30 November 2009, pay the relevant exercise price to PearlStreet and accept the Offer in respect of the Shares issued following the exercise of their PearlStreet Options.

If you hold PearlStreet Options, you should have recently received a form to complete and return to PearlStreet to exercise your PearlStreet Options.

• (b)

Employee share plan

PearlStreet has an Employee Share Plan ( ESP ), last approved by Shareholders in November 2007.

The ESP allows eligible employees of PearlStreet to purchase Shares under two options: a tax exempt option and a tax deferred option. Shares are issued under the ESP subject to certain restrictions on their transfer and disposal.

In the event of a takeover bid or other change of control event, the ESP gives the Board the discretion to determine that any or all of the restrictions placed on the Shares cease at a time determined by the Board.

The Board has resolved that, in light of the Offer by ALS, all restrictions attached to Shares issued under the ESP cease with effect from the date on which this Target’s Statement is lodged with ASIC. Employee Shareholders are therefore able to sell any Shares issued under the ESP into the Offer from ALS.

Shareholders should seek tax advice on the consequences of accepting the Offer in respect of Shares received under the ESP.

9.6 Consents

Freehills has given, and has not withdrawn before the lodgement of this Target’s Statement with ASIC, its written consent to be named in this Target’s Statement as PearlStreet’s Australian legal advisers in the form and context in which it is so named. Freehills has not advised on the laws of any foreign jurisdiction, and has not provided tax advice in relation to any jurisdiction. Freehills has not caused or authorised the issue of this Target’s Statement, does not make or purport to make any statement in this Target’s Statement or any statement on which a statement in this Target’s Statement is based,

Target's statement PearlStreet Limited

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9 Additional information

and takes no responsibility for any part of this Target’s Statement other than any reference to its name.

Argonaut Capital Limited has given, and has not withdrawn before the lodgement of this Target’s Statement with ASIC, its written consent to be named in this Target’s Statement as PearlStreet’s corporate advisers in the form and context in which it is so named. Argonaut Capital Limited has not caused or authorised the issue of this Target’s Statement, does not make or purport to make any statement in this Target’s Statement or any statement on which a statement in this Target’s Statement is based, and takes no responsibility for any part of this Target’s Statement other than any reference to its name.

Link Market Services Limited has given, and has not withdrawn before the lodgement of this Target’s Statement with ASIC, its written consent to be named in this Target’s Statement as PearlStreet’s share registry in the form and context in which it is so named. Link Market Services Limited has not caused or authorised the issue of this Target’s Statement, does not make or purport to make any statement in this Target’s Statement or any statement on which a statement in this Target’s Statement is based, and takes no responsibility for any part of this Target’s Statement other than any reference to its name.

As permitted by ASIC Class Order 01/1543 this Target’s Statement contains statements which are made, or based on statements made, in documents lodged by ALS with ASIC or given to the ASX, or announced on the Company Announcements Platform of the ASX, by ALS. Pursuant to the Class Order, the consent of ALS is not required for the inclusion of such statements in this Target’s Statement. Any PearlStreet Shareholder who would like to receive a copy of any of those documents may obtain a copy (free of charge) during the Offer Period by ringing 1300 131 678 (for calls made from within Australia) or +61 (0)2 8280 7173 (for calls made from outside Australia). (Any telephone calls to these numbers will, as required by the Corporations Act, be tape recorded, indexed and stored.)

As permitted by ASIC Class Order 03/635, this Target’s Statement may include or be accompanied by certain statements:

• fairly representing a statement by an official person; or

• from a public official document or a published book, journal or comparable publication.

In addition, as permitted by ASIC Class Order 07/429, this Target’s Statement contains share price trading data sourced from IRESS and Bloomberg without their consent.

9.7 Publicly available information about PearlStreet

PearlStreet is a listed disclosing entity for the purposes of the Corporations Act and as such is subject to regular reporting and disclosure obligations. Specifically, as a listed company, PearlStreet is subject to the listing rules of ASX which require continuous disclosure of any information PearlStreet has that a reasonable person would expect to have a material effect on the price or value of its securities.

Copies of ASX announcements made by PearlStreet are available from ASX’s website at www.asx.com.au or from PearlStreet’s website at www.pearlstreet.com.au.

9.8 No other material information

This Target’s Statement is required to include all the information that PearlStreet Shareholders and their professional advisers would reasonably require to make an informed assessment whether to accept the Offer, but:

• only to the extent to which it is reasonable for investors and their professional advisers to expect to find this information in this Target’s Statement; and

• only if the information is known to any director of PearlStreet.

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10 Glossary and interpretation

The directors of PearlStreet are of the opinion that the information that PearlStreet Shareholders and their professional advisers would reasonably require to make an informed assessment whether to accept the Offer is:

• the information contained in the Bidder’s Statement (to the extent that the information is not inconsistent or superseded by information in this Target’s Statement);

• the information contained in PearlStreet’s releases to the ASX, and in the documents lodged by PearlStreet with ASIC before the date of this Target’s Statement; and

• the information contained in this Target’s Statement.

The directors of PearlStreet have assumed, for the purposes of preparing this Target’s Statement, that the information in the Bidder’s Statement is accurate (unless they have expressly indicated otherwise in this Target’s Statement). However, the directors of PearlStreet do not take any responsibility for the contents of the Bidder’s Statement and are not to be taken as endorsing, in any way, any or all statements contained in it.

In deciding what information should be included in this Target’s Statement, the directors of PearlStreet have had regard to:

• the nature of the Shares;

• the matters that Shareholders may reasonably be expected to know;

• the fact that certain matters may reasonably be expected to be known to Shareholders’ professional advisers; and

• the time available to PearlStreet to prepare this Target’s Statement.

10 Glossary and interpretation

10.1 Glossary

The meanings of the terms used in this Target’s Statement are set out below.

Term	Meaning
$orAUD	Australian dollar.
ALS	Australian Laboratory Services Pty Ltd ABN 84 009 936 029.
ASIC	Australian Securities and Investments Commission.
ASX	ASX Limited ACN 008 624 691.
AWST	Australian Western Standard Time.

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10 Glossary and interpretation

Term	Meaning
Bid Implementation	the bid implementation agreement dated 27 October 2009 between Campbell
Agreement	Brothers and PearlStreet.
Bidder’s Statement	the bidder’s statement of ALS dated 10 November 2009.
Board	the board of directors of PearlStreet.
Campbell Brothers	Campbell Brothers Limited ABN 92 009 657 489.
Catalyst	Catalyst Investment Managers Pty Limited ABN 43 118 410 101.
CGT	capital gains tax.
Competing Proposal	means a bona fide proposal or offer by any person with respect to any
	transaction (by purchase, scheme of arrangement, takeover bid or otherwise)
	that may result in any person (or group of persons) other than Campbell
	Brothers or its related entities:
	1 acquiring voting power of more than 50% in PearlStreet or any subsidiary
	of PearlStreet; or
	2 acquiring an interest in all or a substantial part of the assets of PearlStreet
	or any subsidiary of PearlStreet.
Corporations Act	the_Corporations Act 2001_(Cth) (as modified or varied by ASIC).
FY2009	the financial year ended on 30 June 2009.
FY2010	the financial year ending on 30 June 2010.
Notice of Status of	ALS’s notice disclosing the status of the conditions to the Offer which is
Conditions	required to be given by section 630(3) of the Corporations Act.
OfferorALS’s Offer	the offer by ALS for PearlStreet Shares, which offer is contained in
	section 8.1(a) of the Bidder’s Statement.
Offer Period	the period during which the Offer will remain open for acceptance in
	accordance with section 8.1(d) of the Bidder’s Statement.

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10 Glossary and interpretation

Term	Meaning
Offer Price	$0.75 cash per Share.
PearlStreet	PearlStreet Limited ABN 97 107 329 224.
PearlStreet Option	an option, quoted on ASX, to acquire an unissued PearlStreet Share at $0.36
	per Share and expiring on 30 November 2009.
PearlStreet Shareor	a fully paid ordinary share in PearlStreet.
Share
Prescribed	an occurrence listed in section 8.8(a)(iii) of the Bidder’s Statement.
Occurrences
Recapitalisation	the proposal received by PearlStreet from Catalyst as announced to the ASX
Proposal	by PearlStreet on 29 September 2009.
Rights	has the meaning given in section 9.1 of the Bidder’s Statement.
Shareholder	a holder of PearlStreet Shares.
Target’s Statement	this document (including the attachments), being the statement of PearlStreet
	under Part 6.5 Division 3 of the Corporations Act.
VWAP	means the volume weighted trading average trading price of PearlStreet
	Shares on ASX.

10.2 Interpretation

In this Target’s Statement:

• (a) Other words and phrases have the same meaning (if any) given to them in the Corporations Act.

• (b) Words of any gender include all genders.

• (c) Words importing the singular include the plural and vice versa.

• (d) An expression importing a person includes any company, partnership, joint venture, association, corporation or other body corporate and vice versa.

• (e) A reference to a section, clause, attachment and schedule is a reference to a section of, clause of and an attachment and schedule to this Target’s Statement as relevant.

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10 Glossary and interpretation

• (f) A reference to any legislation includes all delegated legislation made under it and amendments, consolidations, replacements or re-enactments of any of them.

• (g) Headings and bold type are for convenience only and do not affect the interpretation of this Target’s Statement.

• (h) A reference to time is a reference to AWST.

• (i) A reference to dollars, $, AUD, cents, ¢ and currency is a reference to the lawful currency of the Commonwealth of Australia.

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11 Authorisation of Target’s Statement

11 Authorisation of Target’s Statement

This Target’s Statement has been approved by a resolution passed by the directors of PearlStreet. All PearlStreet directors voted in favour of that resolution.

Signed for and on behalf of PearlStreet:

date 10 November 2009 sign here ►

print name D R Eiszele

position Chairman

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Annexure A

Joint announcement of Offer

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Annexure A

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