Hamilton James & Bruce Group Limited ABN 90 091 302 975

Registered Office Level 12, 20 Bridge Street, NSW 2000

Notice of General Meeting

A General Meeting of the Company will be held:

At: HJB Boardroom. Level 12, 20 Bridge Street, Sydney
Friday 16^th September, 2005 On: At: 11.00 $am$

Business

There are two Resolutions. Resolution 1 is conditional on Resolution 2 being passed ie either both are passed or neither will have effect.

Resolution 1: To seek approval from Shareholders to dispose of 100% of the Group's current operations in New Zealand.

Resolution 2: To seek approval from Shareholders to invest in 25% of a new business which will be controlled by the senior executives of the existing business (OCG Consulting Ltd)

As disclosed in its Announcement on 17^th June, 2005, Hamilton James & Bruce Group Limited ("HJB") announced that, subject to shareholder approval, it had entered into a Heads of Agreement ("HOA") to dispose of 100% of its business in New Zealand, trading as OCG Consulting Limited ("OCG"), and to simultaneously invest in 25% of the entity which is acquiring OCG.

Approval is sought under Chapter 10 of Australian Stock Exchange listing rules to dispose of 100% of OCG, and make the consequential investment in 25% of the entity which is acquiring OCG.

Full details of the transaction are included in the attached explanatory memorandum. In summary, the approval of this resolution will result in:

1. A capital profit on sale of approximately \$A2.47 million;
1. Net proceeds on sale and re-investment in the vicinity of \$A 7.93 million. Of this, \$A5.93 million would be received on settlement while the remainder would be received two years from the date of settlement (expected to be 30th September, 2005.)
1. A return to HJB shareholders by way of two fully franked special dividends of 2 cents per share, to be paid in December 2005 and December 2006. These would be in addition to any interim and final dividends.
HJB will retain a 25% interest and a board seat in the new OCG Consulting Ltd.

An independent opinion from HLB Mann Judd Corporate (NSW) Pty Limited on the fairness and reasonableness of the transaction is attached for shareholder consideration.

In the opinion of the Independent Expert the transaction as proposed is not fair but reasonable.

Directors strongly recommend that shareholders approve the proposed transactions.

Voting Exclusion Statement

In accordance with the Listing Rules of the Australian Stock Exchange Limited, the Company will disregard any votes cast on a resolution by OCG Consulting Limited, El Vacio Limited and Hematlal Patel Limited, or associates of these entities.

The company will not disregard a vote cast by the parties to this transaction if that vote is cast as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

By order of the Board

L. Seft

Cheryl Sefton Company Secretary DATED 8th August, 2005

Shareholders are referred to the following documents accompanying this Notice of Meeting:

Proxy Form; and
Explanatory Notes
Independent Expert's opinion

Explanatory Notes

This notice of General Meeting should be read in conjunction with these Explanatory Notes, which form part of this Notice of Meeting.

Overview of the reasons to dispose of 100% of the New Zealand business operations and to reinvest in 25% of the new company.

After a strategic review of the HJB Group's business operations and refinement of its strategic direction, the Board has decided to concentrate on and pursue growth opportunities in the Australian market.

The OCG Consulting Limited business has been a strong contributor to HJB Group profit since acquisition in July 2002. However, it has remained distinct and separate from the Australian operations. The expected back office revenue and cost synergies have not been forthcoming, while the expected cultural fit, an important ingredient for professional services businesses has not eventuated.

After a review of the Group's strategy, the Board commenced negotiations with OCG Management with a view to the sale of the New Zealand business.

The details of the proposed transaction can be summarized as follows:

HJB sells the New Zealand operations to a new entity for \$NZ 11.25 million.
HJB will retain 25% of the capital of the new entity with a resultant carrying value of \$NZ 2.25 million.
A further 28% of the new entity is owned by a third party private investor.
The remaining 47% of the new entity will be owned by existing OCG Management.
The new entity will acquire the OCG Consulting Limited name.
A profit on sale of the transaction of approximately \$NZ 2.69 million (\$A 2.47 million) will be earned on the sale of 100% of the New Zealand operations.
Net proceeds on the sale and reinvestment of 75% of the business of \$NZ 8.53 million (\$A 7.93 million). Of this \$NZ 6.47 million (\$A 5.93 million) will be received at settlement and the remainder two years after settlement.
HJB will retain a Board position in the new OCG Consulting while it holds its 25% investment.

Financial Analysis

$1.$ OCG Consulting Contribution to Group Results

Prior to any management charges, interest holding charges and goodwill amortisation, OCG Consulting Limited contributions to the HJB Group results since its acquisition are as follows:

	Year Ended	Year Ended	6 mths Ended
	June 2003	June 2004	Dec 2004
\$A 000 Sales	6,327	8,049	4,899
EBITDA	1,506	2.529	1,401
Profit Before Tax	1,346	2,270	1,281

$2.$ Normalised HJB results, excluding OCG Consulting

\$A 000 Sales	31,996	32.774	17,347
EBITDA	2.091	2.301	1.420
Profit Before Tax $(1)$	1,429	1.672	1.091

(1) Adjusted for cost of holding and goodwill
Amortisation related to OCG.

After the transactions proposed in this document the pro forma HJB Balance Sheet would be as follows (based on May 2005 Management Balance Sheets).

	May 2005 Mgmt. Balance Sheet \$A000	May 2005 Pro Forma \$A000
Current assets Brand Name/	12,420	18,351
Data Bases	13,092	8,256
Goodwill	3,266	689
Investment	2	2,065
Loan		1,887
Other Non Current
Assets	5,448	5,448
ASSETS	34,228	36,696
Current
Liabilities Non Current	8,375	8,375
Liabilities	8,039	8,039
LIABILITIES	16,414	16,414
NET ASSETS/ EQUITY	17,814	20,282

3. Taxation Implications

The advice HJB has received from its professional taxation advisers is that there will be no NZ taxation payable on this transaction.

However, from an Australian tax perspective there may be a potential taxable gain in respect of that part of the increase in the value of the OCG business, from the date of acquisition by HJB to the date of the proposed transaction, which relates to the OCG brand name.

This matter will be resolved in the near term, however the HJB Board is mindful of the need to provide some guidance to shareholders on this issue.

Based on the best estimate the Board can make, and taking a somewhat conservative view, the Board believes the ultimate Australian taxation liability (if there is one at all) could be in the range of \$A 50,000 to \$A 150,000.

4. Dividends

The HJB Board believes the proceeds from the sale of OCG should be shared between the business and its shareholders.

Accordingly, it has resolved to pay two special dividends, each of 2 cents per share, in December of 2005 and 2006 respectively. The first of these 2 cent dividends will be declared after the meeting called to approve the sale has ratified the sale.

Since the company has adequate available franking credits, both of these special dividends will be fully franked.

In addition to the special dividends, it is anticipated that the final dividend for the 2004/2005 year will be 1 cent per share, thus making the total ordinary dividend for the year 2004/2005 a fully franked 2.5 cents. This final ordinary dividend will be declared following finalisation of the annual results and should be paid by the end of October of this year.

The Board has adopted a strategy of paying at least 70% of its after tax profits as fully franked ordinary dividends for the foreseeable future.

5. Future results

Since the appointment of John Colvin as its new CEO in August 2004, the company has been engaged in a major re-engineering of its business with a focus on improving operating efficiency and long term results.

A presentation of the current strategy can be viewed on the HJB website at www.hib.com.au.

It is clear that the replacement of the significant contribution from OCG to the profitability of the group will be, at least in the short term, a challenge. However, the HJB Board has a well developed strategy to get the Australian business to perform at more acceptable levels in the near term, and, over the next 4-5 years aims to produce returns in excess of an EBIT margin of 30%.

Barring unforeseen circumstances, HJB directors are planning for the 2005/2006 Australian results to approximate those of 2004/2005 for Australia and New Zealand combined. This financial year's budget and operating plans reflect the Board's position. In the medium term business profitability should show significant improvement on historically achieved levels.

6. Independent Experts Report

The attached report from HLB Mann Judd Corporate finds the
transaction not fair, but reasonable.

Directors strongly recommend approval of this transaction.

Signed at Sydney on 8^th August, 2005

COSB WS

Anna Buduls Chairman

a portal de la constancia de la constancia de la constancia de la constancia de la constancia de la constancia
La constancia de la constancia de la constancia de la constancia de la constancia de la constancia de la const

John Colvin CEO

ABN 90 091 302 975

HAMILTON JAMES & BRUCE

APPOINTMENT OF PROXY

If you propose to attend and vote at the General Meeting, please bring this form with you. This will assist in registering your attendance.

All Registry communications to: C/- ASX Perpetual Registrars Limited Level 8, 580 George Street, Sydney, NSW, 2000 Locked Bag A14, Sydney South, NSW, 1235 Telephone: (02) 8280 7111 Facsimile: (02) 9287 0309 ASX Code: HJB Email: [email protected] Website: www.asxperpetual.com.au

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M A THE MAIN AND AN AIR AN 1979. THE STATE OF A THE STATE OF A THE STATE OF A THE STATE OF A THE STATE OF A TH

X99999999999

I/We being a member(s) of Hamilton James & Bruce Group Limited and entitled to attend and vote hereby appoint

the Chairman of the Meeting (mark box)

$OR$ if you are NOT appointing the Chairman of the Meeting as your proxy, please write the name of the person or body corporate (excluding the registered securityholder) you are appointing as your proxy

or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following instructions (or if no directions have been given, as the proxy sees fit) at the General Meeting of the Company to be held at HJB Boardroom, Level 12, 20 Bridge Street, Sydney at 11.00am on Friday, 16 September 2005 and at any adjournment of that meeting. Where more than one proxy is to be appointed or where voting intentions cannot be adequately expressed using this form an additional form of proxy
is available on request from the share registry. Proxies will only no later than 48 hours before the meeting.

IMPORTANT: FOR ITEMS 1 AND 2 BELOW

If the Chairman of the Meeting is to be your proxy and you have not directed your proxy how to vote on Items 1 and 2 below, please place a mark in this box. By marking this box you acknowledge that the Chairman of the Meeting may exercise your proxy even if she .
has an interest in the outcome of that Item and that votes cast by her, other than as proxyholder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on items 1 and 2 and your votes will not be counted in computing the required majority if a poll is called on these Items. The Chairman of the Meeting intends to vote undirected proxies in favour of items 1 and 2.

	Should you desire to direct your proxy how to vote on any resolution please insert $\;\mid \mathsf{X}\mid$ in the appropriate box be

Resolution 1

To seek approval from Shareholders to dispose of 100% of the Group's current operations in New Zealand.

Resolution 2

To seek approval from Shareholders to invest in 25% of a new business which will be controlled by the senior executives of the existing business (OCG Consulting Ltd).

For	Against Abstain*

* If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

SIGNATURE OF SECURITYHOLDERS - THIS MUST BE COMPLETED

Joint Securityholder 2 (Individual)

Joint Securityholder 3 (Individual)

Sole Director and Sole Company Secretary

Director/Company Secretary (Delete one)

Director

This form should be signed by the securityholder. If a joint holding, either securityholder may sign. If signed by the securityholder's attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the securityholder's constitution and the Corporations Act 2001 (Cwlth).

ASX Perpetual Registrars Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a securityholder (including your name, address and details of the securities you hold) to be included in the public register of the entity in which you hold securities. Information is collected to administer your securityholding and if some or all of the information is not collected then it might not be possible to administer your security holding. Your personal information may be disclosed to the entity in which you hold securities. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.asxperpetual.com.au). HJB PRX042

Licensed Investment Adviser

22 July 2005

The Directors Hamilton James & Bruce Group Limited Level 12 20 Bridge Street SYDNEY NSW 2000

Dear Directors

Independent Expert's Report: Disposal of Current Operations in New Zealand and Investment in 25% of a New Business

1. Introduction

You have requested HLB Mann Judd Corporate (NSW) Pty Ltd ("HMJC") to prepare an independent expert's report ("IER") relating to a proposal for the disposal by Hamilton James & Bruce Group Limited ("HJB") of its interest in the operations in New Zealand operated by its wholly owned subsidiary OCG Consulting Limited ("OCG"). The proposal includes the concurrent investment in 25% of a new company ("New OCG") that will continue the business of OCG. These proposals are referred to in this report as the "Transaction".

$2.$ Purpose of the Independent Expert's Report

HJB must comply with the Listing Rules of the Australian Stock Exchange ("ASX").

As the Transaction involves the disposal of the OCG's business, which the Listing Rules deem to be a "substantial asset", to parties that include five of OCG's New Zealand executives (each a "related party"), HJB must do so only with the approval of holders of its ordinary securities.

Listing Rule 10.10.2 requires an independent expert's report to be included with the notice of meeting called for the purpose of considering a proposed disposal of assets. That report must state whether, in the expert's opinion, the transaction is fair and reasonable to the holders of the entity's ordinary securities.

Listing Rule 10.10.1 requires a voting exclusion statement be sent to shareholders with the notice of meeting to approve the Transaction. A voting exclusion statement has the effect of causing any votes cast by related parties referred to above to be disregarded.

Level 19 207 Kent Street Sydney NSW 2000 Australia DX 10313 SSE Telephone +61 (0)2 9020 4000 Fax +61 (0)2 9020 4190 Email: [email protected] Website: www.hlb.com.au

Liability limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW)

HIB Mann Judd Corporate (NSW) Pty Ltd is a member of EDB International. A world-wide organization of accounting firms and business advisers

Our IER is prepared at the request of the directors of HJB for the purpose of advising whether or not the Transaction is "fair" and "reasonable" to HJB shareholders entitled to vote on the two interdependent resolutions to approve the Transaction.

As part of the Australian Financial Services legislative requirements we are also required to provide you with a Financial Services Guide ("FSG"), which is included on page 24 of this report.

$3.$ Assessment of the Transaction

HMJC notes that the term "fair and reasonable" has no legal definition although over time a commonly accepted meaning has evolved and ASIC provides guidance in Policy Statement 75 Independent Expert Reports to Shareholders ("PS 75")

According to PS 75:

"Fairness" relates to price or quantitative criteria whereas "reasonableness" involves consideration of factors other than value or price.
$\blacksquare$ "Fairness" involves a comparison of the consideration with the value that may be attributed to the assets, which are the subject of the acquisition. An offer is "fair" if the value of the offer price is equal to or greater than the value of the assets that are the subject of the offer.
"Reasonableness" involves an analysis of qualitative factors other than fairness.

An offer is "reasonable" if it is fair. However, an offer may also be reasonable even if considered not fair based on an analysis of factors other than the valuation of the assets that are the subject of the offer.

In arriving at our conclusions and opinion, HMJC has assessed the following aspects of the Transaction:

the underlying value of the Business based on a consideration of relevant valuation ۰ methods and the adoption of the Capitalisation of Future Maintainable Earnings methodology
the value of the 25% interest in New OCG
other matters that may affect the Transaction

$\ddot{4}$ . Fairness Criteria

The Transaction is not fair. This conclusion is based on the assessed value of the offer price of NZ\$12.295 million to NZ\$12.495 million being less than the assessed value of the Transaction of NZ\$14.700 million to NZ\$15.900 million.

$\overline{5}$ . Reasonableness Criteria

We have assessed the Transaction to be reasonable based on the matters detailed in Section 20. We have not identified any factors that in our opinion make the offer not reasonable.

6. Conclusion and Opinion

The Transaction is not fair but is reasonable to HJB shareholders entitled to vote on the resolutions to approve the Transaction.

Yours faithfully

ID Haigh Director and representative

Alleade

P B Meade Director and representative

$\frac{1}{2}$

$\ddot{\phantom{a}}$

$\label{eq:1} \begin{aligned} \mathbf{w}{1},\ldots,\mathbf{w}{n},\ldots,\mathbf{w}{n},\ldots,\mathbf{w}{n}, \end{aligned}$

1.	THE TRANSACTION
2.	REQUIREMENTS FOR AN INDEPENDENT EXPERT'S REPORT
3.	BASIS OF ASSESSMENT OF THE TRANSACTION - FAIRNESS AND REASONABLENESS
4.	SOURCES OF INFORMATION AND RELIANCE ON THAT INFORMATION 8
5.	OVERVIEW OF HJB GROUP LIMITED
6.	SHARE PRICE AND SHARE VOLUME TRADING PERFORMANCE 11
7.	CURRENT OPERATIONS OF OCG GROUP
8.	REVIEW OF OCG'S EARNINGS HISTORY
9.	OCG'S FORECASTS
10.	VALUATION METHODOLOGY
11.	FUTURE MAINTAINABLE EARNINGS OF OCG
12.	PRICE EARNINGS RATIO
13.	COMPARABLE LISTED AUSTRALIAN COMPANIES
14.	NON-CORE OR SURPLUS ASSETS
15.	TAXATION CONSEQUENCES OF THE TRANSACTION
16.	VALUATION OF THE BUSINESS
17.	VALUATION CROSS CHECK
18.	VALUATION OF 25% INTEREST IN NEW OCG
19.	ASSESSMENT OF FAIRNESS
20.	ASSESSMENT OF REASONABLENESS
21.	CONCLUSION
	FINANCIAL SERVICES GUIDE ("FSG")
	APPENDIX 1 - SOURCES OF INFORMATION
	APPENDIX 2 - VALUATION METHODOLOGY
	APPENDIX 3 - DESCRIPTION OF LISTED COMPARABLE COMPANIES28
	APPENDIX 4 - SUMMARY OF COMPARABLE LISTED COMPANIES
	APPENDIX 5 - DECLARATIONS, QUALIFICATIONS, DISCLOSURE OF INTEREST AND CONSENTS

1. THE TRANSACTION

1.1. On 17 June 2005, Heads of Agreement ("HOA") were signed whereby Hamilton James & Bruce Group Limited ("HJB") as the sole shareholder of OCG Consulting Limited ("OCG") agreed to transfer to a new company ("New OCG") the entire operations of OCG being the executive leasing, executive and personnel recruitment and human resources business known and operated under the name OCG Consulting, together with associated assets (other than fixed assets), leases, customer agreements, trade marks and intellectual property referred to herein as the "Business". Concurrent with the sale of the Business HJB will invest in 25% of New OCG.
1.2. The Agreement for Sale and Purchase of Business and Shares ("Purchase Agreement") confirming the terms of the HOA has been completed and is awaiting execution. That agreement cannot have effect until HJB's shareholders approve the Transaction (refer also 2.3 below).
1.3. The proposed purchase price for the Business is NZ\$11,250,000, plus NZ\$258,000 for fixed assets (ie a total consideration of NZ\$11,508,000). The purchase price also includes NZ\$1.00 each for two New Zealand incorporated shelf companies: OCG Limited and OCG Recruitment Limited.
1.4. There will be three shareholders of New OCG, a company incorporated in New Zealand:
a wholly owned subsidiary of HJB, HJB Consulting Limited ("HJB $\bullet$ Consulting"), incorporated in New Zealand;
El Vacio Limited a company incorporated in New Zealand and owned by ٠ executives employed by the Business; and
$\bullet$ Hematlal Patel Limited ("HPL") a company incorporated in New Zealand
1.5. The abovementioned shareholders are to subscribe for their shares as follows:

$\ddot{\phantom{a}}$

للمراجا

Shareholder	% of Shares	Consideration Payable for Shares NZS	Number of shares
HJB Consulting	25.00	2,250,000	4,500,000
El Vacio	46.88	3,300,000	8,438,400
HPL	28.12	2,700,000	5,061,600
Total	100.00	8,250,000	18,000,000

1.6. New OCG will be funded by the above capital subscription of NZ\$8,250,000 and an advance of NZ\$3,000,000 pursuant to funding arrangements with the ANZ Bank.
1.7. In addition HJB Consulting will advance NZ\$1,800,000 to El Vacio to partly fund its purchase of shares in New OCG on the following terms:
interest accruing 6 monthly in arrears on the outstanding balance at the published cash rate of the Reserve Bank of New Zealand:
30% of all dividends received by El Vacio from New OCG will be applied to $\bullet$ pay interest and reduce the balance of the loan; and
in any event, the loan will be repayable in full in two years.
1.8. El Vacio will provide HJB Consulting with an equitable mortgage over 75% the shares held by El Vacio in New OCG as security for the loan in paragraph 1.7.
New OCG is to pay dividends at six monthly intervals equal to 100% of net profits $1.9.$ after tax and after allowing for ANZ Bank covenants that profits equal to 3 months working capital and 12 months' capital expenditure of the Business be retained.
1.10. A Shareholders Agreement for New OCG, to govern the operations, of New OCG has also been completed and is awaiting execution. Parties to the Shareholders Agreement are HJB Consulting, El Vacio, and HPL as shareholders of New OCG, Mr Patel (as an associate of HPL), New OCG and 5 executives of the Business as covenantors.
1.11. The Shareholders Agreement gives El Vacio first right of refusal, ahead of HJB Consulting, to acquire the shares held by HPL.
1.12. The Shareholders Agreement does not give HJB Consulting any preferential right to sell its shares in New OCG to the other shareholders.

Hamilton James & Bruce Group Limited Independent Expert's Report July 2005

$\overline{2}$ . REQUIREMENTS FOR AN INDEPENDENT EXPERT'S REPORT

2.1. As a listed public company, HJB must comply with the Listing Rules of the Australian Stock Exchange ("ASX"). The Transaction involves the disposal of the HJB's New Zealand subsidiary OCG to a new company owned 75% by OCG's New Zealand executives and HPL, and 25% by HJB through HJB Consulting.
2.2. ASX Listing Rule 10 is entitled "Transactions with persons in a position of influence" and Listing Rule 10.1 requires that should an entity dispose of a substantial asset to a related party it must do so with the approval of holders of the entity's ordinary securities. A substantial asset is one where the value of the consideration is 5% or more of the consolidated equity interests. The consideration for the Business is more than 5% of the consolidated equity interests of HJB. We have been provided with legal opinion that, for the purposes of Rule 10, HJB and New OCG are related parties.
2.3. In these circumstances, HJB must obtain shareholder approval for the Transaction to be completed. Listing Rule 10.10.2 requires an independent expert's report to be included with the notice of meeting called for the purpose of considering a proposed disposal of assets. That report must state whether, in the expert's opinion, the transaction is fair and reasonable to the holders of the entity's ordinary securities.
2.4. Listing Rule 10.10.1 requires a voting exclusion statement be sent to shareholders with the notice of meeting to approve the Transaction. A voting exclusion statement has the effect of causing any votes cast by related parties referred to in paragraph 2.2 above to be disregarded.

BASIS OF ASSESSMENT OF THE TRANSACTION - FAIRNESS AND 3. REASONABLENESS

3.1. In preparing this report, HMJC has had regard to the relevant Policy Statements and Practice Notes issued by The Australian Securities and Investments Commission ("ASIC") in relation to valuations and expert's reports, with particular reference to ASIC Policy Statement 74 Acquisitions agreed to by shareholders, Policy Statement 75 Independent expert's reports to shareholders, Practice Note 42 Independence of experts' reports and Practice Note 43 Valuation reports and profit forecasts.
3.2. ASIC Policy Statement 75 sets out guidelines for experts engaged to prepare reports for the benefit of shareholders considering matters such as the Transaction. The independent expert's report should, inter alia, provide an opinion as to whether the offer is fair and reasonable.

3.3. The term "fair and reasonable" has no legal definition although over time a commonly accepted meaning has evolved and ASIC provides guidance in PS 75. "Fairness" relates to price or quantitative criteria whereas "reasonableness" involves consideration of factors other than value or price.
"Fairness" involves a comparison of the consideration with the value that may be $3.4.$ attributed to the assets, which are the subject of the acquisition. An offer is "fair" if the value of the offer price is equal to or greater than the value of the assets that are the subject of the offer.
"Reasonableness" involves an analysis of qualitative factors other than fairness. An $3.5.$ offer is "reasonable" if it is fair. However, an offer may also be reasonable even if considered not fair based on an analysis of factors other than the valuation of the assets that are the subject of the offer.

4. SOURCES OF INFORMATION AND RELIANCE ON THAT INFORMATION

4.1. In the preparation of this report and in arriving at our opinion we have referred to and relied upon the sources of information as detailed in Appendix 1.
In addition we have also had discussions with the Sydney Head Office management of $4.2.$ HJB and visited the Auckland Head Office of OCG and had discussions with their management. The information obtained in Auckland related to the operation of the Business, risks and opportunities in the industry, historical trading results and future prospects.
4.3. HMJC has not conducted an audit of the financial accounts or records of the HJB group. Similarly, HMJC has not conducted any form of review that would be normally undertaken for the half yearly accounts of a publicly listed company. HMJC does not warrant that its enquiries have identified all matters that an audit or due diligence investigation might disclose.
4.4. Information provided to HMJC includes financial forecasts prepared by OCG management for the three years ending 30 June 2008 for the New Zealand operations. HMJC has analysed and considered the forecasts as outlined in Section 9 of this Report.
4.5. HMJC has not been engaged to undertake a review of the OCG forecasts and has not conducted such a review. HMJC has not been engaged to review prospective financial information in accordance with AUS 804: The Audit of Prospective Financial Information. Consequently, HMJC does not express an opinion on the basis of the assumptions used for the calculation of the forecasts or the outcomes of the forecasts. Forecast results are uncertain and are dependent on a number of future events being realised. Actual results may vary significantly from forecast results. HMJC does not warrant or guarantee the forecasts.

4.6. The management of HJB have advised HMJC that accounting information prepared by way of management accounts and forecasts has been prepared in a manner consistent with the methods of accounting used in previous accounting periods. HJB have agreed to indemnify HMJC in respect of costs, charges and expenses to any inquiry or proceedings caused by reason of reliance of information provided by HJB or the failure of HJB to provide relevant material information.
4.7. The statements and opinions expressed in this report are made in good faith and have been based on the information detailed in Appendix 1 and discussions outlined in paragraph 4.2. HMJC believes the information provided to be reliable, complete and not misleading and that no material facts have been withheld.

5. OVERVIEW OF HJB GROUP LIMITED

Prior to Listing

Hamilton James and Bruce was established in 1979 in Sydney initially as a specialist 5.1. recruiter of permanent professionals to the banking and financial services sector. In 1986 Markham was established in response to growing demand for non-executive and support staff recruitment services and in 1988 Priority Personnel was established to specialise in recruitment of administrative and support staff, primarily in the banking sector.
5.2. During the 1990s offices were opened in Melbourne, Parramatta and Brisbane and operations expanded into recruiting in the areas of accounting, IT, sales and marketing and public relations.
5.3. In August 2000 a prospectus was issued to the public to subscribe for 21.7 million shares at A\$1 and on 12 September 2000, official quotation was given to 56,879,200 shares by the Australian Stock Exchange. The listed company, Hamilton James & Bruce Group Limited, incorporated the abovementioned operations.

After Listing

5.4. In June 2002 HJB acquired 100% of the business of Bowden Computer Placements (Queensland) Pty Limited for a consideration of A\$2,020,000.
5.5. In July 2002 HJB acquired 100% of the business of OCG Consulting Limited, New Zealand's second largest executive recruitment firm for NZ\$4,400,000. Together with additional consideration paid in respect of the 2003 and 2004 years, on the basis of subsequent earnings the total purchase price became NZ\$8,954,000.

Current Operations

5.6. HJB is one of Australia's major publicly listed recruitment groups, comprising specialist recruitment firm Hamilton James & Bruce, HJB Priority, Bowden Computer Placements and OCG Consulting. The group employs 280 staff in five locations -Sydney, Parramatta, Melbourne, Brisbane and Auckland providing recruitment services to clients locally and internationally. The group provided services to over 1,000 clients in the 2004 financial year with no client contributing more than 4% of net sales. Clients include large and small corporates, government departments and enterprises and not-for-profit organisations. Larger clients are serviced through Preferred Supplier Agreements and account for approximately 40% of sales.
5.7. Industry specialisations include, accounting, sales and marketing, information technology, banking finance and insurance, legal, engineering, human resources, and business support. Placements are approximately 60% permanent and 40% temporary.

Earnings History

5.8. HJB's earnings for the financial years ended 30 June 2001 and 30 June 2002 (prior to the purchase of OCG) together with the years ended 30 June 2003 and 2004 (that includes OCG results) are tabulated below. Results for the eleven months to 31 May 2005 are also included in the table. The 2001 to 2004 results are audited. The 2005 figures combine results for the six months ended 31 December 2004, reviewed by HJB's auditors and management figures for the five months ended 31 May 2005.
5.9. The figures in the following table commence with the normal "bottom line" of net profit after tax and work back to establish earnings before interest, tax, and amortisation of goodwill (EBITA).

	2005 11 Months	2004	2003	2002	2001
	to 31 May A\$'000	A\$'000	A\$'000	A\$'000	A\$'000
Net profit after tax	845	2,184	1,403	230	1,724
Tax expense	751	1,416	1,103	520	1,664
	1,596	3,600	2,506	750	3,388
Interest	401	106	83	(118)	(132)
EBIT	1,997	3,706	2,589	632	3,256
Amortisation of goodwill	434	341	269.	814	1,444
EBITA	2,431	4,047	2,858	1,446	4.700
OCG Contribution	1,885	2.416	1.391

5.10. Note that OCG's contribution to EBITA is significant being 49% in 2003, 60% in 2004 and 78% in the 11 months to 31 May 2005.

6. SHARE PRICE AND SHARE VOLUME TRADING PERFORMANCE

The following graph shows HJB's share trading history (volume and price) on the $6.1.$ Australian Stock Exchange from the date of listing in September 2000 to 30 June 2005.

6.2. The issue price for the listed shares was A\$1.00. The shares have traded below that amount since listing. Note: prices shown in the graph above are weighted therefore the price in the September 2000 quarter reflects the decrease from A\$1.00 following listing.
6.3. The following table is a further summary of the information in the graph above.

Date	Share Price Range AS	Average Share Price AS
3 months to 30 June 2005	$0.345 - 0.60$	0.47
12 months to 30 June 2005	$0.345 - 0.72$	0.53
3 years to 30 June 2005	$0.21 - 0.72$	0.47
5 years to 30 June 2005	$0.21 - 1.00$	0.61

6.4. The last sale price of HJB shares at 30 June 2005 was A\$0.345. Based on shares on issue of 61,141,685 the market capitalisation of HJB, including the Business, was A\$21.1 million at 30 June 2005.

6.5. In the two years from June 2002 to June 2004, during the ownership of OCG, HJB generally traded at prices below A\$0.35. In the year ended 30 June 2005 the shares traded as high as A\$0.72. However, the financial year opened with a price of A\$0.35 and closed at 30 June 2005 at A\$0.345.
6.6. The EBITA of HJB for the 11 months to 31 May 2005 is A\$2.431 million (paragraph 5.9). Annualised EBITA is A\$2.652 million. The enterprise value of HJB at 30 June 2005 was A\$23.7 million, being the Market value of HJB shares at 30 June 2005 of A\$21.1 million, plus interest bearing borrowings as 31 May 2005 of A\$2.6. The EBITA multiple of HJB, calculated using the above figures, is therefore 8.94 being the Enterprise Value divided by EBITA.

7. CURRENT OPERATIONS OF OCG GROUP

7.1. OCG operates the Business in Auckland, New Zealand. The Business is the second largest recruitment operation in New Zealand and in early July 2005 moved its operations from 120 Albert Street to 29 Albert Street.
7.2. OCG has been wholly owned by HJB since July 2002 when it was acquired from a group of working shareholders that included senior management and consulting staff. This group had obtained ownership through a management buyout of the Executive and Management Services business units of Opal Consulting Group Limited in February 2000.
7.3. The Business operates two core businesses, Executive Search and Selection (ESS) and Executive Leasing (EL). ESS seeks to permanently place suitable candidates in senior management positions and includes such services as advertising the position. interviewing and short listing candidates, performing psychometric testing and supporting the candidate and client through to ultimate placement. The ESS operation contributes approximately 30% of the gross revenue of the Business. The placement of temporary executive staff by the EL operation contributes the remaining 70% of gross revenue of the Business.

The net revenue for permanent placements is 60% and temporary placements 40%. These proportions are similar to those of HJB.

7.4. Both core businesses are operated as market divisions with specialist consultants in the areas of Chief Executive/Director, General and Senior Management, Sales and Marketing, Accounting and Finance, Human Resources and Technical and Operations.

7.5. As noted above, the Business is the second largest of its type in New Zealand, Hudson being the largest. There are between 120 to 150 clients who use the services of the Business on a regular basis. Amongst them are many household names: ANZ Banking Group (New Zealand) Limited, Carter Holt Harvey Limited, Vodafone NZ Limited, Auckland District Health Board, New Zealand Steel Limited, and Air New Zealand Limited.
7.6. In the twelve months to 31 December 2004, the top 30 clients contributed 54.6% of the gross margin of the Business. The top 10 contributed 33.7% and the Top 5, 23.9% of the gross margin. The largest client contributed 8.1% of the gross margin.

Of the Top 30 clients, 9 have Preferred Supplier Agreements that are renegotiated on a yearly basis. Together they provide 28.2% of the gross margin. All Top 5 clients have Preferred Supplier Agreements.

7.7. The Business employs 60 staff including 35 consultants.
7.8. Five of the senior management referred to in 7.2 are shareholders in El Vacio. All five are key personnel of the Business, having worked there for periods of at least 9 and up to 21 years.

8. REVIEW OF OCG'S EARNINGS HISTORY

8.1. The earnings of the Business for the financial years ended 30 June 2003, 30 June 2004 and for the eleven months to 31 May 2005 are tabulated below, together with the budgets set for those periods.

	11 months to 31 May 2005		2004		2003
	Actual NZ\$*000	Budget NZ\$'000	Actual NZ\$'000	Budget NZS'000	Actual NZ\$*000	Budget NZS'000
Permanent placement	5,748	4,955	5.965	4,755	4,635	4.146
Consultant remuneration	(3,497)	(3,350)	(3,254)	(2.925)	(2,753)	(2,569)
Temporary placement	14,668	14.934	13,589	12,240	10,213	11,565
Temporary remuneration	(11, 145)	(11, 164)	(10, 425)	(9,219)	(7, 724)	(8,632)
Operating contribution	5,774	5.375	5,875	4,851	4.371	4,510
Overheads	(3,774)	(3, 436)	(3, 133)	(3,296)	(2, 814)	(3,096)
Earnings before interest, tax and amortisation
(EBITA)	2,000	1.939	2,742	1,555	1,557	1,414

8.2. The figures for the eleven months include a cost of NZ\$88,000, being rent of NZ\$44,000 per month for April and May 2005 paid for the new premises at 29 Albert Street referred to in para 7.1. This amount was paid in addition to the rent payable at 120 Albert Street up to 30 June 2005.

8.3. For each of the three periods reviewed there are not any one-off costs that materially affect the underlying earnings of the Business. The actual earnings for each period approximate the respective budgets except for 2004 when additional permanent placement income of NZ\$1.2 million effectively flowed through to the net earnings. This increase was due to some large additional placements for Vodafone, together with additional revenue from an increase in consultants employed by the Business. For each period when consultant remuneration exceeds budget there is a corresponding increase in Permanent Placement income.
8.4. We have been informed that June 2005 trading is expected to return a similar contribution to May 2005 in which EBITA was NZ\$153,000.

Normalised EBITA for the 12 months to 30 June 2005 has been estimated as follows:

11 months to 31 May 2005 (para 8.1) Add June 2005 estimated EBITA	2,000
Add 3 months rent - April to June 2005 for 29 Albert Street	153 132
Estimated normalised EBITA for 2005	NZ\$2,285

OCG'S FORECASTS 9.

9.1. The management of the Business have prepared forecasts for each of the years 30 June 2006, 30 June 2007 and 30 June 2008.

	2006 NZ\$'000
Permanent placement Consultant remuneration Temporary placement Temporary remuneration	5,154 (3,294) 18,004 (13,395)
Operating contribution Overheads	6,469 (4,270)
EBITA (based on consultants' capacity in 2005)	2,199
Additional net profit after employing 5 additional consultants	399
EBITA (revised to include 5 additional consultants)	2.598

For the 2007 year an additional 6 consultants have been included in the forecast and 3 more in 2008 year. These additional consultants have expected additional net profit contributions of NZ\$373,000 for 2007 and NZ\$598,000 for 2008.

9.2. In summary, the forecasts are as follows:

	EBITA	SALES
	NZS'000	NZ\$'000
2006	2,598	23.158
2007	2,971	24,988
2008	3,196	26.808

9.3. To support the forecast additional earnings generated by the employment of additional consultants an analysis of the 2003, 2004 and 2005 figures shows:

	2005	2004	2003
Increase* in consultants' remuneration		4.39% 11.25% 7.16%
Increase* in permanent placement fees	16.00%	25.47% 11.18%

* actual compared with budget
9.4. The above forecasts include the increased rent payable at 29 Albert Street, together with the amortisation of the lease fitout at those premises.
9.5. The annualised sales of 2005 year are:

	٠ 22,444 --------------------------------------
June estimate based on May 2005	2.028
11 months to 31 May 2005	20,416
	NZ\$'000

10. VALUATION METHODOLOGY

10.1. Attached as Appendix 2 is a summary of the various methodologies considered by HMJC in the valuation of the Business.

In selecting an appropriate method to value the Business, HMJC has considered and evaluated the following:

the availability and stability of the earnings history of the Business; $\bullet$
the preparation and reliability of forecasts of future earnings of the Business; $\bullet$ and
the access to publicly available valuation benchmarks in the recruitment ٠ industry

10.2. Having regard to the above factors, HMJC considers the most appropriate valuation methodology for valuation of the Business to be the Capitalisation of Future Maintainable Earnings ("FME") method. The reasons for selecting this method are as follows:
the Business has a history of profitability over many years before and during its $\bullet$ ownership by HJB;
the forecasts for the ongoing operations of the Business for each of the 3 years ending 30 June 2006, 2007 and 2008 are available;
the reliability of past budgets compared to actual results as outlined in Section 8 of this report, which gives us confidence in the reliability of the forecasts; and
the availability of relevant data of listed comparable companies. Although there are no listed recruitment companies in New Zealand and the New Zealand Stock Exchange is small by comparison to the Australian Stock Exchange, there are sufficient listed recruitment companies on the Australian market for meaningful comparisons to be made.
10.3. Earnings before interest, tax, depreciation and amortisation ("EBITDA") is the preferred measurement of earnings for most trading operations as it most accurately reflects the return generated by the operations of a business and ignores factors that relate to the ownership of a business and/or factors that may not be relevant to the actual earnings capacity of a business, including:
interest costs that may vary between operations reflecting the method of $\bullet$ financing:
effective tax rates vary depending on tax regimes in different countries, different e timing and tax planning issues implemented by different operators;
different accounting policies may affect annual depreciation charges; and
amortisation of intangible assets, especially goodwill, affects comparisons ٠ between companies that have achieved operational growth by acquisition and those that have generated internal growth.
10.4. HMJC has used EBITA (earnings before interest tax and amortisation of intangible assets) not EBITDA, to calculate the Business' FME. We have therefore allowed for depreciation and amortisation of leased assets in the estimated FME of the Business as the Business and comparable operations will have similar assets such as software and office furniture and fittings that are treated using a similar accounting method.

EBITA disregards amortisation of goodwill, which most recruitment companies will pay for as they purchase a new business. A large proportion of the acquisition cost of such businesses consists of the amount paid for the goodwill associated with the business name.

10.5. The value derived by the capitalisation of FME method will be for the whole Business. Any surplus assets to the operations of the Business must be added and any borrowings or liabilities not related to the Business deducted to arrive at the value of the Business.

The value of the Business using the FME method requires the following:

the calculation of a level of maintainable earnings EBITA having regard to the historic and forecast operating results of the Business and any factors likely to affect the operating performance;
an appropriate capitalisation multiple having regard to comparable listed companies, current economic climate, the extent and nature of competition. stability and quality of earnings, spread and financial standing of clients, growth prospects and relative business risks; and
the value of any surplus non-core assets and liabilities and net borrowings.

FUTURE MAINTAINABLE EARNINGS OF OCG 11.

11.1. In assessing the future maintainable EBITA of the Business, HMJC has considered the historic earnings detailed in Section 8 of this report and the forecasts detailed in Section 9.

Set out below are the historical and forecast results of the Business:

	2008 Forecast	2007 Forecast	2006 Forecast	2005 Forecast/ Annualised	2004 Audited	2003 Audited
	NZ'000	NZ'000	NZ'000	NZ'000	NZ'000	NZ'000
Sales revenue EBITA	26,808 3,196 $\mathcal{C}^{\mathcal{C}}$	24,988 2.971	23,158 2.598	22,444 2.285	19,554 2,742	14.848 1,557
EBITA Sales revenue	11.9%	11.9%	11.2%	10.2%	14.0%	10.5%

11.2. In Section 9 reference was made to the historical results confirming previously set budgets so that forecasts for 2006, 2007 and 2008 can be given credibility assuming similar trading conditions prevail in those years.

The only non-recurring item noted is expenditure of NZ\$80,000 to be incurred on the "making good" of the premises at 120 Albert Street after the move to 29 Albert Street. This one off expenditure has not been included in any of the preceding figures.

11.3. After consideration of the above table and the analysis of historical and forecast results HMJC has adopted a maintainable EBITA of NZ\$2.45 million, an amount approximating the mid-point between the 2005 EBITA annualised and the 2006 forecast.

12. PRICE EARNINGS RATIO

12.1. The price earnings ratio or PER, is the multiple that is applied to the maintainable earnings to arrive at the value of the Business.
12.2. In assessing the appropriate PER to apply to the earnings of the Business HMJC has had regard to:
stability and quality of earnings;
spread and financial standing of clients;
quality of management and likely continuity of management;
industry cycle considerations;
source and supply of clients and candidates;
historical and current earnings yields of similar companies quoted on the Australian Stock Exchange which give a guide to the market assessment of companies within the industry; and
nature and size of the operations.
12.3. There are no recruitment companies listed on the New Zealand Stock Exchange. There are 10 recruitment companies listed on the Australian Stock Exchange, including HJB. HMJC has used the publicly available information of these companies to assist in its assessment of the capitalisation rate.
12.4. As Australia and New Zealand recruitment companies have similar operating structures and work in similar economies, HMJC considers that Australian information is a reasonable guide to the consideration of a suitable PER for the Business. We have therefore analysed comparable Australian businesses in the following section 13 of this report.

COMPARABLE LISTED AUSTRALIAN COMPANIES $13.$

13.1. HMJC has identified, in addition to HJB, 9 other Australian listed companies that operate in the recruitment market, including 4 with businesses more closely aligned to the Business. Appendix 3 gives a brief overview of the activities of those 4 listed companies. Price earnings ratios were calculated for each of the four companies using the closing share prices on the ASX at 30 June 2005 and EBITA figures for the 6 months to 31 December 2004, annualised (ie. multiplied by 2). Whilst none of those companies selected is precisely comparable to HJB or the operations of the Business, the data provides some information to assist in the evaluation of the Business.

13.2. Appendix 4 compares the market capitalisation and amount of current level of EBITA of the 4 companies discussed in paragraph 13.1 and Appendix 3 of this report. It shows that the 4 companies have an EBITA multiples ranging from 6.7 to $16.7$ . The average is 9.9 and the weighted average is 8.0. A listed company's current share price generally reflects anticipated future earnings rather than past earnings, although past earnings are generally a good indicator of future earnings capacity. As we have selected a maintainable EBITA with reference to the expected EBITA for 2005 and the forecast EBITA for 2006, 2007 and 2008, it is appropriate to consider comparable multiples based on forecast earnings for the purpose of this valuation.

13.3. Matters we have considered in assessing the appropriate EBITA multiple include:

Matters that tend to increase the multiple:

the share price of listed companies often represents the market value of a minority interest in a company;
the quality and the likely continuity of management of the Business senior staff $\bullet$ have a long-term history with the Business and 5 of them are involved in the proposed purchase of the Business;
the nature and size of the Business the second largest in New Zealand;
stability and quality of earnings of the Business refer Sections 8 and 9 of this report for statistics and commentary;
industry cycle considerations the recruitment industry has prospered over the past four years with a candidate shortage encouraging employers to use recruiting agencies to supply the shortfall; and
source and spread of clients refer Sections 7.5 and 7.6 of this report outlining the quality and spread of clients.

Matters that tend to decrease the multiple:

the Business is located in New Zealand and there is no comparable data $\bullet$ available on New Zealand recruitment agencies. The EBITA multiple calculated is based on Australian listed companies;
the Business will be operated as an unlisted New Zealand company. However, $\bullet$ because of its size and quality of earnings there would be the potential to list the company on the New Zealand Stock Exchange.
13.4. After consideration of the above factors HMJC are of the opinion that the effect of the issues that decrease the multiple of 8.0 referred to in paragraph 13.2 are greater than those that increase the multiple and have selected an EBITA multiple with a range of $6.0 \text{ to } 6.5.$

14. NON-CORE OR SURPLUS ASSETS

14.1. Non-core or surplus assets are those that are not essential to providing the estimated future cash flows or are excess to the required operating assets. As the Transaction is for the sale of the database, goodwill and current operating assets necessary to a recruitment business there are no non-core or surplus assets in the Business.

TAXATION CONSEQUENCES OF THE TRANSACTION 15.

15.1. We have sighted correspondence to HJB, from PricewaterhouseCoopers in New Zealand and Australia, outlining the taxation consequences of the Transaction.
15.2. There appears to be no taxation payable on the Transaction in New Zealand, however, the taxation position in Australia has not yet been clarified as disclosed in the Explanatory Statement and Notes. The Directors of HJB have indicated in that statement that "...the ultimate Australian taxation liability (if there is one at all) would be in the range of A\$50,000 to A\$150,000".

16. VALUATION OF THE BUSINESS

16.1. Based on future maintainable earnings of NZ\$2.45 million and an EBITA multiples of 6.0 to 6.5 times, HMJC has assessed the value of the Business to be between NZ\$14.7 million and NZ\$15.9 million.

17. VALUATION CROSS CHECK

17.1. HMJC has referred in paragraph 6.4 to the overall market value of HJB as at 30 June 2005 of A\$21.1 million. The valuation of the Business as at 30 June 2005 by HMJC is in a range of NZ\$14.7 million to NZ\$15.9 million which, when converted to Australian dollars at an exchange rate of 0.92 (mid-point rate at 30 June 2005), is A\$13.5 million to A\$14.6 million.
17.2. The assessed value of the Business of between A\$13.5 million and A\$14.6 million is between 57.0% and 61.6% of the Enterprise Value of HJB at 30 June 2005 which was A\$23.7 million (paragraph 6.6).
17.3. The assessed proportionate value of the Business in paragraph 17.2 (ie between 57% and 61.6%) is broadly consistent with the percentage contribution of OCG's earnings to HJB's total earnings; ie 60% in 2004 and 78% in the 11 months to 31 May 2005 (paragraph 5.10).

18. VALUATION OF 25% INTEREST IN NEW OCG

18.1. As outlined in Section 1 which describes the Transaction, HJB through a new company HJB Consulting will subscribe NZ\$2,250,000 for a 25% interest in the capital of New OCG, the company that is to operate the Business.
18.2. The Shareholders Agreement does not provide for any exit strategy for HJB Consulting's 25% interest in New OCG. That agreement provides for only certain pre-emptive rights should a shareholder wish to dispose of its interest; however those rights do not require other shareholders to acquire those shares.
18.3. The effect of the Transaction is that, if completed, HJB will sell its 100% interest in the Business and re-invest NZ\$2,250,000 of the sales proceeds, by way of a 25% minority shareholding, into the same business.
18.4. There are two separate areas to consider. A discount to reflect that, notwithstanding that 25% is a large minority interest, the remaining 75% of shareholders can influence the management policy of the Business. A further discount to reflect the lack of marketability or liquidity of the shareholding is necessary.
18.5. A discount of 15% is considered appropriate to allow for both a minority interest discount and a discount for non-negotiability of the minority shareholding.
18.6. The following therefore is an assessment of the effect on the Valuation of New OCG after allowing for the discount of 15% referred to above

Value of 100% of New OCG	NZ\$14.7 m	to $NZ$15.9 m$
Value of 25% of New OCG	NZ\$ 3.7 m	to NZS $4.0 \text{ m}$
Less discount of $15%$ (para 18.5)	$NZS$ 0.5 m	to NZ\$ $0.6 \text{ m}$
Value of 25% of New OCG after discount	NZ\$ $3.2 \text{ m}$	to NZ\$ $3.4 \text{ m}$

18.7. The value of the 25% interest in New OCG is between NZ\$3.2 million to NZ\$3.4 million.

19. ASSESSMENT OF FAIRNESS

19.1. The Transaction is for the sale of the Business for NZ\$11.25 million plus NZ\$258,000 for fixed assets, and the re-investment into that Business for a minority holding of 25% at a cost of NZ\$2.25 million. This results in an offer price equal to net sales proceeds of NZ\$9.258 million (before the loan to El Vacio - refer 1.7) and a 25% equity interest in New OCG.
19.2. As noted in paragraph 3.4 the offer is "fair" if the value of the offer price is equal to or greater than the value of the assets that are the subject of the offer.
19.3. A comparison of the offer price (refer 19.1) with our valuation of the assets that are the subject of the offer (ie the Transaction) is as follows:

	High value NZ\$'000	Low value NZS'000
Consideration for sale of the Business (para. 1.3)	11,508	11,508
Less reinvestment in equity in New OCG (para. 1.5)	2,250	2,250
	9,258	9,258
Add value of 25% interest in New OCG (para. 18.6)	3,200	3,400
Assessed value of offer price before tax Less Directors' estimate of maximum tax payable -	12,458	12,658
A\$150,000 (refer Section 15)	163	163
Assessed value of offer price after tax	12,295	12,495
Assessed value of the Business (para. 16.1)	14,700	15,900
Excess of assessed value of the Transaction compared with assessed value of the offer price	2,405	3,405

20. ASSESSMENT OF REASONABLENESS

20.1. HMJC has formed the opinion that the offer is reasonable for the following reasons:
Should the Transaction not proceed, the New Zealand executives who have very 20.1.1 considerable experience in the New Zealand recruitment industry would, be able to set up their own operations, without any restrictive covenants. This would result in the value of HJB's investment in New Zealand declining, as the New Zealand executives would be transferring the value of HJB's New Zealand operations to their new business.

20.1.2 HJB shareholders retain an interest in the New Zealand operations for a cost of NZ\$2.25 million which is less than our assessed value of between NZ\$3.2 million to NZ\$3.4 million. This investment allows HJB to benefit from the potential growth of the New Zealand business and to participate on a listing on the New Zealand Stock Exchange should the shareholders pursue this course.
The Explanatory Statement and Notes refers to two fully franked dividends of 20.1.3 A\$0.02 per share that would be paid to shareholders should the Transaction be approved. These additional dividends would allow HJB shareholders to receive a cash distribution from their shares that would not be available if the Transaction was not to proceed.
The Transaction includes the disposal of OCG to HPL, a private equity investor. 20.1.4 This disposal can be contrasted with the disposal or divestment through an initial public offering ("IPO"). Private equity investors typically pay less consideration than would apply to a comparable acquisition through an IPO and as we have not been advised of any alternative offers to acquire the Business, the lower purchase price is a factor in considering the reasonableness of the Transaction.
20.2. During the preparation of this report we have not identified any factors that in our opinion make the offer not reasonable.

$21.$ CONCLUSION

21.1. In HMJC's opinion, the Transaction is not fair but is reasonable to HJB shareholders entitled to vote on the resolutions to approve the Transaction.

Licensed Investment Adviser

FINANCIAL SERVICES GUIDE ("FSG")

HLB Mann Judd Corporate (NSW) Pty Limited ("HLB Mann Judd Corporate") carries on business at the address at the foot of this page. HLB Mann Judd Corporate holds an Australian Financial Services licence No. 253134, authorising it to provide financial product advice to wholesale and retail clients, including advice on securities.

The Corporations Act 2001 requires HLB Mann Judd Corporate to provide a FSG in connection with its independent expert's report ("the Report") included in the Explanatory Statement and Notes of Hamilton James & Bruce Group Limited ("HJB") to be dated on or about 25 July 2005.

HLB Mann Judd Corporate does not provide any personal retail financial product advice.

Except for fees calculated on a time-cost basis which are \$48,000 (excluding GST) and outof-pocket expenses, payable to HMJC, in relation to the preparation of this report, no related party, or any director, employee or any associate of HLB Mann Judd Corporate receives any remuneration or other benefit associated with the Report.

HLB Mann Judd Corporate is required to be independent of HJB in order to provide the Report. Except for HLB Mann Judd Corporate's agreement to prepare the Report neither that company nor any related party have any relationship with HJB and do not have any shareholding in HJB. HLB Mann Judd Corporate considers itself to be independent in terms of the independence requirements of The Institute of Chartered Accountants in Australia and Practice Note 42 of ASIC.

HLB Mann Judd Corporate has internal complaints-handling mechanisms. Complaints should be made in writing to The Complaints Officer at the address below and we will respond within 1 month to that complaint. If a complainant is not satisfied with the response, the matter may be referred to Financial Industry Complaints Services Limited ("FICS"). HLB Mann Judd Corporate is a member (No. F3604) of FICS, whose address is PO Box 579, Collins Street West, Melbourne Vic 8007.

HLB Mann Judd Corporate is only responsible for the Report and this FSG. Complaints or questions about the Explanatory Statement and Notes and Notice of General Meeting should not be directed to HLB Mann Judd Corporate, which is not responsible for that document.

22 July 2005

Level 19 207 Kent Street Sydney NSW 2000 Australia DX 10313 SSE Telephone +61 (0)2 9020 4000 Fax +61 (0)2 9020 4190 Email: [email protected] Website: www.hlb.com.au

Liability limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW)

Sources of Information

In preparing this report and arriving at our opinion, we have considered and relied upon, the following principal sources of information:

Heads of Agreement dated 17 June 2005 for the sale of the New Zealand operations.
Agreement for Sale and Purchase of Business and Shares (completed but unsigned and awaiting execution).
Shareholders Agreement relating to the operations of the new New Zealand company (completed but unsigned and awaiting execution).
Annual Reports of HJB for the three years to 30 June 2004.
Half yearly report of HJB for the six months to 31 December 2004.
Management accounts for the HJB Group, including OCG, for the eleven months to $\bullet$ 31 May 2005.
Forecasts for the OCG business for the three years ending 30 June 2008. ٠
Income tax return of OCG for the year ended 30 June 2004. $\bullet$
Top 20 Shareholders of HJB as at 31 March 2005. $\bullet$
ASX announcements of HJB. $\bullet$
$\bullet$ Australian income tax correspondence on the proposed Transaction by PricewaterhouseCoopers, Australia.
New Zealand tax advice on the proposed Transaction by PricewaterhouseCoopers, New Zealand, dated 9 May 2005.
$\bullet$ Explanatory Statement and Notes and Notice of General Meeting to HJB shareholders to consider the Transaction

Valuation Methodology

In its Practice Note 43, ASIC outlines various methods of valuation that it expects an independent expert to consider in preparing his valuation including the following commonly applied valuation methods:

Capitalisation of future maintainable earnings
Discounting of projected cash flows
Net tangible asset value on a going concern basis ۰
Reference to quoted market price

Each of these valuation methodologies can be used in different circumstances and should be selected after taking into account the circumstances of the company being valued, the nature of its operations and the business environment in which it operates.

Capitalisation of Future Maintainable Earnings

The capitalisation of future maintainable earnings method is commonly used to value companies with established and profitable operations and a history of profitability that enables an assessment of potential earnings to be made. The capitalisation of these potential or future earnings using a price earnings ratio multiple results is the basis for the valuation. The multiple reflects, inter alia, comparable business capitalisation rates, future growth prospects, business outlook and business risk. The application of this method requires:

estimation of future maintainable earnings; $\qquad \qquad \bullet$
calculation of a relevant range of p/e multiples; ۰
consideration of the level of debt; and
. allowance for the value of any surplus assets and liabilities.

Discounting of Projected Cash Flows

Discounted Cash Flow ("DCF") methodology involves valuing the net present value of a business's future cash flows using an appropriate discount rate. It requires an analysis of future cash flows discounted at a rate that recognises an opportunity cost of capital and reflecting an expected rate of return that investors can obtain from investments having similar risks. A terminal value is placed on the business at the end of the cash flow period and this value is also discounted to a present value.

This valuation method is appropriate for businesses or projects with finite lives, or start up/early stage projects where earnings in the first few years are expected to be negative.

Net Tangible Assets on a Going Concern Basis

The Net Tangible Asset on a Going Concern Basis ("NTA") methodology is based on valuing all assets and liabilities at market value and is usually appropriate for businesses where the majority of assets consist of cash or passive or non-trading assets. This method ignores the ability of the business' asset basis to generate ongoing future earnings at a level sufficient to justify a value in excess of its assets in an orderly realisation.

Quoted Market Price

For listed companies, the market price at which the shares have been traded on the ASX is considered to be an indication of the value of the company as the market price is assumed to incorporate the effect of the publicly available information on the company, its prospects, future earnings and risk.

Description of Listed Comparable Companies

A brief description of the Australian listed companies that have operations comparable to the Business which is outlined in Section 11 of this report is provided below.

Candle Australian Limited ("CND"*)

CND was listed on ASX in 1997 and is a specialist provider of recruitment services to the information communications and technology, banking, finance, insurance, accounting, government and business support sectors. CND operates through 3 divisions: Information Communications and Technology, Banking and Finance and Business Support and they supply skilled professionals and support staff to businesses and government in Australia and New Zealand. It employs over 200 staff through 14 offices in Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra in Australia and Auckland and Wellington in New Zealand.

CND's market capitalisation is approximately A\$93 million.

Integrated Group Limited ("IWF"*)

IWF listed on ASX in 1999 and is Australia's second largest listed staffing company. Its principal activities are the recruitment and supply of permanent and temporary personnel to the industrial and commercial sectors. A larger part of their operations providing, approximately 70% of their revenue, relates to these activities. The remaining 30% is labour related in marine and maintenance areas.

IWF's market capitalisation is approximately A\$96 million.

Catalyst Recruitment Systems Limited ("CRU"*)

CRU listed on ASX in 1999 and has made 7 acquisitions of recruitment businesses since 2001. It specialises in recruitment services to industrial and commercial sectors, executive government and call centres.

The company has offices in all Australian mainland states.

CRU's market capitalisation is approximately A\$32 million.

Ambition Group Limited ("AMB"*)

AMB listed on ASX in 1999 and is a provider of recruitment services to the accounting, banking and finance, information technology and marketing sectors. It has offices in Sydney, Parramatta, Melbourne, Brisbane, Hong Kong and Singapore.

AMB's market capitalisation is approximately A\$11 million.

* - ASX code

Summary of Comparable Listed Companies

The share market valuation of Australia's listed companies provides supporting evidence for an appropriate earnings multiple for the Business. The share prices were the closing share prices as at 30 June 2005. The earnings used for all companies, except for Ambition Group Limited, were the latest published trading figures which were for the 6 months to 31 December 2004. These were annualised (multiplied by 2) and in case of Candle Australia Limited adjusted for a subsequent profit upgrade. The earnings used for the Ambition Group Limited were for the 12 months to 31 December 2004.

The Enterprise Value is the "ungeared" value of the business. It equals the market capitalisation of the company plus any borrowings. The EBITA multiple is derived by dividing the Enterprise Value by EBITA.

	Date of Listing	Issue Price A\$	Share Price AS	Market Capitalisation AS'000	Enterprise Value A\$'000	EBITA A\$'000	EBITA Multiple
Candle Australia Limited (CND)	January 1997	1.00	2.05	93,047	98.317
						11,390	8.63
Integrated Group Limited (IWF)	October 1999	1.00	1.36	95,842	128,531	19,208	6.69
Catalyst Recruitment
Systems Limited (CRU)	June 1999	1.10	0.71
				31,643	36,744	4,794	7.66
Ambition Group
Limited (AMB)	November 1999	1.00	0.54	11,057	13,598	815	16.68
Average							9.92.
Weighted Average							8.00

Declarations, Qualifications, Disclosure of Interest and Consents

This appendix forms part of and should be read in conjunction with the report of HLB Mann Judd Corporate (NSW) Pty Limited ("HMJC"), dated 22 July 2005, relating to the Resolutions which will be dealt with at the General Meeting of HJB to be held on or about 29 August 2005.

Purpose and Scope of Report

HMJC's report has been prepared at the request of the directors of HJB. The report has been prepared for the purpose of providing information to the shareholders who are entitled to vote at the General Meeting. It is not intended that this report be used for any purpose other than to accompany the Notice of General Meeting and Explanatory Statements and Notes to be sent to the shareholders of HJB. In particular, it is not intended that this report should be used for any purpose other than as an expression of HMJC's opinion as to fairness and reasonableness of Resolutions with respect to the shareholders entitled to vote on the resolutions.

HMJC's report is limited to the matters contained therein and is not to be read as extending by implication or otherwise to any matter not referred to in the report.

The statements and opinions contained in this report are given in good faith. In the preparation of this report HMJC has relied, in part, upon information provided by HJB, and OCG which information HMJC believes, on reasonable grounds, to be reliable, complete and not misleading. It is not implied, and should not be construed, that we have verified the information and records made available to us. The information provided was evaluated through analysis, enquiry and review for the purpose of forming an opinion on the Resolutions. We do not express any opinion on the financial or other information to which our report refers.

An important component of the information used in forming an opinion of the nature expressed in this report is the judgment and views of management and its advisers. This information was also evaluated through analysis, enquiry and review to the extent practical, however, such information by its nature is often incapable of verification. HMJC, or any person or entity associated with it, will not accept liability for any losses, damages, costs, expenses or claims whatsoever arising out of, or connected with, errors in our report that are caused by, or in any way connected with or related to, the provision to us of false, misleading, deceptive or incomplete information or documentation, or the acts or omissions of any other person.

Our opinion is based upon economic, market and other conditions at the date of this report. Such conditions can change significantly, even over relatively short periods of time.

A draft of this report was given to HJB for purposes of review and confirmation or correction of factual matters. That review did not result in any change to judgmental content of the report.

Indemnity

HJB has agreed that, to the extent permitted by law, HJB will indemnify HMJC and its employees and officers in respect of any liability suffered or incurred as a result of or arising out of the preparation of the report if, and to the extent that, such liability arises by reason of reliance on information provided by HJB, or the failure of HJB to provide relevant material information. This indemnity will not apply in respect of any conduct on HMJC's part involving a lack of good faith, due care, negligence, wilful misconduct or breach of law.

HJB has also agreed to indemnify HMJC and its employees and officers for time spent and reasonable legal costs and expenses incurred in relation to any inquiry or proceeding initiated by any person except where HMJC or its employees or officers are found liable for or guilty of conduct involving a lack of good faith, due care, negligence, wilful misconduct or breach of law, in which case HMJC shall bear such costs.

Qualifications of the Expert

HMJC is the corporate advisory arm of HLB Mann Judd (NSW Partnership) and is wholly owned by the partners of the firm. HMJC holds an Australian Financial Services licence (number 253134). Reference should be made to HMJC's Financial Services Guide dated 22 July 2005.

HLB Mann Judd is a national association of independent accounting firms. HLB Mann Judd (NSW Partnership) is a member of HLB International, a worldwide organisation of accounting firms and business advisers.

Ian Haigh, FCA, and Philip Meade, B.Comm, CA, are each directors and authorised representatives of HMJC. They are senior partners of HLB Mann Judd and both have had extensive experience in the provision of corporate financial advice, including the preparation of independent expert reports on valuations, mergers and acquisitions.

Disclosure of Interest

HMJC and any person associated with it do not have any pecuniary or other interest in the transaction that gives rise to the Resolutions, other than to the extent of fees receivable for the preparation of this report. Such fees are not contingent upon the outcome of the meeting of shareholders called to consider the Resolutions. Neither HMJC nor the signatories to this report, Ian Haigh and Philip Meade, have any pecuniary or other interest that could reasonably be regarded as being capable of affecting their ability to form an unbiased opinion in relation to the Resolutions.

To the best of our knowledge and belief, neither HMJC, HLB Mann Judd (NSW Partnership), nor the signatories of this report, Ian Haigh and Philip Meade, have or have had any relationship with HJB or any person associated therewith in relation to the transaction that gives rise to the Resolutions other than in connection with the preparation of this report.

Consents

HMJC consents to the issue of this report in the form and content in which it is included with the Explanatory Statement and Notes be sent to shareholders of HJB. Neither the whole nor any part of this report nor any reference thereto may be included in any other document without the prior written consent of HMJC as to the form and context in which it appears.