SCHOOLBLAZER LIMITED — AGM Information 2007

Jan 29, 2007

I

CHAIRMAN'S ADDRESS TO AGM 31 JANUARY 2007

Ladies and Gentlemen, welcome to the Annual General Meeting of HGL.

Corporate Strategy

Firstly let me again detail our Corporate Strategy;

HGL strategic objectives are to consistently increase core profits and dividends through

• Growing the profitability from our current import and distribution businesses, which may include bolt on acquisitions
• Utilising our funds management skills to assist with the management and growth of MMC $\bullet$ Contrarian Limited and MMC Asset Management Limited
• Investing in publicly listed companies where appropriate and $\bullet$
• Acquiring businesses in line with our well documented acquisition criteria as set out on page 11 $\blacksquare$ of the annual report

We believe these strategies will continue to increase core profits and dividends which in turn enhances the net worth of the company and ultimately shareholder wealth.

What we have achieved during 2006:

• Core Profit (or as previously referred to as Operating Profit) increased 6% to $7.4 million which was equivalent to 15.5 cents per share compared to 14.7 cents in 2005.
• Total Reported Profit increased 23% to $9.1 million which includes $1.1 million from the sale of $\bullet$ securities. Reported earnings per share were 18.9 cents compared with 15.4 cents in 2005.
• Listed Securities held increased in value by $5.7 million and whilst not reflected in the profit were credited to Reserves and thereby strengthened our balance sheet.
• Dividend payments for the year increased 14% to 11.6c per share. This represented a payout ratio of 75% of core profits. All dividends continue to be fully franked.

Phone: +612 9221 7155 Fax: +612 9233 2713 Email: hol@hol.com.au Web: www.hgl.com.au

I

Return on Shareholders Funds was 14%. This return is calculated on the profit calculated under the rules of AIFRS. If the increase in value of our listed investments which we actively manage were taken to account the return would increase to 21%.

In comparing our achievements with the first three strategic objectives listed above I believe your company performed well.

In regard to the fourth objective as I reported in January 2006 we completed the acquisition of JSB, a specialty lighting importer for an estimated consideration of $9 million with an initial payment of $4 million in October 2005 and a further $5 million payable over 3 years commencing in October 2006.

In early October 2006 we increased our investment in J Leutenneger by 15% to 100% by purchasing the balance of the equity from its former Chief Executive. The new Chief Executive Officer of J Leutenneger has acquired 20% equity in the Company.

It has been a difficult year in which to acquire suitable businesses at appropriate prices. We identified a number of potential acquisitions which progressed to final due diligence however they failed to satisfy our acquisition criteria.

Whilst we are disappointed in not completing a major acquisition during the year other than JSB, we remain confident that an acquisition will be made in the near future and at present are examining a number of opportunities.

Import and Distribution

HGL has $57.4m invested in 11 individually managed businesses that import and distribute a wide range of branded products including optical, beauty care, graphics, fabric and haberdashery, headwear, specialist lighting, pharmacy products and promotional solutions and point of sale.

Phone: +612 9221 7155 Fax: +612 9233 2713 Email: hol@hol.com.au Web: www.hgl.com.au

I

During the year the earnings before interest and tax from these businesses declined to $13m from $13.5m. This decline mainly arose following several months in the second half of the financial year, of weaker than anticipated trading conditions. I can confirm my views in the annual report of the underlying strength of our businesses.

HGL is a long term investor and has a specific philosophy in managing and in growing these businesses. I recommend that you read about our philosophies which are set out in detail on page 10 of our annual report.

Funds Management and Listed securities

HGL has a 37% shareholding MMC Asset Management Limited (MMC) a boutique fund manager. MMC manages the portfolio of MMC Contrarian Limited (MMC Contrarian) a Listed Investment Company with $255m of investments as well as acting as the responsible entity and manager of 5 MMC unlisted trusts with $355m of investments. HGL provides services to MMC in relation to the management of the MMC Contrarian portfolio.

Following discussions between MMC Contrarian, MMC Asset Management and HGL to determine the best future operational aspects of this arrangement a proposal was put forward for a reconstruction of the arrangement. This was announced to you on 17th November 2006 and presented to and approved by the shareholders of MMC Contrarian yesterday.

We consider that the acquisition by MMC Contrarian of its manager and the termination of our management agreement whereby MMC Contrarian issues scrip as consideration creates a more secure and flexible asset for HGL.

This transaction provides HGL with a 6% shareholding in MMC Contrarian and crystallises a $7.0 million profit. With recent share purchases totalling $8m HGL currently holds 9.5% of MMC Contrarians issued capital.

Phone: +612 9221 7155 Fax: +612 9233 2713 Email: hol@hol.com.au Web: www.hgl.com.au

I

HGL also has a 6% investment in Hunter Hall International Limited which is an international funds management group listed on the Australian Stock Exchange. HGL was a corner stone investor on the formation of Hunter Hall in the mid 1990's which now has $2.0 billion under management.

During the year the market value of our listed securities increased by $8.2m and as at 30th September 2006 the market value was $30.8m. Since the year end the market value of these securities has increased to $38.7m a further amount of $7.9m. In conjunction with our 9.5% investment in MMC Contrarian the total invested in listed securities now amounts to $62.2m. Of this value $23.5m is attributable to our investment in MMC Contrarian and $19.3m to Hunter Hall.

Outlook for 2007

Management continue to identify suitable operating investments and are hopeful of concluding a major acquisition during the year.

Although HGL achieved an increase in core profit during 2006, as I mentioned our businesses experienced several months of weaker than anticipated trading conditions in the second half of the financial year. I confirm that core earnings are in line with budget for the first quarter of this financial year.

HGL has shareholders funds in excess of $80m and net borrowings of approximately $14m. We have strong businesses and strategies to deliver value over the long term to our shareholders. With favourable economic conditions we look forward to an improved year ahead.

Your Board remains confident that dividend payments will continue to increase.

Again I thank all our joint venture partners, management and staff for their dedication in achieving these results

Thank You

PG Miller Chairman HGI 1 imited

HGL Limited ABN 25 009 657 961

investing in businesses