MEEKA METALS LIMITED — Proxy Solicitation & Information Statement 2006

Jan 30, 2006

LA LA LA LA CARDINA DE LA LA LA LA LA LA LA LA LA LA LA LA LA

a a bha bha tha an sheachan sea

• Salaman manang
• Tin der Noevalle van de Broeke de
• TAN DELEN EN EK GENNANDER BIBLIOT
• a sa basan na mga mag

MARIANIA MARI Hann Großer an Britann DA KAMBULAN MANGKAT KAMPUNYAN MANGKAT KANG KALENDAR DAN MANGKAT		DATA SANG KABUPATEN MENGENUSIAN

PROXY INFORMATION

The proxy form must be completed and lodged with the Company Secretary at:

Integrated Investment Group Limited

Level 11, 54 Miller Street North Sydney NSW 2060 Phone (02) 8913 6046 Facsimile (02) 9929 8591

not less than two (2) clear business days (48 hours) before the time appointed for holding of the Extraordinary General Meeting.

A member entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint not more than two (2) proxies to attend and vote in his or her stead. A proxy need not be a member of the Company.

If a member wishes to direct a proxy how to vote, an "X" should be inserted in the appropriate space against each resolution to be proposed at the meeting, otherwise the proxy may vote as he or she thinks fit or may abstain from voting.

The form must be signed personally by the member or by his or her attorney. A corporation must sign under its Constitution.

Where the form is signed by an attorney, a copy of the relative Power of Attorney, if not previously exhibited to the Company, must be produced at the address stated above not less than forty eight (48) hours before the time appointed for holding the Extraordinary General Meeting.

Documents may be lodged by post or facsimile to the address or facsimile number stated above.

PROXY FORM

The Secretary,
Integrated Investment Group Limited (ACN 080 939 135)
Level 11, 54 Miller Street
North Sydney NSW 2060
Facsimile (02) 9929 8591
I (the undersigned)……………… ………………………………………………………………………………
	(FULL NAME) (ADDRESS)
being a member of Integrated Investment Group Limited ACN 080 939 135 hereby appoint:
(FULL NAME)	(ADDRESS)
or, failing him, the Chairman of the Meeting as my proxy to attend and exercise % of my votes on my behalf at the Extraordinary General Meeting of the Company to be held on 28 February 2006 and at any adjournment thereof.
The Chairman advises that it is his intention to vote in favour of the Resolutions as set out in the Notice of Meeting in respect of any undirected proxies which may be granted in favour of the Chairman. This proxy is to be used as follows in relation to the resolutions to be proposed at the meeting:
DECALITIAN	c^o	AC AINICT	ADCTAIN

	RESOLUTION	FOR	AGAINST	ABSTAIN
1.	Sale of Shares in Photolibrary Pty Limited
2.	Capital Return
3.	Adoption of Remuneration Report

NOTE: IF YOU HAVE NOT COMPLETED VOTING INSTRUCTIONS - PLEASE READ BELOW

If the Chair of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of resolution, please place a mark in the box $\Box$

By marking this box, you acknowledge that the Chair of the meeting may exercise your proxy even if he has an interest in the outcome of the resolutions and that votes cast by the Chair for those resolutions other than as a proxy holder will be disregarded because of that interest.

If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not caste your votes on the resolutions and your votes will not be counted in calculating the required majority if a pill is called on the resolution.

If two proxies are being appointed, the proportion of voting rights this proxy is appointed to represent is . . . . . . . . . . . . . . . . . . .

SIGNATURE OF SHAREHOLDERS - THIS MUST BE COMPLETED
Shareholder 1 (Individual)		Joint Shareholder 2 (Individual)		Joint Shareholder 3 (Individual)

Sole Director and Sole Company Secretary

Director/Company Secretary (Delete One)

Director

This form should be signed by the shareholder. If a joint holding, either shareholder may sign. If signed by the shareholder'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 shareholder's constitution and the Corporations Act.

INTEGRATED INVESTMENT GROUP LIMITED ACN 080 939 135

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notice is given that an Extraordinary General Meeting of the Company will be held on 28 February 2006 at 10.00 am (Sydney time) at York Conference and Function Centre, Level 2, 99 York St, Sydney in the State of New South Wales.

AGENDA

$1₁$ Sale of Shares in Photolibrary Pty Limited

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

"THAT for the purpose of Australian Stock Exchange Listing Rule 11.2, approval is given for the disposal by the Company of all of its Shares (representing 46.51% of the issued share capital) in Photolibrary Pty Limited to the following purchasers: Mulmore Investments Pty Limited, Denego Pty Limited, Solidarity Nominees Pty Limited, Fabemu No2 Pty Ltd, Multizone Development Pty Limited, Coolbrun Pty Limited, Sue Hadley, Christine Penklis, Charles Franklin Plumridge, Dalbrun Pty Ltd, John Douglas Schahinger & Elizabeth Mary Frank atf Schank Superannuation Fund, JB & HC Pond Investments Pty Ltd, Victoria Annoscia-Thornley and Chris Zwolinski, for an aggregate consideration of \$3,960,000 pursuant to a Share Sale Agreement dated 15th December 2005 (which Share Sale Agreement is conditional, amongst other things, on approval by Shareholders of this Company). This resolution is subject to and conditional upon the passing of Resolution 2."

Voting Exclusion Statement

The Company will disregard any votes cast in respect of the above resolution by a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed, and any associates of those persons. However the Company need not disregard a vote if it:

• It is caste by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form.
• It is caste 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.

$2.$ Capital Return

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

"THAT subject to and conditional upon the passing of Resolution 1, the share capital of the Company be reduced by way of an equal reduction by an amount of \$3,588,516 by paying an amount of 2.9 cents per Share to all of the Shareholders of the Company".

3. Remuneration Report

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

"THAT the Remuneration Report of the Company for the financial year ended 30 June 2005 is adopted".

Dated this 31st day of January 2006

BY ORDER OF THE BOARD

John Smith Company Secretary

INTEGRATED INVESTMENT GROUP LIMITED A.C.N 080 939 135

Explanatory Memorandum

Introduction

Transaction Overview

The Resolutions to be submitted at the Extraordinary General Meeting convened by the accompanving Notice of Meeting concern:

• The sale of shares held by Integrated Investment Group in Photolibrary; $(a)$
• $(b)$ The approval of a return of capital of 2.9 cents per share to the shareholders of Integrated Investment Group. Despite the return of capital IIG shareholders will retain their existing shares in IIG;
• $(c)$ The approval of the Remuneration Report of the Company for the financial year ended 30 June 2005.

On 15 December 2005 the Company entered into a Share Sale Agreement, to sell all of the issued shares it owns in Photolibrary. The purchasers are identified on page three of this document. It is a condition precedent of the sale of Photolibrary that Shareholders of Integrated Investment Group approve Resolutions 1& 2 that are the subject of this Notice of Meeting. Resolutions 1 & 2 of the Notice of Meeting are interdependent. This means that those Resolutions will not be implemented by the Company unless both of those Resolutions are approved by the Shareholders. The other Resolution, namely Resolution 3, is not relevant to the completion of the sale of Photolibrary shares, and will be implemented by the Company in any event. All of the above resolutions are ordinary resolutions.

The only activity of Integrated Investment Group is its investment in Photolibrary. Integrated Investment Group owns 16,805,038 ordinary shares in Photolibrary. This represents 46.7% of that company. The current shareholders of Photolibrary (other than IIG) and certain others have agreed to purchase the shares held by Integrated Investment Group for a total consideration of \$3.96 million.

It is proposed that all of these funds, less costs, future working capital requirements and repayment of remaining liabilities, be returned to shareholders by way of a capital return following the receipt of proceeds of the sale. Accordingly, the share capital of IIG will be reduced by way of an equal reduction of capital by an amount of \$3,588,516 by paying an amount of \$0.029 per Share to all of the Shareholders of IIG.

Further details of the sale of Photolibrary and the proposed reduction of capital are contained in this Explanatory Memorandum which is also accompanied by the enclosed Independent Expert's Report.

Important Dates for Shareholders

Shareholder meeting	Tuesday February 28, 2006
Trading commences in IIG Shares on an "Ex Return of Capital" basis	Wednesday March 1, 2006
Record date for determining Shareholders entitled to participate in capital return	Tuesday March 7, 2006
Trading in IIG Shares suspended from close of business	Tuesday March 7, 2006
Payment of Reduction of Capital to Shareholders	Monday March 20, 2006

Advantages of the Photolibrary divestment

Following is a summary of certain of the advantages of Integrated Investment Group proceeding with the Photolibrary divestment and capital reduction:

• 1. Stops further dilution of the Photolibrary investment held by Integrated Investment Group. There is every indication that Photolibrary will continue to require investment via cash injections to fund its acquisition strategy. It is the view of the Directors based on the company's stock price, investor interest and market valuation, that the market is unlikely to support further capital injection in Integrated Investment Group for investment in Photolibrary.
• 1. Provides certainty of return. Shareholders of Photolibrary will receive all the funds from the sale, less costs, less future working capital requirements and repayment of remaining liabilities, as Integrated Investment Group has no other business assets or interests or investments in which to invest the proceeds. The Board will actively investigate other opportunities in the future and provide shareholders with further information, as and when this is available.
• 1. The transaction price offered exceeds the low value and meets the high value assessment of Photolibrary in the Independent Expert's Report. This Report which is attached shows:

	Low Value	High Value
Shares in Photolibrary	\$3,174,326	\$3,910,296

The price per share payable to Integrated Investment Group for its shares in 4. Photolibrary of 23.56 cents per share is higher than the price of 18.35 cents per share paid for 46.46% of the Shares in Photolibrary on 18 August 2005.

Additional advantages of the Photolibrary divestment and other information relevant to the Photolibrary divestment are explained in the Independent Expert's Report.

Suspension of Trading in IIG Shares

ASX has informed the Company that if the Transaction is approved then trading in the Company's shares will be suspended from the close of business on the fifth business day following such approval. The Company's shares will be reinstated by ASX once the Company has satisfied the requirements of Chapters 1 and 2 of the Listing Rules which will ordinarily include:

• ↑ the issue by the Company of a Prospectus which complies with the Corporations Act including information as to the Company's proposed activities;
• ↑ meeting ASX Listing Rules "spread" requirements of at least 500 shareholders each with a parcel having a value of at least \$2,000.

As indicated elsewhere in this Explanatory Memorandum, the Board intends to investigate other opportunities and will provide shareholders with further information as and when this is available.

Information Relevant to each of the Resolutions

Ordinary Resolution 1 - Sale of Shares in Photolibrary

It is proposed to sell the 16,805,038 ordinary shares owned by Integrated Investment Group to Mulmore Investments Pty Ltd; Denego Pty Ltd; Solidarity Nominees Pty Ltd; Fabemu No 2 Pty Ltd; Multizone Development Pty Limited; Coolbrun Pty Ltd; Sue Hadley, Christine Penklis; Jon Douglas Schahinger and Elizabeth Mary Frank atf Schank Superannuation Fund; Dalbrun Pty Ltd; JC and HC Pond Investments Pty Ltd; Vittoria Annoscia-Thornley; Chris Zwolinski; Charles Plumridge.

The consideration for this sale will be \$3,960,000 pursuant to a Share Sale Agreement dated 15 December 2005.

As required under Australian Stock Exchange Listing Rule, 11.2 approval is required from shareholders to dispose of these shares. Please note that Resolution 1 is conditional on the passing of Resolution 2.

The main components of the Proposed Transaction are:

• 1. Purchase consideration of \$3.96 million;
• 1. Consideration payable in cash;
• 1. Consideration payable on completion date;
• 1. Return of Capital to shareholders of Integrated Investment Group shortly after completion date;
• 1. Approval by the Shareholders at an Extraordinary General Meeting in accordance with Corporations Act and the Listing Rules of the Australian Stock Exchange;

Overview of Integrated Investment Group

Integrated Investment Group is an Australian listed investment company, which has invested in various companies since inception. In the last 18 months, the Company has divested itself of all investments except it's holding in Photolibrary. Photolibrary is an independent photo library providing content to advertisers, agencies, publishers and others.

Interests of Executive Officers

Executive Officers of Photolibrary, who are also Directors and shareholders of Integrated Investment Group, have the following interests in Photolibrary:

Name	Interest
Timothy John Moore*	3,900,000 nil paid, non participating, shares
Glenn Bruce Parker	500,000 nil paid, non participating shares
Timothy John Moore*	Entitlement to 2,328,688 executive options
Glenn Bruce Parker	Entitlement to 3,175,483 executive options

* Interest held by Darjeeling Pty Limited ACN 003 971 551 as trustee for Inverell Trust

Independent Expert's Report

The Board of the Company has an obligation to its Shareholders to provide an analysis of Resolution 1. The Board has appointed Riad Tayeh of de Vries Tayeh, Chartered Accountants as the independent expert for the purpose of providing Shareholders with an expert opinion on the fairness and reasonableness of the transaction to the Shareholders.

What is fair and reasonable must be judged by the Independent Expert in all the circumstances of the proposal. This means taking into account the likely advantages to the existing Shareholders if the proposal is approved, and comparing them with the advantages and disadvantages to those Shareholders if it is not approved.

On the basis of the matters discussed in the Independent Expert's Report, the Independent Expert has formed the opinion that the proposed Divestment is both fair and reasonable to the Shareholders of IIG.

Shareholders should read the Independent Expert's Report carefully and in full.

Interdependence

Resolution 1 is proposed for the purpose of obtaining the approval of Shareholders for the purposes of Listing Rule 11.2. Resolution 1 is only effective if Resolution 2 is passed.

Advantages to the Passing of Resolution 1

Resolution 1, if passed, will permit the Company to divest all of its Photolibrary shares for a consideration of \$3,960,000.

The proposed divestment is consistent with the objectives of the Company, which is to protect and maximise returns to investors. Unless the Shareholders agree to Resolution 1, IIG is likely to suffer a dilution of its investment in Photolibrary and will not be able to re-build value for the Shareholders.

Additional advantages of the Photolibrary divestment are explained in the Independent Expert's Report. The benefits of the divestment are also identified in the Introduction section of this Explanatory Memorandum.

Disadvantages to the Passing of Resolution 1

The sale of Photolibrary shares will mean that Integrated Investment Group disposes of its core business activity. However, the Board will actively investigate other opportunities, worthy of investment for IIG and provide shareholders with further information as and when this is available.

Voting Exclusion Statement

A voting exclusion statement is set out in the Notice of Meeting. This requires the Company to disregard any votes cast on Resolution 1 by or on behalf of any of the purchasers of the Photolibrary Shares or any associates of those persons. The names of those purchasers are set out in Resolution 1.

Ordinary Resolution 2 - Return of Capital

As required by Section 256C of the Corporations Act, Shareholders are asked to approve the Return of Capital received as proceeds from the Divestment Transaction and the resulting reduction in share capital and return of proceeds to shareholders. The transaction will result in proceeds as follows:

Total Consideration	\$3,960,000
Less Current Liabilities	\$125,000
Less Likely Costs of Transaction	\$60,000
Less Capital to be retained by IIG	\$186,484
TOTAL AVAILABLE FOR RETURN	\$3,588,516

The resulting change in the share capital is as follows:

Capital To Be Returned	\$3,588,516
Number of Shares on Issue	123,741,945
Proposed Capital Return per Share	2.9 cents

Interdependence

Resolution 2 is proposed for the purpose of obtaining the approval of Shareholders for the purposes of Section 256C of the Corporations Act. Resolution 2 is conditional on the passing of Resolution 1.

Capital Return

The Company's auditor BCS Lamb and Ellis have advised that in their opinion the return of capital is likely to be treated as a capital event, rather than income. However, this is general advice only and the Board strongly recommends that every shareholder obtain their own independent tax advice and confirm their own individual position.

A letter containing this opinion, from the BCS Lamb and Ellis Chartered Accountants is attached to this Explanatory Memorandum.

Advantages to the Passing of Resolution 2

The proposed capital return is consistent with the objectives of the Company, which is to protect individual shareholders capital. Under current circumstances, the Directors believe the best recipients of the surplus funds are the Shareholders.

It is important for Shareholders to note that the capital reduction does not result in a divestment of shares in IIG. Each shareholder will still hold the same number of shares in IIG after the capital reduction and can benefit in the future in any increase in the value of IIG via other investments that it may make.

Disadvantages to the Passing of Resolution 2

The Company's capital base will be significantly reduced and returned to Shareholders. $\mathbb{f}$ the Company proposes further investments requiring funding, the Company will need to examine funding requirements at that time.

Ordinary Resolution 3 - Adoption of Remuneration Report for Financial Year End 2005

The Shareholders are asked to approve the Remuneration Report of the Company for the financial year ended 30 June 2005.

In accordance with section 250R of the Corporations Act, Resolution 3 will be advisory only and will not bind the directors or the Company.

At the companies Annual General Meeting on 30 November 2005 this resolution was passed unanimously. However, this resolution was inadvertently excluded from the Notice of Meeting. Accordingly this resolution is re-tabled for voting on by shareholders.

Resolution 3, if passed, will ensure that the Company complies with the formal requirements of the Corporations Act.

Recommendation of the Board

The approval of Ordinary Resolutions 1, 2 and 3 are recommended by the Board of IIG.

The reasons for this recommendation are as follows:

• 1. The consideration offered for the shares is fair and the Proposed Transaction is reasonable, based on both the Independent Experts Report and having regard to the last independent transaction involving a disposal of Shares in Photolibrary on 18 August 2005.
• 1. Photolibrary intends to continue to acquire other companies and engage in organic growth. These activities will require additional capital to be raised. It is unlikely at current market valuation that Integrated Investment Group will be able to raise additional capital to participate in future capital raisings and so is likely to suffer dilution of its interests in Photolibrary. The ability of Directors to increase business value in Integrated Investment Group is tied to its stake in Photolibrary. Increasing value for shareholders in this scenario is highly unlikely.
• 1. As Integrated Investment Group has no other current activities, requiring funding, the Directors believe it is in the best interests of Shareholders to return surplus capital to Shareholders.

Glossary

In this Explanatory Memorandum and the Notice of Meeting:

ASIC means the Australian Securities & Investments Commission.

ASX means Australian Stock Exchange Limited.

Board means the board of directors of the Company.

Capital Return means reducing the Share Capital of the Company by 2.9 cents per Share to return a total of \$3,588,516.00 for Shareholders.

Company or Integrated Investment Group or IIG means Integrated Investment Group Limited ACN 080 939 135.

Completion means completion of the acquisition of the Photolibrary shares held by the Company in accordance with the terms of the Share Sale Agreement.

Consideration means the cash that Integrated Investment Group will receive under the Share Sale Agreement.

Constitution means the current constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

Divestment means the sale of shares in Photolibrary in terms of the Share Sale Agreement.

Explanatory Memorandum means this Explanatory Memorandum that accompanies and forms part of the Notice of Meeting

Extraordinary General Meeting means the general meeting of the Company to be convened by the Notice of Meeting.

Independent Expert means de Vries Tayeh.

Independent Expert's Report means the independent expert's report prepared by the Independent expert, as set out in the Explanatory Memorandum.

Listing Rules means the Official Listing Rules of the ASX.

Notice of Meeting means the notice of meeting dated 31st January 2006 which this Explanatory Memorandum accompanies and in which the Resolutions are set out.

Photolibrary means Photolibrary Pty Ltd ACN 088 525 077.

Resolutions means the resolutions referred to in the Notice of Meeting and Resolution means any of them, as the context requires.

Share means a fully paid ordinary share in the Company.

Shareholder or Member means a holder of Shares.

Share Sale Agreement means the agreement dated 16^th December 2005 between the Company and the Photolibrary acquirers for the divestment by the Company of all of the issued Photolibrary Shares.

Transaction means the Divestment, the Capital Return (and all other associated obligations and transactions contemplated by the Share Sale Agreement) and the Resolutions.

INTEGRATED INVESTMENT GROUP LIMITED $("IIG")$

A.C.N. 080 939 135

INDEPENDENT EXPERT'S REPORT

On the divestment of the interest held in Photolibrary Pty Limited $(^{a}PL")$

Prepared by de Vries Tayeh Chartered Accountants

19 December 2005

Level 3, 95 Macquarie Street Parramatta NSW 2150

Tel. (02) 9633-3333 Fax. (02) 9633-3040

www.devriestayeh.com.au

TABLE OF CONTENTS

Key Conclusions 1.1 1.2 Summary of Opinion PURPOSE OF REPORT 2 2.1 Scope of Report 2.2 Basis of Evaluation Sources of Information 2.3 Limitations and Reliance on Information 2.4 3 THE TRANSACTION Key Terms & Components of Transaction 3.1 Parties to the Transaction 3.2 Financial Effects of Transaction 3.3 4 BUSINESS OVERVIEWS Integrated Investment Group Limited 4.1 IIG Financial Performance and Position 4.1.1 4.1.2 IIG Shareholders	EXECUTIVE SUMMARY
IIG Background and Industry Outlook 4.2
4.3 Photolibrary Division
4.3.1 Background Information
Photolibrary Financial Performance and Position 4.3.2
Industry Outlook 4.3.3
4.3.4 Business Prospects
ASSESSMENT APPROACH 5
ASIC Policy Statement 75 - "Fair and Reasonable" 5.1
ASIC Practice Note 43 - "Valuation Methodologies" 5.2
5.3 Valuation Approaches
Asset Approach 5.3.1
5.3.2 Market Approach
5.3.3 16 Income Approach
5.3.4 Preferred Methodology
Assessment of Consideration 5.4
Assessment of the Value of Photolibrary 5.5
5.5.1 Asset Based Method
5.5.2 Market Value Method
CONSIDERATIONS AS TO WHETHER TO VOTE IN FAVOUR OF THE SALE 19 6
Ability to Fund Expansion of Photolibrary 6.1
Debt Funding 6.1.1
6.1.2 Equity Funding
Net Tangible Asset Position 6.2
6.3 Gearing/Debt Levels
CONCLUSION AND OPINION 7

Appendix A - Qualifications, Declarations, Disclaimer and Consent

EXECUTIVE SUMMARY 1

1.1 Key Conclusions

Under the terms of the Transaction. IIG are offered an amount of \$3.96 million for their 46.51% holding in Photolibrary Pty Limited.

For the purpose of assessing the consideration being paid to IIG, we have estimated the value of the shares in Photolibrary Pty Limited to be as follows:

	Extragandus
Shares in Photolibrary Pty Limited	.326
		\$3.910.296

For the reasons outlined below in this Report, we have also assessed the Transaction as being reasonable.

1.2 Summary of Opinion

This Independent Expert's Report ("IER") has been prepared at the request of the board of IIG to provide advice to shareholders with regards to the sale by IIG of its interest in Photolibrary Pty Limited ("PL") ("the Transaction").

In our opinion, the consideration offered for the shares is fair and the Transaction is reasonable.

Before taking any action, shareholders should consider the whole of this IER. Shareholders' decisions as to whether to vote in favour of the return of capital may be influenced by the their particular circumstances and if shareholders are in any doubt, they should consult an independent adviser.

PURPOSE OF REPORT 2

2.1 Scope of Report

The board of IIG has determined to dispose of its interest in Photolibrary Pty Limited.

IIG has announced the following transactions:

• Sale of shares held in Photolibrary Pty Limited ("PL"); and
• Return of capital to shareholders to be funded from the consideration.

The shares held in PL constitute the main undertaking of IIG. ASX Listing Rule 11.2 requires IIG to get the approval of holders of its ordinary securities to the Transaction. Listing Rule 11.2 also specifies that IIG must not enter into an agreement to dispose of its main undertaking unless the agreement is conditional on the entity getting that approval.

To assist shareholders in making an informed decision, we have been appointed by the board of IIG to prepare a valuation of the shares held by IIG in PL and an assessment of the consideration offered for those shares, in the form of an Independent Expert's Report. The purpose of this report is to state whether, in the expert's opinion, the Transaction is fair and reasonable to holders of IIG's securities whose votes are not to be disregarded (i.e. not associated with the transaction).

The sale of the shares held by IIG in PL is to be considered by shareholders at an Extraordinary General Meeting of IIG. This IER considers only the transaction for the sale of the PL shares and not any other matters that may be considered by shareholders at the forthcoming meeting. Figures are quoted in Australian dollars unless otherwise stated.

The Transaction is discussed in more detail in Sections 3 to 5, and de Vries Tayeh's opinion of the Transaction is set out in Section 7.

2.2 Basis of Evaluation

In evaluating fairness and reasonableness, we have considered the requirements of the Corporations Act 2001 (Cth) and relevant Policy Statements and Practice Notes issued by the ASIC.

Policy Statement 74 provides quidelines for independent experts on how to evaluate whether or not a proposed transaction is fair and reasonable when preparing reports under Section 611. While the Transaction is not a takeover, and Policy Statement 74 is therefore not applicable, it is nevertheless useful in determining acceptable definitions of key terms. Policy Statement 74 states that the evaluation should:

• Be judged in all circumstances of the proposed transaction in respect of value;
• Compare the likely advantages and disadvantages to the shareholders if the proposed transaction is agreed to, with the advantages and disadvantages to those shareholders if it is not; and
• Consider the value of the company if the proposed transaction is approved but this should not be the sole factor in evaluating the proposal.

The term "fair and reasonable" has no legal definition. Policy Statement 75 attempts to provide a precise definition of fair and reasonable. Fairness involves a comparison of the value of the consideration being offered with the full value that may be attributed to the securities, which are the subject of the offer, based on the value of the underlying businesses, assets and liabilities. An assessment of reasonableness involves an analysis of other nonfinancial factors that may affect shareholders accepting the transaction.

For the purpose of this report, de Vries Tayeh has treated "fair" and "reasonable" as separate concepts in accordance with Policy Statement 75. A "fair" transaction is one in which the consideration being paid per share under the Transaction is greater than or equal to the value of each of those shares, and in which the value of those shares fully reflects the value of the company's assets and liabilities.

As required by Policy Statement 74, the concept of fair and reasonable for non-associated shareholders has been judged in all the circumstances of the proposal.

In forming our opinion on whether or not the Transaction is fair and reasonable for IIG's nonassociated shareholders we have:

• Compared the fair market value of PL with the value ascribed by the market in IIG securities; and
• Compared the likely advantages and disadvantages of the Transaction.

For the purposes of this Report, we have assumed that the shares in PL will be divested in terms of the Agreement.

2.3 Sources of Information

In preparing this IER, de Vries Tayeh has had access to:

Publicly Available Information:

• Audited financial statements for IIG for the years ended 30 June 2004 and 2005;
• Half Yearly Reports for IIG for the six months ended 31 December 2003 and 2004:
• Industry Data and Reports;
• Recent press articles on IIG; and
• ASX Company Announcements and Market Releases

Non-Publicly Available Information:

• Internal management reports;
• Board papers of IIG;
• Discussions with the Chairman, Managing Director and members of management of $\mathsf{IIG}$ :
• Audited financial statements for PL for the year ended 30 June 2005;

We have not undertaken an audit or verification of the data provided to us and have relied upon that data.

2.4 Limitations and Reliance on Information

The opinion of de Vries Tayeh expressed in this IER is based on economic, sharemarket, business and trading conditions prevailing at the date of the announcement and any material subsequent events to the date of this Report. These conditions can change significantly over relatively short periods. If they did change materially, the valuation and opinion could vary significantly. However, de Vries Tayeh has no obligation or undertaking to advise any person of any change in circumstances which come to its attention after the date of this report or to review, revise or update its Report or opinion.

This Report is based upon financial and other information provided by IIG and its board and advisers. de Vries Tayeh has considered and relied upon this information and has no reason to believe that any material facts have been withheld. The information provided to de Vries Tayeh has been evaluated through analysis, inquiry and review for the purposes of forming an opinion as to whether the Transaction is fair and reasonable. However, de Vries Tayeh does not warrant that its inquiries have identified or verified all of the matters that an audit, extensive examination or due diligence investigation might disclose.

An important part of the information used in forming an opinion as to fairness and reasonableness is comprised of the opinions and judgement of management. This type of information was evaluated through analysis, inquiry and review. However, such information is often not capable of external verification or validation and has not been independently verified.

To the extent that there are legal issues relating to assets, properties, or business interests or issues relating to compliance with applicable laws, regulations, and policies, de Vries Tayeh:

• Assumes no responsibility and offers no legal opinion or interpretation on any issue; $\bullet$ and
• Has generally assumed that matters such as title, compliance with laws and regulations and contracts in place are in good standing and will remain so and that there are no legal proceedings, other than as publicly disclosed.

3 THE TRANSACTION

3.1 Key Terms & Components of Transaction

The Explanatory Memorandum ("EM") sent to shareholders outlines the key terms and conditions of the sale of the PL shares. The Completion date of the transaction is expected to be 10 days after fulfillment or deemed fulfillment of certain conditions. Fulfillment is to be no later than 28 February 2006 or such later date to which the parties may agree in writing, and Completion is therefore due by 10 March 2006.

The significant conditions of the sale agreement can be summarised as:

• Approval of shareholders of IIG in general meeting in accordance with the $\bullet$ Corporations Act and the Listing Rules of the Australian Stock Exchange, such meeting to be held no later than 28 February 2006;
• Consent being given to the sale and transfer by IIG to the purchasers of the shares, by the major shareholders of PL, pursuant to an existing shareholders' agreement in PL. That consent has been given;
• Execution of a Deed of Accession by new shareholders of PL. Those new shareholders have undertaken to execute the Deed of Accession;

The main components of the Transaction are:

• Purchase consideration of \$3.96 million;
• Consideration payable on or before completion date;
• Capital return to shareholders of IIG of approximately 3 cents per IIG share, on or shortly after completion date.

3.2 Parties to the Transaction

The shares in PL held by IIG are to be purchased by a group of entities, some of which are existing shareholders in IIG. However, their shareholding in IIG is not influential. These parties are:

Remit to Territore state	ENTRAPTED TO	EARTH DAYS Signes meet Holding meet	ES SUNT Stiric Stiller	EZOSHORING Fillet
Mulmore Investments Pty Limited	2,050,163	13.20%		$0.00\%$
Denego Pty Limited	1,025,082	6.60%		0.00%
Solidarity Nominees Pty Limited	615,049	3.96%		$0.00\%$
Fabernu No. 2 Pty Ltd	4,920,391	31.69%		$0.00\%$
Multizone Development Pty Ltd	410,032	1.13%		$0.00\%$
Coolbrun Pty Limited	1,332,606	8.58%		0.00%
Sue Hadley	2,870,229	18.48%		0.00%
Christine Penklis	615,049	3.96%		$0.00\%$
JD Schahinger & EM Frank atf Schank Superannuation Fund	615,049	3.96%		0.00%
Dalbrun Pty Ltd	37,682	0.24%		$0.00\%$
JC & HC Pond Investments Pty Ltd	568,450	1.57%	1,991,288	1.61%
Vittoria Annoscia-Thornley	507,114	1.40%	2,766,657	2.23%
Chris Zwolinski	1,162,779	3.22%	6,343,760	5.13%
Charles Plumridge	75,363	0.49%
	16,805,038	98.49%	11,101,705	8.97%

3.3 Financial Effects of Transaction

Given the assets to be released from IIG and consideration to be received, the financial effects of the sale can be demonstrated in the following table. The estimated profit from sale equates to \$486,000 (after tax) and can be broken down via disposition of assets as follows:

Salab Shakeshi amboliya ya katika m Calananan ashina asala anka Ile
		Note (\$'000s)	(\$000s)
lSale Consideration			3,960
Shares in Photolibrary Pty Ltd at cost		(8, 414)
Provision for write down of investment	2	5,000	(3, 414)
			546
Expenses associated with sale			60
Capital Profit on Sale (before tax)			486
Less: Deduction for capital loss on
shares previously written off	2		(486)
Taxable Profit			0
Tax Payable at Corporate Rate 30%			0
Profit on Sale (after tax)			486
Motes: 1. Cost of acquiring shares as per 2005 audited accounts 2. Writedown expensed in 2005 financial year, but not tax deductible

IIG expects that the profit from the sale of the PL shares would be offset against existing capital losses and therefore no capital gains tax would be payable. The after tax profit to be recorded on the sale will be approximately \$486,000.

BUSINESS OVERVIEWS 4

4.1 Integrated Investment Group Limited

Integrated Investment Group Limited (IIG), formerly known as Captech Group Limited, is an Australian investment company that that invested in the areas of media, travel, biotechnology, property, corporate finance and corporate advisory. IIG first listed on the Australian Stock Exchange in December 1999.

In the last 18 months the company has divested itself of all significant business investments except its shareholding in PL. PL operates Australia's largest independent photo library servicing publishers, advertising agencies and multi-nationals though its wholly or partly owned international subsidiaries in Australia, London, Oxford UK, Malaysia, Singapore, Thailand and New Zealand.

4.1.1 IIG Financial Performance and Position

For the purposes of this IER, it is appropriate to consider IIG as comprising its Photolibrary investment as the only operating activity, as no other investments remain with IIG.
The Photolibrary investment is detailed fur

	The financial performance of IIG can be summarised as follows:
--	----------------------------------------------------------------

Inchence Investment Cromp Amired
		Year Ended Year Ended 30-Jun-05 30-Jun-04
	Economic Entity	Parent	Economic Entity	Parent
Total Revenue	$(\$'000s)$ 11,892	(\$'000s) 352	(\$'000s) 3,452	(\$'000s) 1,058
Cost of Sales	(5,690)	0	(1, 194)	0
Gross Margin	6,202	352	2,258	1,058
Expenditure	(7, 356)	(5,879)	(3,206)	(2, 553)
Earnings before Tax, Interest, Depreciation and Amortisation	(1, 154)	(5,527)	(948)	(1, 495)
Depreciation and Amortisation	(5,924)	0	(303)	0
Earnings before Interest & Tax	(7,078)	(5,527)	(1, 251)	(1,495)
Interest Expense	(40)	(40)	(300)	(226)
Profit before Tax	(7, 118)	(5, 567)	(1, 551)	(1,721)
llncome tax	438	$\theta$	0	0
Profit/(Loss) from Ordinary Activities	(6,680)	(5, 567)	(1,551)	(1, 721)
Net. attributable (profit)/loss tol outside equity interests	349	0	255	0
profit/(loss) attributable Net tol members of the parent entity	(6, 331)	(5, 567)	(1,296)	(1, 721)

As at 30 June 2005 the assets and liabilities of IIG were as follows:

Integrated Investment Cromp Umiled Statement of Amanotal Position at 30 Ama 2005
		As at	As at
		30-Jun-05	30-Jun-04
	Economic		Economic
	Entity $(\$'000s)$	Parent (\$'000s)	Entity (\$'000s)	Parent (\$'000s)
ICURRENT ASSETS
lCash assets	1,294	87	2,557	71
Receivables	2,722	2	1,548	$\overline{2}$
Investments	$\Omega$	0	525	525
lOther	343	0	176	0
ITOTAL CURRENT ASSETS	4,359	89	4,806	598
NON-CURRENT ASSETS
Investments	0	3,414	0	8,414
Property plant and equipment	647	0	447	0
Deferred tax assets	709	0	387	0
Intangible assets	7,311	0	12,235	$\Omega$
TOTAL NON-CURRENT ASSETS	8,667	3,414	13,069	8,414
ITOTAL ASSETS	13,026	3,503	17,875	9,012
CURRENT LIABILITIES
Payables	4,640	22	3,046	219
Interest-bearing liabilities	75	0	1,500	1,500
Provisions	107	0	146	0
TOTAL CURRENT LIABILITIES	4,822	22	4,692	1,719
NON-CURRENT LIABILITIES
Payables	133	0	0	$\Omega$
Interest-bearing liabilities	146	128	252	100
ITOTAL NON-CURRENT LIABILITIES	279	128	252	100
TOTAL LIABILITIES	5,101	150	4,944	1,819
NET ASSETS	7,925	3,353	12,931	7,193
EQUITY
Contributed equity	28,421	28,421	26,694	26,694
Reserves	0	(16)	51	(16)
Retained profits	(23, 345)	(25, 052)	(17, 013)	(19, 485)
Parent entity interest	5,076	3,353	9,732	7,193
Outside equity interest	2,849	0	3,199	0
TOTAL EQUITY	7,925	3,353	12,931	7,193

4.1.2 IIG Shareholders

The following table details IIG's top twenty ordinary shareholders as at 29 September 2005.

Sharahafaa	Sharcholdine	lerviciesnis, 1991 - 1998 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 19
Darjeeling Pty Ltd	19,400,000	15.68%
Kanilo Pty Ltd	15,588,777	12.60%
Ganghong Yang	15,000,000	12.12%
Ken Done & Associates Pty Ltd	8,031,316	6.49%
Done Nominees Pty Ltd	7,881,028	6.37%
Lucette Marie-Claire Moore	7,690,000	6.21%
Chris Zwolinski	6,343,760	5.13%
lGlenn Parker	3,475,000	2.81%
I E Properties Pty Ltd	2,666,670	2.16%
JB&HC Pond Investments Pty Ltd	1,991,288	1.61%
Tukdah Pty Ltd	1,488,883	1.20%
Simon Thornley	1,412,666	1.14%
Vittoria Annoscia-Thornley	1,353,991	1.09%
Ridbrook Pty Ltd	1,212,500	0.98%
The Hakuna Matata Group Pty Ltd	1,074,048	0.87%
Richard Daniell Investments Pty Ltd	1,030,000	0.83%
Lee Smash Repairs Pty Ltd	1,000,000	0.81%
Benjamin Charles Spencer	1,000,000	0.81%
Michael Stanford	1,000,000	0.81%
Clodene Pty Ltd	946,665	0.77%
Top 20 Ordinary Shareholders	99,586,592	80.48%
Total Ordinary Shares on Issue	123,741,945	100.00%

There are currently no quoted options on issue. The unquoted options on issue are as follows:

Rate of Ca	Nimerical $\blacksquare$	ELECTION DESCRIPTION	TEXPLORED Wikiped
1 May 2002	75.500	30 November 2006	0.50
1 July 2004	1,600,000	1 July 2009	0.10
28 October 2004	1,000,000	28 October 2009	0.10
26 November 2004	3,615,310	26 November 2009	0.10 S
14 October 2005	250,000	14 October 2010

We have not taken the value of these options into account as they fall outside the scope of this report.

4.2 IIG Background and Industry Outlook

IIG has had a history of investment in a number of diversified industries. It has recently divested itself of all material investments with the exception of its shareholding in PL.

During the fiscal year ended 30 June 2004, IIG broadened its investment base into the international media industry through its acquisition of 53.07% of PL. More details on the background of PL are given in Section 4.3 of this IER.

On 18 August 2005 IIG's ownership in PL was reduced to 46.51%, due to a capital raising by PL in which IIG declined to participate. The Board of IIG consulted at that time with the top 8 shareholders of IIG, representing some 70% of the issued shares, regarding the opportunity to increase IIG's investment in PL. After that consultation the Board determined that IIG was not in a position to participate in the capital raising and the opportunity was declined.

In the opinion of the directors, PL is as a result no longer a controlled entity of IIG. We are not in a position to dispute or affirm that opinion, as there are a number of shareholders who make up the remaining 53.49% of ownership of PL.

PL is looking to continue to expand its operations in Australia and overseas and will be looking to shareholders to raise funds for this expansion via share issues. The management of IIG is of the opinion that IIG is not in a position in the current market to raise sufficient capital to contribute to this expansion. Expenditure by PL is estimated to be in the vicinity of at least AUD \$17 million.

A conditional offer has been entered into with certain of the existing shareholders of PL, and others who are senior executives or associated with senior executives of PL, to purchase all the shares held by IIG.

4.3 Photolibrary Division

4.3.1 Background Information

Photolibrary Pty Limited is a supplier of photographic images and moving footage to the advertising and publishing industries worldwide.

The company was established in July 1999 and since then has acquired a number of businesses in that field overseas, as well as developing its market in Australia.

At 30 June 2005 PL had the following interests:

Photolibrary Group Limited	UK	100%
Photolibrary.com (NZ) Limited	New Zealand	100%
Photolibrary.com Pte Limited	Singapore	50%
VPA Photolibrary.com Sdn. Bhd.	Malaysia	.50%
Photolibrary.com Co Limited	Thailand	.50%

It should also be noted that Photolibrary Group No. 2 Limited is a wholly owned subsidiary of Photolibrary Group Limited.

The fiscal year 2005 was the first full year of operations with all of these subsidiaries and/or controlled entities.

1989 - Johann Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Mari		Finns and the second second second second second second second second second second second second second second
Sinawal Putter	STEET CENTER TO THE	623 mmmmm
Integrated Investment Group Limited	16,805,038	46.51%
Fabemu (No. 2) Pty Limited	6,528,897	18.07%
Sue Hadley	3,808,524	10.54%
Mulmore Investments Pty Limited	2,720,374	7.53%
Coolbrun Pty Limited	1,768,243	4.89%
Denego Pty Limited	1,360,187	3.76%
Solidarity Nominees Proprietary Limited	816,112	2.26%
lChristine Penklis	816,112	2.26%
Jon Douglas Schahinger	816,112	2.26%
Lyfam Pty Limited	544,075	1.51%
Charles Franklin Plumridge & Mark Rowsthorn	100,000	0.28%
Daibrun Pty Limited	50,000	0.14%
Total Ordinary Shares Issued:	36,133,674	100.00%

The ordinary shareholders in Photolibrary Pty Limited are presently as follows:

There are 4,400,000 nil paid, non-participating special shares on issue as at 19 December 2005. There are also entitlements to 5,504,171 executive options which have been granted but not paid or converted.

If these special shares and options were converted to ordinary shares, the effect would be to further dilute the shareholding held by IIG.

4.3.2 Photolibrary Financial Performance and Position

The financial performance of Photolibrary over the last 2 years can be summarised as follows:

LARING TELEVISION CONTROLLED Summay of an anala Cartermanes
	Year Ended			Year Ended 30-Jun-04
	30-Jun-05 Economic		Economic
	Entity $(\$'000s)$	Parent Entity (\$'000s)	Entity $(\$'000s)$	Parent Entity (\$'000s)
Total Revenue Cost of Sales	11,610 (5,690)	4,912 (2,533)	5,469 (2,716)	4,485 (2, 224)
Gross Margin Expenditure	5,920 (6,651)	2,379 (2, 367)	2,753 (4,520)	2,261 (3,899)
Earnings before Interest, Tax, Depreciation and Amortisation	(731)	12.	(1,767)	(1,638)
Depreciation and Amortisation Earnings before Interest & Tax	'553) (1, 284)	(192) (180)	(675) (2, 442)	(621) (2,259)
Interest Expense lProfit before Tax	O. (1, 284)	n (180)	(50) (2,492)	(50) (2,309)
Income tax Profit/(Loss) from Ordinary Activities Net (profit)/loss attributable to	438 (846)	0 (180)	(1) (2,493)	0 (2,309)
outside equity interests	85	0	52	0
Net profit/(loss) attributable to members of the parent entity	(761)	(180)	(2, 441)	(2,309)

ENDONIAL AVENUE Statement of Financial Position at 30 June 2005
	As at		As at
		30-Jun-05	30-Jun-04
	Economic Entity	Parent Entity	Economic Entity	Parent Entity
	(\$'000s)	(\$'000s)	(\$'000s)	(\$'000s)
ICURRENT ASSETS Cash assets	1,207	324	2,476	1,855
Receivables	2,722	2,173	1,572	586
Other	343	117	157	37
ITOTAL CURRENT ASSETS	4,272	2,614	4,205	2,478
NON-CURRENT ASSETS
Receivables	0	191	0	5,685
Other financial assets	0	5,465	0.	93
Property plant and equipment	647	241	445	259
Deferred tax assets	293	$\Omega$	384	0
Intangible assets	5,319	$\Omega$	4,872	$\Omega$
ITOTAL NON-CURRENT ASSETS	6,259	5,897	5,701	6,037
ITOTAL ASSETS	10,531	8,511	9,906	8,515
CURRENT LIABILITIES
Payables	4,225	1,559	2,847	1,350
Interest-bearing liabilities	54	$\Omega$	0	0
Provisions	107	108	108	108
TOTAL CURRENT LIABILITIES	4,386	1,667	2,955	1,458
NON-CURRENT LIABILITIES
Interest-bearing liabilities	152	0	25	0
Payables	0	0	33	33
ITOTAL NON-CURRENT LIABILITIES	152	0	58	33
TOTAL LIABILITIES	4,538	1,667	3,013	1,491
NET ASSETS	5,993	6,844	6,893	7,024
EQUITY Contributed equity	16,407	16,407	16,407	16,407
Reserves	0	0	51	0
Retained profits/(Accumulated losses)	(10, 276)	(9, 563)	(9, 514)	(9, 383)
Parent entity interest	6,131	6,844	6,944	7,024
Outside equity interest	(138)	0	(51)	0
TOTAL EQUITY	5,993	6,844	6,893	7,024

As at 30 June 2005 the assets and liabilities of Photolibrary were as follows:

4.3.3 Industry Outlook

PL is looking to continue its expansion into further markets throughout the world. The market does not appear to be likely to mature for some years yet, and a steady growth of earnings can be expected. This is particularly so in more developing industrial regions where advertising and media are playing a major role in increasing consumer demand.

4.3.4 Business Prospects

Photolibrary has a number of opportunities and threats facing it.

The largest risk facing Photolibrary is a fundamental change in technology, and it must be prepared to meet and adapt to any such changes as quickly as possible. These changes could be in a number of areas $-$ the platforms, locations, methods of delivery etc $-$ the company will have to adapt to changes efficiently to maximize revenue recoupment.

As the company's major source of revenue is from the advertising sector, it can be assured of a steady flow of sales provided that it can fulfill the needs of those customers.

Photolibrary also has the opportunity to improve profitability in acquiring additional subsidiaries and then taking advantage of economies of scale to reduce costs, by increase revenue while holding down fixed costs of delivery.

5 ASSESSMENT APPROACH

The Australian Securities and Investment Commission ("ASIC") has issued Policy Statement 75 and Practice Note 43, which are relevant when reporting on transactions for which an IER is required.

5.1 ASIC Policy Statement 75 - "Fair and Reasonable"

Policy Statement 75 refers to an offer for securities or 100% ownership of a target company. The Transaction is not the sale of shares in IIG but rather the sale of its investment in a private, non-listed company. Nevertheless the principles behind ASIC Policy Statement 75 are relevant for adoption in this matter.

In assessing whether or not the transaction is fair and reasonable, we have drawn our definitions of "fair" and "reasonable" from ASIC Policy Statement 75 and have used the following definitions in assessing this transaction:

Fair – the transaction is fair if the value of the price or consideration is equal to or greater than the value of the assets that are the subject of the offer

Reasonable - the transaction is reasonable if it is fair. It may also be reasonable if, despite not being fair but after considering other significant factors, shareholders should approve the transaction in the absence of any higher offer being made.

5.2 ASIC Practice Note 43 - "Valuation Methodologies"

The assessment of whether or not the Transaction is fair and reasonable has been determined by considering the position of IIG before and after the transaction and examining issues which impact upon the valuation of the shares held in PL.

Practice Note 43.39 states:

"It is not the ASIC's role or intention to limit the expert's exercise of skill and judgment in selecting the most appropriate method or methods of valuation. However, it is appropriate for the expert to consider:

(a) the discounted cash flow method;

(b) the application of earnings multiples appropriate to the businesses or industries in which the company or its profit centres are engaged, to the estimated future maintainable earnings or cash flows of the company, added to the estimated realisable value of any surplus assets, on the basis that a controlling shareholder would seek to maximise the value of its investment:

(c) the amount which an alternative acquirer might be willing to offer if all the securities in the target company were available for purchase;

(d) the amount that would be distributed to shareholders on an orderly realisation of assets;

(e) the most recent quoted price of listed securities; or

(f) the current market value of the asset, securities or company.

The ASIC does not suggest that this list is exhaustive or that the expert should use all of the methods of valuation listed above."

5.3 Valuation Approaches

There are three main valuation approaches that can be applied to a business, asset or other form of investment. These are the asset approach, market approach and income approach. A basic understanding of the assumptions that underlie these methodologies will confirm that they comply with the above recommendations put forward by the ASIC.

5.3.1 Asset Approach

The asset approach is primarily used for companies/businesses that are making less than an economic rate of return on assets employed. In such a scenario, winding up of the company may be the best way to maximize shareholder value, in which case the assets of the business will be sold separately.

Asset based methods, being

• Net tangible assets method,
• Orderly realisation of assets, and
• Break up or forced sale,

ignore the possibility that the company's value could exceed the realisable value of its assets. These methods are appropriate when companies are not profitable, the company is not actively trading or a significant proportion of a company's assets are liquid.

As PL has been making trading losses over the last few years, we would consider it appropriate to use the net tangible assets method to calculate a value of the shares in that company.

5.3.2 Market Approach

The market approach to value is based on the principle of substitution. In other words, substitute companies, assets or investments should sell at the same price. The main methods include:

• Capitalisation of maintainable earnings;
• Share trading history $\bullet$
• Industry specific methods

This approach to value involves comparing key valuation indicators of companies comparable to the company being valued, or analysing past transactions that are comparable with the transaction at hand.

It is reasonable to use the market approach method when:

• There is an adequate number of comparable companies or market transactions; and
• Reliable data is available for both the subject company and the comparable companies, both as to their financial position and as to the basis of market values.

As PL is not a listed company, there are no readily comparable companies. There are a number of other companies in Australia that provide similar services but they are also unlisted. They are also of a lesser scale of operations than PL or they are separate divisions of much larger organisations based in the USA and UK.

However, IIG itself can be considered a substitute company for the value of the shares being sold. IIG has no other material business than the investment in PL and accordingly the value of its own shares should represent the market's perceived value of IIG's holding in PL.

de Vries Tayeh have adopted the Market Approach as a comparative method for valuing the shares of PL in this IER, as we don't believe that by itself it represents the most accurate method of calculating a true market value for the shares.

Capitalisation of maintainable earnings is not presently appropriate in the case of PL, as it is experiencing major growth and expansion. In these cases, it is important that when using capitalisation of maintainable earnings, a long-term view is adopted that discounts any shortterm irregularities in profitability. At present, the long-term picture is still very much unknown and therefore no figures are available from management on which to base calculations of future maintainable earnings.

5.3.3 Income Approach

The income approach to value involves calculating the present value of the company's estimated future stream of earnings or cash flows.

Income approach methodologies include discounted cash flows and capitalisation of earnings. cash flow, or dividends. Capitalisation techniques are a short form calculation of discounted cash flow calculations.

Although the discounted cash flow approach relies on the availability of long-term earnings and cash flow projections, it is particularly suited to situations where cash flows (and/or earnings) are not stable in the short term, or where significant cash outflows will be incurred prior to cash inflows being earned.

In this case, the discounted cash flow method is best used in conjunction with a welldeveloped business plan for the short to medium-term, say 5 to 10 years, in order to determine the cash inflows and outflows over that period of time.

In our view there can be as much error in using capitalisation methods with single point estimates when changes are known to be occurring as there can be in using the discounted cash flow approach with uncertain data.

5.3.4 Preferred Methodology

The discounted cash flow methodology (an income approach) is the generally preferred valuation method where it can be applied. However, in this IER we do not believe it to be the most appropriate method to use, as:

• Business plans are not available for the short to medium-term;
• Investment strategies for that period are as yet unknown and expected cash outflows and inflows are therefore unknown:
• The company has only had one full financial year of operations with current subsidiaries and controlled entities and therefore the cash flows in previous years are not a reliable indicator of cash flows in the future.

We have therefore rejected this method and instead compared the results that would be obtained under an assets based method, with a market based method as comparison, in order to determine whether there are any material variances.

The valuation of the business of PL is one that can be highly subjective because of:

• The industry in which it operates is subject to technological change and the company's ability to generate profits will be highly dependent upon its ability to adapt to changes in its environment;
• The company is undergoing expansion and looking at acquisitions of other similar businesses around the world and this will require considerable injection of investment capital.

5.4 Assessment of Consideration

There are no adjustments to be made against the consideration of \$3.96 million, and accordingly the effective purchase consideration is equal to the consideration of \$3.96 million.

There are no contingencies or warranties against the purchase price, other than clear title being given to the purchaser on completion of the transaction.

5.5 Assessment of the Value of Photolibrary

In defining value, we have used a fair market value definition¹, viz.:

"The price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm's length in an open and unrestricted market, when neither is

^<sup>1 Source: International Glossary of Business Valuation Terms, National Association of Certified Valuation Analysts, USA.

under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts."

This normally assumes:

• a reasonable timeframe to complete the transaction; and
• neither party having any special circumstances.

In assessing fair market values, we have not taken into account any specific investment value that the business may have to a particular purchaser.

An assessment of the value of the PL shares has been made by applying a market value methodology, as well as an asset based methodology for purposes of comparison.

5.5.1 Asset Based Method

Using the audited financial accounts of Photolibrary Pty Limited as at 30 June 2005, and on the assumption of an orderly realisation or forced sale/break up of assets, we have calculated the net assets of the company to be as follows:

	luation Method	1999 - Participante de la provincia de la provincia de la provincia de la provincia de la provincia de la pro	Valitzari id
Book Value	6.844.226	\$0.1889	\$3,174,326
Going Concern Value
	\$8,431,066	\$0.2327	\$3,910,296
Forced Realisation
Value	\$7,592,502	\$0.2095	\$3,521,373

This valuation includes an assessment of the value of investments in subsidiaries and controlled entities, also using a net asset method.

While the shares are themselves tangible assets, they are largely represented by the value of goodwill in the six subsidiaries. The shares are not listed in the open market so there is no comparable market value to assign to them. They are also dependent on the ongoing financial and management support of Photolibrary Pty Limited, and accordingly their value in a forced sale would be approximately equal to the value of net tangible assets only.

This is backed up by the fact that the Australian operation controls all online data, including digital image stock as well as accounting and sales data. All operations in each subsidiary are centrally monitored and maintained from the head office in North Sydney.

In addition to those shares and businesses, there is a value to be attributed to the Australian operations of PL. The company does not record its own goodwill in the books and records. but it has established itself as the largest provider in the market in Australia and we are of the opinion that this makes the company, or its shares, a marketable commodity.

The following methodologies are preferred for valuing identifiable intangible assets:

• Comparable sales;
• Net present value of marginal cash flows;
• Relief from Royalties

In this case, comparable sales is the most relevant method of valuation, but limited by the fact that there are few recorded sales of a similar industry and business size with which to compare. Accordingly, we have reviewed the prices paid by PL for its acquisition of Oxford Scientific and used similar multiples of earnings to value the Australian business.

5.5.2 Market Value Method

		Date Last % Ohante Ken				Low Avenue Vol 1
3-Nov-05	0.0290	116.00%	0.0290	0.0290	0.0290	33,000
18-Oct-05	0.0250	-53.70%	0.0250	0.0250	0.0250	50.000
$26-Sep-05$	0.0540	$-1.82%$	0.0540	0.0320	0.0430	10.500
$20-$ Sep $-05$	0.0550	30.95%	0.0550	0.0480	0.0515 12.500
7-Sep-05	0.0420	5.00%	0.0420	0.0420	0.0420	200,000
30-Aug-05	0.0400	14.29%	0.0400	0.0350	0.0375	60.468

IIG shares last traded on the Australian Stock Exchange as follows:

This resulted in an average of \$0.038 over that period. The total number of shares currently on issue is 123,741,945 resulting in average market capitalisation of between \$4,702,194.

However, if market capitalisation was calculated using the last sale price only, which is the generally accepted method, the current value of the IIG shares on the market would be $$3,588,516.$

While PL is not listed, there is data that gives an indication of market value for the shares in the company. In August 2005, an existing shareholder who owned 14,710,553 shares in Photolibrary Pty Limited, representing approximately 46.5% of the issued share capital of the company, agreed to dispose of its entire interest in Photolibrary to a group of private investors. This transaction was completed at a share price of 18 cents per share. The current book value per share for the company is 18.89 cents per share. The amount offered under the Transaction is 23.56 cents per share.

6 CONSIDERATIONS AS TO WHETHER TO VOTE IN FAVOUR OF THE SALE

6.1 Ability to Fund Expansion of Photolibrary

The operating performance of IIG for the financial years ended 30 June 2004 and 2005 are set out in Section 4.1.1. The company has incurred losses before interest, tax, depreciation and amortisation.

It is noted, however, that interest bearing debt has decreased from 2004 to 2005, after the completion of convertible notes to equity.

6.1.1 Debt Funding

The operations of PL have improved with the acquisitions of subsidiaries but are still showing losses in 2004 and 2005. The performance of PL and its subsidiaries is not expected to turn positive until some time in the future. As IIG is no longer a majority shareholder, it has no access to the cash resources of PL and no control over dividends.

Faced with these losses, and the fact that IIG does not have any current profitable investments to offset same, it is unlikely that IIG could borrow further funds due to its inability to fund the cost of same from current earnings.

6.1.2 Equity Funding

The share price performance of IIG has been consistent with the All Ordinaries over the last year. We have also compared the share performance with that of a similar company in the same category of diversified financial investment, London City Equities Limited ("LCE"). This company also has a similar level of market capitalisation.

The following graph traces the price history of IIG and LCE compared to the Small Ordinaries ("XSO") for the past year:

The performance of IIG shares has been fairly consistent with LCE, but below the market as per the Small Ordinaries Index.

The flat share price reflects the close relationship between net assets of IIG of \$3.353 million and its current market capitalisation of \$3.589 million. Accordingly, it would appear that IIG in its current position has little chance of raising funds through increased equity. This does not take into account any speculative trading on the basis of future income streams.

The inability to raise equity funding is confirmed by the events in August 2005 (referred to in Section 4.2) when large shareholders in IIG were asked whether they wished to participate in the capital raising for PL and they refused.

6.2 Net Tangible Asset Position

In the current market environment where raising equity is difficult and IIG does not have a great ability to raise further debt, the sale of the PL shares is a realistic alternative for shareholders in order to realise its value and eventually improve the financial position of IIG by enabling it to invest in other opportunities.

Gombarkontok kalendari hakkade
	30/06/2005	Post Sale
	(\$'000s)	(\$'000s)
lNet Assets	3,353	3,289
Profit on Sale (after tax)		486
lResultant Net Assets:	3,353	3,775
Less: Intangible Assets	0	Ω
	3,353	3,775
Ordinary shares on issue:	123,742	123,742
Net Tangible Assets per Share (\$) before return of capital	0.0271 \$	0.0305 S

The sale of the PL shares would result in the following changes to net tangible assets of IIG:

Of the net assets of \$3,775,000, it is proposed that \$3,588,516 million be returned to shareholders against the capital value of their shares, at a proposed return of \$0.029 per share. After that return of capital, the net tangible asset per share is reduced to \$0.0015 per share. Shares may still be valued in the marketplace at a premium to the value of cash held, likely representing the possible values of a listed shell.

6.3 Gearing/Debt Levels

As part of the Transaction all debt will be repaid out of the proceeds from the sale of PL shares held by IIG. As a result, the Transaction will have the following effect on the gearing ratio of the company:

	30/06/2005	Post Sale
	(\$'000s)	(\$'000s)
Interest Bearing Debt	128
Lease Liabilities
Total Interest Bearing Debt	128
Equity	3,353
Gearing Ratio	3.82%	$0.00\%$

7 CONCLUSION AND OPINION

While the investment in Photolibrary has potential, IIG is not the best vehicle in which to raise sufficient cash to increase its investment in that company. Photolibrary management has determined that the company will continue its growth around the world and to do so will require additional funding from shareholders.

If IIG is not in a position or the best vehicle to fund this growth and market positioning, its level of shareholding will diminish to the point where it no longer has any control over the activities of the company. The investment returns will also diminish as a result.

If the sale of the Photolibrary shares is approved, sufficient funds will be realised to return capital to shareholders and allow the company to seek other opportunities.

Our preliminary valuation of the PL shares is in the range of \$3,174,326 to \$3,910,296. The effective consideration offered for the PL shares is \$3,960,000. Accordingly, in our opinion the Transaction is fair.

In line with the definitions provided in Section 5.1 of this IER, the Transaction is also reasonable because it is fair.

There are a number of considerations that shareholders should bear in mind in assessing this transaction and they are set out in the preceding Section 6.

de Vries Tayeh believes the advantages to IIG in proceeding with the sale include:

• There is no need to raise further capital for investment in Photolibrary, hence avoiding $\bullet$ further dilution:
• Certainty and early realisation of a profit on the sale of the shares;
• Full value received for the present value of the shares;
• Company can pursue other opportunities as desired such as increase the value to current shareholders by utilizing the listed corporate shell.

The disadvantage to IIG in proceeding with the sale is that it may be foregoing considerable future earnings from its shareholding in Photolibrary, albeit a much diluted shareholding. Given that this is a minority holding in a private company, we have not considered it appropriate to discount that position.

de Vries Tayeh considers the Transaction is fair and reasonable. In our opinion, it is in shareholders' interests to vote in favour of the sale of the Photolibrary shares.

For and on behalf of de Vries Tayeh

$Rf$ ong $^{\prime}$

Riad Tayeh Partner.

Appendix A

Qualifications, Declarations, Disclaimer and Consent

Qualifications

de Vries Tayeh is a Sydney based firm of Chartered Accountants, specialising in corporate strategy, business valuations and insolvency.

Mr Riad Tayeh is a partner of de Vries Tayeh. He has over 20 years' experience in accounting and consulting. Professional memberships include the Institute of Chartered Accountants in Australia and the Insolvency Practitioners' Association of Australia.

Other staff of de Vries Tayeh, Ms Suelen McCallum, assisted with the preparation of this IER.

Declarations

de Vries Taveh does not have any interest in the outcome of the transactions proposed by IIG. de Vries Tayeh is entitled to a fee for services rendered, estimated to be \$20,000 excluding GST, based on time spent at normal hourly rates. The fee payable to de Vries Tayeh is in no way dependent upon the outcome of the transactions.

Early drafts of Sections 2 through 6 were submitted to management on 8 November 2005. A draft of this IER dated 8 November 2005 was submitted to the directors of IIG for review of correctness with regards to factual information contained in the IER. No changes have been made to the valuation or our opinions as a result of that review.

de Vries Tayeh and its associates does not have at the date of this report nor has had any shareholding in or other relationship with IIG or Photolibrary that could reasonably be regarded as capable of affecting its ability to provide an unbiased opinion in relation to the Transaction, de Vries Tayeh had no part in the formulation of the Transaction. Its only role has been the preparation of this Report. de Vries Tayeh considers itself independent in terms of Practice Note 42 issued by the ASIC on 8 December 1993.

Disclaimer

Compilation and preparation of this document involved making judgments which may be affected by unforeseen events including wars, economic disruption, dislocations, business cycles, industrial relations, labour difficulties, political action, changes of government and other factors, the effects of which are not capable of precise assessment. In many cases, value judgments must be made based on material compiled by government agencies, scientific organisations, research organisations, industrial, commercial and professional organisations and others.

de Vries Tayeh will not be liable for any loss or damage caused to its client, or any other third party as a result of any errors in data which is either supplied by the client, supplied by a third party to de Vries Tayeh, or which de Vries Tayeh is required to estimate.

All surveys, forecasts, projections and recommendations contained or made in relation to or associated with this document are made in good faith and on the basis of information supplied to de Vries Tayeh at the date of preparation. Achievement of the projections and budgets set out in this document will depend, among other things, on the actions of others over which de Vries Tayeh has no control.

de Vries Tayeh is not an expert in the field of taxation or law. de Vries Tayeh shall not be liable for any loss, damages or penalties which may result from any failure to obtain independent taxation or legal advice.

This IER has not been prepared for any purpose other than to satisfy the requirements of the Australian Stock Exchange Listing Rules 11.1, 11.2 and 11.3 by providing an opinion to ordinary shareholders with regards to the fairness and reasonableness of the transactions for their consideration prior to voting on the transactions.

Consent

Neither the whole nor any parts of this document may be appended or referenced to in any documents without the prior written consent of de Vries Tayeh.

de Vries Tayeh consents to the inclusion of this IER, in the form and context in which it is included, in the Explanatory Memorandum to be issued to IIG shareholders in relation to the transaction.

22 December 2005

Chartered accountants since 1995 $-61292482500$ $+$ 812 9248 2555 Level 2 / 123 Clarence Street Sydney NSW 2000 Australia GPO Box 3789 Sydney NSW 2001 words zin with come

The Directors Integrated Investment Group Limited Level 11 54 Miller Street NORTH SYDNEY NSW 2060

Letter to Shareholders

You have requested us to prepare a letter to shareholders of integrated Investments Group Limited ("IG") in respect of the proposed capital reduction. We understand the nature of the transaction is as follows:

• There is a Share Sale Agreement to dispose of all of the shares in $\bullet$ Photolibrary Pty Limited held by IIG for \$3,960,000.
• As a result of the cash being available from the above transaction, IIG will $\bullet$ undertake a reduction in its share capital of \$0.029 per share within a period of 90 days of the settlement of the sale contract for the Photolibrary Pty Limited shares.

You have asked us to provide a general letter of advice to shareholders of IIG who will be in receipt of the proposed capital reduction. The advice you have requested is of a general nature only and should not be relied on by any shareholders, who should seek their own professional tax advice.

Tax Implications for Shareholders

In our opinion, we consider that the following tax implications should generally arise from the capital reduction by IIG outlined above:

• The capital reduction payment should not be assessable as a dividend under $\bullet$ section 44 of Income Tax Assessment Act 1936 ("ITAA36").
• The capital reduction payment should be not be income according to $\bullet$ ordinary concepts and therefore not assessable under section 6-5 of income Tax Assessment Act 1997 ("ITAA97").
• Section 45A of ITAA36 should not apply as all shareholders are to receive a $\bullet$ pro-rata return of capital.

BCS Lamb & EIIIs ABN 17 109 396 466 Globai representation: Integra international

• Section 45B of ITAA 36 should not apply as the capital reduction should not $\bullet$ be paid in substitution of dividends as IIG has significant retained losses and no reserves from which to pay any dividends.
• Capital Gains Tax Event G7 of ITAA97 should apply upon the capital reduction $\bullet$ payment – the result for shareholders will depend upon the cost base of their individual IIG shares. The capital gains tax result for shareholders should be:
• $\circ$ If a shareholder has a cost base for a parcel of IIG shares of less than \$0.029 per share a capital gain will arise; or
• o If a shareholder has a cost base for a parcel of IIG shares of more than \$0.029 per share the capital payment will reduce the cost base of the shares.

Importantly, no capital loss should arise as the result of the capital reduction. Some shareholders could hold IIG shares with costs bases above and below \$0.029 per share - a capital gain would arise for shares with costs bases below \$0.029 per share and no offsetting capital loss should be available for those shares with a cost base above that figure.

We trust the above provides shareholders with some general information in respect of the taxation implications of the IIG capital reduction.

Yours faithfully, BCS Lamb & Ellis

mnd (M

David Lamb Director

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