PPK GROUP LIMITED — Proxy Solicitation & Information Statement 2006

Jul 10, 2006

PLASPAK GROUP LIMITED (ABN 65 003 964 181)

NOTICE OF GENERAL MEETING

and

EXPLANATORY MEMORANDUM

16 August 2006 Date:

Time: $3.00 p.m.$

Location: Sofitel Wentworth Hotel, 61-101 Phillip Street, Sydney, NSW

In this document you will find:

• $\mathbf{1}$ . Notice of General Meeting.
• An explanatory statement containing an explanation of, and $\mathbf{2}$ information about, the proposed resolutions to be considered at the meeting and information to explain the resolutions.
• з. A Proxy Form.

PLASPAK GROUP LIMITED (ABN 65 003 964 181)

NOTICE OF GENERAL MEETING

A general meeting of the members of Plaspak Group Limited will be held:

• on Wednesday 16 August 2006; У.
• at 3pm; and $\tilde{\mathbf{z}}$
• at the Sofitel Wentworth Sydney Hotel, 61-101 Phillip Street, Sydney, NSW. $\mathcal{L}$

Words or expressions used in this Notice of Meeting and Explanatory Memorandum are defined in the Glossary which appears at the end of the Explanatory Memorandum.

AGENDA

ORDINARY BUSINESS

Item1 - Plastics Packaging Business Sale

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

"That in accordance with the requirements of ASX Listing Rule 11.2 and the Corporations Act 2001 (Cth) approval is given for the disposal of the Company's shareholdings in Subsidiary Operating Companies engaged in the Plastics Packaging Business in accordance with the Sale Agreements described in the Explanatory Memorandum which accompanied the Notice of this meeting."

Voting Exclusion Statement

The Company will disregard any votes cast on Agenda Item 1 by:

• The persons who might obtain a benefit, except a benefit solely in the capacity of holders of Company's securities, if the resolution is passed; and
• An associate of the persons who might obtain a benefit, except a benefit solely in the capacity of holders of Company securities, if the resolution is passed.

However, the Company will not disregard a vote if:

• It is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
• It is cast by the person chairing the meeting as proxy for a person who is entitled $\bullet$ to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

Item 2 - Other Business

To transact any other business that may be brought forward in conformity with the Constitution of the Company.

SPECIAL BUSINESS

Item 3 - Change of Company Name

To consider and, if thought fit, to pass the following resolution as a special resolution:

"That:

• $(a)$ the name of the Company be changed to PPK Group Limited, with effect from a date determined by the Board, being no later than completion of the Sale Agreements; and
• the Constitution of the Company be amended by deleting, in clause 1.1, $(b)$ the words "Company means the company named above [Plaspak Group Limited], whatever its name may be at the relevant time", and substituting "Company means PPK Group Limited", with effect from a date determined by the Board, being no later than the completion date of the Sale Agreements."

The above resolution has been proposed in accordance with the requirements of Section 157 of the Corporations Act. The Board will only determine to change the Company name if Resolution 1 is passed and the Sale Agreements proceed to completion.

By Order of the Board

Robert Nicholls Company Secretary

DATED: 7 July 2006

APPOINTMENT OF PROXIES

A member who is entitled to attend and vote at the meeting may appoint a proxy to attend and vote at the meeting on behalf of that member. A proxy may be an individual or body corporate and is not required to be a member of the Company. A member who is entitled to cast two or more votes at the meeting may appoint two proxies. Where a member appoints two proxies, the member may specify the proportion or number of votes each proxy is appointed to exercise. Where a member appoints two proxies but does not specify the proportion or number of votes each proxy may exercise, each proxy may exercise half of the member's votes. Fractions will be disregarded.

A member may direct the member's proxy how to vote on the proposed resolutions by following the instructions on the Proxy Form that accompanies this Notice of Meeting.

A proxy may decide whether or not to vote on any proposed resolution, except where required by law or the Company's constitution to vote. If the member appointing the proxy:

• directs the proxy how to vote on a proposed resolution, then the proxy may vote on that resolution only in the way directed;
• does not direct the proxy how to vote on a proposed resolution, then the proxy ٠ may vote on that resolution as the proxy thinks fit.

If a member appoints the Chairman of the meeting as proxy and does not direct the Chairman how to vote on an item of business, then, if a poll is called on that item, the Chairman will vote as proxy for that member in favour of that item of business.

To be effective, proxy forms must be received:

• at the registered office of the Company at 25-27 Waratah Street, Kirrawee, New ۰ South Wales 2232;
• by facsimile on (02) 9521 4561; or
• by email to proxies@plaspak.com.au

by 3pm (Sydney time) on or by Monday, 14 August 2006.

Proxies received after the nominated time will not be effective for the scheduled meeting.

A form of proxy accompanies this Notice of Meeting and must be completed in accordance with the instructions "How to complete the proxy form" provided with the Proxy Form.

CORPORATE REPRESENTATIVES

A body corporate that is a member, or that has been appointed as a proxy of a member, may appoint an individual to act as its representative at the meeting. The appointment must comply with the requirements of section 250D of the Corporations Act 2001. The representative should bring to the meeting evidence of his or her appointment, including the authority under which it is signed, unless the evidence has previously been given to the Company.

DETERMINATION OF ENTITLEMENTS TO ATTEND AND VOTE AT THE MEETING

Under the Corporations Regulations 2001 and the Company Constitution, the Company has determined that the shares of the Company on issue as at 3pm (Sydney time) on Monday, 14 August 2006 will be taken, for the purposes of the meeting, to be held by the persons who held them at that time. Accordingly, the persons entitled to attend and vote at the meeting will be the registered holders of the Company's shares at the time.

PLASPAK GROUP LIMITED (ABN 65 003 964 181)

EXPLANATORY MEMORANDUM

OVERVIEW OF PLASPAK'S BUSINESS

The business activities of Plaspak are currently comprised of:

The Plastics Packaging Business $(a)$

Made up of six manufacturing facilities in Australia and a joint venture distribution business in New Zealand, the Plastics Packaging Business provides a wide range of plastic bottles, closures and sprays, servicing the food, beverage, household chemicals, personal care, industrial chemicals and agricultural industries in Australia and New Zealand.

The Plastics Packaging Business manufactures products from a wide range of plastic resins including Polyethylene, Polypropylene, Polystyrene, PVC and PET, utilising technologies such as blow moulding, injection blow moulding, stretch injection blow moulding and injection moulding.

York Precision Plastics $(b)$

Following the December 2004 on market takeover of York Group Limited, Plaspak acquired the York Precision Plastics business, which manufactures and distributes acrylic and thermoplastic sheeting throughout the southern hemisphere.

The business has two integrated commercial divisions:

• lighting: selling various manufactured and imported products to major lighting manufacturers; and
• industrial: manufacturing a variety of thermoplastic products for a diverse $\bullet$ range of end use applications for customers in industries including signage, construction and automotive.
• $(c)$ Rambor

Also acquired by Plaspak as part of the York Group Limited takeover, Rambor is a leading designer and manufacturer of proprietary hand held equipment for the underground coal mining industry. Rambor equipment is primarily used for the installation of roof and wall retention chemical anchor bolts.

Commercial Property Portfolio $(d)$

Plaspak holds an extensive portfolio of industrial properties, which include:

• five manufacturing facilities occupied by the companies operating the $\bullet$ Plastics Packaging Business and located at Arndell Park, Kirrawee and Seven Hills in NSW, Virginia in Queensland and Dandenong in Victoria;
• York Precision Plastics' headquarters at Riverwood in NSW; and

two vacant sites at Arndell Park and Virginia, which will be capable of $\bullet$ development.

Valuations commissioned by Plaspak establish that the properties have a current market value of $56.5 million.

PURPOSE OF THIS MEETING

The General Meeting referred to in the accompanying Notice of Meeting is being held so Plaspak shareholders can consider the proposed resolutions set out in the Notice of Meeting.

Agenda Item 1 relates to the proposed sale by the Company of its Shareholdings in Subsidiary Operating Companies engaged in the Plastics Packaging Business and is submitted for consideration by the Shareholders in compliance with ASX Listing Rule 11.2, as the Shareholdings are considered to represent the Company's main undertaking.

The proposed disposal of the Shareholdings is pursuant to the Sale Agreements and involves the sale of shares in the Subsidiary Operating Companies which own and operate the Plastics Packaging Business.

TERMS OF THE PLASTICS PACKAGING BUSINESS SALE

The Sale Agreements, which are subject to Shareholder approval, include the following key terms:

• The consideration payable by the purchaser, Skyson for the Shareholdings is $50 $(a)$ million less lease and hire purchase liabilities assumed by Skyson on completion. The lease and hire purchase liabilities at completion are estimated to be approximately $7.5 million.
• $(b)$ Completion is subject to:
  • no regulatory intervention;
  • Shareholder approval in accordance with ASX Listing Rule 11.2 and the Corporations Act 2001 (Cth); and
  • no material adverse change occurring in respect of the Plastics Packaging Business before the scheduled completion date.
• $(c)$ The scheduled completion date is 1 September 2006.
• $(d)$ Additional payments of up to $5 million may also be payable to the Company for the provision of transitional consultancy services assessed by the achievement of agreed performance criteria during the 18 months following completion of the sale.
• $(e)$ There is provision for adjustment between the Company and Skyson in relation to any movement in working capital between 30 June 2005 and the completion date. This will have the effect that to the extent that any profits from 30 June 05 up to

the completion date remain in working capital, those profits accrue to the Company.

• $(f)$ The Company gives Skyson usual warranties for a transaction of this kind.
• The liability of the Company for breaches of warranties and indemnities are $(q)$ limited in terms of the timing of claims and the monetary amount of those llabilities.
• $(h)$ All sale transactions are wholly interdependent.

FINANCIAL INFORMATION REGARDING THE SALE

The value of the assets comprising the Plastics Packaging Business and their contribution to the Company's recent past and current earnings are set out in the following table:

		Year to$30 - Jun - 05$$000s	6 months to31-Dec-05$000s	5 months to31-May-06$000s
(i)	Book values of assets andliabilities sold	31,300	33,463	32,600
(ii)	Contribution to earnings
	Segment result*	8,143	3,536	3,918
	Interest included	1,624	988	708
	Allocate group overheads	(2,200)	(700)	(917)
	Allow market rent for properties	(4,044)	(2,022)	(1,685)
	Exclude Yalgar Rd rent	(145)	(145)	(113)
	Allow interest expense on leaseand hire purchase liabilities sold	(692)	(334)	(247)
	Pre-tax contribution to earningsfrom assets sold	2,686	1,323	1,664

* Segment result for 30 June 2005 and 31 December 2005 in accordance with published accounts.

The consideration payable by Skyson represents a surplus of approximately $10 million over the book value of the assets sold.

Other than minimal lease liabilities, Plaspak will become debt free.

On completion of the sale of the Plastics Manufacturing Business, Plaspak will retain as its ongoing businesses and investments:

• York Precision Plastics; $\bullet$
• Rambor; and $\bullet$
• Its extensive portfolio of industrial properties with the five manufacturing facilities ٠ leased to the operating subsidiaries of the purchaser of the Plastics Packaging Business,

Set out below is a pro-forma Consolidated Projected Balance Sheet of Plaspak, as at completion (ie. on the basis that the sale of the Plastics Packaging Business has occurred), with a 31 December 2005 Plaspak Consolidated Balance Sheet provided as a comparative.

PLASPAK GROUP LIMITED Balance Sheet Projection

	$00031 December2005	$000PostTransaction
Current Assets
CashCash at bank	409	4043,636
Receivables	23,581	4,022
Inventories	15,316	5,445
Sale of Yalgar Road property	2,438
Other	1,035	65
	42,779	13,572
Non-current Assets
Investments	450	450
Property Plant & Equipment	73,078	44,855
Deferred Tax Assets	1,475	696
Intangibles	5,094	4,880
Other	880	831
	80,977	51,712
Total Assets	123,756	65,284

	$00031 December2005	$000PostTransaction
Liabilities
Payables	13,519	3,665
Interest Bearing liabilities	47,449
HP and Lease liabilities	12,429	2,217
Tax liabilities	996	1,051
Provisions	3,634	1,105
Other	15	872
Total Liabilities	78,042	8,910
Net Assets	45,714	56,374
Shareholder Equity
Contributed EquityReserves	38,82958	38,82958
Retained Profits	6,676	17,487
Total Parent entity equity	45,563	56,374
Outside Equity Interest	151
Total Shareholder Equity	45,714	56,374

The above pro-forma Projected Balance Sheet has been prepared on the basis of the following notes and assumptions:

• It is based on projected profits and cash flow up to the projected $(i)$ completion date of the sale of 1 September 2006.
• $(ii)$ Land and buildings are included at a book value of $41.5 million. As indicated above, current market value is $56.5 million. If the land and buildings were sold there would be an estimated tax liability of $4.5 million.
• Additional payments of up to $5 million for the provision of transitional $(iii)$ consultancy services have been excluded.
• The positive impact of the working capital adjustment at the time of $(iv)$ completion of the sale has been estimated at $2.5 million.

It is projected that ongoing operating earnings in 2007 will be approximately 5.1 cents This is without any contribution to earnings from the sale of the per share. Shareholdings or the associated transitional consultancy services.

A profit and loss projection prepared on a full year post-sale basis is set out below.

PLASPAK GROUP LIMITED Profit & Loss Projection

	$
Rent Received	4,179,101
Interest Income	500,000
York Precision Plastics	1,245,000
Rambor	672,000
Profit before Head Office Costs	6,596,101
Less:
Head Office Costs	1,600,000
Profit Before Tax	4,996,101
Income tax Expense	1,498,830
Profit After Tax	3,497,271

The above profit and loss projection has been prepared on the basis of the following notes and assumptions:

• It is based on projected profits and cash flow of retained businesses and $(i)$ rents from industrial properties. It does not include the impact of any capital management initiatives or new undertakings.
• Additional payments of up to $5 million for the provision of transitional $(ii)$ consultancy services have been excluded.

PERCEIVED ADVANTAGES AND DISADVANTAGES OF THE PROPOSED SALE

The decision to sell the Subsidiary Operating Companies and their Plastics Packaging Business was made after lengthy and detailed deliberation by the Directors. The Directors considered and took into account various factors.

The following were considered to be advantages of the sale:

The Plastics Packaging Business operates in a mature manufacturing industry $(a)$ which, in the Board's view, has limited scope for growth.

• There continues to be a steady erosion of available work due to customers $(b)$ transferring their operations to overseas locations, particularly Asia.
• The businesses are subjected to continued pressure on selling prices and volatile $(c)$ raw material costs (linked to the price of oil), which involve short term spikes with a limited ability to recover the cost increases from customers.
• The Plastics Packaging Business on a stand alone basis will continue to struggle to $(d)$ achieve a return on shareholders funds (commensurate with risk) considered acceptable by the Directors.
• The sale price represents a significant surplus (of approximately $10 million) over $(e)$ the book value of the assets sold and, in the opinion of the Directors, a fair and reasonable price for the assets sold.
• The sale presents an opportunity to realise the Plastics Packaging Business assets $(f)$ at an acceptable price and therefore provides certainty of return on those assets.

The following were considered to be disadvantages of the sale:

The proposed sale involves Plaspak disposing of its principal operating business $(a)$ activity. However, the Board will actively investigate other opportunities worthy of investment for Plaspak and will provide shareholders with further information as and when this is available.

The proposed resolution detailed in Item 1 of the Agenda, if passed, will permit the Company to dispose of its Shareholdings. On the whole the Directors consider that it is in the interests of the Company to dispose of its Shareholdings:

• because the advantages set out above outweigh the disadvantages; $(a)$
• due to the fact that as set out in the "Financial Information Regarding the Sale" $(b)$ section of this Explanatory Memorandum, following the sale of the Shareholdings, the Company will continue to maintain comparable earnings per share; and
• because the proposed sale is consistent with the objectives of the Company, $(c)$ which are to protect and maximise shareholder returns.

CHANGE OF NAME TO "PPK GROUP LIMITED"

It is a condition of the Sale Agreements that the Company change its name to "PPK Group Limited" so that the purchaser can obtain the benefit of the use of the name Plaspak and the goodwill associated with it.

The new name "PPK Group Limited" will enable continuity in the Company ASX Listing Code "PPK".

Directors only propose to change the Company name if the proposed resolution detailed in Item 1 of the Agenda is approved by shareholders and the Sale Agreements proceed to completion.

CONCLUSION

The Directors unanimously recommend that eligible shareholders vote in favour of the proposed resolutions detailed in Items 1 and 3 of the Agenda for the reasons set out in this Explanatory Memorandum.

As at the date of this Notice, the Directors who hold Plaspak shares intend to vote their Plaspak shares in favour of the proposed resolutions detailed in Items 1 and 3 of the Agenda.

If shareholders cannot attend the meeting, they are urged to complete the proxy form and return (see proxy form details) it as soon as possible and in any event by no later than 3pm on Monday, 14 August 2006.

GLOSSARY

In this Explanatory Memorandum:

Expressions to which a meaning is given elsewhere in this Explanatory Memorandum have the meaning so given wherever they are used.

Agenda means the ordinary and special business detailed within the Notice of Meeting.

ASX means Australian Stock Exchange Limited (ACN 008 624 691).

ASX Listing Rules mean the official Listing Rules of the ASX.

Board means the Board of the Directors of the Company from time to time.

Company or Plaspak means Plaspak Group Limited (ABN 65 003 964 181).

Constitution means the current Constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

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

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

Notice of Meeting means the Notice of Meeting dated 7 July 2006 which this Explanatory Memorandum accompanies and in which the proposed resolutions as detailed in Items 1 and 3 of the Agenda are set out.

Plastics Packaging Business means the plastics packaging businesses owned and operated by the Subsidiary Operating Companies.

Sale Agreements means the:

• Implementation Agreement dated 27 June 2006 between the Company, Skyson $(a)$ and other related entities of the Company and Skyson.
• Share Purchase Agreements dated 27 June 2006 between Skyson as Purchaser $(b)$ and the vendor entities of the Subsidiary Operating Companies.
• $(c)$ Consultancy Services Agreement to be entered into on completion between the Company and Geminder Holdings Pty Ltd.

Shareholder means a holder of fully paid ordinary shares in the capital of the Company.

Shareholdings means the shares owned by the Company in the Subsidiary Operating Companies.

Skyson means Skyson Pty Ltd (ACN 113 852 823), the Purchaser named in the Sale Agreements.

Subsidiary Operating Companies means:

• Plaspak (PET) Pty Ltd (ACN 060 963 037); $\bullet$
• Plaspak Contaplas Pty Ltd (ACN 001 291 989); $\bullet$
• Plaspak Closures Pty Ltd (ACN 003 503 982);
• Plaspak QP Pty Ltd (ACN 067 920 218);
• Plaspak Steri-Plas Pty Ltd (ACN 003 562 123); $\blacksquare$
• JWS Manufacturing Pty Ltd (ACN 084 569 139); ٠
• ACN 119 394 679 Pty Ltd;
• ACN 119 389 196 Pty Ltd; and
• GV Engineering Pty Ltd (ACN 000 946 127),

which companies own all the assets and liabilities used in the conduct of the Plastics Packaging Businesses, which assets and liabilities include:

• goodwill, all plant and equipment with associated lease and hire purchase $(a)$ liabilities; and
• working capital, which includes trade debtors, inventories, trade creditors and $(b)$ accruals and employee entitlements of transferring employees.

Proxy Form

All correspondence to:

Piaspak Group Limited PO Box 297 Jannali NSW 2226 Enquiries (within Australia) (02) 9521 8444 (outside Australia) 61 2 9521 8444 Facsimile 61 2 9521 4561 proxies@plaspak.com.au

Mark this box with an "X" if you have made any changes to your address details (see reverse)

Plaspak Group Limited

ACN 003 964 181

Appointment of Proxy

I/We being a member/s of Plaspak Group Limited and entitled to attend and vote hereby appoint

OR

the Chairman of the Meeting (mark with an $"X"$

or failing the person named, or if no person 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 directions (or if no directions have been given, as the proxy sees fit) at the General Meeting of Plaspak Group Limited to be held at the Softel Wentworth Hotel, 61-101 Phillip Street, Sydney on Wednesday, 16 August 2006 at 3.00 pm and at any adjournment of that meeting.

Voting directions to your proxy - please mark

to indicate your directions

Against Abstain* For

Write here the name of the person you are appointing

if this person is someone other than the Chairman of

the Meeting

Ordinary Business

Item 1 Sale of plastics packaging businesses

Special Business

Item 3 Change of company name to "PPK Group Limited"

* 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.

PLEASE SIGN HERE

This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Securityholder 1 Securityholder 2 Securityholder 3 ...................................... Director/Company Secretary Director Sole Director and Sole Company Secretary Contact Daytime Telephone $\overline{Date}$ Contact Name

How to complete the Proxy Form

$\mathbf{I}$ . Your Name and Address

This is your name and address as it appears on the company's share register. If this information is incorrect, please mark the box and make the correction on the form. Security holders sponsored by a broker should advise their broker of any changes. Please note, you cannot change ownership of your securities using this form.

$2.$ Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting, please write the name of that person. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a security holder of the company.

Votes on Items of Business 3.

You may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

Appointment of a Second Proxy $\overline{4}$ .

You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company's share registry or you may copy this form.

To appoint a second proxy you must:

• on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of securities $(a)$ applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.
• $(b)$ return both forms together in the same envelope.

5. Signing instructions

You must sign this form as follows in the spaces provided:

Individual:	where the holding is in one name, the holder must sign.
Joint Holding:	where the holding is in more than one name, all of the security holders should sign.
Power of Attorney:	to sign under Power of Attorney, you must have already lodged this document with the registry. If you havenot previously lodged this document for notation, please attach a certified photocopy of the Power ofAttomey to this form when you return it.
Companies:	where the company has a Sole Director who is also the Sole Company Secretary, this form must be signedby that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have aCompany Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Directorjointly with either another Director or a Company Secretary. Please indicate the office held by signing in theappropriate place.

If a representative of the corporation is to attend the meeting the appropriate "Certificate of Appointment of Corporate Representative" should be produced prior to admission. A form of the certificate may be obtained from the company's share registry.

Lodgment of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below not later than 48 hours before the commencement of the meeting at 3.00 p.m. on Wednesday, 16 August 2006. In other words, this Proxy Form must be received by no later than 3.00 p.m. on Monday, 14 August 2006. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Documents may be lodged by post, delivery, e-mail or facsimile to the registered office of Plaspak Group Limited at:

Post: PO Box 297, Jannali, N.S.W 2226 Delivery: 25-27 Waratah Street, Kirrawee NSW 2232, Australia Facsimile: 61 2 9521 4561 Email: proxies@plaspak.com.au