SERVICE STREAM LIMITED — Proxy Solicitation & Information Statement 2006

Nov 16, 2006

000001 հվվնդվելվլիյրեցկիոցնե MR JOHN SAMPLE FLAT 123 SAMPLE STREET SAMPLE STREET SAMPLE STREET SAMPLETOWN VIC 3030

17 November 2006

Dear Shareholder

Proposed merger with Service Stream Limited

On 27 July 2006, TCI and Service Stream Limited ("STR") announced a proposal to merge their businesses by way of scheme of arrangement proposed by STR (under which TCI will acquire all of the shares in STR).

The implementation of the merger involves several steps to be taken by the shareholders of TCI, which are the subject of the enclosed documents.

$\mathbf{1}$ . Notice of General Meeting and Related Documents

The meeting is an opportunity for shareholders of TCI to approve or not approve the merger with STR as several of the resolutions that will be considered at this meeting are critical to the merger, and it will not proceed if they are not passed by shareholders.

If you would like to vote at the scheme meeting (which the directors of TCI encourage you to do), your options are to:

• $(a)$ attend and vote at the meeting in person; or
• appoint someone as your proxy to attend and vote at the meeting on your behalf (see the instructions on $(b)$ the enclosed proxy form).

$\overline{2}$ . Prospectus in relation to the Offer of Shares in TCI

As part of the merger proposal between TCI and STR, the founders of TCI, Jim Cooney and Samantha Grant, have agreed to offer 9 million of the shares they currently hold in TCI to other TCI shareholders. The prospectus sets out this offer by Jim Cooney and Samantha Grant to sell you 3 TCI shares at \$0.87 per share for every 20 shares you currently hold.

If you decide to take up the offer (which you may choose to do for your full entitlement or for part only of your entitlement), you should complete the enclosed Acceptance and Entitlement Form and return it (as well as a cheque or bank draft for payment of the purchase price) to the address specified on the form.

$3₁$ Scheme Booklet

The Scheme Booklet was prepared by STR for its shareholders and is included in this pack for reference purposes only.

Additional information in relation to Resolution 1 4.

Further to the information set out in the enclosed Notice of General Meeting, we are required to provide the following additional information in relation to Resolution 1:

• the maximum extent of the increase in STR's voting power in TCI and the voting power of each its associates (see $(a)$ list below) that would result from STR's purchase of TCI Shares under the Share Sale Agreement would be from 19.9% to 45%;
• the voting power that each of STR and its associates would have in TCI as a result of its purchase of TCI Shares $(b)$ under the Share Sale Agreement would range from 36% to 45%; and
• the associates of STR are its subsidiaries, being: $(c)$

Communications Services Australia Consulting Pty Ltd ACN 095 043 057; Service Stream Communications Pty Ltd ACN 067 943 873; Service Stream Solutions Pty Ltd ACN 112 410 358; Milcom Communications Pty Ltd ACN 078 820 774; and Fibercom Technology Pty Ltd ACN 097 908 908.

If you have any queries in relation to the above, please do not hesitate to contact Mark Stackpool (CFO) at 9478 9999 or Stephe Wilks (the TCI director with day to day carriage of this matter) at 9226 9839.

You should also consult your professional advisers if you are in any doubt as to how to deal with the enclosed documents.

Yours sincerely,

Stephe Wilks Non-Executive Director Total Communications Infrastructure Limited

www.tciltd.com.au

ABN: 46 072 369 870

Total Communications Infrastructure Limited ACN 072 369 870

NOTICE OF GENERAL MEETING

AND RELATED DOCUMENTS

in relation to a general meeting to be held on 18 December 2006 at 2.00pm The Grace Hotel, 77 York Street, Sydney

Registered office: c/- Australian Company Secretaries Pty Ltd GPO Box 4231 Level 5 255 George Street SYDNEY NSW 2001 Telephone: (02) 9252 1933 Facsimile: (02) 9252 2487

Contents

	PART A: ABOUT THESE DOCUMENTS	3
	PART B: LETTER FROM THE BOARD	5
	PART C: NOTICE OF MEETING	$\overline{7}$
	PART D: EXPLANATORY MEMORANDUM	10
	PART E: GLOSSARY	38
	PART F: TERMS AND CONDITIONS OF TCI OPTIONS	42.
PART G:	OTHER TERMS AND CONDITIONS OF TCI OPTIONS (AND EXCHANGE OF OPTIONS)	44
	PART H: TERMS AND CONDITIONS OF EXCHANGE OPTIONS	52
	PART E AUDITOR'S NOMINATION	62
	PART J: INDEPENDENT EXPERT'S REPORT	63

PART A: ABOUT THESE DOCUMENTS

Shareholders of Total Communications Infrastructure Limited ("TCF") are requested to consider the Resolutions set out in the Notice as well as the contents of all other Documents in connection with the proposed Resolutions.

Part D of this notice comprises an Explanatory Memorandum relating to the Resolutions which you should read before attending the meeting or appointing a ртоху.

A glossary of the key terms used throughout this document is contained in Part E of these Documents.

Part J of this notice comprises an Independent Expert's Report.

Please read the whole of these Documents carefully, determine how you wish to vote and then cast your vote accordingly, either in person or by proxy.

You can vote by:

• attending and voting at the Meeting; or
• appointing someone as your proxy to attend and vote at the Meeting on your behalf, by completing and returning the Proxy Form to the Company in the manner set out on the Proxy Form (enclosed with these Documents). The Company must receive your duly completed Proxy Form by no later than 2pm on 16 December 2006.

Also accompanying this Notice of Meeting is:

• a Scheme Booklet relating to the scheme of arrangement between Service Stream $\bullet$ Limited ACN 008 027 978 (STR) and its members. The Scheme Booklet provides a detailed summary of the Merger and the process by which the Merger of STR and the Company will occur. Whilst it is addressed to members of STR, it provides a detailed summary of the various transactions relating to the Merger and the Merged Group following the Merger. It also contains the full text of the Merger Implementation Agreement; and
• a Prospectus. This is an offer by the founding TCI Shareholders, Jim Cooney and Samantha Grant, to TCI Shareholders with an Australian registered address (on the TCI share register) of a total of 9 million TCI Shares at \$0.87 each (the "Founders' Share Offer").

Importance of these resolutions

Resolutions 1, 2, 3 and 6 are conditions precedent to the Merger Implementation $\bullet$ Agreement. If they are not all passed, either STR or TCI may (after consultation with the other) terminate the Merger Implementation Agreement, in which event the Merger will not occur.

Entitlement to Vote and Entitlement to accept the Founders' Share Offer

• If you are registered as a shareholder of TCI at 7pm on 16 December, 2006 you $\bullet$ may vote at the Meeting.
• If you are registered as a shareholder of TCI at 7pm on 15 November 2006, with an Australian registered address (on the TCI share register), you are eligible to $\bullet$ accept the Founders' Share Offer.

PART B: LETTER FROM THE BOARD

15 November 2006

Dear Shareholder

On 27 July 2006 the Company and Service Stream Limited announced their proposal to merge. The Merger is unanimously supported by your directors, as we believe that it is in the interests of TCI Shareholders.

The Merger will be implemented by a Scheme of Arrangement between STR and its shareholders and through a series of other inter-related transactions which are described in more detail in this Notice of Meeting.

This meeting is an opportunity for TCI Shareholders to approve or not to approve the Merger, as several of the resolutions that will be considered at this meeting are critical to the Merger, and it will not proceed if they are not passed.

The Merger with STR will bring together two of Australia's leading technical services companies in the telecommunications sector and is expected to generate significant benefits for customers, shareholders and staff of both companies. As explained in the pages which follow, post merger there will be significant increases in liquidity, size and scale of the Company.

STR is a significant participant in the telecommunication industry, offering a diverse range of services including design, installation and maintenance of networks, recoverable works, technical labour service, customer administration services, logistic services and contact centre solutions.

After the Merger, the Merged Group will be called Service Stream Limited and its board of directors will comprise a combination of key executives and independent members from both the STR and TCI Boards including Patrick Flannigan (Managing Director and CEO), Rod Stanton and Michael Doery (Executive Directors), Stephe Wilks, Adrian Field, Russell Small and Lyn Davies (Non-Executive Directors), with Lyn Davies being appointed as Chairman. The Board will be comprised of two directors who were directors of TCI prior to the Merger and five directors who were directors of STR prior to the Merger.

As part of the Merger the Founding TCI Shareholders, Jim Cooney and Samantha Grant will be selling their entire holding in the Company (45%) the details of which are set out in the Explanatory Memorandum. Of this holding, a total of 9 million shares are offered to TCI Shareholders with an Australian registered address (on the TCI share register) at $$0.87 - this$ is the Founders' Share Offer. See the attached Prospectus for further details of this offer.

The Company has employed PKF Corporate Advisory Services to advise on the terms of the Merger from the perspective of TCI Shareholders. Their report forms Part J of these Documents. They have concluded that the proposed acquisition of TCI Shares by STR is fair and reasonable to the existing TCI Shareholders (excluding the founding TCI Shareholders, Jim Cooney and Samantha Grant) in the context of the Merger.

Please carefully read the Documents which follow, including the Resolutions, the Explanatory Memorandum and the Independent Expert's Report. If you are in any doubt as to any matter, please do not hesitate to contact Mark Stackpool (the Company CFO) at 9478 9999 or Stephe Wilks (the TCI Director with day to day carriage of this matter) at 9226 9839. You should also consult your professional advisers if you are in any doubt.

Your TCI Directors unanimously recommend that you vote to approve the Resolutions which will be put at the Meeting on 18 December 2006. The Chairman of the meeting will be Trevor Duff. He has indicated that he will vote all undirected proxies in favour of all Resolutions.

The Directors unanimously recommend that you vote in favour of all the Resolutions. Please note that where a recommendation in this notice is made by TCI Directors, the chairman of TCI, Jim Cooney, is not included in that recommendation. This is because it would be inappropriate for him to make a recommendation in the light of his material personal interest in the sale of his TCI Shares and the outcome of the Merger.

Your vote is important and we encourage you to either attend the Meeting in person or complete the Proxy Form accompanying the Notice and return it in accordance with the directions provided.

Yours sincerely

The Board of Directors

PART C: NOTICE OF MEETING

Notice is given that a General Meeting (the "Meeting") of Total Communications Infrastructure Limited ("TCI") will be held at The Grace Hotel, 77 York Street, Sydney NSW on 18 December 2006 at 2pm.

DEFINITIONS

Unless expressly provided otherwise, each capitalised term used in this Notice has the same meaning as is ascribed to it in Part E - Glossary of Terms.

For explanation, please see Part $D$ – Explanatory Memorandum.

BUSINESS

Sale of TCI Shares by the Founding TCI Shareholders to Service Stream Limited

Resolution 1	To consider and, if thought fit, pass the following ordinary resolution:
	"That the sale and purchase of the Founding TCI Shareholders" Shares (by STR or the Founding TCI Shareholders, as the case may be), as contemplated by the Share Purchase Agreement, and any other transaction or appointment contemplated by that agreement, be approved in accordance with the requirements of item 7 of the table in section 611 of the Corporations Act."
NOTE:	Voting restrictions apply. See Explanatory Memorandum attached.

Financial assistance

Resolution 2	To consider and, if thought fit, pass the following special resolution:
	"That the giving of financial assistance by TCI and any of its subsidiaries (in accordance with Part 2J.3 of the Corporations Act) as required to give effect to the transactions contemplated by the Merger Implementation Agreement and the Share Purchase Agreement and any other transaction agreed between TCI and STR for the purposes of clause $2.1(i)(ii)$ of the Merger Implementation Agreement, be approved."
NOTE:	Voting restrictions apply. See Explanatory Memorandum attached.

Selective capital reduction

Resolution 3	To consider and, if thought fit, pass the following special resolution:
	"That, subject to the Scheme being Effective, a selective capital reduction and cancellation of the TCI Shares the subject of the Share Purchase Agreement, for nil consideration payable by TCI, be approved in accordance with the requirements of Chapter 2J.1 of the Corporations Act."
NOTE:	Voting restrictions apply. See Explanatory Memorandum attached.

Change of name to Service Stream Limited

Resolution 4 To consider and, if thought fit, pass the following special resolution:

"That, subject to:

• $(a)$ Implementation of the Scheme; and
• $(b)$ the change of name of STR,

and in accordance with section 157 of the Corporations Act, TCI change its name from "Total Communications Infrastructure Limited" to "Service Stream Limited."

Issue of TCI Options to Rod Stanton

Resolution 5	To consider and, if thought fit, pass the following ordinary resolution:
	"That, subject to Implementation of the Scheme and pursuant to the provisions of Listing Rule 10.11, 2,000,000 TCI Options be issued to Rod Stanton."
NOTE:	Voting exclusions apply. See Explanatory Memorandum attached.

Issue of Replacement Options to STR Directors who will join the TCI Board

Resolution 6 To consider and, if thought fit, pass the following ordinary resolution: "That, subject to Implementation of the Scheme and pursuant to the provisions of Listing Rule 10.11, and in accordance with the Merger Implementation Agreement, under which the STR Options held by the STR Director Optionholders are to be cancelled, Replacement Options be issued to the STR Director Optionholders on the terms as set out in Schedule 1 to the Merger Implementation Agreement." Voting exclusions apply. NOTE: See Explanatory Memorandum attached.

Removal of auditor

Resolution 7 To consider and, if thought fit, pass the following ordinary resolution: "That, subject to Implementation of the Scheme and pursuant to section 329(1) of the Corporations Act, VJ Ryan & Co be removed as auditor of the Company with effect from the Effective Date."

Appointment of auditor

Resolution 8 To consider and, if thought fit, pass the following special resolution: "That, in accordance with section 327D of the Corporations Act and subject to Implementation of the Scheme and Resolution 7 being passed, Deloitte Touche Tohmatsu, having consented to act as auditor of TCI, be appointed as the auditor of TCI with effect from the Effective Date."

Dated 15 November 2006

BY ORDER OF THE BOARD

method in the second state of the second state of the second state of the second state of the second state of

Mark Stackpool Company Secretary

PART D: EXPLANATORY MEMORANDUM

GENERAL EXPLANATION

Resolutions 1, 2, 3 and 6 are conditions precedent to the Merger Implementation Agreement. If they are not passed, either STR or TCI may (after consultation with the other) terminate the Merger Implementation Agreement, in which event the Merger will not occur.

Resolutions 1, 2 and 3 are required to effect part of a series of associated transactions which together relate to the proposed Merger. The Merger itself will be effected by scheme of arrangement between STR and its shareholders (the "Scheme"). The Scheme Booklet which is included with this Notice of Meeting sets out in detail the terms of the Merger and all the associated transactions.

Your directors strongly recommend you read the Scheme Booklet in its entirety and in particular the sections to which you are referred in this Notice of Meeting.

The Scheme and the associated transactions are summarised below.

The Scheme

Under the proposed Scheme, TCI will acquire all of the shares in STR. STR Shareholders will receive two New TCI Shares for every five STR Shares they own.

After the Scheme takes effect, the TCI Board will comprise seven directors, being the five current directors of STR and two directors nominated by TCI. After the allotment of New TCI Shares to STR Shareholders and the cancellation of the TCI Shares held by STR, the share register of TCI will comprise:

• as to 50.5%, TCI Shareholders who are currently STR Shareholders; and
• as to 49.5%, existing TCI Shareholders.

This assumes that:

• all 9 million TCI Shares offered to existing TCI Shareholders prior to the $\bullet$ Scheme taking effect have been taken up by them;
• STR Shareholders approve the issue of 1 million STR Shares to each of Patrick $\bullet$ Flannigan (Managing Director of STR and the proposed Managing Director of the Merged Group) and Michael Doery (CFO of STR and the proposed CFO of the Merged Group) at the STR Annual General Meeting); and
• the percentage shareholdings of the TCI share register following the Merger do $\bullet$ not include any dilution for any TCI Options issued in accordance with the Merger.

Following Implementation of the Scheme, TCI will change its name to "Service Stream Limited" - this will be effected by the passing of Resolution 4.

Associated transactions

The founders of TCI, Mr James Cooney and Ms Samantha Grant (the "Founding TCI Shareholders" now live in the United Kingdom and are pursuing unrelated business ventures in Europe. Together they hold approximately 45% of TCI Shares, being 49,324,308 shares. To enable them to dispose of their shareholding, they agreed with STR in the Share Purchase Agreement:

• subject to the Merger proceeding, to offer 9 million shares to TCI Shareholders at $\bullet$ \$0.87 per share; and
• subject to the approval of TCI Shareholders (at the Meeting), to sell the balance of $\bullet$ their shareholding (including any TCI Shares not taken up by existing TCI Shareholders) to STR at \$1.0137 per share.

The Founding TCI Shareholders have in the Option Deed granted a call option to STR which becomes effective if a proposal (other than the Scheme) is announced before 31 March 2007 for a takeover, restructure or other change of control of TCI. In these circumstances, STR may exercise the call option to purchase such number of TCI Shares as will give STR voting power of 19.9% in TCI (or less, at STR's election).

The purchase price for the balance of the Founding TCI Shareholders' shares will not be payable by STR to the Founding TCI Shareholders unless and until the Scheme is Effective.

Payment for the balance of the Founding TCI Shareholders' shares will be made in two tranches:

• the full amount owing, less \$10 million, will be payable on the day five Business Days after the second court hearing, assuming the court approves the Scheme ("Initial Payment"); and
• the remaining \$10 million will be payable, interest free, two years after the $\bullet$ Initial Payment is made (or at an earlier time if the market price of the TCI Shares reaches certain benchmarks) ("Second Payment").

If the Scheme does not take effect for any reason, the shares sold to STR by the Founding TCI Shareholders will be re-transferred to the Founding TCI Shareholders, by exercise of put or call options, for \$1.0137 per share.

TCI has agreed to seek shareholder approval for the grant of financial assistance in respect of STR's acquisition of TCI Shares from the Founding TCI Shareholders -Resolution 2. The financial assistance proposed to be given by TCI comprises:

• a first ranking fixed and floating charge over the Merged Group's assets and $\bullet$ uncalled capital to be granted to Westpac to secure the financial accommodation which STR will obtain from Westpac to fund the Initial Payment;
• a cross guarantee in favour of Westpac; and

a second ranking fixed and floating charge over the assets of TCI and all the subsidiaries of the Merged Group in favour of the Founding TCI Shareholders to secure payment by STR of the Second Payment for the TCI Shares.

The TCI Shares acquired by STR will be cancelled pursuant to a selective capital reduction, subject to the approval of TCI Shareholders (Resolution 3) and STR (as the shareholder whose shares are to be cancelled). There will not be any amount payable to STR on cancellation of these shares.

The selective capital reduction and cancellation will increase the earnings per TCI Share after the Merger from that which would have prevailed had the selective capital reduction not occurred.

Frequently Asked Questions

This section provides summary answers to some basic questions that TCI Shareholders may have in relation to the Merger and the Scheme. This section should be read in conjunction with this Notice and the Scheme Booklet.

General questions

• What has happened? On 27 July 2006, STR and TCI announced a proposal to merge their businesses by way of scheme of arrangement proposed by STR. Under the Scheme, TCI will acquire all of the Scheme Shares in consideration of the issue of the New TCI Shares to existing STR Shareholders.
• Who is STR? STR is a public company listed on the Australian Stock Exchange with annual revenues exceeding \$170 million. The company is an Australian owned and operated industrial services enterprise with proven outsourced field force management, technical support, customer assistance and asset management capabilities. STR aims to generate superior returns for shareholders by leveraging its equipment installation and maintenance capabilities across a range of infrastructure based industries. See section 2 of the Scheme Booklet for a more detailed summary of STR.
• The Merger will be effected by way of an STR scheme of How will the Merger arrangement. be effected?

A meeting of STR Shareholders will be held that requires shareholders to vote in favour of the Merger (together with Court and other regulatory consents) for the Merger to proceed.

This Notice is for a general meeting of TCI Shareholders to consider certain matters associated with the Merger.

What happens if the Scheme is	The Scheme, if implemented, will have the following effect:
implemented?		all of the STR Shares on issue at the Record Date ("Scheme Shares") will be transferred to TCI;
		STR Shareholders will receive shares in TCI ("New TCI Shares ") in exchange for the transfer of their Scheme Shares to TCI - that is, they will become shareholders in the Merged Group;
		the STR Group will become wholly owned by TCI;
		STR will be delisted from ASX; and
	٠	TCI will change its name to "Service Stream" Limited".
		The board of directors of the Merged Group will comprise:
		John Llewellyn (Lyn) Davies (STR's current Chairman) as Chairman;
		one non-executive director from TCI (Stephe Peter Wilks);
	٠	two non-executive directors from STR (Adrian James) Field and Russell Andrew Small);
		one executive director from TCI (Rodney Allen Stanton, current Chief Executive Officer of TCD: and

two executive directors from STR (being STR's $\bullet$ Managing Director and Chief Executive Officer, Patrick Joseph Flannigan as Managing Director and Chief Executive Officer of the Merged Group and STR's executive director and Chief Financial Officer, Michael Edward Doery, as executive director and Chief Financial Officer of the Merged Group).

The management structure of the Merged Group will be as follows:

• Managing Director and CEO: Patrick Flannigan; $\bullet$
• Executive Director and CFO: Michael Doery; $\bullet$
• Executive Director and Director of Operations: Rod ٠ Stanton;
• General Manager Service Stream Communications $\bullet$ (including the operations of Fibercom): Joe Caporale;
• General Manager Service Stream Solutions: John $\bullet$ Grame; and

	General Manager - TCI: Rod Stanton.
	Profiles of the continuing STR Directors are set out in STR's annual report for the financial year ended 30 June 2006. The relevant qualifications and experience of Stephe Wilks and Rod Stanton are set out in TCI's annual report for the financial year ended 30 June 2006.
	For detailed financial information relating to STR, TCI and the Merged Group, see section 4 of the Scheme Booklet.
What proportion of TCI will current TCI Shareholders hold after the Merger?	Existing TCI Shareholders will move from holding 100% of TCI to approximately 49.5% on an undiluted basis of the enlarged "TCI Group" which will hold STR as a subsidiary. This takes into account completion of the TCI capital reduction and share cancellation and assumes that all 9 million TCI Shares offered to existing TCI Shareholders prior to the Scheme taking effect have been taken up by them and also assumes that STR Shareholders approve the issue of 1 million STR Shares to each of Patrick Flannigan and Michael Doery at the STR Annual General Meeting.
Why is the Merger being proposed?	The proposed Merger will be beneficial to TCI for a number of reasons, including that it will:
	expand TCP's product and service offering;
	result in consolidation of robust business models combining long term contracts with specialised turnkey project based work;
	in combination of experienced result $\mathbf{a}$ an management team and board;
	provide an ability to leverage existing customer relationships;
	enable diversification opportunities for staff and may give rise to improved retention of staff;
	result in broader capability in the telecommunications sector;
	result in increased national coverage; and
	result in no material foreseeable cannibalisation of revenues.
	The reasons why you should support the Merger and vote in favour of the Resolutions and possible disadvantages of the Merger are discussed under the heading "Advantages, Disadvantages and Risks" below in this Explanatory Memorandum. The TCI Directors have considered these matters in forming their recommendation that you vote in

favour of the Resolutions.

What will be the name of the Merged Group?	The Merged Group will be called "Service Stream Limited".
What are the risks associated with the Scheme?	Some of the key risks that you should consider and which may affect the performance of TCI, the Merged Group and the value of TCI Shares are discussed under the heading "Advantages, Disadvantages and Risks" below in this Explanatory Memorandum.
What should I do?	Read this Explanatory Memorandum, Independent Expert's Report and Scheme Booklet carefully (noting that the Scheme Booklet is primarily a document addressed to STR Shareholders) and then vote by attending the Meeting or by appointing a proxy to vote on your behalf.
	If you are in any doubt about what you should do, seek advice from your independent professional adviser.
Scheme Consideration
What will TCI Shareholders receive if the Scheme is approved?	TCI Shareholders will continue to hold the same number of shares in the Merged Group that they currently hold in TCI, although their percentage entitlement in the total number of TCI Shares will be reduced.
Voine
When and where will the TCI Meeting be held?	The TCI Meeting will be held on 18 December 2006 at The Grace Hotel, 77 York Street, Sydney, Australia, commencing at 2.00pm.
Am I entitled to vote?	You are entitled to vote at the TCI Meeting if you are a TCI Shareholder as at 7pm on 16 December 2006. This means you will have to be registered as a shareholder of TCI before the close of business on Friday 15 December 2008. You may vote in person or by completing and lodging the personalised Proxy Form that is enclosed with these Documents, provided that Proxy Forms must be received by TCI no later than 2.00 pm on 16 December 2006.
What do the TCI Directors recommend?	The TCI Directors unanimously recommend that you support the Merger and vote in favour of the Resolutions.

What is the opinion of the Independent Expert?	As set out in the Independent Expert's Report, the Independent Expert concluded that the proposed acquisition of the TCI Shares by STR is fair and reasonable to the existing TCI Shareholders (excluding the Founding TCI Shareholders), in the context of the Merger. The Independent Expert's Report is set out in Part J of these Documents.
How do I vote?	You may vote in person by attending the TCI Meeting or by completing and lodging the Proxy Form that is enclosed with these Documents.

Am I entitled to If you are registered as a shareholder of TCI at 7pm on accept the Founders' 15 November 2006 you will be entitled to accept the Share Offer to TCI Founders' Share Offer to TCI Shareholders. Note that the Shareholders? offer and acceptance are subject to the Scheme becoming Effective.

STR's acquisition of TCI Shares

What is happening with the TCI Shares held by the Founding TCI Shareholders?

The Founding TCI Shareholders currently hold 49,324,308 TCI Shares. Subject to the Scheme becoming Effective, they will offer 9 million of those shares to existing TCI Shareholders at \$0.87 per TCI Share. STR will acquire all TCI Shares held by the Founding TCI Shareholders (other than those taken up by existing TCI Shareholders under the Founders' Share Offer) at a price of \$1.0137 per share. The purchase price will be payable by STR in two tranches.

If the Scheme is not approved by the Court, the Founding TCI Shareholders may exercise a call option to repurchase any TCI Shares it has sold to STR, or STR may exercise a put option compelling the Founding TCI Shareholders to repurchase the TCI Shares. In either case, the Founding TCI Shareholders would repurchase the shares for the price payable by STR for the initial purchase.

If a proposal (other than the Scheme) is announced before 31 March 2007 for a takeover, restructure or other change of control of TCI, STR may exercise a call option to purchase TCI Shares equating to up to 19.9% of voting power in TCI from the Founding TCI Shareholders.

What will happen with the TCI Shares	If the Merger takes effect, TCI will undertake a selective capital reduction to cancel the TCI Shares held by STR. The
owned by STR?	capital reduction must be approved by a special resolution of
	TCI Shareholders (Resolution 3) and a further meeting of
	TCI Shareholders at which only STR is entitled to vote (as
	the shareholder of TCI whose shares are to be cancelled).
	No consideration will be payable to STR for the cancellation
	of its TCI Shares. The capital reduction and share
	cancellation are explained further in section 3 of this
	Explanatory Memorandum.

Financial assistance
What is financial assistance?	The Corporations Act permits a company to financially assist a person to acquire shares in itself or a holding company of the company if the giving of the financial assistance is authorised by:
	a special resolution of the shareholders of the company giving the financial assistance; and
	in the case of a company that will be a subsidiary of a listed domestic corporation immediately after the acquisition, a special resolution of shareholders of the holding company.
	Financial assistance can involve a number of things, including the giving of security in support of borrowings or an acquisition.
What are the details	It is proposed that TCI will grant:
of the proposed financial assistance?	a first ranking fixed and floating charge over the Merged Group's assets and uncalled capital to Westpac, to secure the financial accommodation which STR will obtain from Westpac to fund the Initial Payment;
	a cross guarantee in favour of Westpac; and
	a second ranking fixed and floating charge over the Merged Group's assets, and will also approve a similar fixed and floating charge over the assets of each subsidiary of the Merged Group in favour of the Founding TCI Shareholders to secure payment by STR of the Second Payment for the TCI Shares.

Advantages, Disadvantages and Risks

Advantages of the Merger for TCI Shareholders

The Merger will expand TCI's product and service offering

The Merged Group will have an extensive range of telecommunications service offerings, and will be in a strong position to offer end-to-end solutions in the energy and other utility sectors. The Merged Group will also have an enhanced ability to service client infrastructure beyond the telecommunications industry.

Consolidation of robust business models

The Merged Group will earn revenue from long-term contracts and specialised turnkey project based work over an expanded range of customers which will reduce any potential volatility in revenues and reduce the earnings risk profile of the Merged Group.

Significant cash flow generation

The Merger is likely to result in strong positive free cash flow estimated to be approximately \$19 million on a pro forma FY2007 basis for the Merged Group, which provides the Merged Group with significant scope to grow the business and provide quality returns to shareholders in the form of regular dividends.

No material foreseeable cannibalisation of revenues

The Merger is unlikely to result in any material cannibalisation of revenue due to the complementary nature of the businesses and the lack of 'cross over' between products and services offered by STR and TCI.

Combination of experienced management team and board

The management and board of the Merged Group will comprise key executives and board members from STR and TCI, who together provide a great depth of experience in the telecommunications sector and this provides the management with a stronger platform to continue to grow the business.

Ability to leverage existing customer relationships

A stronger base of customer relationships to enhance new growth opportunities across all core business areas will result through the combination of the STR's and TCI's current customer bases.

Diversification opportunities for staff and improved retention

The Merger is expected to benefit staff of both businesses through broader career opportunities.

Broader capability in the telecommunications sector

Successful completion of the Merger will combine complementary businesses to provide the Merged Group's target customers with a combined service offering with greater appeal than each offering individually. The Merger will also provide the opportunity to operate from a broader base to support growth and more efficient development and provisioning of products and services through access to STR's and TCI's respective intellectual property.

Increased national coverage

The Merged Group will expand to a total of over 2,000 staff operating across 19 locations Australia-wide, providing a substantial presence in the telecommunications sector.

Complementary businesses, capturing full scope of telecommunications sector

The Merged Group will bring together two complementary businesses to form a leading provider of integrated services and solutions to the telecommunications industry in Australia. It will combine STR's services of design, installation and maintenance of networks, recoverable works, technical labour service and customer administration, logistic services and contact centre solutions with the extensive wireless communications services offered by TCI.

Increased scale in capital markets

The Merger is expected to benefit shareholders by creating a larger listed company than either STR or TCI on a stand-alone basis, which may attract a greater level of broker coverage resulting in increased market awareness of the Merged Group.

Improved share liquidity

It is expected that shares in the Merged Group are likely to be more liquid than the existing shares in either STR or TCI as a result of the Merger.

Increase TCI Share value

TCI Shares have experienced an increase in value since the announcement of the Merger on 27 July 2006. If the Merger does not proceed, it is likely that TCI's share price will fall.

Possible disadvantages of the Merger for TCI Shareholders

There are a number of risks and disadvantages that may result from the Merger that you should consider when making a decision on how to vote. The TCI Directors acknowledge these risks and disadvantages. However, they believe that the advantages outlined above outweigh the disadvantages that may arise from the Merger.

Some of the possible risks of the Merged Group's business are discussed below and some of the possible disadvantages are described below. Most of the risks are risks that TCI faces in its business today.

TCI Shareholders will be exposed to the risks specific to STR's operations $\bullet$

You may wish to maintain the same portfolio risk profile for your investment and will need to seek alternative investment. In doing so, you may find it difficult to find another investment with a similar risk and dividend yield to that of TCI and may incur transaction costs in undertaking any new investment.

Existing TCI Shareholders will not hold 100% of TCI

Existing TCI Shareholders will hold less than 50% of TCI after the Merger.

Exposure to integration risk $\bullet$

Unforeseen issues and complications may arise during the integration of STR and TCI which may result in a delay in the integration process or in expected strategic benefits not being fully achieved.

Some TCI Shareholders may disagree with the Directors of TCI and the Independent Expert

You may believe that the Merger and the consideration offered by TCI to STR Shareholders pursuant to the Scheme are not in the best interest of TCI Shareholders. Some TCI Shareholders may believe that TCI will deliver greater returns to TCI Shareholders over the long term by not merging with STR.

Risks

See section 5 of the Scheme Booklet in relation to the General and Specific risks attached to the Merger.

In addition to the risks set out in the Scheme Booklet, the TCI Directors also see the following specific risks for TCI:

• After the Merger, TCI will be controlled at board and management level by $\bullet$ personnel who were STR personnel prior to the Merger.
• TCI has established relationships with its customers. There is a possibility that $\bullet$ the customers of TCI will not approve of the Merger and withdraw their custom. TCI relies heavily on a small number of customers and accordingly the loss of a customer could have a material impact upon TCI. As at the date of this Notice, TCI is not aware of any negative reaction whatsoever from any of its customers to the announcement of the proposed Merger.

Resolution 1 – Transfer of TCI Shares to STR 1.

That the sale and purchase of the Founding TCI Shareholders' Shares (by STR or the Founding TCI Shareholders, as the case may be), as contemplated by the Share Purchase Agreement, and any other transaction or appointment contemplated by that agreement, be approved in accordance with the requirements of item 7 of the table in section 611 of the Corporations Act.

Section 606 of the Corporations Act prohibits certain acquisitions of relevant interests in voting shares. Section $606(c)(i)$ prohibits a transaction where a person's voting power in the company increases from 20% or below to more than 20%. However a person may acquire such a relevant interest if acquired under one of the exceptions listed in section 611 of the Corporations Act.

Section 611, item 7 of the Corporations Act validates the acquisition of a relevant interest where approval is obtained by a resolution passed at a general meeting of the target company in which the acquisition is made, if:

• no votes are cast in favour of the resolution by: (a)
• the person proposing to make the acquisition and their Associates; $\bullet$ $\overline{or}$
• the persons (if any) from whom the acquisition is to be made and $\bullet$ their Associates; and
• the members of the target company were given all information known to $(b)$ the person proposing to make the acquisition or their Associates, or known to the target company, that was material to the decision on how to vote on the resolution.

$1.1$ TCI Shareholder approval for acquisition of TCI Shares by STR

Under the terms of the Share Purchase Agreement, STR is to acquire all TCI Shares held by the Founding TCI Shareholders that are not taken by TCI Shareholders or any underwriter in the Founders' Share Offer (of 9 million TCI Shares). The minimum number of TCI Shares that STR will acquire will be 40,324,308 shares, or approximately 37% of all issued share capital in TCI prior to the Merger. The actual number of TCI Shares that STR acquires will be dependent upon the extent to which the existing TCI Shareholders take up the pro rata offer made by the Founding TCI Shareholders in relation to a maximum of 9 million TCI Shares.

As a result, under the terms of the Share Purchase Agreement, STR will acquire a relevant interest in TCI Shares for which TCI requires approval under section 611 item 7 of the Corporations Act.

The passing of the resolution will provide the approval necessary to allow STR to obtain the relevant interest in the TCI Shares referred to above.

$1.2$ Voting Restriction

In accordance with section 611 item 7 of the Corporations Act, TCI will disregard any votes cast in favour of Resolution 1 by:

• the Founding TCI Shareholders or their Associates; and $\bullet$
• STR or any Associates of STR.

However TCI will not disregard a vote if:

• it is east by a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or
• it is east by the person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Independent Expert's Report $1.3$

The TCI Directors commissioned PKF Corporate Advisory Services to prepare an Independent Expert's Report in relation to the proposed Merger. The Independent Expert's Report is reproduced in Part J of these Documents.

As set out in the Independent Expert's Report, the Independent Expert concluded that the proposed acquisition of the TCI Shares by STR is fair and reasonable to the existing TCI Shareholders (excluding the Founding TCI Shareholders), in the context of the Merger.

Before you determine how you might vote on Resolution 1, the TCI Directors refer you to the Independent Expert's Report in Part J of these Documents.

TCI Shareholders are advised to read the Independent Expert's Report in its entirety before deciding on how they will vote on this Resolution.

$1.4$ Taxation Consequences

The transfer of the shares from the Founding TCI Shareholders to STR does not have adverse taxation impacts or consequences to either TCI or TCI Shareholders.

Tax implications of the Merger generally

The Merger generally does not have any adverse taxation impacts or consequences for TCI or TCI Shareholders, however the following risks are noted.

STR is acquiring shares from the Founding TCI Shareholders at \$1.0137 per share. As noted above, this does not have adverse taxation consequences for TCI or the continuing TCI Shareholders.

The continuing TCI Shareholders are offered to purchase a proportion of these shares at \$0.87. This may indicate the shares sold to continuing TCI Shareholders are not at an arm's length price relative to current share market or other values. Whilst it is possible that the market value substitution rules under the legislation in relation to CGT may result in these shares being purchased at their market value, it is TCI's view that both transactions are at arm's length such that no adverse consequences arise.

The acquisition of STR by TCI as a member of an existing tax consolidated group or, where that it not the case, the formation of a tax consolidated group by the two companies, will require application of the 'push down' method under the tax consolidation rules. Under this method it is possible that a capital gain could crystallise for the head company where STR's cash equivalent assets exceed the allocable cost amount at the time of the acquisition. The amount of this excess is a capital gain for TCI in accordance with s 104-510 of the Income Tax Assessment Act 1997.

Finally, the Merger will result in a failure of continuity of ownership which will be relevant to the ability of the Merged Group including TCI to claim deductions for bad debts, unless the Merged Group can satisfy the same business test. The same business test is not available to corporate groups whose turnover is greater than \$100 million. As the annual revenues of STR were \$170 million, a deduction for bad debts, if any, would not be available. The companies have no losses carried forward that would not be available for recoupment as a result of the Merger.

$\overline{2}$ . Resolution 2 - financial assistance

That the giving of financial assistance by TCI and any of its subsidiaries (in accordance with Part 2J.3 of the Corporations Act) as required to give effect to the transactions contemplated by the Merger Implementation Agreement and the Share Purchase Agreement and any other transaction agreed between TCI and STR for the purposes of clause 2.1(i)(ii) of the Merger Implementation Agreement, be approved.

The information set out in this section constitutes a disclosure statement for the purposes of section 260B(4) of the Corporations Act.

2.1 Particulars of financial assistance proposed to be given

TCI is seeking shareholder approval for the grant of financial assistance in respect of STR's acquisition of TCI Shares from the Founding TCI Shareholders. The financial assistance proposed to be given by TCI comprises:

• a first ranking fixed and floating charge over the Merged Group's assets and uncalled capital to be granted to Westpac to secure the financial accommodation which STR will obtain from Westpac to fund the Initial Payment;
• a cross guarantee in favour of Westpac of the debts of STR; and

a second ranking fixed and floating charge over the assets of TCI and all the subsidiaries of the Merged Group in favour of the Founding TCI Shareholders to secure payment by STR of the Second Payment for the TCI Shares:

(together the "TCI Finance Documents").

$2.2^{\circ}$ Reasons for the proposal for financial assistance by TCI

If the Merger proceeds, the Initial Payment is payable after the Scheme takes effect.

STR has procured financial accommodation from Westpac to fund the Initial Payment. It is a condition of the financial accommodation that security be provided by both TCI and the STR Group.

$2.3$ Effect of the proposed financial assistance on the Merged Group

• This section sets out financial and other relevant information in relation to $(a)$ the effect of the grant of financial assistance by TCI to STR and the Merged Group.
• $(b)$ In accordance with section 260A(1) of the Corporations Act, TCI is seeking shareholder approval for the grant of financial assistance to the Merged Group. Section 260B(4) of the Corporations Act requires TCI to provide all the information known to the company which is material to the decision on how to vote on the financial assistance resolution by TCI Shareholders.
• The financial assistance to be granted by TCI to STR and the Merged $(c)$ Group is related to the TCI Finance Documents set out in section 2.1 above. This financial assistance to be granted to Merged Group and the Founding TCI Shareholders, as set out in section 2.1 above, comprises certain first and second ranking charges over the Merged Group's assets and uncalled capital and a cross guarantee.
• The TCI Directors have assessed the effect of granting financial assistance $(d)$ by examining the following criteria:
• compliance with the covenant requirements of the Westpac financial $\bullet$ accommodation, set out in section $2.3(f)$ below; and
• the Merged Group's ability to meet the Second Payment for the TCI Shares to the Founding TCI Shareholders due on or around 28 December 2008 (or at an earlier time if the market price of TCI Shares reaches certain benchmarks).
• Accordingly, the assessment has had regard as to whether: $(e)$
• the forecast financial performance and the statement of cash flows $\bullet$ of the Merged Group and the resultant financial measures meet the

requirements of the financial covenants set out in the Westpac financial accommodation; and

• the Merged Group defaults in respect to the payments owing to either Westpac or the Founding TCI Shareholders under the TCI Finance Documents.
• Set out below is a summary of the Westpac financial covenants and other $(f)$ financial undertakings:
• Maintenance of a minimum interest cover ratio of 4.5 times. The $\bullet$ interest cover ratio is defined as EBITDA/Interest Expense ("Interest Cover");
• Shareholders funds of the Merged Group (i.e. share capital plus $\bullet$ reserves plus retained earnings) equal to the greater of \$50 million or 85% of the prior year balance:
• Maximum debt to EBIT ratio to be no more than 3.0 times, to $\bullet$ reduce to 2.5 times by 30 June 2008; and
• Without the prior written consent of Westpac:
  • dividends to be restricted to 65% of NPAT: $\circ$
  • capex restricted to \$3 million in any one year; and $\circ$
  • no financial accommodation in excess of \$1 million in total $\circ$ other than already agreed during the due diligence.
• $(g)$ The terms of the security over the assets of TCI and all the subsidiaries of the Merged Group in favour of the Founding TCI Shareholders will contain financial covenants similar to those required by Westpac referred to above.
• Based on the financial information of the Merged Group set out in section $(h)$ 4 of the Scheme Booklet, summarised below is a comparison between financial covenants required under the Westpac financial accommodation and the forecast performance and other financial measures of the Merged Group for the year ending 30 June 2006.

Financial covenants	Pro forma Merged Group for the year ending 30 June 2006	Westpac financial accommodation covenants for financial accommodation
Interest Cover	10.65x	4.5x
Shareholders funds of	$$97.97$ million	$$50$ million (1)
the Merged Group post
Merger
Debt to EBIT (2)	l Ix	No more than 3x and to
		reduce to 2.5x by 30 June
		2008

• (1) For the purposes of this calculation, we have referred to the minimum shareholders' funds as set out in the Westpac financial covenants.
• For the purpose of this calculation, we have excluded Merged $(2)$ Group's cash balance as at 30 June 2006.
• Based on the information contained in the table set out above and the $(i)$ forecast financial performance of the Merged Group, the directors of STR and TCI have no reason to believe that the Merged Group will not comply with its obligations in connection with the financial covenants included in the Westpac financial accommodation. Accordingly the financial assistance provided by TCI to STR and the Merged Group in relation to the Westpac financial accommodation will not materially prejudice the interests of the Merged Group or its shareholders or the ability to pay its creditors.
• As set out in section 2.1 of this Explanatory Memorandum, TCI is also $(i)$ granting financial assistance to the Merged Group by virtue of the second ranking fixed and floating charge over the Merged Group's assets in favour of the Founding TCI Shareholders to secure the Second Payment in respect of the relevant TCI Shares.
• The Second Payment (i.e. \$10 million cash) is payable interest free two $(k)$ years after the Initial Payment (which is anticipated to be on or around 28 December 2006) or earlier if the market price of TCI Shares reaches certain benchmarks. Accordingly, the Second Payment is expected on or around 28 December 2008.
• $(1)$ Based on the cash balance of the Merged Group, the forecast financial performance and statement of cash flows of the Merged Group for the year ending 30 June 2007 and the head room available on the Westpac financial accommodation, the TCI Directors have no reason to believe that the Merged Group would be unable to meet its obligations in connection with the Second Payment to the Founding TCI Shareholders. Accordingly the financial assistance provided by TCI to the Merged Group in relation to the Second Payment will not materially prejudice the interests of the Merged Group or its shareholders or the ability to pay its creditors.

Consequences if TCI Shareholders do not approve financial assistance $2.4$

If the giving of financial assistance by TCI is not approved by the TCI Shareholders, under the terms of the Merger Implementation Agreement, either STR or TCI may terminate the Merger Implementation Agreement (after consulting with the other party to consider alternative methods which might enable the Scheme to proceed) and consequently the Merger would not proceed. In that circumstance, TCI may be required to pay the break fee to STR, as described in section 8.2 of the Scheme Booklet.

$2.5^{\circ}$ Voting Restrictions

In accordance with section $260(B(1)(a)$ of the Corporations Act, TCI will disregard any votes cast in favour of Resolution 2 by STR or its Associates.

However TCI will not disregard a vote if:

• it is east by a person as 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 a proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 3 – Selective reduction and cancellation of TCI 3. Shares held by STR

That, subject to the Scheme being Effective, a selective capital reduction and cancellation of the TCI Shares the subject of the Share Purchase Agreement, for nil consideration payable by TCI, be approved in accordance with the requirements of Chapter 2J of the Corporations Act.

$3.1$ The proposal

TCI Shareholders are asked to approve the selective capital reduction and cancellation of the TCI Shares that will be held by STR in accordance with Resolution 1. The reduction and cancellation must also be approved by a special resolution of the holders of the TCI Shares being cancelled (the holder will be STR), pursuant to section 256C of the Corporations Act.

In accordance with section 256B of the Corporations Act, for TCI to be able to reduce its share capital by the cancellation of the TCI Shares held by STR, the proposed share reduction must:

• be fair and reasonable to TCI Shareholders as a whole;
• not materially prejudice TCI's ability to pay its creditors; and $\bullet$
• be approved by special resolution of the TCI Shareholders.

$3.2$ Reasons for the proposal

As set out in this Explanatory Memorandum under the heading "General Explanation" above, STR has agreed to purchase the TCI Shares held by the Founding TCI Shareholders. The purchase price is at a discount to the current market price of TCI Shares as at the date of this Notice, and after the shares are cancelled the earnings per TCI Share will be greater than they would have been had the capital reduction not occurred.

In any event, under section 259D of the Corporations Act, where a company obtains control of an entity that holds shares in the company, the entity must cease to hold the shares within 12 months. Accordingly, once TCI obtains control of STR, STR must cease to hold its TCI Shares within 12 months. STR and TCI have agreed that the best way to achieve this is for TCI to undertake a selective capital reduction of the TCI Shares held by STR and then to cancel those shares for nil consideration.

3.3 What approvals are needed for the proposal to proceed?

For the proposal to proceed, the selective capital reduction must be approved by special resolution at both the Meeting and a further meeting convened by TCI at which only STR may vote. Each special resolution must be passed by at least 75% of the votes cast by the relevant shareholders entitled to vote on the resolution.

The proposal must be approved separately by STR because the capital reduction involves the cancellation of shares held by STR.

$3.4$ What happens to STR's TCI Shares if the proposal is approved?

If the requisite shareholder approvals are received, then all TCI Shares held by STR will be cancelled. No consideration will be payable to STR in respect of this cancellation.

Consequences if TCI Shareholders do not approve the capital reduction $3.5 -$

Under the terms of the Merger Implementation Agreement, if TCI Shareholders do not approve the proposed capital reduction and share cancellation, either STR or TCI may terminate the Merger Implementation Agreement (after consulting with the other party to consider alternative methods which might enable the Scheme to proceed) and, if a party elected to terminate, the Merger would not proceed. In that circumstance, TCI may be required to pay the break fee to STR, as described in section 8.2 of the Scheme Booklet.

3.6 Consequences if STR does not approve the capital reduction

Under the terms of the Merger Implementation Agreement, if STR does not approve the proposed capital reduction and share cancellation, TCI may terminate the Merger Implementation Agreement (after consulting with STR to consider alternative methods which might enable the Scheme to proceed) and, if TCI elected to terminate, the Merger would not proceed. In that circumstance, STR may be required to pay the break fee to TCI, as described in section 8.2 of the Scheme Booklet.

3.7 If the proposal is not approved and the Merger proceeds

If the proposal is not approved by the TCI Shareholders or STR at their respective meetings, the capital reduction will not proceed and (assuming that neither party elects to terminate the Merger Implementation Agreement) TCI and STR must implement the divestment of STR's TCI Shares by some other means within 12 months after the Scheme takes effect, in order to comply with section 259D of the Corporations Act.

3.8 If the proposal is approved and the Merger does not proceed

The occurrence of the capital reduction and cancellation will be conditional on the Scheme proceeding and will take effect only after TCI Shareholders (at the Meeting) and STR have approved the capital reduction and cancellation and only after the Effective Date. If the Merger does not proceed, the capital reduction and cancellation will not take effect. The Share Purchase Agreement between the Founding TCI Shareholders and STR provides for put and call options so that STR can require the Founding TCI Shareholders to repurchase any TCI Shares which STR has acquired or the Founding TCI Shareholders can require STR to resell the shares to the Founding TCI Shareholders in certain circumstances. Accordingly, if the Scheme does not proceed there will not be a capital reduction to deal with that shareholding.

$3.9₂$ Financial implications of capital reduction for the Merged Group

The key financial implications of the proposed capital reduction on the Merged Group are:

• The Merged Group's share capital will be reduced by approximately \$40.9 million, being the proposed capital reduction assuming that the offer of 9 million shares to TCI Shareholders at \$0.87 per share by Founding TCI Shareholders will be fully accepted:
• $\bullet$ The pro-forma ratio between net interest bearing liabilities and shareholders equity has been assessed at 26% for the year ending 30 June 2006:
• The pro-forma Interest Cover of the Merged Group has been assessed at $\bullet$ 10.65 times for the year ending 30 June 2006; and
• The proposed capital reduction will not prejudice the Merged Group's ability to pay its creditors, its solvency position, or its ability to pay its debts as and when they fall due.

3.10 Taxation implications of capital reduction for the Merged Group

There are no immediate taxation consequences that arise for TCI Shareholders as a consequence of the reduction and cancellation of the 36.79% shareholding held by STR, provided that the transaction is undertaken within a tax consolidated group.

The structure of the Merger is to complete the cancellation of the TCI Shares as part of a tax consolidation group.

3.11 Impact on growth strategies of the Merged Group

Following the capital reduction, the Merged Group will still be well placed to take advantage of any new growth opportunities that may arise including compatible acquisitions and opportunities to develop the existing or new speciality businesses.

3.12 STR Directors' intentions

STR Directors stated in the Scheme Booklet that they are of the opinion that the proposed selective capital reduction and share cancellation is fair and reasonable to STR and accordingly intend to vote in favour of the resolution to approve the reduction of the STR shareholding in TCI at the relevant meeting.

The STR Directors have formed the view that it is fair and reasonable because the impact of the capital reduction will be to increase TCI's earnings per share from that which would have prevailed had the capital reduction not occurred. This will benefit STR's Shareholders when they become TCI Shareholders. Further, the capital reduction will remove the overhanging shareholding of the Founding TCI Shareholders which may have been seen to have had a depressing effect on the TCI Share price.

3.13 Independent Expert's Report

Analysis of the proposed selective reduction and cancellation of the TCI Shares held by STR is set out in the Independent Expert's Report.

The Independent Expert concluded that the proposed selective reduction and cancellation of the TCI Shares held by STR is fair and reasonable to the existing TCI Shareholders, in the context of the Merger.

Before you determine how you might vote upon Resolution 3, the TCI Directors refer you to the Independent Expert's Report in Part J of these Documents.

TCI Shareholders are advised to read the Independent Expert's Report in its entirety before deciding on how they will vote on this Resolution.

3.14 Directors' recommendations

TCI Directors are of the opinion that the proposed selective capital reduction and share cancellation is fair and reasonable to TCI and recommend that TCI Shareholders vote in favour of the resolution to approve the capital reduction and cancellation of the STR shareholding in TCI.

The TCI Directors have formed the view that it is fair and reasonable because the impact of the capital reduction will be to increase TCI's earnings per share from that which would have prevailed had the capital reduction not occurred.

3.15 Voting Restriction

In accordance with section $256C(2)(a)$ of the Corporations Act, TCI will disregard any votes cast in favour of Resolution 3 by the Founding TCI Shareholders or their Associates.

However TCI will not disregard a vote if:

it is cast by a person as 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 a proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 4 - Change of name to "Service Stream $\overline{4}$ . Limited^"

That, subject to:

• Implementation of the Scheme; and
• the change of name of STR,

and in accordance with section 157 of the Corporations Act, TCI change its name from "Total Communications Infrastructure Limited" to "Service Stream Limited".

Section 157 of the Corporations Act requires TCI to pass a special resolution in order to adopt a new name. In accordance with the terms of the Merger Implementation Agreement, the TCI Directors have recommended for TCI Shareholder approval that the name of TCI be changed to "Service Stream Limited".

The TCI Directors believe that the name change is appropriate as a result of the proposed Merger, specially as the name for the group company $-$ the business currently conducted by TCI will continue to be operated under and known by that name. Accordingly, the Directors recommend that, subject to the Merger proceeding, TCI Shareholders approve the name change to reflect the future direction of TCI.

5. Resolution 5– Issue of TCI Options to Mr Stanton

Resolution 5

That, subject to Implementation of the Scheme and pursuant to the provisions of Listing Rule 10.11, 2,000,000 TCI Options be issued to Rod Stanton.

ASX Listing Rule 10.11 requires shareholder approval to be obtained for the issue of any options to directors.

By reason of ASX Listing Rule 7.2 (Exception 14), if the approval of the TCI Shareholders for the issue of these options is obtained pursuant to Listing Rule 10.11, separate approval is not required pursuant to Listing Rule 7.1. This means that the issue of these options will not erode the Company's ability to issue equity securities up to the 15% limit prescribed by the ASX Listing Rule 7.1 without further shareholder approval.

5.1 Background

TCI has not currently adopted any employee share option plans, but as contemplated in section 8.11 of the Scheme Booklet, it is proposing to do so following Implementation of the Scheme. Subject to Implementation of the Merger, TCI proposes to issue to Rod Stanton 2,000,000 TCI Options. Five hundred thousand of these options will vest upon Implementation of the Scheme and a further 1,500,000 will vest in three tranches with threshold conditions based on EBIT growth over the next three years.

The terms of the TCI Options are set out in Parts F and G of these Documents.

$5.2$ ASX Listing Rule 10.11

For the purposes of Listing Rule 10.13, the following information is provided to shareholders:

$(a)$ The name of the persons to whom the securities will be issued

Rod Stanton or his nominees.

(b) The number of securities to be granted

The number of TCI Options to be granted to Mr Stanton is 2,000,000.

$\left( c\right)$ The date by which the Company will grant the securities

It is intended that all 2,000,000 TCI Options proposed to be issued will be issued on the Effective Date. Of these options, 500,000 will vest (i.e. be able to be exercised) immediately. The rest will vest on the terms and conditions set out in Parts F and G of these Documents.

The issue price of the securities and terms of the issue $(d)$

There is no issue price for the TCI Options as the TCI Options will be granted for no consideration.

Voting Exclusion Statement. (e)

See below.

The intended use of the funds raised (f)

There will be no funds raised.

5.3 Other information that is reasonably required by TCI Shareholders to make a decision and that is known to TCI or any of its directors

The following information is provided to shareholders to allow them to assess whether or not it is in TCI's interests to pass this resolution.

$(a)$ Mr Stanton, is a related party by virtue of him being a TCI Director. Subject to TCI Shareholder approval, the maximum number of TCI Options that will be granted to Mr Stanton under this Resolution is 2,000,000.

• (b) The nature of the financial benefit is the issue of the TCI Options to Mr Rod Stanton for nil consideration.
• Mr Stanton expresses no opinion and makes no recommendations to the $(c)$ TCI Shareholders in respect of Resolution 5 because he has a material interest in the outcome of that resolution.
• Each director of TCI (excepting Mr Stanton) recommends that TCI $(d)$ Shareholders vote in favour of the Resolution. It is believed the benefit is a fair reward to Mr Stanton for his contribution to TCI during the course of the proposed Merger and is an incentive to Mr Stanton in the future to act in the best interests of the company and increase the market value of TCI Shares.
• $(e)$ No other director of TCI has a personal interest in the outcome of Resolution 5.
• TCI will not receive a tax deduction for the value of the Options issued to $(6)$ Mr Stanton.
• The chairman of the Meeting intends to vote undirected proxies held by $(g)$ the chairman in favour of the Resolution.

Current Share Capital

The 2,000,000 TCI Options proposed to be issued to Mr Stanton on Implementation are designed as a reward for Mr Stanton's contribution to the Group in assisting to bring the Merger to fruition. In addition, if the TCI Options are issued pursuant to the proposed resolution. TCI considers that Mr Stanton will have a vested interest in the affairs of TCI. As options are a performance based incentive, Mr Stanton will have an incentive to ensure that the market price of the shares of TCI increases to create a value in the TCI Options and this will benefit all TCI Shareholders.

The potential cost to TCI of the issue of 2,000,000 TCI Options is that there will be dilution of the issued share capital if the TCI Options are exercised. Having regard to the issued capital of the Merged Group immediately following to the Merger (140,003,278 shares on issue) and assuming that the TCI Options were all exercised immediately, the dilution effect would be 1.41%. As set out in Part F of these Documents, the TCI Options cannot be exercised until the vesting conditions are achieved. Note that the "dilution" will occur at the same time as an injection of capital into TCI in the form of the payment of the respective exercise prices of the TCI Options.

Valuation of the TCI Options to be issued to Mr Stanton

The value of the 2,000,000 million TCI Options to be issued to Mr Stanton (or his nominee) will vary depending on satisfaction of the vesting conditions and fluctuations in the price of TCI's shares. However, assuming a price of \$1.43 for the shares in TCI (closing price as at 2 November 2006) and having regard to the applicable accounting standards for determining the value of share and option based payments, the TCI Directors believe that the current value of Mr Stanton's TCI Options is \$1,010,119. This valuation is based on the Black $\&$ Scholes pricing model, the terms of the options and the following assumptions:

• All vesting conditions will be satisfied (accordingly no discount has been $(a)$ attributed as a result of this uncertainty).
• The market price of a share is \$1.43 (being the ASX closing price on 2 $(b)$ November 2006).
• $(c)$ A volatility factor of 40% assessed having regard to the following:
• volatility of TCI over a 1 year period prior to the announcement 43%; $(i)$
• $(ii)$ volatility of TCI since the announcement to 2 November $2006 - 32\%$ ; and
• (iii) volatility of TCI since listing $-43\%$ .
• $(d)$ An interest rate of 5.85% per annum based on the 5 years Commonwealth bond rate.
• A dividend yield of 4.9% per annum based on the maximum dividend $(e)$ distributable by the Merged Group.

Remuneration Package of Mr Stanton

In addition to the TCI Options proposed by this resolution, Mr Stanton's remuneration package is \$366,000, inclusive of base salary, non monetary payments and superannuation. In addition, Mr Stanton is entitled to a bonus based on performance incentives. In 2006, this bonus was \$160,000.

The security holding in the Company of Mr Stanton (or his Associates) before and after the proposed issue of TCI Options referred to in this Notice of Meeting

	Number of TCI Shares	Number of TCI Options	Total number of TCI Shares and TCI Options	Percentage holding on a fully diluted basis
Before the issue of 2.000,000 TCI Options referred to in this Notice of Meeting are issued	400.000	0	400.000	0.29%
After issue of $2,000,000$ TCI Options to Mr Stanton (or his nominee)	400.000	2.000,000	2.400,000	1.69%

Assumes:

• The Merger has been implemented, all TCI Shares have been issued as part $\bullet$ of the Scheme to former STR Shareholders and TCI has 140,003,278 TCI Shares on issue prior to the issue of the TCI Options.
• All options are converted to shares on a 1 for 1 basis.

5.4 Terms of the issue of the TCI Options to be issued to Mr Stanton

Full details of the terms and conditions of the TCI Options to be issued to Mr Stanton are as set out in Parts $F$ and $G$ of these Documents.

5.5 Voting Exclusion for Resolution 5

TCI will disregard any votes cast on Resolution 5 by:

• Rod Stanton; and $\bullet$
• any Associate of Rod Stanton.

However TCI will not disregard a vote if:

• it is east by a person as 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 a proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 6 - Issue of Replacement Options to STR 6. Directors who will join the TCI Board

Resolution 6

That, subject to Implementation of the Scheme, and pursuant to the provisions of Listing Rule 10.11, and in accordance with the Merger Implementation Agreement, under which the STR Options held by the STR Director Optionholders are to be cancelled, Replacement Options be issued to the STR Director Optionholders on the terms and as set out in Schedule 1 to the Merger Implementation Agreement.

As part of the Merger and pursuant to the Merger Implementation Agreement, STR Options which have been issued to STR Director Optionholders at the date of the Meeting are to be cancelled and replaced by options in TCI ("Replacement Options"). Replacement Options are proposed to be issued to Patrick Flannigan, Michael Doery, Russell Small and Adrian Field.

Although the issue of the Replacement Options is pursuant to the Merger Implementation Agreement, ASX Listing Rule 10.11 requires shareholder approval to be obtained for the issue of any options to directors.

By reason of ASX Listing Rule 7.2 (Exception 14), if the approval of the TCI Shareholders for the issue of these options is obtained pursuant to Listing Rule

10.11, separate approval is not required pursuant to Listing Rule 7.1. This means that the issue of these options will not erode the Company's ability to issue equity securities up to the 15% limit prescribed by the ASX Listing Rule 7.1 without further shareholder approval.

Also, to comply with the requirements of the Listing Rules, the terms of the Replacement Options and the information required by the Listing Rules and the Corporations Act are set out in Parts G and H of these Documents.

Each TCI Director recommends that TCI Shareholders vote in favour of the Resolution $-$ if it is not passed, STR and TCI each may terminate the Merger Implementation Agreement - this means the Merger would fail.

No current director of TCI has a personal interest in the outcome of Resolution 6.

TCI will not receive a tax deduction for the value of the Replacement Options issued to any of Messrs Flannigan, Doery, Field or Small.

The chairman of the Meeting intends to vote undirected proxies held by the chairman in favour of the Resolution.

Voting Exclusion for Resolution 6

TCI will disregard any votes cast on Resolution 6 by:

• any of Messrs Flannigan, Doery, Field and Small; and
• any Associate of Messrs Flannigan, Doery, Field and Small.

However TCI will not disregard a vote if:

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

Resolutions 7 and 8 - Removal of VJ Ryan & Co as 7. auditors of TCI and appointment of Deloitte Touche Tohmatsu as auditors of TCI

Resolution 7: That, subject to Implementation of the Scheme and pursuant to section 329(1) of the Corporations Act, VJ Ryan & Co be removed as auditor of the Company with effect from the Effective Date.

Resolution 8: That, subject to Implementation of the Scheme and Resolution 7 being passed, Deloitte Touche Tohmatsu having consented to act as auditor of TCI, be appointed as the auditor of TCI with effect from the Effective Date.

TCI's current auditor, VJ Ryan & Co, has been given notice that it will be removed from its position as auditor of TCI from the Effective Date, subject to the Implementation of the Merger.

TCI has received a nomination for Deloitte Touche Tohmatsu to be appointed as auditor of TCI with effect from the Effective Date and subject to the passing of Resolution 8 and Implementation of the Merger. A copy of the nomination is included in Part I of these Documents. Deloitte Touche Tohmatsu is the current auditor of STR and is considered by the TCI Directors to be the appropriate auditor for the Merged Group.

PART E: GLOSSARY

A\$ or \$	Australian dollars.
ASIC	Australian Securities and Investments Commission.
Associate	The meaning given to that term in section 12 of the Corporations Act.
ASX	Australian Stock Exchange Limited or the market conducted by it, as the context requires.
Business Day	A business day for the purpose of the listing rules of ASX.
Corporations Act	Corporations Act 2001 (Cth).
Court	The Supreme Court of Victoria.
Deloitte Touche Tohmatsu	Deloitte Touche Tohmatsu of 180 Lonsdale Street, Melbourne.
Documents	Each of the Notice, Explanatory Memorandum, Independent Expert's Report, Proxy Form and all other documents, that each constitute part of this booklet and that accompany each other when sent to each TCI Shareholder.
Effective	When used in relation to the Scheme, means coming into effect, pursuant to section $411(10)$ of the Act, of the order of the Court made under section $411(4)(b)$ in relation to the Scheme, but in any event at no time before office copies of the orders of the Court are lodged with ASIC.
Effective Date	20 December 2006, being the date on which an office copy of the Scheme order is lodged with ASIC.
Explanatory Memorandum	The Explanatory Memorandum forming Part D to these Documents.
Founders' Share Offer	The offer by the Founding TCI Shareholders of 9 million TCI Shares to other TCI Shareholders (not being foreign residents).
Founding TCI Shareholders	Mr James Cooney and Ms Samantha Grant.
Implementation	The coming into effect of the Scheme, being the transfer of the STR Shares to TCI pursuant to the Scheme and the payment of the Scheme consideration

	to the Scheme Members.
Implementation Date	4 January 2007, being the date that the Scheme is implemented will be provided to the Scheme Members.
Independent Expert	PKF Corporate Advisory Services (NSW) Pty Limited (ABN 70 050 038 170).
Independent Expert's Report	The report of the Independent Expert as set out in Part J of these Documents.
Initial Payment	The first payment of part of the purchase price payable by STR to the Founding TCI Shareholders under the Share Purchase Agreement. The amount payable is the full amount payable by STR to the Founding TCI Shareholders less \$10 million.
Interest Cover	The interest cover ratio, being EBITDA / interest expense.
Listing Rules	The official listing rules of ASX as from time to time amended or waived in their application to a party.
Meeting	The general meeting being convened by the TCI Directors and pursuant to the Notice.
Merged Group	TCI after Implementation of the Scheme, when the STR Group will become wholly owned by TCI and to be known as "Service Stream Limited".
Merger	The Merger of STR and TCI involving TCI acquiring all of the STR Shares pursuant to the Scheme.
Merger Deed Poll	The deed of that name dated 27 July 2006 executed by TCI in favour of Scheme Members (a copy of which is set out in Appendix 3 of the Scheme Booklet).
Merger Implementation Agreement	The Agreement between TCI and STR, dated 27 July 2006 as amended from time to time, under which each party undertakes specific obligations to give effect to the Scheme (a conformed copy of which is set out in Appendix 2 of the Scheme Booklet).
New TCI Shares	The TCI Shares to be issued under the Scheme.
Notice	Notice of General Meeting of the The - TCI. Shareholders, that accompanies and forms part of these Documents (Part C).
Option Deed	The agreement of that name between STR and the Founding TCI Shareholders entered into on 27 July 2006 in relation to the grant of an option to STR over

	certain TCI Shares held by the Founding TCI Shareholders.
Proxy Form	The proxy form enclosed with these Documents.
Record Date	29 December 2006, being the fifth Business Day following the Effective Date.
Replacement Options	TCI Options which are proposed to be issued by TCI to STR Director Optionholders in consideration of the cancellation of their STR Options.
Resolution	Any one of the resolutions set out in the Notice.
Scheme	The scheme of arrangement under section 411 of the Corporations Act between STR and the Scheme Members, the terms of which are set out in Appendix 1 to the Scheme Booklet.
Scheme Booklet	The scheme booklet produced by STR and distributed to STR Shareholders in relation to the Scheme copy of which accompanies Meeting, these $\mathbf{a}$ Documents.
Scheme Consideration	For every 5 Scheme Shares, 2 New TCI Shares.
	If the number of Scheme Shares held by a Scheme Member means that their aggregate entitlement to New TCI Shares is not a whole number, then any fractional entitlement will be rounded up.
Scheme Meeting	The meeting of STR Shareholders ordered by the Court to be convened pursuant to section 411 of the Corporations Act to consider and, if thought fit, to approve the Scheme effecting the Merger.
Scheme Member	means each person who is registered in the register of members of STR as the holder of a Share as at the Record Date.
Scheme Share	A STR Share held by a Scheme Member.
Second Payment	The second and final payment of part of the purchase price payable by STR to the Founding TCI Shareholders under the Share Purchase Agreement. The amount payable is \$10,000,000.
Share Purchase Agreement	The agreement of that name between STR and the Founding TCI Shareholders entered into on 27 July 2006 (and as amended from time to time) in relation to sale of TCI Shares by the Founding TCI the

Shareholders to STR.

STR	Service Stream Ltd (ABN 58 008 027 978).
STR Director	A director of STR from time to time.
STR Director Optionholders	The STR Directors who currently hold STR Options, being Patrick Flannigan, Michael Doery, Adrian Field and Russell Small.
STR Group	STR and its subsidiaries.
STR Option	Option over STR Shares granted in accordance with the STR Employee Share Plan.
STR Share	A fully paid ordinary share in STR.
STR Shareholder	Each person who is registered in the STR register of shareholders from time to time as the holder of a STR Share.
TCI or the Company	Total Communications Infrastructure Limited (ABN 46 072 369 870).
TCI Board	The board of directors of TCI from time to time.
TCI Director	A director of TCI from time to time. Where a recommendation in this notice is made by TCI Directors, the chairman of TCI, Jim Cooney, is not included in that recommendation. This is because it would be inappropriate for him to make a recommendation in the light of his material personal interest in the sale of his TCI Shares and the outcome of the Merger.
TCI Finance Documents	The financial accommodation documents set out in section 2.1 of the Explanatory Memorandum.
TCI Options	An option to acquire one TCI Share.
TCI Share	A fully paid ordinary share in TCI.
TCI Shareholder	Each person who is registered in the register of members of TCI as the holder of a TCI Share.
VJ Ryan & Co	VJ Ryan & Co of level 5, 255 George Street, Sydney.
Westpac	Westpac Banking Corporation (ABN 33 007 457 141).

PART F: TERMS AND CONDITIONS OF TCI OPTIONS

TCI Options for Rod Stanton

Tranche of TCI Options	Exercise Price	Vesting Conditions
Each of these Options	have this exercise price	and before the holder can exercise them, these financial performance conditions must be satisfied	and the Executive must remain an employee of the Company until this date
150,000	\$0.990	2007 TCI EBIT is at least 7.5% more than 2006 TCI EBIT	31-Oct-07
100,000	\$0.990	2007 TCI EBIT is at least 12.5% more than 2006 TCI EBIT	31-Oct-07
125,000	\$0.990	2007 TCI EBIT is at least 18% more than 2006 TCI EBIT	31-Oct-07
125,000	\$0.990	2007 TCI EBIT is at least 25% more than 2006 TCI EBIT	31-Oct-07
500,000
150,000	\$1.080	2008 TCI EBIT is at least 7.5% more than 2007 TCI EBIT	31-Oct-08
100,000	\$1.080	2008 TCI EBIT is at least 12.5% more than 2007 TCI EBIT	31-Oct-08
125,000	\$1.080	2008 TCI EBIT is at least 18% more than 2007 TCI EBIT	$31 - Oct-08$
125,000	\$1.080	2008 TCI EBIT is at least 25% more than 2007 TCI EBIT	31-Oct-08
500,000
150,000	\$1.200	2009 TCI EBIT is at least 7.5% more than 2008 TCI EBIT	31-Oct-09
100,000	\$1.200	2009 TCI EBIT is at least 12.5% more than 2008 TCI EBIT	31-Oct-09

125,000	\$1.200	2009 TCI EBIT is at least 18% more than 2008 TCI EBIT	31-Oct-09
125,000	\$1.200	2009 TCI EBIT is at least 25% more than 2008 TCI EBIT	31-Oct-09
500,000		Exercisable immediately on
500,000	\$1.125	issue	Immediately
500,000

PART G: OTHER TERMS AND CONDITIONS OF TCI OPTIONS

$1.$ Definitions in this Part G

In this Part G, unless the context otherwise requires:

"Bonus Issue" means, with respect to any securities, a Pro Rata Issue of the securities for whose issue no consideration is payable to the issuing entity;

["Completion of the Merger" means when an office copy of the order of the court approving the scheme of arrangement between STR and its shareholders for the merger with TCI is lodged with ASIC and the scheme has otherwise become unconditional;}

"2006 EBIT" means TCI EBIT for the Financial Year ended on 30 June 2006;

"2007 EBIT" means TCI EBIT for the Financial Year ending on 30 June 2007;

"2008 EBIT" means TCI EBIT for the Financial Year ending on 30 June 2008;

"2009 EBIT" means TCI EBIT for the Financial Year ending on 30 June 2009;

["Eligible Termination Event" means:

• the death of the Executive: $(a)$
• $(b)$ the incapacity of the Executive which renders him unable to perform the Duties:
• a person's voting power in TCI increasing after the date of this $(c)$ agreement from 50% or below to more 50%, other than due to Completion of the Merger;
• TCI disposes or agrees to dispose of the whole or a substantial part of $(d)$ its business or property;]

"Expiry Date" means, with respect to any Options, the last date on which they can be exercised, being 31 October 2011;

"Exercise Price" means, with respect to any Options, the price payable to exercise them, being the exercise price for each of the Options specified in the table above, subject to any adjustments made under clause 4 or 5 of this Part G;

["Financial Year" period of 12 months ending on 30 June;]

["Group" means TCI and its related bodies corporate;]

"Market Price" means, with respect to any securities quoted on the financial market of ASX, the closing price of the securities on SEATS (as defined in ASX's business rules), excluding special crossings, overnight sales and exchange traded option exercises and, with respect to any other securities, the market price of the securities as determined by the board of directors of TCI acting reasonably;

["Option" means an option to subscribe for 1 Share on and subject to the terms set out in this schedule;]

"Pro Rata Issue" means, with respect to any securities, an issue of the securities which has been offered or made to all holders of securities of the same class on a pro rata basis but does not include an issue of securities in lieu or in satisfaction of dividends or by way of dividend reinvestment;

"Share" means an ordinary share in the capital of TCI;

"TCI EBIT" means, with respect to a Financial Year, the earnings of the business conducted by TCI only for the Financial Year before interest and tax, as disclosed in the audited financial accounts of TCI for that Financial Year:

"Transmission Event" means, in relation to an Option holder:

• the death of the individual; $(a)$
• $(b)$ the individual becoming of unsound mind; or
• $(c)$ the individual becoming a person who is or whose estate is, liable to be dealt with under a law about mental health;

"Vesting Condition" means, with respect to any TCI Options, a condition that needs to be met (including, without limitation, a requirement that something continues, or does not happen by a particular date) before the holder can exercise them, being a vesting condition for those TCI Options specified in the above table, subject to clause 8 of this Part G.

$2.$ Exercise

2.1 Notice of exercise

Subject to this clause 2, an exercise of any TCI Options may only be effected by the holder completing and signing a notice of exercise of the TCI Options in the form, or substantially in the form, of the notice of exercise prepared or approved by or on behalf of TCI for this purpose for the time being, and giving the notice to TCI together with payment of the Exercise Price for each TCI Option exercised and, unless otherwise agreed by TCI, only upon receipt by TCI of that notice and payment will the TCI Options be taken to have been duly exercised.

2.2 Exercise Price

Payment of the Exercise Price of any TCI Options by cheque will be deemed to have been received by TCI at the time the cheque is received if and only if the amount of the cheque is subsequently paid by the drawer's bank to or for the account of TCI as cleared funds.

$2.3$ No exercise before Vesting Conditions met

No TCI Options may be exercised, and TCI is not required to issue any Shares underlying any TCI Options, unless and until each Vesting Condition for the TCI Options has been met to TCI's satisfaction provided that this clause 2.3 will not apply if the Executive ceases to be an employee of TCI due to a notice of termination under [clause $11.1(b)$ of the Executive's employment agreement (12 months' notice given by TCI) or clause 11.2 (6 months' notice given by the Executive)] being given within 6 months after a person whose voting power in TCI increases after the date of this agreement from 50% or below to more than 50%, other than due to Completion of the Merger.

3. Issue of Shares

3.1 Issue

If any TCI Options are duly exercised. TCI must issue to the holder of the TCI Options one fully paid Share for each TCI Option exercised within 14 days from the date of receipt by TCI of payment of the Exercise Price for those TCI Options in cleared funds.

Ranking $3.2$

Shares issued pursuant to the exercise of TCI Options will rank for dividend from the date they are issued and will otherwise rank pari passu with all other Shares then on issue.

$3.3$ ASX quotation

If Shares are quoted on the financial market of ASX, TCI must apply for quotation on the financial market of ASX of all Shares issued pursuant to the exercise of TCI Options as soon as reasonably practicable after their issue, but in any case within the time limit prescribed by the ASX Listing Rules.

Participation in new issues 4.

4.1 Bonus Issue

If at any time after the issue of TCI Options there is a Bonus Issue of Shares and if after that time a holder of the TCI Options exercises any of the holder's TCI Options, TCI must issue to the holder at the same time it issues under clause 3.1 of this schedule the Shares the subject of the exercised TCI Options, the number of bonus Shares which the holder would have received if before the Bonus Issue the holder held the Shares the holder would have been entitled to had the holder duly exercised the TCI Options.

$4.2$ Other Pro Rata Issue

If at any time after the issue of TCI Options there is a Pro Rata Issue of Shares other than a Bonus Issue, the Exercise Price of each TCI Option existing on the record date for determining entitlements in relation to the Pro Rata Issue will be reduced according to the following formula:

$$
O' = O \frac{E[P - (S + D)]}{N + 1}
$$

where:

O' is the new Exercise Price of the TCI Option;

O is the old Exercise Price of the TCI Option;

E is one or such other number of Shares into which the TCI Option is exercisable:

P is the average Market Price per Share (weighted by reference to volume) of the Shares during the 5 trading days ending on the day before the "exrights date" or "ex entitlements date" in relation to the Pro Rata Issue;

S is the subscription price for a Share under the Pro Rata Issue;

D is the dividend (if any) due by TCI but not yet paid on the existing Shares (except those to be issued under the Pro Rata Issue); and

N is the number of Shares with rights or entitlements that must be held to receive a right to one new Share pursuant to the Pro Rata Issue.

$4.3 -$ No other issues

Except as set out in this clause 4, TCI Options shall not entitle their holder to participate in any issue of securities in or in respect of TCI other than the Shares to be issued upon exercise of the TCI Options in accordance with this schedule.

5. Reorganisation of TCI Options

If at any time after the issue of TCI Options, [in addition to such other amendments to accord with the ASX Listing Rules at the time of the reconstruction?:

the Shares are converted into a larger or smaller number of shares, the $(a)$ number of TCI Options immediately prior to such conversion will be converted in the same ratio as the Shares and the Exercise Price will be adjusted in inverse proportion to that ratio;

• $(b)$ TCI reduces its share capital by a return of capital to the holders of Shares, the number of TCI Options will remain the same but the Exercise Price will be reduced by the same amount as the return of capital on each Share:
• TCI reduces its share capital by a cancellation of capital that is either lost $(c)$ or not represented by available assets where no Shares are cancelled, the number of TCI Options and the Exercise Price will remain unaltered;
• $(d)$ there is pro rata cancellation of Shares, the number of TCI Options will be reduced in the same ratio as the Shares and the Exercise Price will be amended in inverse proportion to that ratio; or
• there is any other reconstruction or reorganisation of TCI's share capital, $(e)$ the number of TCI Options or the Exercise Price or both will be reorganised in such manner as the directors of TCI consider necessary so that the holders of the TCI Options will not receive a benefit in respect of the TCI Options that the holders of Shares do not receive in connection with the reconstruction or reorganisation;

provided that all entitlements will be rounded down to the nearest whole number and fractions will be disregarded (subject to the provisions with respect to rounding of entitlements as sanctioned by the meeting of holders of Shares approving the reconstruction or reorganisation of TCT's share capital) and in all other respects this schedule will remain unchanged as a consequence of any reconstruction or reorganisation.

6. Transfer and Transmission Event

Transfer of TCI Options 6.1

• Subject to clause 6.2 of this schedule, a holder of TCI Options may $(a)$ transfer each of them by:
• an instrument in writing in any usual form or in a form $(1)$ approved by TCI which is signed by or on behalf of both the transferor and the transferee; and
• $(2)$ sending the completed transfer to TCI for registration accompanied by any evidence TCI requires to prove the title of the transferor or the transferor's right to the TCI Options (including, without limitation, if a certificate for the TCI Options was issued by TCI, the certificate) and any other evidence TCI requires to prove the right of the transferee to be registered as the owner of the TCI Options;

and within 14 days from satisfaction of these requirements TCI must register the transfer.

(b) A transferor of TCI Options remains the holder of the TCI Options transferred until:

• $(1)$ the transfer is registered; and
• (2) the name of the transferee is entered in the register of holders of TCI Options for the TCI Options transferred.
• TCI may retain any registered instrument of transfer for the period $(c)$ that TCI thinks fit.
• (d) Except in the case of fraud, TCI must return any instrument of transfer which TCI declines to register, to the person who sent it to TCI together with any documents which accompanied the transfer.
• To the extent permitted by law, TCI may waive all or any of the $(e)$ requirements of this clause 6.1 which are to be satisfied by the transferor or transferee.

$6.2$ Registration of transfers

Subject to this schedule, the Corporations Act and the ASX Listing Rules, the directors may decline to register a transfer of an TCI Option.

6.3 Power to suspend registration of transfers

TCI may at any time suspend the registration of a transfer of TCI Options for any period not exceeding 30 days in a year.

6.4 Transmission Event

• $(a)$ A person who becomes entitled to TCI Options because of a Transmission Event may:
• $(1)$ sign a written notice stating that the person wishes to register as the holder of the TCI Options and serve it on TCI; or
• execute a transfer of the TCI Options to another person; $(2)$

subject to proving that person's entitlement by producing any evidence that TCI requires (including, without limitation, if a certificate for the TCI Options was issued by TCI, the certificate).

• The rules about transferring TCI Options apply with the necessary (b) changes to a transfer under clause $6.4(a)(2)$ as if:
• the relevant Transmission Event had not occurred; and $(1)$
• the person entitled to the TCI Options because of the $(2)$ Transmission Event were the registered holder of the TCI Options.

6.5 No sale or transfer until Vesting Conditions met

Despite anything else contained in this schedule, no TCI Options may be offered for sale, sold, transferred, made the subject of a declaration of trust or otherwise disposed of or Encumbered unless and until each Vesting Condition for the TCI Options has been met to TCI's satisfaction.

7. Termination

$7.1$ Expiry Date

All TCI Options remaining unexercised by 11.59 pm on the Expiry Date for those TCI Options will lapse and terminate immediately after that time.

Termination in certain circumstances before Vesting Conditions met $7.2$

Whilst any Vesting Condition for any TCI Options has not been met to TCI's satisfaction, the TCI Options will terminate:

• if the TCI Options or any of them are offered for sale or purportedly $(a)$ sold, transferred, made the subject of a declaration of trust or otherwise disposed of or Encumbered by the holder of them, on that happening; or
• on the happening of any other event or in any other circumstance $(b)$ described in the Vesting Condition as resulting in termination of the TCI Options.

$7.3$ Termination where Vesting Condition not met

If any Vesting Condition for any TCI Options is not or cannot be met to TCP's satisfaction, the TCI Options will terminate.

$7.4$ Termination before or after Vesting Conditions met

If the Executive ceases to be employed by TCI due to termination by TCI under $[clause 11.1(a) of the Executive's employment agreement]$ (summary dismissal)], all TCI Options remaining unexercised by the time of termination will lapse and terminate immediately after that time.

8. Vesting Conditions – postponement of termination and waiver

Despite anything else contained in this schedule:

$(a)$ where a Vesting Condition for any TCI Options requires the Executive to remain an employee of TCI until a particular time, and the Executive ceases to be an employee before that time other than due to termination by TCI under $[clause 11.1(a)$ of the Executive's employment agreement (summary dismissal)], the termination of the TCI Options under clause 7 of this schedule will be postponed for a period of:

• $(1)$ in the case of termination under [clause 11.1(b) of the Executive's employment agreement (12 months' notice)] or due to an Eligible Termination Event, 13 months from the date notice of termination is given to the Executive or the date of cessation of employment, whichever date occurs first; and
• (2) in any other case, 1 month from the date of cessation of employment;

(but not beyond the Expiry Date) to allow exercise of the TCI Options in that period, in which case the TCI Options will not terminate until the end of that period and the Executive (or the Executive's legal personal representative) may exercise any of the TCI Options before they terminate; and

TCI may waive any Vesting Condition for any TCI Options (even (b) after the Vesting Condition has not been or cannot be met) either unconditionally or, with the approval of the Executive, on any conditions TCI decides (including, without limitation, the substitution of another condition in place of the Vesting Condition), in which case, the TCI Options will be taken never to have been subject to that Vesting Condition and will not terminate, or be taken to have terminated, due to that Vesting Condition not being met subject, if TCI is admitted to the official list of ASX at the time of the waiver or postponement, to any requirements of the ASX Listing Rules which may apply in relation to the waiver or postponement.

PART H: TERMS AND CONDITIONS OF EXCHANGE OPTIONS

Tranche of Replacement Options	Exercise Price	Vesting Conditions
Each of these Options	have this exercise price	and before the holder can exercise them, these financial performance conditions must be satisfied	and the Executive must remain an employee of the Company until this date
240,000	\$0.990	2007 EBIT is at least 7.5% more than 2006 EBIT	31-Oct-07
160,000	\$0.990	2007 EBIT is at least 12.5% more than 2006 EBIT	31-Oct-07
200,000	\$0.990	2007 EBIT is at least 18% more than 2006 EBIT	31-Oct-07
200,000	\$0.990	2007 EBIT is at least 25% more than 2006 EBIT	31-Oct-07
800,000
240,000	\$1.080	2008 EBIT is at least 7.5% more than 2007 EBIT	31-Oct-08
160,000	\$1.080	2008 EBIT is at least 12.5% more than 2007 EBIT	31-Oct-08
200,000	\$1.080	2008 EBIT is at least 18% more than 2007 EBIT	31-Oct-08
200,000	\$1.080	2008 EBIT is at least 25% more than 2007 EBIT	31-Oct-08
800,000
240,000	\$1.200	2009 EBIT is at least 7.5% more than 2008 EBIT	31-Oct-09
160,000	\$1.200	2009 EBIT is at least $12.5\%$ more than 2008 EBIT	31-Oct-09
200,000	\$1.200	2009 EBIT is at least 18% more than 2008 EBIT	31-Oct-09

1. Replacement Options for Patrick Flannigan

200,000	\$1.200	2009 EBIT is at least 25%	31-Oct-09
		more than 2008 EBIT
800,000
1,160,000	\$0.625	Exercisable immediately on	Exercisable
		ssue	immediately
320,000	\$0.9375	Exercisable immediately on	Exercisable
		1SSUC	immediately
320,000	\$1.25	Exercisable immediately on	Exercisable
		issue	immediately
1,800,000

2. Replacement Options for Michael Doery

Tranche of STR Options	Exercise Price	Vesting Conditions
Each of these I Options	this have exercise price	and before the holder can exercise them, these financial performance conditions must be satisfied	and the. Executive must remain an employee of the Company until this date
216,000	\$0.99	2007 EBIT is at least $7.5\%$ more than 2006 EBIT	31-Oct-07
144,000	\$0.99	2007 EBIT is at least $12.5\%$ more than 2006 EBIT	31-Oct-07
180,000	\$0.99	2007 EBIT is at least 18% more than 2006 EBIT	31-Oct-07
180,000	\$0.99	$2007$ EBIT is at least $25\%$ more than 2006 EBIT	$31 - Oct-07$
720,000
216,000	\$1.08	$2008$ EBIT is at least 7.5% more than 2007 EBIT	31-Oct-08
144,000	\$1.08	2008 EBIT is at least $12.5\%$ more than 2007 EBIT	31-Oct-08
180,000	\$1.08	2008 EBIT is at least 18% more than 2007 EBIT	31-Oct-08
180,000	\$1.08	2008 EBIT is at least $25\%$ more than 2007 EBIT	31-Oct-08
720,000

216,000	\$1.20	2009 EBIT is at least 7.5% more than 2008 EBIT	$31 - Oct-09$
144,000	\$1.20	2009 EBIT is at least $12.5\%$ more than 2008 EBIT	$31 - Oct-09$
180,000	\$1.20	2009 EBIT is at least 18% more than 2008 EBIT	$31 - Oct-09$
180,000	\$1.20	2009 EBIT is at least 25% more than 2008 EBIT	31-Oct-09
720,000
1,000,000	\$0.625	Exercisable immediately on. issue	Exercisable immediately
320,000	\$0.9375	Exercisable immediately on. issue	Exercisable immediately
320,000	\$1.25	Exercisable immediately on issue	Exercisable immediately
1,640,000

3. Replacement Options for Russell Small

Tranche of Replacement Options	Exercise Price	Vesting Conditions
Each of these Options	have this exercise price	and before the holder can exercise them, these financial performance conditions must be satisfied	and the Executive must remain an employee of the Company until this date
2,266,667	\$0.625	Exercisable immediately on issue	Exercisable immediately

4. Replacement Options for Adrian Field

Tranche of Replacement Options	Exercise Price	Vesting Conditions
Each of these Options	have this exercise price	and before the holder can exercise them, these financial performance conditions must be satisfied	and the Executive must remain an employee of the Company until this date
2,266,667	\$0.625	Exercisable immediately on issue	Exercisable immediately

For the purposes of Listing Rule 10.13, the following information is provided to TCI Shareholders:

$(a)$ The name of the persons to whom the securities will be issued

• Patrick Flannigan; $\bullet$
• Michael Doery; $\bullet$
• $\bullet$ Russell Small; and
• Adrian Field $\bullet$

or their respective nominees.

The number of securities to be granted $(b)$

The number of Replacement Options to be granted to each of Messrs Flannigan, Doery, Field and Small is set out above in this Part H.

The date by which the Company will grant the securities $\left( \mathrm{c} \right)$

It is intended that all 12,533,334 Replacement Options proposed to be issued will be issued on the Effective Date. Of these options, some will only vest (i.e. be able to be exercised) on the terms and conditions set out in this Part H.

$(d)$ The issue price of the securities and terms of the issue

The Replacement Options to be granted to Messrs Flannigan, Doery, Field and Small are in consideration for the cancellation of the options they each hold in STR as at the date of the Meeting.

$(e)$ Voting Exclusion Statement

See section 6 of the Explanatory Memorandum.

$(f)$ The intended use of the funds raised

There will be no funds raised.

Other information that is reasonably required by TCI Shareholders to make a decision and that is known to TCI or any of its directors

The following information is provided to TCI Shareholders to allow them to assess whether or not it is in TCI's interests to pass Resolution 6.

(a) Messrs Flannigan, Doery, Field and Small are related parties by virtue of them being proposed to be directors of TCI. Subject to TCI Shareholder approval, the following maximum number of Replacement Options will be granted to Messrs Flannigan, Doery, Field and Small:

Name of Related Party	Number of Replacement Options
Mr P Flannigan	4,200,000
Mr M Doery	3,800,000
Mr A Field	2,266,667
Mr R Small	2,266,667
Total:	12,533,334

• (b) The nature of the financial benefit is the issue of the Replacement Options for Messrs Flannigan, Doery, Field and Small in consideration of the cancellation of their STR Options held at the date of the Meeting, as provided in the Merger Implementation Agreement as noted above and on the terms set out at the end of this Explanatory Memorandum.
• Each director of TCI recommends that shareholders vote in favour of the $(c)$ resolution - if it is not passed, STR and TCI each may terminate the Merger Implementation Agreement.
• No other director of TCI has a personal interest in the outcome of Resolution 6. $(d)$
• (e) TCI will not receive a tax deduction for the value of the Options issued to any of Messrs Flannigan, Doery, Field or Small.
• $(f)$ The chairman of the Meeting intends to vote undirected proxies held by the chairman in favour of Resolution 6.

Current Share Capital

If the Replacement Options are issued pursuant to the proposed Resolution 6, TCI considers that Messrs Flannigan, Doery, Field and Small will have a vested interest in the affairs of TCL

The Replacement Options are proposed to be issued in consideration for the cancellation of the STR Options held by Messrs Flannigan, Doery, Field and Small as at the date of the Meeting. As the primary purpose of the proposed issue to the proposed directors is not to raise capital but to fulfil a requirement of the Merger Implementation Agreement and to provide an incentive to the proposed directors for services they intend to provide, TCI does not believe that the issue will involve any significant opportunity cost.

The potential cost to TCI of the issue of 12,533,334 Replacement Options is that there will be dilution of the issued share capital if the Replacement Options are exercised. Having regard to the issued capital of the Merged Group immediately following to the Merger (140,003,278 shares on issue) and assuming that the Replacement Options were all exercised immediately, the dilution effect would be 8.22%. As set out in Part H of these Documents, some of the Replacement Options cannot be exercised until the vesting conditions are achieved.

Dealing now with each of the directors who are receiving Replacement Options:

MR P FLANNIGAN

Valuation of the Replacement Options to be issued to Mr Flannigan

The value of the 4,200,000 million options to be issued to Mr Flannigan (or his nominee) will vary depending on satisfaction of the vesting conditions and fluctuations in the price of TCI's shares. However, assuming a price of \$1.43 for the shares in TCI and having regard to the applicable accounting standards for determining the value of share and option based payments, the Directors believe that the current value of Mr Flannigan's Replacement Options is \$2,385,278. This valuation is based on the Black & Scholes pricing model, the terms of the options and the following assumptions (refer to section 5.4 of the Explanatory Memorandum in Part D of these Documents for details about these assumptions):

• All vesting conditions will be satisfied (accordingly no discount has been $(a)$ attributed as a result of this uncertainty).
• (b) The market price of a share is \$1.43 (being the ASX closing price on 2 November 2006).
• $\left( c\right)$ A volatility factor of 40%.
• $(d)$ An interest rate of 5.85% per annum.
• $(e)$ A dividend yield of 4.9% per annum.

The security holding in the Company of Mr Flannigan (or his associate) before and after the proposed issue of Replacement Options referred to in this Notice of Meeting

	Number of TCI Shares	Number of Replacement Options	Total number of TCI Shares and Replacement Options	Percentage holding on a fully diluted basis
Before the issue of 4,200,000 Replacement Options referred to in this Notice of Meeting are issued	403.052	0	403.052	0.29%
After issue of 4,200,000 Replacement Options to Mr Flannigan (or his nominee)	403.052	4,200,000	4.603.052	3.19%

Assumes:

• The Merger has been Implemented, all TCI Shares have been issued as part of the $\bullet$ Scheme to former STR Shareholders and TCI has 40,003,278 shares on issue prior to the issue of the Replacement Options to Mr Flannigan.
• All options are converted to shares on a 1 for 1 basis. $\bullet$

MR M DOERY

Valuation of the Replacement Options to be issued to Mr Doery

The value of the 3,800,000 million options to be issued to Mr Doery (or his nominee) will vary depending on satisfaction of the vesting conditions and fluctuations in the price of TCI's shares. However, assuming a price of \$1.43 for the shares in TCI and having regard to the applicable accounting standards for determining the value of share and option based payments, the Directors believe that the current value of Mr Doery's Replacement Options is $$2,145,021$ . This valuation is based on the Black & Scholes pricing model, the terms of the options and the following assumptions (refer to section 5.4 of the Explanatory Memorandum in Part D of these Documents for details about these assumptions):

• $(a)$ All vesting conditions will be satisfied (accordingly no discount has been attributed as a result of this uncertainty).
• The market price of a share is \$1.43 (being the ASX closing price on 2 (b) November 2006).
• A volatility factor of 40%. $\left( c\right)$
• $(d)$ An interest rate of 5.85% per annum.
• A dividend yield of 4.9% per annum. $(e)$

The security holding in the Company of Mr Doery (or his associate) before and after the proposed issue of Replacement Options referred to in this Notice of Meeting

	Number of TCI Shares	Number of Replacement Options	Total number of TCI Shares and Replacement Options	Percentage holding on a fully diluted basis
Before the issue of 3,800,000 Replacement Options referred to in this Notice of Meeting are issued	603.052	Ω	603052	0.43%
After issue of 3,800,000 Replacement Options to Mr Doery (or his nominee)	603.052	3,800,000	4.403.052	3.06%

Assumes:

• The Merger has been Implemented, all TCI Shares have been issued as part of the Scheme to former STR Shareholders and TCI has 140,003,278 shares on issue prior to the issue of the Replacement Options to Mr Doery.
• All options are converted to shares on a 1 for 1 basis. $\bullet$

MR R SMALL

Valuation of the Replacement Options to be issued to Mr Small

The value of the 2,266,667 million options to be issued to Mr Small (or his nominee) will vary depending on satisfaction of the vesting conditions and fluctuations in the price of TCP's shares. However, assuming a price of \$1.43 for the shares in TCI and having regard to the applicable accounting standards for determining the value of share and option based payments, the Directors believe that the current value of Mr Small's Replacement Options is approximately \$1,747,920. This valuation is based on the Black & Scholes pricing model, the terms of the options and the following assumptions (refer to section 5.4 of the Explanatory Memorandum in Part D of these Documents for details about these assumptions):

• All vesting conditions will be satisfied (accordingly no discount has been $(a)$ attributed as a result of this uncertainty).
• (b) The market price of a share is \$1.43 (being the ASX closing price on 2 November 2006).
• $(c)$ A volatility factor of 40%.
• $(d)$ An interest rate of 5.85% per annum.
• A dividend yield of 4.9% per annum. (e)

The security holding in the Company of Mr Small (or his associate) before and after the proposed issue of Replacement Options referred to in this Notice of Meeting

	Number of TCI Shares	Number of Replacement Options	Total number of TCI Shares and Replacement Options	Percentage holding on a fully diluted basis
Before the issue of 2,266,667 Replacement Options referred to in this Notice of Meeting are issued	6.222.226	0	6.222.226	4.44%
After issue of 2,266,667 Replacement Options to Mr Small (or his nominee)	6.222.226	2.266.267	8.488.893	5.97%

Assumes:

• The Merger has been Implemented, all TCI Shares have been issued as part of the Scheme to former STR Shareholders and TCI has 140,003,278 shares on issue prior to the issue of the Replacement Options to Mr Small.
• All options are converted to shares on a 1 for 1 basis.

MR A FIELD

Valuation of the Replacement Options to be issued to Mr Field

The value of the 2,266,667 million options to be issued to Mr Field (or his nominee) will vary depending on satisfaction of the vesting conditions and fluctuations in the price of TCI's shares. However, assuming a price of \$1.43 for the shares in TCI and having regard to the applicable accounting standards for determining the value of share and option based payments, the Directors believe that the current value of Mr Field's Replacement Options is approximately \$1,747,920. This valuation is based on the Black & Scholes pricing model, the terms of the options and the following assumptions (refer to section 5.4 of the Explanatory Memorandum in Part D of these Documents for details about these assumptions):

• All vesting conditions will be satisfied (accordingly no discount has been (a) attributed as a result of this uncertainty).
• (b) The market price of a share is \$1.43 (being the ASX closing price on 2 November 2006).
• $(c)$ A volatility factor of 40%.
• An interest rate of 5.85% per annum. $(d)$
• $(e)$ A dividend yield of 4.9% per annum.

The security holding in the Company of Mr Field (or his associate) before and after the proposed issue of Replacement Options referred to in this Notice of Meeting

	Number of TCI Shares	Number of Replacement Options	Total number of TCI Shares and Replacement Options	Percentage holding on a fully diluted basis
Before the issue of 2,266,667 Replacement Options referred to in this Notice of Meeting are issued	6.171.026	0	6.171.026	4.41%
After issue of 2,266,667 Replacement Options to Mr Field (or his nominee)	6.171.026	2.266.667	8.437.693	5.93%

Assumes:

• The Merger has been Implemented, all TCI Shares have been issued as part of $\bullet$ the Scheme to former STR Shareholders and TCI has 140,003,278 Shares on issue prior to the issue of the Replacement Options to Mr Field.
• All options are converted to shares on a 1 for 1 basis.

Terms of the issue of the Replacement Options to be issued to Messrs Flannigan, Doery, Field and Small

Full details of the terms and conditions of the Replacement Options to Messrs Flannigan, Doery, Field and Small are as set out in Parts G and H of these Documents.

Other Terms and Conditions of Replacement Options

The terms of the Replacement Options are the same as the terms of the TCI Options set out in Parts G and H of these Documents, except that in the test of vesting conditions, rather than making a comparison of TCI EBIT from one year to the next (as applies to TCI Options) the test is a comparison of EBIT of the Merged Group from one year to the next.

PART I: AUDITOR'S NOMINATION

7 November 2006

The Directors Total Communications Infrastructure Limited Level 1, 118-120 Pacific Highway ST LEONARDS NSW 2065

Dear Sirs

Notice of Intention to Move for Resolution to Remove Auditor of Total Communications Infrastructure Limited (the "Company")

Pursuant to sections 329(IA) and 328B of the Corporations Act and subject to the implementation of the merger between the Company and Service Stream Limited:

• $\mathbf{1}$ . I request the Company, at its next general meeting of shareholders proposed to be held on 18 December 2006, to consider and, if thought fit, pass the resolution that VJ Ryan & Co of Level 5, 255 George Street, Sydney be removed as auditor of the Company; and
• I hereby nominate Deloitte Touche Tohmatsu of 180 Lonsdale Street, $2.$ Melbourne to act as auditor of the Company,

in both instances to take effect from the effective date of the scheme of arrangement between Service Stream Limited and its shareholders.

Yours faithfully

Animal Canadan ₁

James Julian Cooney

PART J: INDEPENDENT EXPERT'S REPORT

Total Communications Infrastructure Ltd and Service Stream Ltd Proposed Merger

Independent Expert's Report

9 November 2006

right size. right people. right answers.^®

9 November 2006

The Directors Total Communications Infrastructure Limited Level 1, 118 - 120 Pacific Highway St Leonards NSW 2065

Dear Sirs

PROPOSED MERGER OF TOTAL COMMUNICATIONS INFRASTRUCTURE LIMITED AND SERVICE STREAM LIMITED INDEPENDENT EXPERT'S REPORT

Introduction

On 27 July 2006, Total Communications Infrastructure Limited ("TCI") and Service Stream Limited ("STR") announced to the Australian Stock Exchange ("ASX") ("Announcement") that they intend to merge ("Proposal") so as to form an expanded group ("Merged Entity"). The Proposal is to be achieved by STR entering into a Scheme of Arrangement ("Scheme"), to which TCI would be a party. The Proposal also involves the acquisition of the TCI shares held by its major shareholders by STR ("STR Purchase"), followed by a capital reduction of those TCI shares ("Capital Reduction").

TCI

TCI is a public company listed on the ASX with annual revenues of approximately \$77 million. Established in 1996, TCI provides project management services, specialising in infrastructure deployment, primarily to the telecommunications industry, and increasingly to other industries such as utilities and renewable energy.

STR

STR is a public company listed on the ASX with annual revenues of approximately \$170 million. STR is an industrial services enterprise with an information technology capability, and outsourced field force management, technical support, customer assistance and asset management capabilities. STR aims to build a business model that leverages its equipment installation and maintenance capabilities across a range of infrastructure-based industries.

Role of PKFCA

The Directors of TCI ("Directors") have requested PKF Corporate Advisory Services (NSW) Pty Ltd ("PKFCA"), to prepare an independent expert's report ("IER") in relation to the STR Purchase providing an opinion as to whether or not the STR Purchase is considered to be fair and reasonable to the TCI Shareholders entitled to vote on the matter ("Non Associated Shareholders"). In addition, PKFCA has been requested to express an opinion as to whether or not the Capital Reduction would materially prejudice TCI's creditors.

Conclusion

In our opinion, for the reasons set out in this report:

• the STR Purchase and Proposal are fair and reasonable to the Non Associated Shareholders; and
• the Capital Reduction would not materially prejudice TCI's creditors.

Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF Corporate Advisory Services (NSW) Pty Ltd | Australian Financial Services Licence 247420 | ABN 70 050 038 170 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales

Summary of Proposal

Full details of the Proposal can be found in either the explanatory memorandum to be provided by the Directors to the Non Associated Shareholders ("Explanatory Memorandum") or the scheme documents to be provided by the Directors of STR to the STR Shareholders ("Scheme Documents"). The broad terms of the Proposal are outlined below:

• 9 million of Mr James Cooney's and Ms Samantha Grant's ("Founders") shares ("Founders' Shares") will be offered for purchase to current Non Associated Shareholders on a pro-rata basis ("Offer");
• STR will acquire the majority of the ordinary shares in TCI ("TCI Shares") held by the Founders and the remaining Founders' Shares not taken up by Non Associated Shareholders:
• TCI will acquire all of the issued shares in STR ("STR Shares"); and
• STR's shareholding in TCI will be cancelled.

The effect of the above is that the Founders will exit from TCI and that there will be a merger between TCI and STR, with STR shareholders owning approximately 50% of the Merged Entity.

Basis of evaluation

Fairness

Set out below are the matters considered by us in forming our view on the fairness of the Proposal:

STR Purchase

We have assessed the effective value of the consideration to be paid to the Founders for their TCI Shares by STR ("Consideration") to be \$0.98 cents per share (refer to paragraph 9.2 below for further details).

We set out below a comparison of PKFCA's assessed fair value of a TCI Share both on a minority and control basis to the Consideration, together with the amount payable by the Non Associated Shareholders to acquire the 9 million TCI Shares from the Founders:

Table 1: Assessed fair market value of TCI Shares vs. Consideration

	Para Ref.	Low value	High value	Midpoint
		s.	S	\$
Consideration per TCI share to be paid by STR to Founders	9.2	0.98	0.98	0.98
Assessed value of TCI (control basis)	7.11	1.16	1.33	1.25
Difference (discount) /premium		(0.18)	(0.35)	(0.27)
Consideration per TCI share to be paid by STR to Founders	9.2	0.98	0.98	0.98
Assessed value of TCI (minority basis)	7.11	0.93 1	1.06	1.00.
Difference (discount) /premium		0.05	(0.09)	(0.02)
Consideration per TCI share to be paid by TCI Non- Associated Shareholders for 9 million Founders Shares	9.2	0.87	0.87	0.87
Assessed value of TCI (minority basis)	7.11	0.93.	1.06	1.00.
Difference (discount) /premium		(0.06)	(0.19)	(0.13)
Source: PKFCA analysis

As will be noted from the above table, in most cases, the Founders are receiving less than the assessed fair value for the TCI Shares being sold by them. Accordingly, the Non Associated Shareholders are not being disadvantaged by the STR Purchase.

Merged Entity

In addition to the above, in our opinion an important consideration for Non Associated Shareholders is whether or not the Proposal will result in greater value to them. Set out below is PKFCA's analysis comparing the assessed values of a TCI Share on a standalone basis, with a Merged Entity Share:

Table 2: Assessed fair market value of TCI Shares vs. Merged Entity Shares
----------------------------------------------------------------------------

	Para Ref.	Low value	High value	Midpoint
		\$	S	\$
Assessed value of TCI (control basis)	7.11	1.16	1.33	1.25
Assessed value of TCI (minority basis)	7.11	0.93	1.06	1.00.
Assessed value of Merged Entity (control basis)	8.10	1.19	1.39	1.29
Assessed value of Merged Entity (minority basis)	8.10	0.99	1.16	1.08
Difference: Merged Entity less TCI (discount) /premium
- control basis		0.03	0.06	0.05
- minority basis		0.06	0.10	0.08
Source: PKECA analysis

Based on the above, it is clear that the Non Associated Shareholders will be more advantaged by implementing the Proposal.

Reasonableness

In addition to the reviewing the fairness criteria, PKFCA also reviewed the overall reasonableness of the Proposal and set out below is a summary of the key advantages and disadvantages of the Proposal:

Advantages

Key advantages for Non Associated Shareholders arising from implementing the Proposal are:

• Earnings per share: based on our analysis, EBITDA per Merged Entity Share will increase from approximately 14.1 cents per TCI Share to approximately 19 cents per Merged Entity Share, assuming that all Non Associated Shareholders participate in the Offer (refer to paragraph 9.3.1);
• Dividends: PKFCA notes that both TCI and STR have paid dividends in the last financial year. TCI paid higher dividends as measured by dividend yield. In our opinion, the Proposal provides for a more diversified income base, a healthier capital structure and better growth opportunities, which will assist in creating more consistent earnings and dividends. We note our concern in relation to potential amortisation charges and the impact to earnings as a result of the Proposal (refer to paragraph 9.3.1 below for further details);
• Share price: We note that, since the Announcement, TCI shares have increased (based on a closing price on 1 November 2006 of \$1.40) by approximately 40%. In our opinion this share price appreciation represents to some extent a re-rating of TCI in anticipation of implementing the Proposal. Should the Proposal not proceed, the TCI share price might depreciate in the absence of such re-rating. Further, we note that TCI would continue to suffer from a perceived overhang of shares owned by the Founding Shareholders that will act to depress its share price;
• Potential re-rating: In our opinion, the Proposal has the potential to lead to a positive re-rating for the Merged Entity Shares in the market;

• Increased market interest/ Potential target: In our opinion the Proposal will make the Merged Entity a more attractive investment than TCI alone and this facilitates the possible acquisition of the Merged Entity. However, Non Associated Shareholders should note that as at the date of this report, there is no offer to acquire all of the Non Associated Shareholders' interests in either TCI or the Merged Entity and such an offer may not materialise;
• Liquidity and Volatility: trading in TCI Shares has been illiquid with a perceived overhang of shares owned by the Founding Shareholders. The Proposal may improve the liquidity of the Merged Entity Shares:
• Attractive exit price/ Premium for control: as a result of implementing the Proposal, the Non Associated Shareholders effectively will obtain a premium for their agreement to the Proposal which is a significant advantage as compared with the likely discount for illiquidity and minority interest that may otherwise apply in the case of an individual Non Associated Shareholder wishing to sell their TCI Shares in the absence of the Proposal. This premium would not be paid necessarily be paid under other scenarios.
• Improved platform for further growth: Overall, the Proposal effects greater diversification in terms of servicing broader sectors including telecommunications, energy and utilities. The Merged Entity would have a national coverage including Adelaide in which TCI currently do not have an office premise located. The Merger brings about an enlarged business operations including contact centre, end-to-end solutions, recoverable works, specialist contracting, managed labour services and an entry into the fixed line infrastructure deployment and management. Further the Proposal provides more entrenchment of TCI into the clients with which TCI and STR have in common:
• Improved cost of capital: The smoothing of cashflows and the larger and more diversified nature of the Merged Entity may assist it in securing cheaper cost of capital.

Disadvantages

Key disadvantages for Non Associated Shareholders arising from implementing the Proposal are:

• NTA: PKFCA notes that Non Associated Shareholders will experience a significant decrease in NTA on both a diluted and undiluted basis if the Proposal takes place due to the calculated goodwill arising as a result of the Proposal.
• Gearing: For Non Associated Shareholders, the gearing (as measured by interest bearing liabilities: total assets (at book values) will significantly increase.
• Risk/return profile: For investors willing to remain invested in TCI in its current form, exposures and risk/ return profile, the Proposal may create a Merged Entity which has a form, exposure and risk/return profile which is no longer suitable for them.
• Forgone opportunity to benefit from improvement in TCI TCI in its current form contains certain growth opportunities that may translate to increases in the share price and result in higher dividend payments. Should the Proposal proceed the Non Associated Shareholders will only benefit from a growth opportunities in TCI as part of a larger Merged Entity;
• Exposure to integration risk- Unforeseen issues and complications may arise during the integration of STR and TCI which may result in a delay in the integration process or in expected strategic benefits not being fully achieved.
• Potential dilution in ownership PKFCA believes that it is likely that the Merged Entity options arising from the Proposal will be exercised, thus diluting the then Existing merged Entity Shareholders.

Conclusion

In PKFCA's opinion the advantages outweigh the disadvantages of implementing the Proposal.

Implications for the Shareholders of Rejecting the Proposal

The key implications for Shareholders if the Proposal was not to proceed would be the opportunity costs of the Proposal benefits and a potential decrease in the TCI share price. Proposal benefits are outlined above.

Apart from the Proposal, PKFCA understands that there are currently no other realistic sale opportunities that are known to TCI. However, it is possible that STR will become a substantial shareholder of TCI, by exercising its option over the Founders 19.9% Founders TCI Shares. Whether or not STR has the financial capacity to acquire the remaining shares in TCI is not certain and consequently, this may have continued adverse ramifications to the TCI share price in the future.

Other alternatives for the Shareholders in absence of the Proposal are the status quo and to seek an alternative bidder. In our opinion all of these scenarios are not as favourable as the Proposal. Under the:

• status quo scenario: TCI would continue to suffer from high revenue and cashflow volatility, its reliance on Telco Capex in addition to foregoing possible Merger benefits; and
• seek an alternative bidder: we understand that TCI has been approached previously by various bidders and the likelihood of alternate transaction involving any likely bidders is not considered probable.

Analysis of any prejudice to ability to pay creditors

Further details of this analysis have been set out in paragraph 9.8 below. PKFCA notes that the Proposal does not prejudice TCI's creditors, should it be implemented.

This summary opinion should be read in conjunction with the full text of the report that sets out our findings.

A Financial Services Guide is set out at Appendix 9.

Yours faithfully

Director

TABLE OF CONTENTS

1		PROPOSAL
	1.1	SUMMARY OF PROPOSAL
	1.2	APPROVAL OF PROPOSAL
$\mathbf{z}$		SCOPE OF REPORT
	2.1	PURPOSE, SCOPE AND LIMITATIONS
	2.2	BASIS OF ASSESSMENT
	2.3	RELIANCE ON INFORMATION
	2.4	USE OF REPORT AND LIMITATIONS
	2.5	INVESTOR CIRCUMSTANCES
	2.6	PROSPECTIVE FINANCIAL INFORMATION
	2.7	CURRENT MARKET CONDITIONS
	2.8	SOURCES OF INFORMATION
	2.9	ASSUMPTIONS
з		REVIEW OF THE TELECOMMUNICATIONS INDUSTRY IN AUSTRALIA
	3.1	INDUSTRY OVERVIEW
	3.2	INDUSTRY OUTLOOK
	3.3	TECHNOLOGY AND CONVERGENCE
	3.4	CAPITAL EXPENDITURE
	3.5	WIRELESS TELECOMMUNICATIONS
	3.6	TELECOMMUNICATIONS SERVICES
	3.7	TELSTRA
	3.8	CONCLUSION ON TELECOMMUNICATIONS INDUSTRY
4		PROFILE OF TCI
	4.1	BACKGROUND
	4.2 4.3	OPERATIONS PERSONNEL
	4.4	SWOT ANALYSIS
		INCOME STATEMENT
	4.5 4.6	MAINTAINABLE EARNINGS OF BUSINESS OPERATIONS
	4.7	REVIEW OF TCI'S BUDGETING PROCESSES
		FORECAST EARNINGS ASSUMPTIONS
	4.8	BALANCE SHEET
	4.9
	4.10 4.11	CASH FLOW STATEMENT AND WORKING CAPITAL CAPITAL STRUCTURE
	4.12	SHARE MARKET TRADING
	4.13	CONCLUSION ON SHARE MARKET TRADING INFORMATION
5		PROFILE OF STR
	5.1	GROUP STRUCTURE
	5.2	BUSINESS OPERATIONS
	5.3	MANAGEMENT
	5.4	SWOT ANALYSIS
	5.5	FINANCIAL PERFORMANCE
	5.6	FORECAST ANALYSIS
	5.7	NORMALISED EARNINGS
	5.8	FINANCIAL POSITION
	5.9	CASH FLOW STATEMENT AND WORKING CAPITAL ANALYSIS
	5.10	CAPITAL STRUCTURE AND OWNERSHIP
	5.11	SHARE PRICE TRADING HISTORY
6		PROFILE OF THE MERGED ENTITY
	6.1	OVERVIEW

PKF

	6.2	MERGED GROUP STRUCTURE
	6.3	MANAGEMENT
	6.4	SWOT ANALYSIS
	6.5	FINANCIAL PERFORMANCE
	6.6	BALANCE SHEET
	6.7	INTEREST BEARING LOANS
	6.8	WORKING CAPITAL
	6.9	CAPITAL STRUCTURE AND OWNERSHIP
7		VALUATION OF TCI SHARES
	7.1	INTRODUCTION
	7.2	CAPITALISATION OF FUTURE MAINTAINABLE EARNINGS
	7.3	FUTURE MAINTAINABLE EARNINGS
	7.4	EARNINGS MULTIPLE
	7.5	PREMIUM FOR CONTROL
	7.6	WORKING CAPITAL REQUIREMENTS
	7.7	SURPLUS ASSETS/ LIABILITIES
	7.8	INTEREST BEARING LIARILITIES
	7.9	CONTINGENT LIABILITIES
	7.10	CONVERSION OF OPTIONS
	7.11	VALUATION CONCLUSION
	7.12	VALUATION CROSS-CHECK
8		VALUATION OF MERGED ENTITY SHARES
	8.1	INTRODUCTION
	8.2	CAPITALISATION OF FUTURE MAINTAINABLE EARNINGS
	8.3 8.4	FUTURE MAINTAINABLE EARNINGS EARNINGS MULTIPLE
	8.5	PREMIUM FOR CONTROL
	8.6	WORKING CAPITAL REQUIREMENTS
	8.7	SURPLUS ASSETS/LIABILITIES
	8.8	LONG TERM BORROWINGS
	8.9	CONVERSION OF OPTIONS
	8.10	VALUATION CONCLUSION
9		PROPOSAL EVALUATION
		. 9.1 APPROACH
	9.2	STR PURCHASE
	9.3	OTHER FINANCIAL IMPACTS OF THE PROPOSAL
	9.4	POTENTIAL MARKET VALUE IMPLICATIONS
	9.5	OWNERSHIP AND CONTROL
	9.6	OTHER ADVANTAGES AND DISADVANTAGES
	9.7	TAXATION CONSEQUENCES
	9.8	ANALYSIS OF ANY PREJUDICE TO TCI'S ABILITY TO PAY CREDITORS
		10 QUALIFICATIONS DECLARATIONS AND CONSENTS
	10.1	QUALIFICATIONS
	10.2	189
	10.3	DISCLAIMER
	APPENDIX 1:	SOURCES OF INFORMATION
	APPENDIX 2:	VALUATION METHODS
	APPENDIX 3:	TCI COMPARABLE COMPANY DESCRIPTIONS
	APPENDIX 4:	TCI COMPARABLE COMPANY FINANCIAL INFORMATION
	APPENDIX 5:	MERGERS AND ACQUISITIONS COMPANY DESCRIPTIONS
	APPENDIX 6:	MERGERS AND ACQUISITIONS COMPANY FINANCIAL INFORMATION 100

PKF

APPENDIX 7:	MERGED ENTITY COMPARABLE COMPANY FINANCIAL INFORMATION 102
APPENDIX 8:	MERGED ENTITY COMPARABLE COMPANY FINANCIAL INFORMATION
	APPENDIX 9: FINANCIAL SERVICES GUIDE

$\blacksquare$ PROPOSAL

Full details of the Proposal can be found in the Explanatory Memorandum. A summary is set out below.

$1.1$ Summary of Proposal

We understand that the Proposal is expected to be achieved in a number of interrelated steps. We understand that all steps are interrelated and all steps must be approved and implemented or none will be. Set out below is an overview of our understanding of the steps required to achieve the Proposal:

Set out below is a description of the various steps required to effect the Proposal, subject to the Proposal proceeding:

Step 1

• The Founders will sell their entire TCI Shareholdings, comprising approximately 49.3 million TCI Shares, of which 40.3 million TCI Shares will be purchased by STR and 9 million TCI Shares will be offered to the Non Associated Shareholders on a pro rata basis at \$0.87 per TCI Share (the Offer). The Offer will be underwritten to an amount of \$5.0 million (or 5,747,126 TCI Shares), with any shortfall to be purchased by STR at \$1.0137 per TCI Share.
• The remaining approximately 40.3 million TCI Shares will be purchased by STR at $\bullet$ \$1.0137 per share ("STR Purchase"), financed by a new debt facility from Westpac and interest-free vendor funding of \$10 million ("Vendor Funding"), repayment of which may be deferred for up to 2 years after completion of the Proposal.

The sum of the STR Purchase (40.3 million TCI Shares at \$1.0137 each) plus the Offer (9 million TCI Shares at \$0.87 each) equates to the consideration (\$48.682 million) ("Consideration").

The Founders have granted STR a call option over 19.9% of the TCI Shares ("Call Option"), exercisable in the event that an alternative proposal arises in relation to TCI prior to the Scheme being approved. The Call Option expires on 31 March 2007 and has an exercise price of \$1.0137 per Share.

Step 2

For every 5 STR Shares held, 2 new TCI Shares will be issued to STR shareholders ("New Shares") ("New Share Issue") and 2 new TCI options ("New Options") will be issued to STR option holders for every 5 STR options ("STR Options") held ("New Option Issue"). The New Options will be on the same terms as the existing STR options (collectively referred to as the "New Issue").

Step 3

TCI will acquire 100% of the STR Shares. The acquisition is subject to approval by both the Non Associated Shareholders and the STR Shareholders under the Scheme.

Step 4

The 40.3 million TCI Shares acquired by STR under the STR Purchase will be cancelled pursuant to the Capital Reduction.

Assuming the above transactions are implemented, full conversion of the New Options and full subscription to the Offer, TCI will have the following capital structure:

• the Non Associated Shareholders will hold a 45% interest in the Merged Entity;
• the STR Shareholders will hold a 55% interest in the Merged Entity; and
• the Founders will not hold any interest in the Merged Entity.

Proposed issue of TCI Options, STR Shares and STR Options

The following key executives of TCI and STR will receive the following shares and options pursuant to successful implementation of the Proposal:

• 500,000 TCI Options (converting to 500,000 New Options) at a strike price of \$1.125 per share to Mr Rod Stanton of TCI; and
• 1,000,000 STR Shares each (converting to 400,000 New Shares) for \$Nil consideration to both Mr Patrick Flannigan and Mr Michael Doery of STR.

Separate to the Proposal, the shareholders of TCI and STR will be asked to approve at their next respective annual general meetings the following issue of options:

• up to 1,500,000 TCI Options (converting to 1,500,000 New Options) to Mr Rod Stanton; $\bullet$
• up to 6,000,000 STR Options (converting to 2,400,000 New Options) to Mr Patrick ٠ Flannigan; and
• up to 5,400,000 STR Options (converting to 2,160,000 New Options) to Mr Michael Doery.

These options are part of the key executives' ongoing remuneration and will be issued in three trances based on EBIT growth performance conditions.

$1.2$ Approval of Proposal

Non Associated Shareholders will be requested to approve the Proposal by approving a number of resolutions under the Scheme as set out in the Explanatory Memorandum. Failure to approve any resolution may result in the Proposal not proceeding.

SCOPE OF REPORT $\overline{2}$

$2.1$ Purpose, Scope and Limitations

2.1.1 STR Purchase

The STR Purchase represents approximately 37% of TCI's issued capital and is therefore subject to Section 606 of the Corporations Act 2001 ("Section 606") ("the Act"). Section 606 does not allow a person to acquire a relevant interest in shares such that they would control 20% or more of the voting shares in a company without making a takeover offer.

Section 611 of the Act ("Section 611") provides an exemption to Section 606 if the Proposed Transaction is approved by a resolution of the shareholders at a general meeting called for that purpose. Section 611 requires shareholders to be given all relevant information known to the person making the acquisition, their associates or the company, which is material to the proposal. prior to the general meeting taking place.

2.1.2 Capital Reduction

A company may reduce its share capital under the provisions of Chapter 2J of the Act, namely Sections 256B-256E. Sections 256B and 256C govern reductions of share capital and require the approval of shareholders prior to the implementation of a capital reduction. Pursuant to Section 256B a company may reduce its share capital if the reduction:

• is fair and reasonable to the company's shareholders as a whole;
• does not materially prejudice the company's ability to pay its creditors; and $\bullet$
• is approved by shareholders under section 256C. $\bullet$

Whilst there is no mandatory requirement for an independent expert's report to be prepared in relation to a capital reduction, the Directors seek an independent expert's opinion to ensure that the Shareholders are provided with an objective analysis of the Capital Reduction by an independent party.

$2.2$ Basis of Assessment

STR Purchase $2.2.1$

Neither the Act nor the ASX Listing Rules define the expression "fair and reasonable". However, guidance is provided by Australian Security and Investment Commission's ("ASIC") Policy Statements ("PS") and Practice Notes ("PN") which establish certain guidelines in respect of independent expert's reports required under the Act. In particular, PS 74 "Acquisitions Agreed to by Shareholders" and PS 75 "Independent Expert Reports to Shareholders" have been considered.

PS 75 relates to the assessment of takeover offers pursuant to Section 640 of the Act. Under PS 75, ASIC draws a distinction between "fair" and "reasonable". PS 75 treats the term "fair and reasonable" as two separate concepts - an offer is "fair" if the value of the offer price or consideration is at least equal to the value of the securities the subject of the offer. The comparison must be made assuming 100% ownership of the target company, irrespective of the percentage holding of the bidder or its associates in the target company. PS 75 considers that an offer is "reasonable" if it is "fair". However, it may also be "reasonable" despite not being "fair".

On the other hand, PS 74 provides that, with regard to a transaction subject to Section 611 of the Act, the assessment of whether a transaction is fair and reasonable should:

• be judged in all circumstances of the proposed transaction;
• compare the value of the shares to be acquired under the proposal and the value of the consideration to be paid. However, this is only one element of the assessment;
• compare the likely advantages and disadvantages for the non-associated shareholders if the proposed transaction is agreed to, with the advantages and disadvantages to those shareholders if it is not; and
• consider whether a premium for control is applicable.

Whilst Section 611 does not explicitly state that an expert's opinion is required in relation to such acquisitions, the ASIC PS 74 "Acquisitions Agreed to by Shareholders" states that it is the company's directors' obligations to provide non associated shareholders with full and proper disclosure to enable them to assess the merit of the proposal under which a person would acquire a substantial interest in the company, and to decide whether to agree by resolution to the proposed acquisition. This obligation may be satisfied by commissioning an independent expert's report on whether the proposed transaction is "fair and reasonable" to the non-associated shareholders.

In view of the above, PKFCA has adopted PS 74 as the appropriate basis for assessing the STR Purchase.

In considering transactions to be approved under Section 611 less weight is given to the fairness criteria than for transactions requiring approval under Section 640. Given that the non-associated shareholders are not receiving the offer but are being asked to approve the transaction, it is reasonable that they would only give their approval if, on balance, there were more advantages than disadvantages to them in approving versus rejecting the proposal (that is, on balance the non-associated shareholders would be better off if the transaction is approved). In such circumstances the consideration under the proposal is only relevant to the non-associated shareholders to the extent that it affects the company and the value of their shareholding.

In our opinion, the STR Purchase will be fair and reasonable to the Non Associated Shareholders, if:

• the value of the Consideration to be paid to the Founders under the proposed STR Purchase is equal to or less than the fair value of the TCI Shares involved (including a premium for either control or significant influence) before the Proposal is implemented;
• the value of a Merged Entity Share is greater than or equal to the value of a TCI Share before the Proposal is implemented;
• on balance, the advantages of approving the STR Purchase (and its subsequent cancellation so as to achieve the ultimate outcome of the Proposal) outweigh any disadvantages to the Non Associated Shareholders;
• the disadvantages of rejecting the Proposal outweigh the advantages to the Non Associated Shareholders; and
• an appropriate premium for control is reflected in the ultimate value to be attributed to the Non Associated Shareholders.

PKFCA has undertaken the following analysis:

• determine the fair value of Founder Shares on a stand alone basis, as presently existing and compared such value to that of the fair value of a TCI Share on a minority basis;
• determine the fair value of the Merged Entity Shares following implementation of the Proposal. This value has been determined on a minority interest basis given that individually and collectively the Non Associated Shareholders would not have control of the Merged Entity; and
• compare the fair value of the TCI Shares (on a control basis) with the fair value of the Merged Entity Shares (on a minority interest basis).

PKFCA has also considered the following matters in particular:

• the likely impact of the Proposal on the Non Associated Shareholders arising from the ability of the current Non Associated Shareholders to acquire 9 million of the Founders' Shares on a pro-rata basis under the Offer:
• the likely impact of the Proposal on the Non Associated Shareholders in regard to the following matters, as compared to their likely position if the Proposal does not proceed:
• prospective earnings per share, dividends and asset backing;
• prospective gearing; and $\overline{\phantom{0}}$
• prospective taxation positions;
• the likely impact of market factors (such as price, liquidity and volatility) regarding the Merged Entity Securities, as compared to the conditions currently experienced by the Non Associated Shareholders:
• the existing legal structures, and management and control, of TCI and the effects of the Proposal upon the same:
• the likelihood of alternative transaction(s) that could realise better value for the Non Associated Shareholders:
• any other advantages and benefits and costs, disadvantages and risks arising from the Proposal; and
• the implications for the Non Associated Shareholders of rejecting the Proposal.

For the purposes of our opinion, the term "value" will be interpreted as meaning "fair market value", which is defined as the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing, but not anxious purchaser and a knowledgeable, willing, but not anxious vendor, acting at arm's length.

It should be noted that PKFCA's engagement was to review the Proposal to be presented to Non Associated Shareholders. It is outside of PKFCA's scope to canvass potential alternative proposals and/or analyse whether or not the structure of the Transaction is the best arrangement that might be achieved by NCML and/or Non Associated Shareholders. PKFCA is not aware of any proposals involving NCML alternative to the Transaction discussed in this report.

2.2.2 Capital Reduction - effect on creditors

In forming our view we had regard to the principles in ASIC PN 29, in particular we have considered whether or not the Proposal is likely to have an impact upon the ability of the Merged Entity to pay its creditors. Specifically, our assessment will include a review of the following:

• review of the cash flows of the Merged Entity;
• ٠ consideration of any debt facilities to be established; and
• review of gearing and working capital ratios.

$2.3$ Reliance on Information

This report is based upon financial and other information provided by the directors of TCI and STR. PKFCA has considered and relied upon this information. PKFCA believes the information provided to be reliable, complete and not misleading, and has no reason to believe that any material facts have been withheld. The information provided was evaluated through analysis, inquiry and review for the purpose of forming an opinion as to whether the Proposal is fair and reasonable.

PKFCA's procedures, in the preparation of this report, may have involve an analysis of financial information and accounting records. This does not include verification work nor constitute an

audit in accordance with Australian Auditing and Assurance Standards ("AUSs") nor does it constitute a review in accordance with AUS 902 applicable to review engagements.

PKFCA does not warrant that its inquiries have identified or verified all of the matters which an audit, extensive examination or "due diligence" investigation might disclose. In any event, an opinion as to whether a corporate transaction is fair and reasonable is in the nature of an overall opinion rather than an audit or detailed investigation. Preparation of this report does not imply that PKFCA has audited in any way the financial accounts or other records of TCI and/or STR.

Use of Report and Limitations $2.4$

This IER has been prepared to assist the Directors in making their recommendation to the Non Associated Shareholders and to assist the Non Associated Shareholders in their considerations of whether or not to approve the Proposal. This report is intended to accompany the Explanatory Memorandum. PKFCA acknowledges that its report may be lodged by the Directors with the ASX, the Court and other regulatory and statutory bodies. This IER should not be used for any other purpose and PKFCA does not accept any responsibility for its use outside this purpose. Except in accordance with the stated purpose, no extract, quote or copy of our report, in whole or in part, should be reproduced without our written consent, as to the form and context in which it may appear.

It is understood that the accounting information provided to PKFCA was prepared in accordance with generally accepted accounting principles and except where noted, (including adoption of AIFRS) prepared in a manner consistent with the method of accounting used by TCI and/or STR, in previous accounting periods.

Under the terms of PKFCA's engagement, the TCI has agreed to indemnify it and its ultimate owner, PKF Chartered Accountants & Business Advisers, a New South Wales Partnership, against any claim, liability, loss or expense, costs or damage, arising out of reliance on any information or documentation provided by the Directors, which is false and misleading or omits any material particulars, or arising from failure to supply relevant information.

Apart from this IER PKFCA is not responsible for the contents of the Explanatory Memorandum or any other document associated with the Proposal. PKFCA has provided its consent for inclusion of this IER in the Explanatory Memorandum.

$2.5$ Investor circumstances

This report only provides general information. PKFCA has not considered the effect of the Proposal on the particular circumstances of individual Non Associated Shareholders. This report does not take into account a Non Associated Shareholder's individual situation, objectives and It is not intended to replace professional advice obtained by Non Associated needs. Shareholders. Non Associated Shareholders should consider whether this report is appropriate for the Non Associated Shareholder's own circumstances, having regard to the Non Associated Shareholder's situation, objectives and needs before relying on or taking action based on this report.

Whether or not individual Non Associated Shareholders should vote to implement or not implement the Proposal, depends upon an investor's situation, objectives and needs, as well as each investor's views as to the advantages and disadvantages associated with either implementing or not implementing the Proposal. Some individual Non Associated Shareholders may place a different emphasis on various aspects of the Proposal from that adopted in our report. Accordingly, individuals may reach different conclusions on whether or not the Proposal is in their particular best interests.

This report does not consider the taxation position of Non Associated Shareholders, which depends upon their own individual circumstances. An individual Non Associated Shareholders' decision in relation to the Proposal may be influenced by their particular circumstances (including their taxation position) and, therefore. Non Associated Shareholders are advised to seek their own independent advice.

PKFCA has not considered the effect of the Proposal on the STR Shareholders and Optionholders.

$2.6$ Prospective Financial Information

In preparing this report, PKFCA has had regard to:

• internal budgets for the year ending 30 June 2007 ("FY2007") prepared by each of TCI and STR as part of its respective ongoing management activity and approved by the board of directors of the respective companies;
• pro forma financial information of the merged entity arising from implementing the Proposal (prepared for the purposes of the Proposal that has been subject to due diligence review by the parties, including adoption and tests of consistent application of accounting policies) comprising:
• a pro forma balance sheet as at 30 June 2006 prepared by the respective TCI and STR management; and
• a pro forma income statement for FY2007.

In this report, the various prospective financial information in relation to TCI, STR and the Merged Entity is referred to as the "Forecasts". For the purposes of this report PKFCA understands. and has assumed, that the Forecasts:

• have been prepared fairly and honestly, on a reasonable basis and are based on the information available to management and the directors of each of TCI and STR at the time, and within the practical constraints and limitations of such information; and
• do not reflect any material bias either positive or negative or "management stretch" target.

PKFCA has been advised that nothing has come to the attention of the board of directors of the respective companies, which would lead them to consider that the respective prospective financial information has not been prepared on a reasonable basis and that the respective prospective financial information does not adequately reflect the prospects of the respective businesses.

The Forecasts are based on assumptions concerning future events and market conditions. While PKFCA understand that the Forecasts have been prepared with due care and attention, and the directors of each of TCI and STR consider the assumptions in respect of their respective companies to be reasonable, future events and conditions are not accurately predictable and the assumptions and outcomes are subject to significant uncertainties.

Actual results are likely to vary from the Forecasts and any variation may be materially positive or negative. Neither the directors, the parties to the Proposal nor PKFCA or anyone else can or does guarantee that the Forecasts or any other prospective statement contained in this report will be achieved.

In our consideration of the prospective financial information PKFCA had regard to various ASIC Policy Statements relating to the use of prospective financial information, including Policy Statement 170 ("PS 170"). PKFCA notes that PS 170 relates to the use of prospective financial information in disclosure documents and Product Disclosure Statements and is not relevant in the present circumstances. PKFCA notes ASIC's policy that any use of prospective financial information in reports to shareholders prepared by independent experts should clearly set out the

scope of the work undertaken by the expert in reviewing that information, and the expert's opinion on the prospective financial information, based on the review undertaken.

Australian Auditing Standard AUS 804 ("AUS 804") classifies prospective financial information1 as either forecasts² or projections³. According to AUS 804, a forecast is based solely on bestestimate assumptions, that is, assumptions as to future events that management expects to take place and actions management expects to take as of the date the information is prepared.

On the other hand, according to AUS 804, projections are based partly or wholly on hypothetical assumptions, that is, assumptions about future events and management actions which are not necessarily expected to take place, such as when an entity is in a start-up phase or is considering a major change in the nature of operations.

PKFCA understands that the respective prospective financial information takes account of the respective operating businesses, current earnings and market position, assessments of revenue growth in each sector in which the respective businesses operate, and estimates of operating costs, based on both historical costs and assessed future needs. Accordingly, PKFCA understands that the respective prospective financial information has been based on "best estimates" assumptions at the time they were prepared.

PKFCA has not been engaged to undertake an independent review of the Forecasts, and has not undertaken such a review. In particular, PKFCA has not been engaged to review the prospective financial information in accordance with Australian Auditing Standard AUS 804, "The Audit of Prospective Financial Information." Accordingly, PKFCA does not express an opinion on the reasonableness of the assumptions underlying the Forecasts, or their achievability.

PKFCA assumes that the prospective financial information, as provided by each of TCI and STR has been prepared on a reasonable basis and is based on the information available to the respective management at the time, and within the practical constraints and limitations of preparing such prospective financial information. PKFCA assumes that the prospective financial information do not reflect any material bias or "management stretch" target.

Prospective financial information is dependent on the outcome of many assumptions, some of which are outside the control of the TCI, STR and/or the Merged Entity. Assumptions relating to prospective financial information can be reasonable at the time of their preparation, but can change materially over a relatively short time.

However, PKFCA has considered as far as is possible in the circumstances, the prospects of each of TCI, STR and the Merged Entity for the purposes of undertaking a valuation of each of TCI and the Merged Entity, in the context of assessing the value aspects of the Proposal in preparing this report.

During the course of considering its opinion, PKFCA has undertaken a limited review of the prospective financial information. The scope of PKFCA's work in this regard comprised of the following:

obtaining details of the prospective financial information;

$\overline{2}$

^"prospective financial information" for the purposes of the standard means financial information of a predictive character based on assumptions about events that may occur in the future and on possible actions by an entity.

^"forecast" for the purposes of the standard means prospective financial information prepared on the basis of assumptions as to future events which management expects to take place and the actions management expects to take as of the date the information is prepared ("best-estimate assumptions").

^"projection" for the purposes of the standard means prospective financial information prepared on the basis of:

$(a)$ hypothetical assumptions about future events and management actions which are not necessarily expected to take place: or

⁽b) a mixture of assumptions management expects to take place and hypothetical assumptions.

• discussions with management regarding the basis on which the prospective financial information has been formulated and where possible, undertaking evaluation of such information, by reference to either past trading performance and/or other documentation provided by each of TCI and STR:
• review of the most recently available monthly management accounts: and
• consideration of economic and industry analysis.

Based on the limited scope of work undertaken by PKFCA, as outlined above, and in particular, the fact that PKFCA has not been engaged to undertake an independent review of the prospective financial information, nothing has come to its attention which would indicate that the Forecasts are not based on reasonable assumptions of each of TCI and STR and consequently the Merged Entity Forecasts.

PKFCA expresses no opinion as to the overall accuracy and reliability of the prospective financial information and does not warrant or guarantee the achievability of the outcomes indicated in the prospective financial information.

$2.7$ Current Market Conditions

Our opinion is based on economic, market and other conditions prevailing at the date of this report. Such conditions can change significantly over relatively short periods of time and such changes may result in the in our opinion becoming outdated and in need of revision. PKFCA reserves the right to revise any valuation, or other opinion, in the light of material information existing at the date of this report that subsequently becomes known to PKFCA.

2.8 Sources of Information

Appendix 1 to this report identifies the information referred to, and relied upon, by PKFCA during the course of preparing this report and forming our opinion.

2.9 Assumptions

In forming PKFCA's opinion, the following has been 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 material legal proceedings, or disputes, other than as publicly disclosed;
• information in relation to the Proposal provided to Non Associated Shareholders or any statutory authority by the parties to the Proposal is complete, accurate and fairly presented in all material respects;
• publicly available information relied on by PKFCA is accurate and not misleading;
• if the Proposal is implemented, that it will be implemented in accordance with its terms;
• the legal mechanisms to implement the Proposal are correct and effective;
• the purchase of Fibercom by STR is complete and effective from 1 July 2006 and there are no material outstanding issues arising from the purchase;
• there are no material undisclosed taxation liabilities affecting either TCI and/or STR arising from the Proposal or precursor transactions;
• there are no other alternative transactions for consideration by the Non Associated Shareholders; and
• cash costs of implementing the Proposal will total \$2 million and these have been appropriately accounted for in the Merged Entity Forecast/ Pro forma Balance Sheet.

REVIEW OF THE TELECOMMUNICATIONS INDUSTRY IN AUSTRALIA $\overline{3}$

In order to assess the value of TCI, the Merged Entity and the merits of the Proposal, PKFCA has briefly reviewed the Australian:

• overall telecommunications industry;
• wireless telecommunications industry $-$ which is the source of most of TCI's project management services revenue; and
• telecommunications services industry which which is the source of most of STR's revenue.

Set out our below is a summary of our review of the above.

$3.1$ Industry Overview

Prior to industry deregulation in the 1990s, the Australian telecommunications industry was a centralised, publicly controlled monopoly run by the Australian Telecommunications Commission ("ATC") which was created after the separation of the state owned telecommunications and postal functions in 1975. In 1991 Telecom Australia was incorporated from the restructured ATC and in 1993 changed to its name to its current trading name, Telstra Corporation Limited ("Telstra").

In the 1990s the Federal Government passed a series of Telecommunications Acts which introduced reforms such as at opening the industry to full competition, allowing the full resale of telecommunications services, the creation of national duopoly via the licensing of a second carrier (Optus) and licensing three mobile telecommunications service operators (Telstra, Optus and Vodafone).

In line with its deregulation policy, one third of Telstra was privatised in 1997, and a further 16 per cent in 1999. The Federal Government currently holds 51.8 per cent of which it currently plans to sell a further portion and place the remainder in the Future Fund.

The telecommunications industry was significantly affected by the global telecommunications and dot-com bubble and decline of 2001 ("2001 Downturn"), as negative business and consumer market sentiment surrounding the global information, communication and technology ("ICT") industry had a flow on negative effect on investment and revenue and the number of operators within the industry subsequently decreased.

The industry has slowly recovered from the 2001 Downturn, driven by an improved economic outlook, growth in business investment and technological developments with capital expenditure and revenues gradually increasing again. IBISWorld estimates that domestic demand for industry products subsequently increased in real terms by 4 per cent in 2003-04 and by 4.5 per cent in 2004-05.

The global telecommunications market is characterised by low growth in developed countries but very high growth in the developing world. Established carriers are looking for new technologies to reduce the cost of delivering services whilst emerging carriers need to employ the most efficient and flexible platforms possible, to manage the challenges of rapid growth and rapid technology change. The historical model of multiple networks, multiple service platforms and multiple charging platforms is being replaced by a new converged model. This convergence benefits both the carrier's infrastructure cost and the subscriber's usage experience.

Consolidation of the telecommunications industry has gathered pace in 2006. Carriers both large and small have divested and acquired assets for strategic benefit and major equipment vendors have merged in order to gain efficiencies and market reach. This environment creates new challenges for all suppliers. Industry consolidation also means that carriers are looking for improved supply chain efficiency and wish to deal with fewer vendors in their networks.

$3.2$ Industry Outlook

The future outlook for the industry and its participants is likely to be affected by the following factors and developments:

• the trend towards broadband from narrow band leading to greater capacity and ability to support a wider range of applications. This can be seen in the gradual replacement of traditional copper wire "legacy" networks with optic fibre next-generation-networks This transition is being driven by cost advantages to major ("NGNs"). telecommunications carriers and consumer demand for new and often larger applications and services delivered at greater speed:
• the convergence of data, voice and video services along a single delivery platform or network ("Convergence");
• levels of capital expenditure undertaken, particularly in relation to telecommunications infrastructure. Presently there is a large amount of capital expenditure planned for the industry;
• the gradual shift from traditional fixed line to wireless technology and services. The increases in mobile telephone penetration rates and usage is driving the expansion of wireless technology, making it one of the highest growth segments within the industry;
• the trend towards end-to-end outsourcing of business processes by telecommunications carriers such as Telstra and Optus and hardware vendors. Carriers are demonstrating a tendency to favour providers that can offer a complete package of services. An example of this is the recent announcement on 13 September 2006 of Telstra's deal with IBM to outsource the supply chain services which is expected to save it \$500 million over 7 years;
• further developments in applications technology, including wireless, broadband, ecommerce and Voice over Internet protocol ("VoIP"), which may provide users with lower costs or additional functionality and allow more efficient use of networks, leading to expansion of capacity and greater traffic volumes; and
• levels of economic growth and per capita income which are the primary driver of disposal income and household consumption.

$3.3$ Technology and Convergence

The telecommunications sector is undergoing a high rate of technological change in order to meet shifting forces of demand as consumers require a broader range of services, provided more quickly and efficiently, which requires greater bandwidth.

Change within the fixed telephony market is being driven by enhancements to copper wire networks and the more widespread use of fibre optic cable which is improving the quality, speed and capacity of transmissions. Compression technologies such as Digital Subscriber Lines ("DSL") allow ordinary copper lines to carry digital content at high speed which allows a wider range of services such as high speed internet. Meanwhile, the capacity of fibre optic cables is frequently being upgraded by new technology which is allowing expansion of capacity.

Changing technology has allowed the wireless market to become one of the fastest growing market segments. The development of broadband technology has resulted in the rollout of various third generation ("3G") networks replacing the narrowband technologies of 2G, which support new applications such as Wireless Application Protocol ("WAP").

The likely effects of Convergence include:

• realisation of cost reductions through the sharing of resources and interaction leading to new efficiencies;
• more complex interfaces leading to greater chance of device failure and requiring higher levels of maintenance; and

the combination of fixed and mobile phone telephony.

Operators within the industry are currently striving to offer successful delivery of converged services over a single network, most likely comprised of a combination of optical fibre and DSL.

Although advancing technology and Convergence have advantages, they also present challenges to operators. In an environment of increasing competitiveness, despite significant technological advances, product and service homogeneity is developing which is making it increasingly difficult for operators to distinguish themselves from their competitors through product differentiation. The cost of keeping pace with rapid technological advances by researching, developing and introducing new technology is also increasing.

As a result, major operators are turning to support services such as billing, hosting, distribution and system maintenance to minimise costs and maintain customer loyalty.

The other major challenge is managing the capital expenditure requirements while using technology to create efficiencies and scale in order to maintain margins.

$3.4$ Capital Expenditure

Following deregulation, telecommunications carriers and other industry participants were forced to upgrade their existing infrastructure in order to compete with an increased number of local and overseas competitors, which resulted in capital expenditure peaking in 1997-98. Capital expenditure fell significantly after the 2001 Downturn, as a result of a weak local market, a significant loss of domestic market share to overseas competitors and a real decline in revenue from export sales. This decline is demonstrated by the reduction in annual spending between 2000 and 2004 by major carriers as follows:

• Telstra, from a peak of \$4,705 million in 1999-00 to below \$3,000 million in 2003-04;
• Optus, from \$2,078 million in 2000-01 to \$942 million in 2002-03;
• Vodafone, from an average annual spend of approximately \$600 million between 1998 and 2000 to \$300 million between 2002 and 2004; and
• AAPT, falling from an average of \$80 million to \$70 million during the same period.⁴

More recently, increasing consumer demand for services has resulted in the upgrading of fixed networks and construction of new wireless infrastructure which has led to the telecommunications sector currently commanding 13% of engineering construction activity and a substantial increase in the number of infrastructure projects as seen below:

⁴ Paul Budde Communications Australia - "Australian Telecommunications Equipment Market - Revenue Overview (2006)"

The future of the industry is expected to be supported by more widespread use of mobile communications leading to the roll-out and expansion of 3G wireless networks by all major carriers. However, Telstra recently announced the abandonment of the proposed construction of the \$4,000 million NGN fibre-to-the-node ("FTTN") network (paragraph 3.7).

$3.5$ Wireless Telecommunications

The wireless sector currently is, and is forecast to be, one of the fastest growing telecommunications sectors. The sector has relatively high barriers to entry, mainly as a result of its capital intensive nature arising from the very high cost of developing a telecommunications network.

The segment consists of three major areas:

• a hardware sector that provides network infrastructure and end-user hardware such as mobile telephones. Major suppliers of hardware include Ericsson, Alcatel and Nokia;
• suppliers of wireless telecommunications services. In terms of revenue, this represents the largest sector within the Australian telecommunications industry, experiencing the second fastest growth rate (paragraph 3.6). The sector is relatively fragmented, with services provided by the approximately 800 enterprises, including:
• call services and network access provided by carriers. This constitutes the largest source of revenue for the industry;
• call centre and help desk operations to carriers and other large companies;
• hardware installation and maintenance; and
• project management of the construction of infrastructure; and
• retailers that offer services and hardware provided by the other sectors directly to end users.

The market share of major suppliers in the sector in Australia in 2005 is shown below:

Figure 3

The factors likely to affect the future performance of the sector are as follows:

wireless technology's increase in relative importance at the expense of wired systems;

• increases in mobile penetration rates, which refers to the number of mobile telephones per 100 people. The Australian Mobile Telecommunications Association ("ATMA") estimates that Australia's mobile penetration rate increased from 58 per cent in 2001-02 to 94 per cent in 2005-06 and a penetration rate exceeding 100% may be achieved by the end of 2008:
• increasing mobile penetration rates are being driven by an increasing level of prepaid customers. According to ATMA, in 2005 43% of all mobile services were prepaid, with this expected to increase to 47%. Prepaid services offer an inexpensive way to enter the market:
• the development of VoIP. Growth in this will threaten the market share of wireless and fixed operators unless costs can be contained; and
• the ability of suppliers to leverage existing investments in 3G infrastructure to launch new services and a maintain customer loyalty.

Set out below is the revenue outlook for the sector:

Figure 4

As can be seen above, wireless sector revenue is expected to experience strong growth at rates above 6% pa until the end of the forecast period. Achieving and maintaining this will require significant increases in capital expenditure on infrastructure to meet demand, which is likely to lead to increased revenues in the telecommunications services sector (paragraph 3.6).

$3.6$ Telecommunications Services

Carriers have recently focused on adopting the role of commoditised internet protocol traffic and access providers, with the implied intention of outsourcing most other activities, from infrastructure construction and maintenance to mobile phone insurance and call centre operations. A dominant feature of the industry in recent years has been role specialisation, with the majority of service providers specialising in a key area within the industry in order to meet Carrier service demands.

Overall, this sector is one of the more slowly growing sectors and is considered to be in the mature phase of the business life cycle, largely as a result of the decline in demand for fixed line services.

Major service areas within the sector are as follows:

wireless:

• fixed (wireline);
• telecommunications resellers; and
• internet service providers ("ISPs").

The factors likely to affect the future performance of this industry are as follows:

• intense competition. Competition is expected to come from both within the industry and from external sources, in particular from the media and information technology industries, which will result in further rationalisation and consolidation at all levels and potentially the establishment of strategic alliances and partnerships spanning a number of industries. As a result of increased competition, margins are expected to reduce and the number of operators is expected to decline, according to IBISWorld, by an annualised rate of over 16.5% per annum to 2010;
• the desire of carriers to reduce the number of permanent employees in order to reduce overheads and increase utilisation of contracted services at lower cost:
• the increasing tendency of carriers to seek end-to-end outsourcing solutions. In order to provide these services, providers must have sufficient scale and range of services to manage a range of projects; and
• the emergence of new technology and Convergence and the corresponding new services required.

Set out below is the revenue outlook for the sector:

Figure 5

Although total revenue growth is forecast to be broadly at or below inflation and GDP growth until 2010, the chart below demonstrates that the low growth is largely the result of a decline in the fixed services segment, while other segments are experiencing considerably higher growth.

With the exception of wired revenue, which is expected to decline over the next 5 years, revenue of all sectors is expected to grow at greater than 3% per annum, with the ISP and Wireless sectors leading growth with expected annual rates of 10.6% and 6.7% per annum, respectively which is mostly driven by growth in mobile phone telephony, increased wireless broadband and increased internet usage.

$3.7$ Telstra

The future of the telecommunications industry was expected to be boosted by the roll-out of the Telstra 3G wireless networks and the FTTN network. Recently however, negotiations between Telstra and the Australian Competition and Consumer Commission ("ACCC") regarding Telstra's proposal to construct a FTTN have broken down, leading to Telstra announcing a decision not to construct the \$6 billion network. As a result, the future of the FTTN that was planned to be constructed by the rival "G9" consortium is also in doubt. Some uncertainty now exists as to the future direction of the Australian ICT industry as a result of being deprived of such a large input of capital expenditure and the subsequent services it would require.

$3.8$ Conclusion on Telecommunications Industry

The telecommunications industry in Australia is currently in a transition phase following the 2001 Downturn. Deregulation and other recent developments to the market have created an environment that is likely to challenge operators seeking to expand or even maintain their market share. The industry is likely to feature rapid growth of wireless applications and the Internet at the expense of wired telephony. With the development of new technology, the trend towards Convergence, and the rapidly changing demand from end users to launch innovative applications, services and hardware, the industry is likely to be characterised by continuing large levels of capital investment.

From our analysis, which includes discussions with the management of TCI and STR, there does not appear to be any current industry trends which are likely to have a material adverse effect on TCI or STR achieving their respective prospective earnings. PKFCA notes that whilst changing consumer demand, rapid advances in technology and the decline in demand for wired services introduces uncertainty to the industry, this is likely to be offset by demand for wireless solutions, rapid growth in Internet usage and increased infrastructure investment.

$\overline{4}$ PROFILE OF TCI

$4.1$ Background

TCI was incorporated in Sydney in February 1995, in order to exploit a perceived niche within the Australian telecommunications market for a specialist infrastructure deployment and project management organisation. TCI was established with the aim of integrating the construction and telecommunications industries and with the philosophy of providing the "complete solution" to the telecommunications industry, from site identification to site handover.

After commencing operations in Sydney, TCI experienced significant expansion with the establishment of offices in Melbourne and Brisbane in 1998 and Perth in 2002. In 1999, TCI established the first earth satellite station in the southern hemisphere. TCI is also currently expanding its range of services from telecommunications infrastructure to other infrastructure areas, such as utilities and wind power generation.

In December 2004, TCI listed on the ASX with a market capitalisation of \$109 million.

Prior to listing, TCI acquired an interest in Personal Broadband Limited. However, immediately after the listing TCI de-merged its interest to the Founders, but retained relationship with Personal Broadband, being a key service provider to it.

On 1 July 2006, TCI acquired Radhaz Consulting Pty Ltd, an engineering company focusing on radio frequency engineering and electromagnetic emissions research and testing.

On the day prior to the Announcement, TCI had a market capitalisation of approximately \$110 million.

$4.2$ Operations

TCI's major activities comprise telecommunications infrastructure project management and construction, with specific focus on the integration of technology solutions with the construction industry. TCI's services focus on identifying, acquiring, designing, building and maintaining sites that will house base stations, as well as the management and maintenance of those base stations. TCI's range of services relating to the deployment and maintenance of telecommunications network infrastructure include:

• coverage and transmission planning;
• property and planning issues includes site design and/or acquisition services such as ٠ tenure negotiation, council consultation, lease and licensing negotiation and planning approval submissions:
• engineering design, with staff experienced in structural, civil, and mechanical engineering and geotechnical services;
• construction of mobile base stations, satellite earth stations and telecommunications rigging in both "Greenfield" and rooftop installations;
• site audits, feasibility studies and specialist reports;
• research and development, such as wind tunnel tests and radio frequency transparent materials development;
• maintenance services, including maintenance inspections, power upgrades and structural strengthening; and
• utilities division dedicated to the acquisition design, construction, maintenance and project managed of utilities projects including energy and water treatment solutions.

$4.3$ Personnel

As at 30 June 2006, TCI had 122 full time equivalent employees. Figure 7 below sets out the key management of TCI:

Figure 7

The qualifications and experience of TCI key management is outlined in Table 3 below.

Name	Position	Qualifications	Background
Jim Cooney	Non Executive Director and Chairman	Chartered Engineer ٠ Bachelor of Engineering ٠ Master of Science Diploma of the Imperial College.	Held a number of senior roles with 20 ٠ years experience in the Engineering & Telecommunications with companies such as Connell Wagner and Vodafone.
Rodney Stanton	CEO	Bachelor of Civil ٠ Engineering	20 years in project management with ٠ Lend Lease and Civic and Civic.
Mark Stackpool	CFO. Company Secretary	Chartered Accountant Bachelor of Commerce ٠	20 years experience in corporate ۰ administration, financial and management accounting, audit and taxation.
Trevor Duff	Non Executive	Bachelor of Commerce	Previous commercial role at TNT. ٠ Currently CEO and MD of MCI ٠
	Director		subsidiaries in Australia and NZ
			Previously senior executive positions ٠ at OTC (Telstra) and MD of Sprint International and Global One
lan Thorley	Non Executive Director	Graduate qualifications in ٠ health administration Master of Commerce ٠	25 years in executive roles ٠ specialising in business development, corporate restructuring, strategy and government relations. Previous CEO of major private ٠ healthcare company Currently CEO of Little Company of ٠ Mary Healthcare
Stephe Wilks	Non Executive	11 M	Director of TCI ٠
	Director	B.Sc	Director of People Telecom Limited; ٠ Principal, Wilks & Associates ٠ Communications Lawyers;
			Previous senior executive roles with ٠ NM Rothschild, Optus and British Telecom.
	Source: TCI management and TCI Annual Reports

Table 3: Qualifications and Experience

SWOT Analysis $4.4$

Set out below is a Strengths, Weaknesses, Opportunities, Threats ("SWOT") analysis of TCI:

Table 4: SWOT Analysis

Strengths	Weaknesses
Accreditation and compliance with International Quality Standard ISO9001	Economically dependent on relationship with Ericsson and Vodafone
Well trained staff with appropriate technical expertise	Reliance on project managers
Ability to retain key staff	Reliance on future capital expenditure of carriers
Market leading reputation for delivering complex and high volume projects	Small number of other customers.
Experienced and well qualified board
Long standing relationships with leading customers in the wireless telecommunications industry
Low capital expenditure requirements
Solid internally generated free cash flow
Opportunities	Threats
Additional infrastructure capacity added to metropolitan areas as mobile customers transfer from 2G to 3G	Loss of key contracts to competitors
networks	Project management performed in-house by major customers
Significant capital investment by carriers in delivering the next generation of technology	Failure of carriers to undertake planned capital expenditure
Horizontal growth into the utilities sector
Source: PKFCA analysis

4.5 Income Statement

Set out below are the audited income statements of TCI for the years ended 30 June 2004, 30 June 2005 and 2006 and TCI management Forecasts:

Table 5: TCI Financial performance

Year ending 30 June	2004 Actual AGAAP \$000	2005 Actual AIFRS '\$000	2006 Actual AIFRS \$000	2007 Forecast AIFRS \$000
Revenue	67.043	93,624	77,075	77,953
Cost of sales	(52, 744)	(65, 922)	(53,372)	(57,788)
Gross margin	14,299	27,702	23,703	20,165
Operating Expenses	(4, 105)	(6,957)	(3,827)	(4,701)
EBITDA	10.194	20,745	19,876	15,464
Depreciation and Amortisation	(249)	(489)	(431)	(437)
EBIT	9.945	20,256	19,445	15,027
Net Interest revenue/ (expense)	(18)	367	747	634
Net Profit before tax	9,927	20,623	20,192	15,662
Taxation expense/(benefit)	(2,992)	(6, 196)	(6, 128)	(4,698)
Net Profit after tax	6,935	14,427	14,064	10,963
EPS (cents)	n/a	14.18	12.83	10.00
Revenue Growth (%)	n/a	39.6%	$-17.7%$	1.1%
Gross Margin (%)	21.3%	29.6%	30.8%	25.9%
EBITDA Growth (%)	n/a	103.5%	$-4.2%$	$-22.2%$
EBITDA Margin (%)	15.2%	22.2%	25.8%	19.8%
EBIT Growth (%)	n/a	103.7%	$-4.0%$	$-22.7%$
EBIT Margin (%)	14.8%	21.6%	25.2%	19.3%
Operating expense growth (%)	n/a	69.5%	$-45.0%$	22.8%

Source: TCI audited FY2004, FY2005 and FY2006 financial statements and TCI Forecasts

The following comments relate to the historical and expected financial performance of TCI:

Revenues

• revenues increased from \$67.0 million in FY2004 to \$93.6 million in FY2005, largely as a result of the fully year effect of securing the Vodafone 2G contract mid way through FY2004. In addition, TCI secured on the Vodafone 3G contract and this offset decreasing Optus and Personal Broadband revenue;
• revenues decreased to from \$93.6 million to \$77.1 million in FY2006 as a result of ٠ programme delivery issues with two major customers leading to delayed revenue recognition;
• Forecast revenues are expected to remain stable as decreasing revenue from Vodafone is expected to be offset by increasing revenue from Telstra and Radhaz;

Operating expenses

• Operating expense increased from \$4.1 million in FY2004 to \$7.0 million in FY2005 as a result of providing for a doubtful debts and staff bonuses;
• overheads fell to \$3.8 million in FY2006, as a result of the reversal of provisions for doubtful debts and staff bonuses no longer being required;

operating costs are expected to increase in FY2007 as a result of the acquisition of Radhaz:

Operating profit

• net profit after tax increased from \$6.9 million in FY2004 to \$14.4 million in FY2005 as a result of the increased sales and operational efficiencies on large scale contracts:
• net profit after tax fell to \$14.0 million in FY2006 as a result of significantly less revenue. However, this decline has been partially offset as a result of tighter operating cost controls; and
• the Forecast net profit after tax is expected to fall as a result of pressure on margin contracts.

Further analysis on the Forecasts is set out in paragraph 4.8 below.

$4.6$ Maintainable Earnings of Business Operations

Set out below is our assessment of historical earnings, normalised to take into account any significant items which are unlikely to recur:

						Table 6: TCI normalised financial performance_
--	--	--	--	--	--	------------------------------------------------

Year ended 30 June	2004	2005	2006	2007
	AGAAP Actual \$000s	AIFRS Actual S000s	AIFRS Actual \$000s	AIFRS Forecast \$000s
EBITDA	10.194	20,745	19,876	15,464
Normalisation adjustments
Release of provision for doubtful debts		1,037	(880)
Release of bonus provision	220	417	(438)	$\sim$
Loss on sale of fixed assets		84		$\sim$
Normalised EBITDA	10,414	22,283	18,558	15.464
Source: TCI

We make the following comments with respect to the above normalisation adjustments:

• in FY2005, TCI provided for an outstanding balance owed by Personal Broadband Limited. This was subsequently reversed in the following year as a result of payment of the amount; and
• since FY2004, TCI has over-accrued a bonus provision. The normalisation adjustments relate to the reversal of these provisions which took place in the following financial year.

4.7 Review of TCI's budgeting processes

PKFCA has assessed the reliability of TCI's management budgeting by comparing management forecasts for FY2005 and FY2006 with actual results. The results of this assessment are set out graphically below:

Source: TCI Prospectus, TCI Financial statements FY2005-2006, TCI management forecasts FY2005-2006 Note: 2005 figures represent accounting under AGAAP

The following observations are based on the analysis set out above:

• with the exception of revenue in FY2006. TCI has met or exceeded forecast performance. The major reason for this negative variance was the unexpected deferral of revenues from two significant contracts; and
• we note that TCI's prospectus forecast EBITDA margins for FY2005 and FY2006 of 18.2% and 25.2% respectively. Actual results were 22.2% and 25.8%, which exceeded forecast margins.

We note that a significant proportion of FY2007 budget revenue is contractually based, with a further proportion based on contracts that that have been consistently renewed for up to 10 years and are expected to continue to be renewed. As a result, approximately 20% of Forecast revenue is expected to come from non-contracted sources.

4.8 Forecast earnings assumptions

Forecasts are predictions of future events and by their nature are subject to inherent uncertainties and limitations, many of which are beyond the control of TCI management. The Forecasts are therefore based on a fixed set of assumptions which are as follows:

• the contractual revenue from a major customer is budgeted to decline as a result of the expected completion of 3G services in various major capital cities;
• the low revenue growth of 1.1% from FY2006 to FY2007 (compared to 40% from FY2004 to FY2005);
• a major expected revenue contribution for FY2007 arises from the newly secured national contract with an additional major customer for the provision of wireless base station deployment services contracted in July 2006;
• marginal overall increase operating revenues is tempered by some pressure on margins; and
• a full year contribution by Radhaz, an electromagnetic emissions consultancy company acquired on 1 July 2006, is expected to assist in sustaining revenue for FY2007.

4.9 Balance Sheet

Set out below are the audited balance sheets of TCI as at 30 June 2004, 2005 and 2006: Table 7: TCI Balance sheet

As at 30 June	2004	2005	2006
	Actual AGAAP	Actual AIFRS	Actual AIFRS
	\$000	\$000	\$000
Current Assets
Cash Assets	4,015	19,548	11,770
Receivables	9,666	14,580	27,878
Inventories	853	4,317	2,243
Other	355	388	0
Total Current Assets	14,889	38,833	41,891
Non Current Assets
Receivables	4,812	0	1
Property, Plant and Equipment	990	843	348
Deferred tax asset	290	646	900
Total Non-Current Assets	6,092	1,489	1,249
TOTAL ASSETS	20,981	40,322	43,140
Current Liabilities
Payables	7,099	16,416	19,352
Interest bearing liabilities	66	0	0
Current tax liabilities	710	1,615	3,308
Provisions	275	2,704	1,694
Total Current Liabilities	8,150	20,735	24,354
Non Current Liabilities
Interest Bearing Liabilities	25	0	0
Provisions	150	170	210
Total Non-Current Liabilities	175	170	210
TOTAL LIABILITIES	8,325	20,905	24,564
NET ASSETS	12,656	19,417	18,576
Current ratio (times)	1.83	1.87	1.72
Liquid ratio (times)	1.68	1.65	1.64
Total Debt to Total Assets ("Debt ratio") (times)	0	0	0
Source: TCI audited financial statements 2004, 2005 and 2006

In relation to the above table, PKFCA notes that:

• TCI's current ratio and liquid ratio have remained reasonably consistent; ė
• TCI has since FY2004 reduced its interest bearing liabilities to nil as at 30 June 2006. ٠

In view of the fact that TCI has no debt and a strong cash position, PKFCA has considered whether or not TCI has surplus assets. Further details of our analysis of surplus assets have been set out in paragraph 7.7 below.

4.10 Cash Flow Statement and Working Capital

Set out below are the audited cash flow statements of TCI for FY2004, FY2005 and FY2006: Table 8: TCI Cash flow Statement

Year ended 30 June	2004	2005	2006
	Actual AGAAP	Actual AIFRS	Actual AIFRS
	\$000	\$000	\$000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers	62,040	89,818	64,838
payments to suppliers and employees	(55, 585)	(66,065)	(53,746)
Income tax paid	(3,094)	(5,646)	(4,689)
Net cash flows from operating activities	3,361	18,107	6,403
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment	8	185	748
Purchase of property, plant and equipment	(657)	(539)	24
Interest received	636	374	(46)
Net cash flows used in investing activities	(13)	20	726
CASH FLOWS FROM FINANCING ACTIVITIES
Finance lease repayments	(69)	(61)	$\Omega$
Proceeds from issue of ordinary shares	0	9.055	∩
Repayment of loan by related party	0	5,132	$\Omega$
(Decrease)/Increase in borrowings	1,013	0	$\Omega$
Dividends paid	(7, 562)	(16, 720)	(14,907)
Net cash flows used in financing activities	(6,618)	(2,594)	(14, 907)
Net decrease/(increase) in cash held	(3, 270)	15,533	(7,778)
Cash at the beginning of the financial year	7,285	4,015	19,548
Cash at the end of the financial year	4,015	19,548	11,770
Source: TCI audited financial statements FY2004, FY2005 and FY2006

We note that TCI has had positive operating cash flows since listing in 2004 and has not at any stage required any working capital financing. In addition, from a review of TCI cash flow forecasts for FY2007 and discussions with TCI management, we understand that TCI will be unlikely to have a material working capital deficit at any stage over the next 12 months.

$4.11$ Capital Structure

Ordinary shares

TCI currently has 109,609,808 shares on issue. The top 10 shareholders which account for approximately 70% of the TCI Shares, are shown in Table 9 below:

Table 9: Top 10 TCI Shareholders as at 31 October 2006

Shareholder	Number of TCI Shares	Percentage of TCI Shares
Mr James Julian Cooney	24,662,154	22.50%
Ms Samantha Alexandra Grant	24,662,154	22.50%
UBS Nominees Pty Ltd	10,050,308	9.17%
J P Morgan Nominees Australia Ltd	7,062,424	6.44%
National Nominees Pty Ltd	1,777,490	1.62%
Westpac Custodian Nominees Limited	1,730,053	1.58%
UBS Wealth Management Australia Nominees Pty Ltd	1,366,623	1.25%
Brispot Nominees Pty Ltd	1,275,063	1.16%
RBC Dexia Investor Services Australia Services Nominees Pty Ltd	1,199,355	1.09%
Invia Custodian Pty Limited	1,194,975	1.09%
Subtotal top 10 holders	74,980,599	68.40%
Other	34,626,209	31.60%
Total	109,609,808	100%
Source: TCI 2006 Annual Report

Based on the above, it is clear that the Founders have a dominant, if not controlling shareholding in TCI, with a combined ownership of some 45% of the shareholding and the next highest shareholder having only 9.17% of the shares.

Options

Upon successful implementation of the Proposal 500,000 TCI Options (converting to 500,000 New Options) at a strike price of \$1.125 per share will be issued to Mr Rod Stanton.

Separate to the Proposal the shareholders of TCI will be asked to approve at the next annual general meeting the issue of up to 1,500,000 TCI Options (converting to 1,500,000 New Options) to Mr Rod Stanton as part of his ongoing remuneration. These options will be issue in three tranches based on EBIT growth performance conditions.

4.12 Share Market Trading

The price at which an entity's shares trade on the ASX is an appropriate basis for valuation (on a minority interest basis) where:

• the shares trade in an efficient market place where willing buyers and sellers readily trade the securities on an informed basis; and
• the market for the entity's shares is active and liquid.

PKFCA has considered the value of TCI Shares by reference to recent market trading on the ASX for a period of one year prior to the day before Announcement ("Trading Period"). In order to assess the reliability of the market price as a basis for determining the value of the TCI Shares, PKFCA considered:

• the liquidity of the stock (that is the level of trading activity as a percentage of the total quoted TCI Shares, and the frequency of trades); over the Trading Period;
• the 'spread' of Shareholders and the total number of TCI Shares that they hold, taking into account any trading or other restrictions applicable to the TCI Shares;
• the frequency of 'unusual' and/or 'abnormal' trading that takes place;
• the presence of any factors that may indicate that trading in the TCI Shares is the result of significant speculative trading; and

the level of knowledge that the buyers and sellers have in respect of TCI.

PKFCA reviewed the following factors relating to the trading activity of TCI Shares over the Trading Period:

• the daily high, low and closing prices;
• the daily volume; and
• the volume weighted average price ("VWAP").

The table below summarises daily trades in TCI Shares over the Trading Period.

Table 10: TCI Share trading prices

	High $(\mathbb{S})$	Low $(\textcircled{\scriptsize{*}})$	VWAP (S)
As at 26 July 2006	1.000	1.000	1.000
1 month to 26 July 2006	1.070	0.890	0.948
3 months to 26 July 2006	1.175	0.890	0.994
6 months to 26 July 2006	1.750	0.890	1.117
12 months to 26 July 2006	1.750	0.890	1.268
Bloomberg Source:

We note the following with respect to the TCI Share price over the Trading Period:

• the closing price of TCI Shares on 26 July 2006 was \$1.00, which corresponded to its initial 2004 listing price:
• the TCI Shares traded between a low of \$0.89 each on 28 June 2006 and a high of \$1.75 each on 31 January 2006;
• the VWAP for the Trading Period was \$1.268, while for the six months and one month prior to the Announcement the VWAP was \$1.117 and \$0.948, respectively. Despite short term price volatility, market sentiment surrounding the TCI Shares appears to have become increasingly negative over the last 12 months;

The chart below illustrates the daily TCI Share prices and volumes traded over the period up to 8 September 2006, (which includes trading after the Announcement):

Factors which may have had an impact on recent TCI Share trading (excluding the Announcement) are detailed below:

Table 11: Recent Announcements

Date	Announcement
25 August 2005 6 October 2005 9 November 2005	the 2005 preliminary final report and financial results were released the 2005 Annual Report and full year results were released the TCI annual general meeting was held
22 February 2006 17 April 2006	TCI released its 2006 half year accounts TCI announced a reduction FY 2006 revenue and earnings as a result of deferral of certain contractual revenue to the following financial year

Source: Bloomberg

We note that since the date of the Announcement, there have been some additional key announcements, including:

• announcement of the Share Purchase Agreement entered into between the Founders and STR on 31 July 2006; and
• preliminary 2006 final report released to market on 28 August 2006 and the FY2006 audited financial statements released to the ASX on 18 September 2006.

As shown in Figure 9 above, the traded daily volume and share price of TCI have steadily increased since the Announcement.

The table sets out some details of trading in TCI Shares:

Table 12: TCI Share trading

	Average daily volume (shares)	Average daily volume (S)	Turnover	Average Bid Ask Spread
As at 26 July 2006	32,020	32,020	0.03%	2.0%
1 month to 26 July 2006	130.073	123.350	2.85%	2.1%
3 months to 26 July 2006	133,490	132,709	7.92%	2.1%
6 months to 26 July 2006	169.494	189.371	19.17%	2.1%
12 months to 26 July 2006	155.142	196.723	35.67%	1.9%
Bloomberg Source:

The following indicates that there is limited liquidity in respect of TCI Shares:

• the volume of trading in TCI Shares consistently decreased over the Trading Period, with the average daily volume falling from approximately 155,000 in the 12 months prior to the Announcement to 130,000 in the one month prior to the Announcement. We also note that the average daily dollar volume fell from \$196,000 to \$123,000 during the same period;
• the total traded volume of TCI Shares during the year ended 26 July 2006 was approximately 36% of the total TCI Shares on issue during the year;
• during the Trading Period the average bid-ask spread was 1.9%. During the one month prior to the Announcement the average spread was 2.1%;
• the top 5 TCI Shareholders (including the Founders) hold approximately 65% of the total TCI Shares as at 30 June 2006. The Founders hold 45% of issued capital. There is therefore an extremely limited degree of 'spread' among TCI Shareholders;
• TCI has not received any notices or queries from the ASX regarding its compliance with continuous disclosure rules, implying that there is a reasonably informed market in relation to its securities; and
• to our knowledge, immediately before the Announcement, there are no brokers which actively cover TCI Shares.

PKFCA also understands that the Founders have attempted on a number of occasions to sell their shares and to date, have not been successful. As a consequence, the TCI share trading has been adversely affected by an "over-hang" of the Founders' share available for sale.

4.13 Conclusion on share market trading information

We note that there may be limitations in using the market price to obtain a value for TCI Shares, particularly given that the Founders have been unable to sell their shares into the market place. Accordingly, we have considered the value of TCI Shares based on the current market prices as a cross check on the reasonableness of the primary valuation method of TCI, which is based on the capitalisation of future maintainable earnings. We note that the market trading price of TCI Shares is not likely to fully reflect their fair market value given the limitations associated with recent market trading in the security.

5 PROFILE OF STR

STR was initially incorporated under the name of Santech Pty Limited ("Santech") in 1984 with its focus on the development of specialised communication technology. Since listing on the ASX on 27 May 1987, the company has undergone three (3) major restructuring schemes. The timing of events leading to the present business structure is as follows:

Table 13: Timing of events

On 12 January 2004, the company changed its name to STR and subsequently was removed from Administration on 15 January 2004. Following a capital raising in January 2004, STR was reinstated on the ASX on 20 February 2004.

STR targeted the large and fragmented industrial services market focusing on provision of end-toend service solutions for the telecommunications industry Customer Premise Equipment ("CPE"). Subsequently, on 6 October 2004, the company issued a prospectus introducing its new business model and a change in business direction.

As part of that new business model, STR has acquired a number of businesses, commencing with Service Stream Communications Pty Ltd ("Communications") (formerly Skilled Communications Services Pty Ltd ("Skilled Communications")) and Communication Services Australia Consulting Pty Ltd ("CSA") in November 2004.

Table 14: Acquisitions and events

Acquisition / event	Date
Skilled Communications Services & Communication Services Australia Consulting Pty Ltd Pracom Ltd operating businesses	November 2004 March 2005
Milcom Pty Ltd	October 2005
\$10.3 million capital raising completed	November 2005
Fibercom Technology Pty Ltd	July 2006
Source: STR

Skilled Communications was established in 1992 by Mr Adrian Field and Mr Russell Small as part of a division in Skilled Engineering Ltd ("Skilled"), a company listed on the ASX, specialising in recruitment and temporary labour supply across a broad range of Australian industries. Skilled Communications was set up to provide installation, maintenance and managed labour services to the communications industry. Both Mr Field and Mr Small were the co-founding directors of STR when it was re-admitted onto ASX in February 2004.

STR completed the acquisition of the operating businesses of listed company, Pracom Ltd ("Pracom"). The businesses provide installation, maintenance, technology and outsource services to tier-one customers predominantly in the telecommunications industry. This business was integrated with the existing STR businesses and was renamed Service Stream Solutions Pty Ltd ("Solutions"). The non-core, unprofitable activities of Pracom were either closed or divested.

Milcom Pty Ltd ("Milcom") is Australia's largest private training and consultancy company. Milcom trains organisations and individuals with the necessary skills to participate in the Information Technology and Telecommunications industry.

Fibercom Technology Pty Ltd ("Fibercom") specialises in telecommunication infrastructure design, building and maintenance.

STR provides complete end-to-end capability for construction, installation and maintenance services across a range of infrastructure-based industries, with a focus on the telecommunications industry. As part of its growth strategy, STR acquired businesses that complement its structure and present significant opportunities for organic growth. The following table indicates the acquisitions of new businesses by STR over the past two (2) years:

Table 15: Acquisitions of businesses by STR

Date	Description
1 November 2004	STR acquired Skilled Communications and CSA from Skilled.
1 March 2005	STR completed the acquisition of the operating businesses of listed company, Pracom Ltd ("Pracom"). The businesses provide installation, maintenance, technology and outsource services to tier-one customers predominantly in the telecommunications industry. This business was integrated with the existing STR businesses and was renamed Service Stream Solutions Pty Ltd ("Solutions"). The non-core, unprofitable activities of Pracom were either closed or divested.
4 January 2006	STR finalised its acquisition of Milcom Pty Ltd ("Milcom"), Australia's largest private training and consultancy company. Milcom trains organisations and individuals with the necessary skills to participate in the Information Technology and Telecommunications industry.
21 August 2006	STR announced its acquisition of Fibercom Technology Pty Ltd ("Fibercom"). Fibercom specialises in telecommunication infrastructure design, building and maintenance.
Source: STR announcements

STR deals not only with every major channel within the telecommunications industry but also has a significant presence in many of the top 200 companies within Australia.

Prior to the Announcement on 27 July 2006, STR had a market capitalisation of approximately \$48.2 million.

$5.1$ Group Structure

The current STR Group is comprised of five (5) wholly-owned subsidiaries, the structure of which is shown in Figure 10 below:

Figure 10

Source: STR Annual Report, STR management

Notes:

¹ Resourcing Solution Pty Ltd ("Resourcing Solutions"), was formerly known as Service Stream Resources Pty Ltd $^{\rm 2}$ businesses acquired and integrated from Pracom Limited

$5.2$ Business Operations

STR is an integrated industrial services group that provides outsourcing services to infrastructurebased industries, in particular, within the telecommunications sector. Currently, STR has approximately 1,500 staff and 11 branches nationally providing the following services:

• design, installation and maintenance of telecommunications networks and facilities; ٠
• outsourced field force management; ٠
• managed technical labour and technical support services;
• contact centre solutions, including customer assistance and logistics services;
• asset management and recoverable works services; and
• training and consultancy services. ٠

The core operating divisions are Communications and Solutions that focus on the Telecommunications sector. However, STR has established infrastructure that is capable of servicing multiple industries, including telecommunications, utilities and related CPE Management sees organic and/or contract-related growth opportunities in environments. telecommunications sector and is reviewing opportunities in the broader based industrial services sector.

The following table illustrates the business activity carried out by each subsidiary:

Figure 11

Major customers are Telstra, Optus and Vodafone. A number of significant contracts have been re-signed in past 12 months:

• Telstra Labour Services 2 years + 2 years;
• Telstra I & M 4 years 2 years + plus 1 year + plus 1 year; and
• Optus Insurance 3 years.

A number of significant contracts have been recently won:

• Telstra Specialist Services 3 years;
• Optus Digital Migration 1 year;
• VERNet 3 years; and
• Vodafone 5 years.

A summary of each subsidiary's principal activities and products is set out in the following paragraphs.

5.2.1 Communications

Communications supplies managed labour in relation to construction, installation and maintenance services for a number of industries across Australia, primarily within the communications industry. The basis of the Communications business was purchased from Skilled in November 2004. As a major source of revenue for STR, the services comprise:

• Installation & Maintenance: installation and maintenance of plant and equipment, ranging from complete optical fibre installations through to residential telephone installations. Telstra is the major customer under a long-term contract of up to 4 years - an initial term of 2 years + plus two, 1 year options.
• Specialist contracting: design, construction, installation and maintenance of network services such as copper access networks, inter-exchange networks, global system mobiles, radio frequency networks, cable TV networks. Telstra network maintenance and augmentation is the primary activity, carried out under a long term contract (with a term of 3 years);
• Resourcing Solutions: supply of flexible labour forces, providing qualified labour teams, test equipment and tools in order to supplement the workforces of major telecommunication providers. Major client is Telstra under a long term contract (3 years left to run). Restraints on competing with the vendor of this business imposed under the purchase agreement end in November 2006;
• Construction and recoverable works projects, primarily including relocation of communications and power assets. STR is one of only 6 national accredited industry specialists and is the only one operating nationally. Customers are other than Telstra and include local councils; and
• Other Telstra business: installation and maintenance of broadband networks, including digital subscriber line technologies such as ADSL; MDU construction and CPAS.

As an end-to-end supplier in the 'Ticket of Work' ("TOW") environment in both Communications and Solutions, STR's number of TOW has increased by approximately 8 times from approximately 7,000 to 57,000 per month since FY2004.

Outlook

STR managements' views as to the outlook for this business are summarised as follows:

• business continues to grow in line with expectation;
• profit exceeding budget:
• margins improving with increasing volumes;
• Specialist Contracting continues to grow:
• Construction order book is exceeding expectations and Construction outlook is positive for next two years;
• Resourcing Solutions assist diversification of customer base once restraints end; and
• opportunities exist to expand current skill base into utilities other than telecommunications.

5.2.2 Solutions

Solutions is one of the core business activities of STR and delivers a broad spectrum of services designed to meet the customers' workflow processes which could be for a specific process or an end-to-end customised supply chain. The basis of the Solutions business was formed from the assets purchased from Pracom in March 2005.

Solutions is primarily an outsourced provider of services within telecommunications comprising of 4 major business units:

• Field Services installation and maintenance services on cable and copper networks. The major customer is Optus.
• Contact Centre Operations call centre services, where calls in relation to sales acquisition, directory assistance, and pre-sales and post-sales customer care are managed. Major customers are Vodafone and Optus.
• Order Management Services logistics management, where warehousing, packaging and despatches pursuant to orders are carried out. The major customer is Optus and STR manages its mobile handsets insurance claims process on an end-to-end basis, including contact centre and logistics (procurement and shipment); and
• Hosted Solutions Technology development services, involving operations support services - technology for management systems is set in place to maintain the customer's business processes. Major customer is Vodafone. Carrier-specific platforms have been developed.

The above services are offered individually or in a bundled fashion as a support to the customers' existing business process structure.

$5.2.3$ Milcom

Milcom is a registered training organisation ("RTO") that has been in operations for 15 years, specialising in training programs within the telecommunications and utilities sectors. The organisation is accredited to provide national recognised qualifications up to the level of Advance Diploma. Milcom provides training in the following areas:

• telecommunications;
• security; ٠
• electro technology;
• information technology; and
• contact centre.

Training centres are located in New South Wales, Victoria and Queensland.

Operating as a stand-alone training facilitator, Milcom provides training to both STR staff and external parties.

Milcom's revenues are derived as follows:

• 80% from individual students; and
• 20% from corporate customers, including:
• Telstra via Ross Navigate and Accenture; $\frac{1}{2}$
• Optus; $\overline{\phantom{0}}$
• Transfield;
• Downer Engineering; $\overline{a}$
• ABB; and
• DFAT, Federal Police.

5.2.4 Fibercom

Fibercom has 18 years of experience in telecommunication infrastructure design, installation and maintenance for both internal and external networks, including optical fibre, coaxial cable, copper cable and wireless solutions. Its expertise in fibre optics, testing and installation techniques complements Communications' services.

5.3 Management

Figure 13 below sets out the key management personnel of STR.

Figure 13

The qualifications and experience of STR key management personnel are outlined in below.

Table 16: Qualifications and Experience of Board of Directors of STR

Name	Position	Qualifications	Background
John. Llewellyn (Lyn) Davies	Independent Chairman	Diploma of Agriculture ٠ Diploma Company Directors ٠ Course Fellow of the Australian Institute of ٠ Company Directors and Australian Institute of Management Member of the Australian Institute ٠ of Agricultural Science and Technology and Emeritus member of the Australian Association of Agricultural Consultants	More than 20 years at chief ٠ executive level with previous companies including Goodman Fielder Limited, Wattie Limited and Elders IXL Limited ٠ He had previously held the position of a Chairman in HRL Limited. The Nordia Group, Floriana Pty Limited and Collins Booksellers Group and was a Director of Castle Bacon Pty Ltd Currently, he is also the Chairman ٠ of Citywide Service Solutions Pty Ltd and Yarra Valley Grammar and a Director of Mackay Consolidated Limited Industries and Pty ParaQuad Victoria
Patrick J. Flannigan	Managing Director & Chief Executive Officer	Business degree from Victoria ٠ University Fellow of the Australian Institute of ٠ Company Directors and Australian Institute of Management	Previously a founder and a director ٠ Maintenance Integrated Οf Services More than 20 years in the ٠ industrial services sector Spent 11 years in Skilled and held ٠ various positions including that of General Manager Currently, a Director the 0f ٠ Australian Grand Prix Corporation and a Director and Chairman of Finance the Committee for Western Chances
Michael Doery	Executive Director & Chief Financial Officer	Fellow of the Institute of Chartered ٠ Accountants	With 24 years experience at ٠ KPMG, including 14 years as a partner, he specialised in telecommunications. ΙT and services sectors Over the last 15 years, he has ٠ served on various boards of charities and is presently a Director of the Australian Drug Foundation
Adrian Field	Non-executive Director	"A" Grade Electrician Qualification ٠	٠ Extensive experience in the telecommunications, electrical and construction industries with over 20 years of business experience with Skilled Communications and CSA He also co-founded Direct Cash ٠ Pty Ltd, a private owned ATM business in Australia which was sold to Cashcard During the last 12 months, he co- founded Hyperion Capital, a private equity fund

Name	Position		Qualifications			Background
Russell Small	Non-executive Director	٠ (Valuations)	Diploma of Business	Studies	٠. ٠ ٠	Extensive experience in the telecommunications, electrical and construction industries with over 20 years of business experience with Fujitsu, Honeywell, Skilled Communications and CSA He also co-founded Direct Cash Pty Ltd, a private owned ATM business in Australia which was sold to Cashcard During the last 12 months, he co- founded Hyperion Capital, a private equity fund

Source: STR Management, STR Financial Accounts

Table 17: Qualifications and Experience of Executive Team of STR

Name	Position	Qualifications	Background
Joseph Caporale	Executive General Manager. Communications	None ٠	Over a period of 10 years, he has ŋ held various leadership roles in Skilled Power Services. Skilled Skilled Communications and Customer Contact οf the In-depth knowledge ų telecommunications and power industries in Australia
John Gramc	Executive General Manager, Solutions	qualifications $\bullet$ Tertiary in. electronics and a Master οf Business Administration from the Swinburne University οf Technology	$\blacksquare$ More than 25 years experience in telecommunications within the Australia and Asia $\blacksquare$ Over 6 years of experience with Pracom prior to joining STR in March 2005
Stephen Campbell	Company Secretary & Group Financial Controller	Business $\bullet$ Bachelor ОÍ in Accounting Master of Business ٠ Administration (Advances) Chartered Accountant ٠ Affiliate αť Chartered the ٠ Secretaries in Australia Graduate Completing the ٠ Diploma in Applied Corporate Governance	With ٠ more than 18 years various experience in senior positions within the accounting profession as well as listed and private organisations within the manufacturing, property, gaming and financial services industries
Alistair Legge	Group Technology Executive	Degree in Electrical Engineering ٠ (Honours) from University of Melbourne Masters of $\bullet$ Business Administration from the Australian Graduate School of Management	More than 15 years of experience ٠ technology consultation in. predominantly to the utilities. telecommunications and financial services organisations
Dawn Lackie	Group Human Resources Executive	Masters in Human Resource $\bullet$ Management, University Οf Melbourne Currently $\overline{\phantom{0}}$ completing	٠ Held senior management positions in both telecommunications and FMCG industries in New Zealand. Australia and the United Kingdom
I Millner	Executive General Manager, Milcom	Bachelor of Arts from the $\bullet$ Macquarie University, Sydney and a Certificate in Electronics and Communications from the North Sydney Technical College	Has 26 years in training and ٠ engineering fields.
	Source: STR Management, STR Financial Accounts

SWOT Analysis $5.4$

Set out below is a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis for each subsidiary of STR:

$5.4.1$ Communications

Table 18: Communications SWOT Analysis

	Strengths	Weaknesses
٠ ٠	Best Quality Provider - Telstra's KPI's confirm Lowest cost provider in 18M; Most experienced personnel - long history Good industry relationships Training capabilities National footprint Low overheads	Telstra-reliant - Lack client diversity Smaller balance sheet than some competitors Diversity of activities may weaken focus
	Opportunities	Threats
	Telstra privatisation - may lead to more outsourcing Diversify Resourcing Solutions outside of communications sector	Telstra changes direction Australian economic activity decreases Larger competitors undercut pricing to buy work Loss of key personnel
	Well-positioned for industry consolidation Opportunity to replicate activities in other industry sectors e.g. Power, Metering

5.4.2 Solutions

Table 19: Solutions SWOT Analysis

Strengths	Weaknesses
Field Services Industry knowledge ٠ Well trained workforce ٠	Dependency on one major customer
Technology ٠ Management of sub contractor base ٠ Order Management Services Experience (12 yrs with Optus) ٠ Specialised BPO and APRA accreditation are ٠ barriers to entry Specialised technology - some embedded ٠	Dependency on one major customer
technology in carrier's infrastructure Contact Centre Operations Customer focused services - cultural alignment with ٠ clients Some proprietary technology embedded in carriers' ٠ infrastructure Hosted Solutions	Poor market positioning of services ٠ Call Centre Operations infrastructure requires ٠ upgrading
Flexible, solutions driven business ٠ Technology embedded within carriers' infrastructure ٠	Do not have scale of larger competitors ٠
Opportunities	Threats
Field Services Use existing model in other market segments ٠ End to end service offering within DSL, ISP's, etc. ٠	Optus change tender process - adopt SingTel open tender process
Order Management Services Utilise existing BPO model to provide cost effective ٠ insurance solutions in other market seaments. Dedicated new business development team focuses on insurance model.	Optus change tender process - adopt SingTel open ٠ tender process Pre-paid cellular products ٠
Contact Centre Operations Increased visibility will produce tangible results ٠ Specialise in CCO activities that involves more ٠ complex administration / data processing that cannot be readily off-shored. Increase service offerings to mitigate off shoring threat. Revamp facility and technology infrastructure. ٠ Use technology to deliver savings (internally and to ٠ customer)	Potentially increased employee costs ٠ Off-shoring ٠ Regulatory changes ٠
Hosted Solutions Utilise flexibility to win smaller deals / add value ٠ Upgrade existing services to customers ٠ Source: STR Management	Carrier alignment with international players

5.4.3 Milcom

Table 20: Milcom SWOT Analysis

	$1800$ co. MIICOIII O 11 O 1 Alialysis
	Strengths	Weaknesses
٠	15 year history in the telecommunications training industry	Instructor age Size of operation
٠	Accredited to provide nationally recognised qualification up to Advance Diploma	Seen by Service Stream competitors as not independent
٠	Telstra-accredited training provider
٠	Training provider for National Electrical and Communications Association of Australia ("NECA") in New South Wales, Victoria, Queensland and for the national office.
٠	On line capabilities including Recognition of Prior Learning ("RPL") and Recruitment
٠	Provide customised training programmes for individuals
	Experienced instructors
	Opportunities	Threats
	Large database of students	Changes to government policy:
	Access to Service Stream's network	- RTO support
	Rolling out new programmes for higher qualifications	- Licensing
	Increasing the utilisation of the on-line system	- State government apprenticeship funding
	Access to Telstra and Optus via Service Stream	Competition - from other training providers Telstra's operations
	Source: STR Management

Financial Performance 5.5

The historical financial performance of STR for FY2005 and FY2006 and the Forecast financial performance for FY2007 is summarised in the following table:

Table 21: STR Financial performance

Year ended/ending 30 June	2005 Actual AIFRS \$000	2006 Actual AIFRS \$000	2007 Forecast AIFRS $*000$
Revenue	60,576	170,919	219,173
EBITDA	2,250	8,741	11,741
Depreciation and Amortisation	(601)	(1, 547)	(2,528)
EBIT	1,649	7,194	9,213
Net Interest Expense	(538)	(934)	(895)
Net Profit before tax	1,111	6,260	8,318
Taxation expense/(benefit)	(69)	(1,908)	(2,496)
Net Profit after tax	1,042	4,352	5,822
EPS (Cents) Revenue Growth % EBITDA Growth % EBITDA Margin % EBIT Growth %	1.03 254.0% $(80.1)\%$ 3.7% (85.4)%	2.79 182.3% 288.5% 5.1% 336.3%	3.33 28.2% 34.3% 5.4% 28.1%
EBIT Margin %	2.7%	4.2%	4.2%

Source: STR audited financial statements for FY2005, FY2006 and management forecasts for FY2007 Notes:

PKFCA notes the following with respect to the financial performance of STR:

Year ended 30 June 2006

$n/a - not available$

• STR commenced operations on 1 November 2004 with the completion of the acquisition of Skilled Communications and CSA. Essentially, for FY2005, it had 8 months of actual operational activities;
• revenue increased from \$60.6 million in FY2005 to \$171.0 million in FY2006 and EBITDA increased from \$2.3 million in FY2005 to \$8.7 million in FY2006, reflecting the new income streams contributed by Solutions and Milcom during FY2006 and the full year results from Communications; and
• STR had an EBITDA margin of 3.7% in FY2005 which improved to 5.1% in FY2006.

Year ending 30 June 2007

• Forecasts are predictions of future events and, by their nature, are subject to inherent uncertainties and limitations, many of which are beyond the control of STR management. The Forecasts are therefore based on a set of assumptions, which, in summary, are as follows:
• a substantial part of the revenue growth is driven by opportunities with Telstra and the newly negotiated pricing arrangements;
• management advised that the expected growth in revenue of 28.2% in FY2007 is expected to be derived predominantly from the following:

• the revenue and EBITDA growth from the call centre operations is forecast to increase by 105% and 56% respectively, mainly due to the newly won Vodafone contract:
• revenue from specialist contracting work is expected to rise as a result of increasing demand and opportunities in new technologies such as fibre optics. Within the specialist group, growth of 56% in revenue and 120% in EBITDA is expected for FY2007;
• increases in telephone installation and maintenance volume from Telstra is forecast to give rise to an increase in EBITDA for the telephony installation and management division;
• full year contribution from the Brisbane operation; and
• a full year contribution by Milcom and a contribution Fibercom; and
• interest and finance charges are budgeted at an average of 8.5% pa.

5.6 Forecast analysis

PKFCA assessed the reliability of management forecasts by comparing forecasts for FY2005 and FY2006 to actual results. The results of this assessment are set out graphically below:

Figure 14

STR Prospectus, STR Financial statements FY2005 and FY2006, STR management forecasts FY2005 and Source: FY2006

The following observations are based on the analysis set out above:

• STR exceeded forecast performance both revenue and EBITDA in the years analysed;
• Forecast EBITDA margins for FY2005 and FY2006 were 4.3% and 5.4%, respectively. The actual margins for FY2005 and FY2006 were 3.7%, and 5.1% which were slightly below the forecast margin; and
• EBITDA variances between actual and forecast performance were 7.8% in FY2005 and 2.8% in FY2006.

We note that a portion of future revenue is contractually based including, a 3-year specialist services contract with Telstra, 1-year digital migration with Optus, 3-year VERNet contract and a 3-year contract agreement with Vodafone for the outsourced component of its customer contact centre and supporting technology. Significant contracts renewed during the financial year ended

30 June 2006 comprise 2-year contract for labour services with Telstra, 4-year contract for installation and maintenance services with Telstra and a 3-year contract with Optus for installation services.

Other factors driving the revenue budget expectations include estimates based on tender documents proposed during invitation, labour services placements subject to external and internal factors as well as new income streams from Milcom and Fibercom. As a result, approximately 30% of revenue is expected to come from non-contractual sources.

$5.7$ Normalised earnings

Set out below is our assessment of historical earnings, normalised to take into account any significant items that are unlikely to recur:

Year ended 30 June	Notes	2005 Actual AIFRS $*000$	2006 Actual AIFRS '\$000	2007 Forecast AIFRS '\$000
EBITDA - gain on disposal of fixed assets Normalised EBITDA	5.5	2,250 (132) 2,118	8,741 (136) 8,605	11,741 11,741
Source: STR

Table 22: STR normalised financial performance

In arriving at the normalised earnings, we have not made any adjustment or allowance for the impact of prior acquisitions would have had, assuming that STR was the owner of these businesses during the above financial years.

5.8 Financial Position

Set out below are the audited balance sheets of STR as at 30 June 2005 and 30 June 2006. Table 23: STR Balance sheet

As at 30 June	Actual AIFRS	Actual AIFRS
	2005 \$000	2006 \$000
Current Assets
Cash Assets	1,475	2,048
Receivables	19,860	24,889
Inventories	619	838
Other	4,444	7,265
Total Current Assets	26,398	35,040
Non Current Assets
Investments		962
Property, plant & equipment	3,234	3,467
Intangible assets	16,379	18,899
Deferred tax assets	1,086	1,040
Total Non-Current Assets	20,699	24,368
TOTAL ASSETS	47,097	59,408
Current Liabilities
Payables	16,278	20,726
Interest bearing liabilities	628	707
Current tax payables		1,197
Provisions	1,231	1,652
Total Current Liabilities	18,137	24,282
Non Current Liabilities
Interest Bearing Liabilities	14,449	5,798
Provisions	366	643
Total Non-Current Liabilities	14,815	6,441
TOTAL LIABILITIES	32,952	30,723
NET ASSETS	14,145	28,685
Current ratio (times)	5.58	1.46
Liquid ratio (times)	5.58	1.42
Debt ratio (times)	1.07	0.23
Source: STR audited financial statements FY2005 and FY2006

In relation to the above, PKFCA notes that:

• $\bullet$ both the current ratio and liquid ratio of STR are more than 1, giving a positive indication of its capability of fulfilling its short-term obligations; and
• the debt-to-equity ratio of STR has reduced from 1.07 to 0.23 as at 30 June 2006 as the ٠ company repays its long term borrowings (commercial bills) which have maturity dates ranging from 30 to 60 days.

5.9 Cash Flow Statement and Working Capital Analysis

Set out below are the audited cash flow statements of STR for FY2005 and FY2006.

Table 24: STR Cash flow Statements

As at 30 June	Actual AIFRS 2005 \$000	Actual AIFRS 2006 \$000
Cash flows from operating activities
Receipts from customers	53,194	165,971
Payments to suppliers and employees	(53, 390)	(156, 764)
Interest received	49	64
Interest and other costs of finance paid	(726)	(923)
Income tax paid		(659)
Net cash flows from operating activities	(873)	7,689
Cash flows from Investing activities
Payment for equity instruments		(962)
Payment for property, plant and equipment	(1,077)	(1, 877)
Proceeds from sale of property, plant and equipment	232	295.
Payment for intangible assets		(348)
Payment for businesses	(17, 253)	(3,774)
Net cash flows from investing activities	(18,098)	(6,666)
Cash flows from financing activities
Proceeds from share issue	11,300	9,490
Payment for share issue costs	(511)	(340)
Proceeds from borrowings	16,645	24,029
Repayment of borrowings	(7, 552)	(32, 200)
Finance lease payments	(148)	(401)
Dividends paid		(1,028)
Net cash flows from financing activities	19,734	(450)
Net increase/(decrease) in cash held	763	573
Cash at the beginning of the financial year	712	1,475
Cash at the end of the financial year	1,475	2,048
Source: STR audited financial statements FY2005 and FY2006

In relation to the above, PKFCA notes that:

• the cash flows in relation to the payment for businesses relates to the acquisition of ٠ Skilled Communications, CSA, Pracom and Milcom; and
• Net cash flows from operating activities were negative in FY2005, but were positive in FY2006.

5.10 Capital Structure and Ownership

Ordinary shares

There are 174,794,445 STR Shares were on issue and the top 10 STR Shareholders accounted for approximately 50% of the total issued capital, as shown in Table 25 below.

Table 25: Top 10 Shareholders as at 29 September 2006

Shareholder	Number of STR Shares	Percentage of STR Shares
Gandel Springwest Pty Ltd	19,540,918	11.2%
Field Enterprises (Aust) Pty Ltd (Adrian Field)	11,127,565	6.4%
Small Enterprises (Aust) Pty Ltd (Russell Small)	11,002,565	6.3%
Blazzed Pty Ltd	11,002,562	6.3%
Invia Custodian Pty Ltd	8,126,864	4.6%
Mr Joseph James Caporale	5,491,031	3.1%
HSBC Custody Nominees (Australia) Limited	4,927,556	2.8%
Citicorp Nominees Pty Limited	4,674,182	2.7%
M F Custodians Ltd	3,736,241	2.1%
National Nominees Ltd	3,725,590	2.1%
Subtotal - Top 10 Shareholders	83,355,074	47.7%
Other	91,439,371	52.31%
Total	174,794,445	100.00%
STR Scheme Document Source:

Options

As at 30 June 2006 there were 31,650,000 options over unissued STR shares outstanding under the Executive Share Option Plan ("ESOP"), of which 2,390,000 options were unvested.

Option Issue Series	Expiry Date	Exercise Price s	Outstanding options held	Exercise Proceeds £
20/01/2004	31/12/2007	0.250	17,000,000	4,250,000
20/10/2004	31/10/2009	0.250	8,380,000	2,095,000
20/10/2004	31/10/2009	0.375	2,310,000	866,250
20/10/2004 (Note 1)	31/10/2009	0.500	2,310,000	1,155,000
01/01/2005	01/01/2010	0.250	120,000	30,000
01/01/2005	01/01/2010	0.375	40.000	15.000
01/01/2005 (Note 2)	01/01/2010	0.500	40,000	20,000
01/03/2005	01/03/2011	0.250	500.000	125.000
07/03/2005	07/03/2010	0.260	200,000	52,000
09/09/2005	01/01/2010	0.250	120,000	30,000
09/09/2005	01/01/2010	0.375	40,000	15,000
09/09/2005 (Note 2)	01/01/2010	0.500	40,000	20,000
30/01/2006	31/10/2009	0.390	500,000	195,000
30/01/2006	31/10/2009	0.250	50,000	12,500
Total			31,650,000	8,880,750

Table 26: STR ESOP options

Source: STR Management

Note 1: Unvested; vest on 04/11/2006

Note 2: Unvested; vest on 01/01/2007

Additional ordinary shares and options

Upon successful implementation of the Proposal. Mr Patrick Flannigan and Mr Michael Doery will each receive 1,000,000 STR Shares (converting to 400,000 New Shares) for \$Nil consideration.

Separate to the Proposal, the shareholders of STR will be asked to approve at the next annual general meeting the following issue of options:

• up to 6,000,000 STR Options (converting to 2,400,000 New Options) to Mr Patrick Flannigan; and
• up to 5,400,000 STR Options (converting to 2,160,000 New Options) to Mr Michael Doery;

as part of their ongoing remuneration. These options will be issue in three tranches based on EBIT growth performance conditions of the Merged Entity.

$5.11$ Share price trading history

Figure 15 illustrates the daily share price and volumes traded of STR over the period to 8 September 2006.

Announcements which may have impacted on recent trading in STR shares (prior to the Announcement) are detailed below:

Table 27: Recent Announcements

Date	Announcement
25 August 2005	The appointment of Lyn Davies as independent director and chairman
30 August 2005	FY2005 preliminary final report released
23 September 2005	A trading halt is requested in relation to fundraising
27 September 2005	\$10.3 million capital raising to be undertaken through the placement of 45,777,779 fully paid ordinary shares in the company at \$0.225 per share
30 September 2005	FY2005 annual report released
28 October 2005	Acquisition of Milcom training business
04 November 2005	2005 annual general meeting
11 November 2005	Change in substantial holdings from several substantial holders
16 November 2005	ASX price query and response as a result of an increase in share price
24 November 2005	General meeting to approved resolutions for the private placement of up to placement of 45,777,779 fully paid ordinary shares in the company at \$0.225 per share and the issue of shares to entities controlled by the directors
31 January2006	3 year contract signed with Telstra Special Services, expected to generate revenues in excess of \$100 million
27 February 2006	FY2006 half year accounts released and announcement of maiden dividend of 0.75 cents per share
09 March 2006	FY2006 Interim results presentation
15 March 2006	Additional 4 year extension of installation and maintenance contract with Telstra worth \$25 million in revenue per year
10 April 2006	Forecast earnings estimate for FY2006 revision from \$3.5 to \$4.1 million
Source: Bloomberg

We note that since the date of the Announcement, there have been some additional key announcements, including:

• the announcement of the Share Purchase Agreement entered into between Founders ۰ and STR on 31 July 2006;
• the acquisition of Fibercom on 21 August 2006;
• preliminary 2006 final report released to market on 25 August 2006; and
• the extension and expansion of existing arrangements with Vodafone announced on 29 August 2006.

As shown in Figure 15 above, the traded daily volume and share price of STR have steadily increased since the Announcement.

PROFILE OF THE MERGED ENTITY 6

$6.1$ Overview

It was expressed in the Announcement that the Merged Entity aspires to become:

"a leading technical and industrial services group, with managed service capabilities across the telecommunications, energy and other utility sectors".

The Merged Entity aims to:

• have expertise across the spectrum of telecommunications areas, including broadband, fixed and wireless, which will allow expanded provision of services to both TCI and STR current customers bases:
• provide bundled end-to-end service solutions; and
• combine the technical installation capability of STR with the design capability of TCI in order to provide a more comprehensive and diverse level of managed services to a broader spectrum of customers.

The Merged Entity will:

• have over 2,000 people across 18 locations in Australia;
• specialise in managed services in the telecommunications and energy sectors;
• have expertise in fixed-line and wireless infrastructure deployment and management; and
• have expected revenues of \$300 million and EBITDA of \$27 million in FY2007.

$6.2$ Merged Group Structure

Set out below is the proposed business structure of the Merged Entity:

Figure 16

6.3 Management

Figure 6 below sets out the proposed organisational structure of the Merged Entity.

Figure 17

6.4 SWOT Analysis

Set out below is a SWOT analysis of the Merged Entity:

Table 28: Merged Entity SWOT analysis

	Strengths		Weaknesses
٠	Experience and depth of management team and Board	٠	Continued reliance on a small number of key customers
٠	Diversification of activity-related income streams and reduction of risk profile
٠	Some degree of diversification of customer revenue streams
	Opportunities		Threats
٠	Leveraging current customer relationships to • achieve increased revenue		Potential for merger disynergies
	Some Merger cost synergies
٠	Improved ability to service a range of industries beyond the telecommunications industry
٠	Potential market re-rating as a result of greater focus by the capital markets
	Pipeline of new growth opportunities
٠	Expanded workforce knowledge and expertise through increased use of in-house training facilities
٠	Better working capital management through improved cash management
	Source: PKFCA Analysis, TCI management and STR management

$6.5$ Financial Performance

Set out below is the Merged Entity forecast income statement for the year ending 30 June 2007 and the proforma income statement for the year ended 30 June 2006 that assumes that the Proposal was implemented as at 1 July 2005. Section 5 of the Explanatory Memorandum provides an extensive explanation for the adjustments to STR and TCI FY2007 budgets to achieve the Merged Entity's forecast Income Statement.

Table 29: Merged Entity Forecast and Pro Forma Income Statement

	Year Ended 30 June
	2006 Actual SOOO	2007 Forecast SOOO
Sales revenue	247,994	297,126
EBITDA	27,299	27,205
Depreciation and amortisation	(1,978)	(2,965)
EBIT	25,321	24,240
Interest expense/(revenue)	2.563	2,618
Profit before tax	22,758	21,622
Income tax expense	7,529	6,710
Profit after tax	15,229	14,912
EPS (cents) undiluted - assuming full participation to the Offer by Non Associated Shareholders	10.9	10.7
EPS (cents) diluted - assuming full participation to the Offer by Non Associated Shareholders	9.6	9.4
Revenue growth %	n/a	19.8%
EBIT margin %	10.2%	8.2%
EBITDA growth %	n/a	$-0.3%$
EBITDA margin %	11.0%	9.2%
Source: Explanatory Memorandum

Among other assumptions, the Forecast Income Statement assumes:

• Merger costs the interest expense of approximately \$2.6 million includes borrowings related to the acquisition of the Founders Shares (refer Section 4 of the Scheme Document);
• Merger costs Proposal transaction costs of \$2.0 million have not been taken into account in earnings but in the balance sheet (refer paragraph 6.6 below); and
• Merger synergies No merger cost synergies have been included (refer Section 4 of the Scheme Document).

Section 4 of the Scheme Document provides an explanation for the adjustments to STR and TCI FY2006 earnings and standalone FY2007 Forecasts to achieve the Merged Entity's Forecast.

6.6 Balance Sheet

Set out below is the proforma balance sheet of the Merged Entity as at 1 July 2006 assuming that the Proposal was effective as at 30 June 2006.

Table 30: Merged Entity Pro Forma Balance Sheet

	As at 1 July 2006 \$'000
Current Assets
Cash Assets	1,500
Trade and other receivables	52,767
Inventories	3,081
Other	7,265
Total Current Assets	64,613
Non Current Assets
Investments	962
Property, Plant and Equipment	3,815
Deferred Tax Assets	1,940
Intangible Assets	111,060
Total Non-Current Assets	117,777
TOTAL ASSETS	182,390
Current Liabilities
Trade and other payables	40,078
Interest Bearing Liabilities	13,778
Current Tax Liabilities	4,505
Provisions	3,346
Total Current Liabilities	61,707
Non Current Liabilities
Interest Bearing Liabilities	13,286
Provisions	853
Trade payables	8,573
Total Non-Current Liabilities	22,712
TOTAL LIABILITIES NET ASSETS	84,419 97,971
Source: Explanatory Memorandum

Full details of the accounting, adjustments and assumptions which underpin the above balance sheet are set out in the Explanatory Memorandum. We note however, that the cost of 2,000,000 STR Shares and 500,000 TCI Options issued to key executives as part of the Proposal have not been included in the above balance sheet. We have been informed that such costs would have no material effect on the level of net assets and total equity.

6.7 Interest bearing loans

As part of the Proposal, STR will acquire the Founders Shares for approximately \$41 million, of which \$10 million will be repaid on a deferred basis. As a consequence, the Merged Entity will have interest bearing borrowings of some \$27 million, a majority of which will be borrowed from Westpac Banking Corporation.

Key details of the proposed loan facility are as follows (source term sheet):

• total facility (including overdraft and other facilities) \$63.8 million;
• rate: commercial bank bill rate, plus margin effective interest rate approximately 7.8%;
• interest only cover ratio of 4.5 times defined as: EBITDA / Interest Expense;
• shareholder funds of the Merged Group being a minimum of \$50 million;
• total debt to EBIT no more than 3.0 times and to reduce to no more than 2.5 times by 30 June 2008: and
• other covenants unless written consent from Westpac is given are:
• dividends to be restricted to 65% of NPAT;
• limits on annual capital expenditure amounts;
• no additional finance debt to be raised without the express consent of Westpac;
• no financial accommodation other than that already agreed during due diligence; and
• no financing of Joint Venture's, except for this approval, without the express consent of the bank.

6.8 Working Capital

We have reviewed the proforma cash balance of the Merged Entity as at 1 July 2006, together with the Merged Entity Forecasts and in conjunction with discussions with management, we understand that no additional working capital requirements are required by the Merged Entity. However, we consider that the Merged Entity proforma cash balance of \$1.5 million as at 30 June 2006 would not be regarded as a surplus asset.

6.9 Capital Structure and Ownership

The ultimate capital structure of the Merged Entity is depended on the number of shares of TCI purchased by Non Associated Shareholders under the Offer, the number of performance options issued to key executives of the Merged Entity and the extent to which options are exercised. Set out below is a calculation of the minimum and maximum amount of or shares which would comprise the Merged Entity share capital:

Table 31: Merged Entity share capital

TCI Valuation	Para. Ref.	Note	No. of TCI Shares/ Options	No. of STR Shares/ Options	No. of New Shares
Number of TCI Shares currently held by Non Associated Shareholders		ŧ	60.285.500		60,285,500
Associated TCI Shares purchased Non bν Shareholders under the offer	1.1	$\overline{2}$	9,000,000		9,000,000
Number of STR Shares pre Proposal	5.10	З		174.794.445	69,917,778
Number of STR Shares issued to Mr Patrick Flannigan and Mr Michael Doery for successful Proposal implementation	1.1	3		2,000,000	800,000
Number of New Shares (undiluted)					140,003,278
Number of TCI Options issued to Mr Rod Stanton for successful Proposal implementation	1.1		500,000		500.000
Number of TCI Options issued to Mr Rod Stanton as part of ongoing remuneration	1.1		1,500,000		1,500,000
Number of STR Options issued to Mr Patrick Flannigan and Mr Michael Doery as part of ongoing remuneration	1.1	3		11,400,000	4,560,000
Other STR Options		3		31,650,000	12,660,000
Number of New Shares (Fully diluted)					159,223,278
Source: PKFCA analysis

In relation to the above table we make the following notes:

• $1.$ equal to the total number of TCI Shares on issue less the number of TCI Shares held by the Founders (109,609,808 less 49,324,308 equals 60,285,500);
• 1. we have assumed that all TCI Shares subject to the Offer are taken up the Non Associated Shareholders; and
• STR Shares and Options are converted as such: 3.
• for every 5 STR Shares 2 New Shares; and
• for every 5 STR Options 2 New Options.

Options

Set out below is our calculation of the total number of New Options and the cash proceeds upon their potential exercise:

Table 32: New Options
Option Group	Expiry Date	Exercise Price	Outstanding options held	Exercise Proceeds \$	Vested/Unvested
STR
Options as at 30 June 2006 (refer paragraph 5.10)
20/01/2004	31/12/2007	0.250	17,000,000	4,250,000	Vested
20/10/2004	31/10/2009	0.250	8,380,000	2,095,000	Vested
20/10/2004	31/10/2009	0.375	2,310,000	866,250	Vested
20/10/2004	31/10/2009	0.500	2,310,000	1,155,000	Unvested; vest on 04/11/2006
01/01/2005	01/01/2010	0.250	120,000	30,000	Vested
01/01/2005	01/01/2010	0.375	40,000	15,000	Vested
01/01/2005	01/01/2010	0.500	40,000	20,000	Unvested; vest on 01/01/2007
01/03/2005	01/03/2011	0.250	500,000	125,000	Vested
07/03/2005	07/03/2010	0.260	200,000	52,000	Vested
09/09/2005	01/01/2010	0.250	120,000	30,000	Vested
09/09/2005	01/01/2010	0.375	40,000	15,000	Vested
09/09/2005	01/01/2010	0.500	40,000	20,000	Unvested; vest on 01/01/2007
30/01/2006	31/10/2009	0.390	500,000	195,000	Vested
30/01/2006	31/10/2009	0.250	50,000	12,500	Vested
			Options to be granted to Mr Patrick Flannigan and Mr Michael Doery (refer paragraph 5.10)
30/11/2006	31/10/2011	0.396	3,800,000	1,504,800	Unvested; vest on 31/10/2007
30/11/2006	31/10/2011	0.432	3,800,000	1,641,600	Unvested; vest on 31/10/2008
30/11/2006	31/10/2011	0.480	3,800,000	1,824,000	Unvested; vest on 31/10/2009
Total			43,050,000	13,851,150
Conversion ratio			5:2
Number of Merged Entity shares issues upon exercise			17,220,000
TCI (refer paragraph 4.11)
31/10/2006	31/10/2009	1.125	500,000	562,500	Vest upon completion of Proposal
31/10/2006	31/10/2007	0.990	500,000	495,000	Unvested; vest on 31/10/2007
31/10/2006	31/10/2008	1,080	500,000	540,000	Unvested; vest on 31/10/2008
31/10/2006	31/10/2009	1.200	500,000	600,000	Unvested; vest on 31/10/2009
Total			2,000,000	2,197,500
Conversion ratio			1:1
Number of Merged Entity shares issues upon exercise			2,000,000
Total number of Merged Entity shares issued upon exercise of all options			19,220,000
Total cash proceeds upon exercise of all options				16,048,650
Source: PKFCA analysis

VALUATION OF TCI SHARES $\overline{7}$

$7.1$ Introduction

Set out in Appendix 2 is a summary of the various methods we considered in the course of arriving at our valuation conclusions on TCI.

$7.2$ Capitalisation of Future Maintainable Earnings

In our opinion, the most appropriate method with which to value TCI is the capitalisation of future maintainable earnings ("CFME") method. The CFME method is described in Appendix 2. We selected this method as most appropriate for valuing TCI for the following reasons:

• TCI has traded profitably in the current and previous financial years and future profitability $\bullet$ is expected;
• TCI Forecasts are, to a large extent, underwritten by the contracts in hand with Optus, Vodafone and Telstra, representing approximately 80% of TCI Forecast revenues;
• the large customer concentration with revenues being dominated by Optus. Telstra. Vodafone:
• having reviewed industry, and economic factors, our conclusion is that there exist various trends which support the future earnings and potential earnings growth of TCI; and
• we have satisfied ourselves TCI business has an indefinite trading life.

In undertaking the CFME method to value TCI, PKFCA:

• estimated the future maintainable earnings of TCI ("FME");
• selected an appropriate earnings capitalisation multiple;
• applied a premium for control and minority discount where applicable;
• valued any surplus assets/liabilities;
• reviewed future working capital requirements;
• deducted interest bearing debt; and
• reviewed any potential contingent liabilities.

Set out below are the key parameters and our considerations with respect to each.

$7.3$ Future Maintainable Earnings

FME is the assessed level of sustainable earnings, in real terms, that can be expected to be derived by the existing operations of the business regardless of short term economic fluctuations and excludes any one off profits or losses.

In our opinion, the appropriate earnings to adopt in valuing most businesses and companies is EBITDA as it most accurately reflects the return generated by the business and ignores factors that may not be relevant to the actual earning capacity of the business such as the following:

• interest costs that reflect the method of financing the business and which vary between businesses:
• interest revenue that reflects earnings on surplus assets;
• effective tax rates that reflect both the tax regimes in different countries and different tax positions of, and tax planning measures implemented by, businesses;
• historical costs of fixed assets at the time of their acquisition and different accounting policies, that will affect annual depreciation charges; and

amortisation charges in respect of intangible assets discriminate against companies that have accomplished business growth by acquisition of other companies as opposed to those that have organically grown their businesses.

Our estimate of the FME of TCI has been determined after a review of:

• TCI normalised historical earnings (refer to paragraph 4.6) and Forecast earnings (refer to paragraphs 4.5 and 4.6 above);
• the assumptions underlying the Forecasts:
• the effect of changes and trends in the industry that may impact on sustainability of earnings, the SWOT analysis of TCI and TCI's competitive strategy;
• the budgeting track record of TCI (refer paragraph 4.7);
• the level of recurring income inherent in the TCI business and forecasts; and
• the likelihood of retaining and attracting new projects.

Based on the above, we have estimated the EBITDA FME of TCI to be \$15.5 million. We note that this FME figure reflects TCI's Forecasts. In our opinion, this is appropriate for the purposes of our valuation as it reflects the expected position of the business. In addition, it is also more likely that more emphasis was placed by parties to the Proposal on the budget earnings of TCI in formulating the Proposal.

$7.4$ Earnings Multiple

$7.4.1$ General

The appropriate earnings multiple is usually assessed by collecting market evidence with respect to the earnings multiples of companies that operate in the same or similar industries. Such multiples are derived from:

• share market prices of listed companies (reflecting a minority interest status);
• initial offer prices of shares in newly listed companies (where available); and
• prices achieved in mergers and acquisitions of comparable companies.

selecting appropriate comparable companies, PKFCA considered In. listed project management/construction companies in Australia and globally. General comments with respect to the operations of the identified companies are set out in Appendix 3. Stock market trading valuation parameters for such companies are set out in Appendix 4. Mergers and acquisitions valuation parameters for acquired comparable companies are set out in Appendix 6. All of our analysis has been performed as at 1 November 2006.

7.4.2 Trading multiples

A listed company's current share price generally reflects expected future earnings rather than past earnings. It is therefore appropriate to select multiples based on forecast earnings for the purpose of capitalising earnings. Forecast earnings however are not always available, and we have therefore focused on both historical/ forecast FY2006 and Forecast earnings multiples in our analysis.

Whilst the companies in our analysis are not identical to TCI, they provide services that are sufficiently similar to TCI for the analysis to provide an indicative range of multiples that may be regarded as relevant for the purpose of valuing TCI.

The capitalisation rate should reflect the growth prospects of the business, the quality of its earnings and the risks of the business. In order to determine the appropriate multiple range to apply to TCI, we have undertaken a limited review of the characteristics of the companies we consider most comparable to TCI.

In this regard, we note that in relation to the companies listed in Appendix 4:

• companies such as Downer EDI, Leighton Holdings, Transfield Services, United Group, Worley Parsons and Ausenco are Australian listed project management and/or construction companies that provide services to a range of industries (including the telecommunications industry), both within Australia and globally. Although TCI has significant differences to these companies, particularly in terms of size, level of revenue and geographic diversification, the multiples of these companies offer some guidance to the multiple applicable to TCI. We note that the multiples for the above companies based on:
• the FY2006 mean and median are 13.8 and 15.7 times, respectively; and
• the FY2007 mean and median are 11.1 and 10.9 times, respectively;
• while they are not listed in Australia, companies such as Baker (Michael), Bilfinger Berger, Hyder Consulting, Mastec and SNC-Lavalin Group are direct competitors with TCI within the Australian market or offer similar services to TCI in overseas markets. We note that the multiples for the above companies based on:
• the last reported financial statements mean and median were 11.8 and 14.1 times, respectively; and
• the next financial year mean and median are 9.7 and 8.3 times, respectively.
• combining the two groups of companies results in the following EBITDA multiples:
• the last reported financial statements mean and median were 12.8 and 14.6 times, respectively; and
• the next financial year mean and median are 10.5 and 10.4 times, respectively.

7.4.3 Merger and acquisition/initial public offering multiples

As set out in Appendix 6, PKFCA reviewed a number of transactions concerning acquisitions of businesses operating in the telecommunications industry. Our primary search tool has been Bloomberg. The overall average multiple (excluding outliers) was 8.2 times and the overall median (excluding outliers) was 6.6 times.

In addition we reviewed recent IPO activity in Australia. However, we have been unable to find comparable companies to TCI.

7.4.4 Multiple applicable to TCI

Based on our analysis of the selected companies, we are of the opinion that the appropriate starting multiple applicable to value TCI is in the vicinity of 10 times. This multiple reflects the Forecasts trading multiple of the companies that provide project management, engineering and construction services.

The following adjustments to the starting EBITDA multiple of 10 times have been made so as to incorporate company specific factors:

• discount for smaller size and lack of critical mass balance sheet and geographic diversification: Compared with the companies in paragraph 7.4, TCI is significantly smaller and trades in Australia only as well as lacks the balance sheet resources of such companies. Accordingly, a discount to the starting multiple has been allowed for this factor;
• discount for reliance on a concentrated customer base: TCI is more reliant on a small number of key clients compared to the comparable companies. A discount to reflect this additional risk has been applied; and
• premium for growth based on our review of the Forecast and the ability of TCI to exceed its forecasts, we consider that TCI has the potential to provide increased earnings above expectations of the general market. A premium to reflect this has been applied.

Based on the above, we have arrived at an adjusted EBITDA multiple (in relation to a minority valuation) in the range between 6.5 and 7.5 times.

In our opinion the above multiple reflects:

• the historical and Forecast financial performance of TCI;
• the Forecast assumptions and strategy of TCI, having regard to relevant industry trends;
• the quality of management and staff; and
• the TCI business model as a stand alone entity. ٠

$7.5$ Premium for control

Our assessment of the earnings multiple range applicable to TCI has been derived predominantly from the multiples observable in listed entities. Therefore, the share price reflects a minority interest value. The interest being valued represents a controlling interest. When valuing a controlling interest, an appropriate allowance should be made for the premium for control. Empirical evidence on premiums for control indicates that these premiums (based on equivalent EBITDA multiples) tend to range between 10% and 25%. Having regard to this, for the purposes of valuing a controlling interest in TCI, we have applied a premium for control of 20%.

$7.6$ Working Capital Requirements

TCI is expected to have a working capital surplus over the next twelve months. As a result no future working capital requirements are expected.

$7.7$ Surplus Assets/ Liabilities

Surplus assets are assets which form part of a business entity or company but do not contribute to the earnings or cash flow generation capacity of that business or company. These are assets which, if sold, would not impact on the revenue or profit generating capacity of the active business undertaking.

Assets and liabilities which do not form part of the core business activity must be valued separately. Such assets are considered to be 'surplus' to the main business undertaking, but nevertheless represent values which should be reflected in the overall value of the company as they could be sold separately and the cash added to the value of the business units.

Assets

A review of TCI's balance sheet, future working capital requirements and Forecast cash flow forecasts and consideration of off-balance sheet items indicates the following:

• a strong working capital ratio of approximately 1.7 times;
• excluding cash, a current ratio of approximately 1.2 times; and
• the business has minimal capital expenditure requirements.

In view of the above, we have assessed \$11.5 million of cash as at 30 June 2006 as surplus to the business.

Liabilities

Subsequent to 30 June 2006 various events have caused TCI to incur the following liabilities:

• acquisition of Radhaz Consulting, resulting in the following purchase price and payment terms:
• initial payment of \$242,848 on 1 July 2006;

• deferred payments of a maximum of \$200,000 (dependant on Radhaz Consulting performance) on each of 31 July 2007, 2008 and 2009. These payments at a discount rate of 10% present value to approximately \$500,000; and
• a final dividend in respect of the 30 June 2006 year of \$5,480,490 to be paid on 29 September 2006 not provided for as a current liability on the 30 June 2006 balance sheet.

We believe it appropriate to take the above amounts into account in the valuation of TCI.

7.8 Interest Bearing Liabilities

As at 30 June 2006, TCI had \$nil interest bearing liabilities.

7.9 Contingent Liabilities

TCI reports in accordance with Australian accounting standards in which AASB 137: "Provisions, Continent Liabilities and Contingent Assets" ("AASB 137") applies.

The effect of AASB 137 is that:

• a contingent liability is defined as: ٠
• a possible obligation to be confirmed by a future event that is outside the control of the entity; or
• a present obligation may, but probably will not, require an outflow of resources; or
• a sufficiently reliable estimate of the amount of a present obligation cannot be made; and
• contingent liabilities must not be recognised but are subject to note disclosure unless the possibility of the future outflow is remote.

As at the latest reporting date no contingent liabilities were disclosed. PKFCA confirmed with TCI management that no material contingent liabilities have arisen since the most recent reporting date.

$7.10$ Conversion of Options

Up to 2,000,000 TCI Options will be issued to Mr Rod Stanton (refer to paragraph 1.1). However, as the number of TCI Options are immaterial compared to the number of TCI Shares on issue, we have ignored the dilutionary effect of these options in the valuation of TCI.

$7.11$ Valuation Conclusion

PKFCA's value of TCI, as derived from the CFME method, is summarised as follows:

Table 33: Equity value of TCI

TCI Valuation	Para Ref.	Low Value	High Value
Maintainable earnings (\$000s)	7.3	15.500	15,500
Earnings multiple (times)	7.4	6.50	7.50
Enterprise value (minority basis) (\$000s)		100.750	116,250
Adjustments surplus assets/ liabilities (\$000s)	7.7
Add: surplus cash (\$000s)		11.500	11,500
Less: 30 June 2006 final dividend not provided (\$000s)		(5,480)	(5,480)
Less: Radhaz Consulting initial payment (\$000s)		(243)	(243)
Less: Radhaz Consulting deferred payment (\$000s)		(500)	(500)
Less: net debt (\$000s)		$\Omega$	0
Equity value (minority basis) (\$000s)		106.027	121,527
Add: control premium (%)	7.5	20%	20%
Add: control premium (\$000s)	7.5	21.205	24.305
Equity value (control basis) (\$000s)		127,232	145,832
Number of shares (000s)	4.11	109.610	109,610
Value per share (control basis) (\$)		1.16	1.33
Less: Liquidity/Minority discount (%) - note 1		20%	20%
Less: Liquidity/Minority discount (\$)		(0.23)	(0.27)
Value per share (minority basis) (\$)		0.93	1.06
Rourna: DKECA analysis

Source: PKFCA analysis

Note 1: discount allows for both minority and liquidity discount to include an allowance for the relatively low liquidity in TCI Shares and the possible perceived overhang caused by the Founders Shares

PKFCA has assessed the value of TCI on a control basis, to be in the range of \$1.16 to \$1.33, with a midpoint of \$1.25.

$7.12$ Valuation Cross-Check

In the table below we have calculated the implied control premium by comparing the value per share on a control basis, being in the range of \$1.16 to \$1.33 with a midpoint of \$1.25 to the market price of TCI shares prior to the Announcement.

Table 34: TCI valuation cross check

	VWAP (3)	Implied valuation (midpoint) premium/(discount)
1 day prior to the Announcement	1.000	25%
1 month to 6 June 2006	0.948	31%
3 months to 6 June 2006	0.994	25%
6 months to 6 June 2006	1.117	12%
Bloomberg and PKFCA analysis Source:

As seen from the above table, the assessed mid-point value is at a premium to the TCI Shares traded prior to the Announcement of 12% to 31%. In our opinion, considering the low level of volumes traded prior to the Announcement, the above implied premium multiple appears to be reasonable.

In view of the above, PKFCA is satisfied with its valuation assessment of TCI.

VALUATION OF MERGED ENTITY SHARES 8

$8.1$ Introduction

Set out in Appendix 2 is a summary of the various methods we have considered in the course of arriving at our valuation conclusions on the Merged Entity.

$8.2$ Capitalisation of Future Maintainable Earnings

In our opinion, the most appropriate method with which to value the Merged Entity is the CFME method described in Appendix 2. We have selected this method as most appropriate for valuing the Merged Entity for the following reasons:

• both TCI and STR have traded profitably in the current and previous financial years and $\bullet$ future profitability is anticipated to continue;
• TCI Forecast revenues are to a large extent underwritten by the contracts in hand with Optus, Vodafone and Telstra representing approximately 80% of TCI forecast revenues. STR's Forecast revenues are also in part underwritten by certain contracts;
• having reviewed industry, political, social and economic factors, our conclusion is that there exists various trends which may support the earnings and potential earnings growth of TCI and STR; and
• we have satisfied ourselves that both TCI and STR businesses have an indefinite trading life.

In undertaking the CFME method to value the Merged Entity, we have given consideration in the determination of the following:

• an estimate of future maintainable earnings;
• selection of an appropriate earnings capitalisation multiple; ٠
• applied a premium for control and minority discount where applicable;
• the value of any surplus assets/liabilities;
• reviewed future working capital requirements;
• expenses associated with the Merger;
• contingent liabilities;
• deducted interest bearing debt; and
• allowed for the conversion of convertible instruments.

Set out below are the key parameters and our considerations with respect to each.

8.3 Future Maintainable Earnings

FME is the assessed level of sustainable earnings, in real terms, that can be expected to be derived by the existing operations of the business regardless of short term economic fluctuations and excludes any one off profits or losses.

In our opinion, the appropriate earnings to adopt in valuing most businesses and companies is EBITDA for the reasons set out in paragraph 7.3 above.

Our estimate of the FME of the Merged Entity has been determined after a review of:

• the historical and Forecast earnings of each of STR and TCI;
• the Merged Entity pro forma historical and Forecast earnings (refer to paragraph 6.5);
• the assumptions underlying the Merged Entity Forecasts;

• the effect of changes and trends in the industry that may impact on sustainability of earnings, the analysis of the strengths, weaknesses, opportunities and threats of the Merged Entity and the effectiveness of the Merged Entity's competitive strategy:
• the budget track record of TCI and STR (refer to paragraphs 4.7 and 5.6);
• the level of recurring income inherent in the Merged Entity business and Forecasts; and
• the likelihood of retaining and attracting new projects.

Based on the above, we have estimated the FME of the Merged Entity to be \$27.0 million. We note that this FME figure reflects the FY2007 Forecast of the Merged Entity. In our opinion, this is appropriate for the purposes of our valuation as it reflects the expected position of the combined businesses and as seen in paragraphs 4.7 and 5.6. In addition, it is also more likely that more emphasis was placed by parties to the Merger on the Forecast earnings in formulating the Proposal.

8.4 Earnings Multiple

The appropriate earnings multiple is usually assessed by collecting market evidence with respect to the earnings multiples of companies that are comparable. Such multiples are derived from:

• share market prices of listed companies (reflecting a minority interest status);
• initial offer prices of shares in comparable companies (where available); and ٠
• prices achieved in mergers and acquisitions of comparable companies.

In selecting appropriate comparable companies, PKFCA has had regard to listed companies that provide project management, engineering and construction services. General comments with respect to the operations of the identified companies are set out in Appendix 7. Stock market trading valuation parameters for comparable companies which are listed are set out in Appendix 8. Mergers and acquisitions valuation parameters for comparable companies acquired are set out in Appendix 6.

8.4.1 Listed companies

Details of the historical and forecast EBITDA multiples for the comparable companies are set out in Appendix 8.

All of our analysis has been performed as at 1 November 2006. A listed company's current share price generally reflects expected future earnings rather than past earnings. It is therefore appropriate to select multiples based on forecast earnings for the purpose of capitalising earnings. Forecast earnings however are not always available, PKFCA have therefore focused on both historical/ forecast FY2006 and forecast FY2007 earnings multiples in our analysis.

Our selection of the above companies that may be considered comparable with the Merged Entity has produced:

• in relation to Australian listed companies:
• in relation to FY2006 EBITDA, multiples (excluding unusual multiples such as Broadcast Services Australia's multiple ("outliers")) that range between 6.3 times and 19.2 times, with an average of 10.5 times and a median of 7.8 times; and
• in relation to forecast FY2007 EBITDA, multiples that range between 6.1 times and 11.4 times, with an average of 8.1 times and a median of 7.2 times;
• in relation to companies listed overseas:
• in relation to the last reported EBITDA, multiples that range between 9.8 times and 21.3 times, with an average of 14.5 times and a median of 14.6 times; and

• in relation to the next financial year forecast EBITDA, (excluding outliers) multiples that range between 6.7 times and 16.3 times, with an average of 10.2 times and a median of 10.0 times:
• in relation to all companies in the appendix:
• in relation to the last reported EBITDA, a simple average multiple of 12.5 times and a median of 11.9 times; and
• in relation to the next financial year forecast EBITDA, a simple average multiple of 9.2 times and a median of 8.9 times.

Whilst the companies in our analysis are not identical to the Merged Entity, they are sufficiently similar to for the analysis to provide an indicative range of multiples that may be regarded as relevant for the purpose of valuing the Merged Entity.

8.4.2 Merger and acquisition/initial public offering multiples

PKFCA have reviewed a number of transactions in the Australian and overseas market concerning acquisitions of businesses operating in the telecommunications industry. Our primary search tool has been Bloomberg - refer to Appendix 6 and paragraph 7.4.3 above.

8.4.3 Multiple applicable to the Merged Entity

The capitalisation rate should reflect the growth prospects of the business, the quality of its earnings and the risks of the business. In order to ascertain the appropriate multiple range to apply to the Merged Entity, PKFCA have undertaken a limited review of the characteristics of the companies PKFCA consider most comparable to Merged Entity.

Based on our analysis of the selected companies, PKFCA are of the opinion that the appropriate starting multiple applicable to the Merger is 9.0 times.

The following adjustments to the starting EBITDA multiple of 9.0 times have been made so as to incorporate company specific factors:

• discount for smaller size of overall business and lack of critical mass balance sheet and geographic risk: Compared with the companies in Appendix 8, the Merged is significantly smaller, and only trades in Australia and will continues to lack the balance sheet of such companies, therefore a discount to the multiple has been allowed for this factor;
• discount for reliance on a concentrated customer base: the Merged Entity will remain heavily reliant on a small number of key clients compared to the comparable companies. A discount to reflect this additional risk has been applied;
• premium for Proposal synergies and prospects for growth: in our opinion the Proposal may create the following major synergies in the Merged Entity:
• a stronger platform for growth: due to a larger portfolio of products, a wider and deeper management and staff team and an enlarged balance sheet; and
• some head office cost savings: due to the smaller size of TCI and STR the head office costs (incorporating related ASX listing costs) represent a large burden on the individual companies. Therefore the extent to which duplication of head office costs could be eliminated in the Merged Entity a substantial cost saving would be realised.

A premium for Proposal synergies such as those described above has been incorporated into the Merged Entity multiple; and

discount for integration risk and Proposal disynergies: in recognition of the fact that all Proposal attract some form of integration risk and disynergies PKFCA has incorporated a discount for this factor in the Merged Entity multiple.

Based on the above, PKFCA have arrived at an adjusted multiple range of between 7.0 and 8.0 times to arrive at a minority interest valuation. In our opinion this multiple reflects the:

• historical and forecast financial performance of TCI, STR and the Forecast financial performance of Merged Entity;
• Forecast assumptions and strategy of Merged Entity, having regard to relevant industry trends:
• possibility of synergies arising from the Proposal;
• the risks associated with Merged Entity including integration risks and Proposal disynergies:
• the quality of management and staff; and
• the Merged Entity business model compared to that of TCI or STR as stand alone entities.

Premium for control 8.5

Our assessment of the earnings multiple range applicable to the Merged Entity has been derived predominantly from the multiples observable in listed entities. Therefore, the share price reflects a minority interest value. The interest being valued represents a controlling interest. When valuing a controlling interest, an appropriate allowance should be made for the premium for control. Empirical evidence on premiums for control indicates that these premiums (based on equivalent EBITDA multiples) tend to range between 10% and 25%. Having regard to this, for the purposes of valuing a controlling interest in the Merged Entity, we have applied a premium for control of 20%.

8.6 Working Capital Requirements

Both TCI and STR are expected to have a working capital surplus over the next twelve months. As a result, the Merged Entity is not expected to have a working capital deficit over the next twelve months due to the level of cash on hand and the current ratio. No additional working capital funding has therefore been factored in our valuation of the Merged Entity.

8.7 Surplus Assets/ Liabilities

A review of the balance sheet and consideration of off balance sheet items of the Merged Entity has identified the following surplus assets/liabilities, for valuation purposes.

Assets

Cash likely to be available from exercise of the Merged Entity options (\$13.851 million).

Liabilities

• for TCI a final dividend in respect of the 30 June 2006 year of \$5,480,000 to be paid on 29 September 2006 not provided for as a current liability on the 30 June 2006 balance sheet;
• for STR a final dividend in respect of the 30 June 2006 year of \$1,959,000 to be paid on 29 September 2006 not provided for as a current liability on the 30 June 2006 balance sheet;
• acquisition of Radhaz Consulting, resulting in the following purchase price and payment terms:
• initial payment of \$242,848 on 1 July 2006;
• deferred payments of a maximum of \$200,000 (dependant on Radhaz Consulting performance) on each of 31 July 2007, 2008 and 2009. These payments at a discount rate of 10% present value to approximately \$500,000;

• acquisition of Fibercom, resulting in the following purchase price and payment terms:
• initial payment of \$1.5 million in August 2006;
• deferred payment of a maximum of \$1.0 million (dependant on Fibercom performance) in approximately 2 years time. This payment at a discount rate of 10% present values to approximately \$850,000; and
• a deferred payment in relation to the purchase of Milcom for a maximum of \$1.0 million (dependant on Milcom performance) in approximately 2 years time. This payment at a discount rate of 10% present values to approximately \$850,000.

We believe it appropriate to take the above amounts into account in the valuation of the Merged Entity.

Merger Implementation Costs of \$2.0 million have been taken into account in the Pro forma Merged Entity Balance Sheet.

8.8 Long term Borrowings

The Merged Entity Pro forma Balance Sheet shows borrowings to include interest bearing debt of \$27.064 million and non interest bearing debt of \$8.573 million. The majority of these borrowings arise as a result of the Proposal. As these borrowings have been recorded at fair value as at 30 June 2006, PKFCA have relied on their book value as equivalent to market value.

8.9 Conversion of Options

The majority of the Merged Entity options are already vested or soon will be vested and are mostly "in the money", based upon our valuation analysis. We have therefore assumed that these options will convert and have accounted for them in our valuation of the Merged Entity.

The number of shares in the Merged Entity would increase by 19.2 million to take into effect the following:

• ٠ the STR Options exchange into 17.2 million New Options which upon exercise would convert into 17.2 million Merged Entity Shares; and
• 2.0 million TCI Options issued to Mr Rod Stanton upon exercise would convert into 2.0 million Merged Entity Shares.

The strike prices of the Merged Entity options are 1.7 times that of the STR Option strike compensating for the 2 New Options for 5 STR Options exchange ratio. The proceeds arising from the exercise of the converted STR Options (into New Options), are therefore the same as if the options were converted into STR Shares rather than Merged Entity Shares. The same applies to the TCI Options. As set out in paragraph 6.9 the total cash proceeds from the exercise of all New Options would be approximately \$16.0 million.

8.10 Valuation conclusion

PKFCA's value of the Merged Entity derived from the capitalisation of future maintainable earnings is summarised as follows:

Table 35: Value of Merged Entity per share

	Para Ref.	Low Value	High Value
Maintainable earnings	8.3	27.000	27,000
Earnings multiple times	8.4.3	7.00	8.00
Enterprise value (minority basis)		189,000	216,000
Adjustments surplus assets/ liabilities (\$000s)	8.7
Add: cash from option exercise (\$000s)	8.9	16.049	16.049
Less: TCI 30 June 2006 final dividend not provided (\$000s)	8.7	(5,480)	(5,480)
Less: STR 30 June 2006 final dividend not provided (\$000s)	8.7	(1,959)	(1,959)
Less: Radhaz Consulting initial payment (\$000s)	8.7	(243)	(243)
Less: Radhaz Consulting deferred payment (\$000s)	8.7	(500)	(500)
Less: Fibercom initial payment (\$000s)	8.7	(1,500)	(1,500)
Less: Fibercom deferred payment (\$000s)	8.7	(826)	(826)
Less: Milcom deferred payment (\$000s)	8.7	(826)	(826)
Less: interest bearing debt (\$000s)	8.8	(27.064)	(27,064)
Less: non interest bearing debt (\$000s)	8.8	(8,573)	(8,573)
Equity value (minority basis) (\$000s)		158,077	185,077
Add: control premium (%)	8.5	20.0%	20.0%
Add: control premium (\$000s)	8.5	31,615	37,015
Equity value (control basis)		189,692	222,092
Number of shares (diluted)	6.9	159,223	159,223
Value per share (control basis)		1.19	1.39
Less: Minority discount (%)		17%	17%
Less: Minority discount (\$)		(0.20)	(0.23)
Value per share (minority basis)		0.99	1.16

PKFCA have assessed the value of a Merged Entity share (on a minority interest basis), based on the CFME method, to be in the range of \$0.99 to \$1.16, with a midpoint of \$1.08.

PROPOSAL EVALUATION 9

$9.1$ Approach

In our opinion, the Proposal will be fair and reasonable to the Non Associated Shareholders, if:

• the value of the STR Purchase is equal to or less than the fair value of one TCI Share (excluding a premium for either control or significant influence);
• the value of a Merged Entity Share is greater than or equal to the value of a TCI Share before the Proposal is implemented;
• on balance, the advantages of approving the Proposal outweigh the disadvantages to the Non Associated Shareholders:
• the disadvantages of rejecting the Proposal outweigh the advantages to the Non Associated Shareholders; and
• an appropriate premium for control is reflected in the ultimate value to be attributed to the TCI Shares of Non Associated Shareholders.

In addition to our valuation comparison outlined above, in assessing whether or not the Proposal is reasonable we have considered the following significant factors:

• the effect of the Proposal on the financial position of shareholders; and
• the effect on of the Proposal on earnings per share. ٠

In forming our opinion as to whether the Capital Reduction would materially prejudice TCI's ability to pay its creditors, we have had regard to the interest cover and debt gearing ratios of the Merged Entity.

$9.2$ STR Purchase

Set out below is our valuation of the consideration of the TCI Shares to be purchased by STR from the Founders compared with the fair value of each TCI Share (inclusive of any premium that may be applicable to the Founders' TCI shares) for the purposes of assessing of whether or not the Non Associated Shareholders have been disadvantaged by not receiving an offer on the same terms as the Founders.

As noted in paragraph 1.1 above, the STR Purchase comprises of the following:

• STR Purchase that is, 40.3 million shares at \$1.0137 per share, part of which will be $\bullet$ Vendor Funding; plus
• the Offer (9 million shares at \$0.87 cents per share).

The sum of the above Consideration is \$48.7 million or approximately \$0.99 cents per share. However, included in the above sum is an amount of \$10 million which is interest free and payment may be deferred for up to 2 years. Based on the Pro forma Balance Sheet, this loan has been assessed to have a value of \$8.6 million (which implies a discount rate of approximately 5.25% pa for two years) and reduces the average Consideration per TCI Share sold by the Founders to \$0.98 cents per share. Accordingly, for the purposes of our analysis, we have used \$0.98 cents per share.

Based on the effective Consideration paid to the Founders for their TCI Shares, set out below is a comparison of the assessed value of the Consideration received to our assessed fair value of their TCI Shares:

	Para Ref.	Low value	High value	Midpoint
		s	S	S
Consideration per TCI share to be paid by STR to Founders	9.2
Assessed value of TCI (control basis)	7.11	0.98 1.16	0.98 1.33	0.98 1.25
Difference (discount) /premium		(0.18)	(0.35)	(0.27)
Consideration per TCI share to be paid by STR to Founders	9.2
Assessed value of TCI (minority basis)	7.11	0.98 0.93	0.98 1.06	0.98 1.00
Difference (discount) /premium		0.05	(0.09)	(0.02)
Consideration per TCI share to be paid by TCI Non-Associated Shareholders	9.2
Assessed value of TCI (minority basis)	7.11	0.87 0.93	0.87 1.06	0.87 1.00.
Difference (discount) /premium		(0.06)	(0.19)	(0.13)
Source: PKFCA analysis

Table 36: Assessed fair market value of TCI Shares vs. Consideration

The current fair value of a TCI Share (including a premium for control) exceeds the value of Consideration to be paid by STR for each Founders' TCI Share and the 9.0 million TCI shares held by the Founders to be offered to the Non Associated Shareholders at \$0.87 per share on a pro rate basis is less than the current fair value of a TCI Share on a minority basis. The above table also confirms that no premium for control is being paid to the Founders for their TCI Shares. Accordingly, we believe that this aspect of the Proposal is fair to the Non Associated Shareholders.

9.2.1 Proposal

Set out below is an analysis of the Non Associated Shareholders position assuming that the Proposal is implemented:

	Para Ref.	Low value	High value	Midpoint
		s	3	\$
Assessed value of TCI (control basis) Assessed value of TCI (minority basis)	7.11 7.11	1.16 0.93	1.33 1.06.	1.25 1.00
Assessed value of Merged Entity (control basis) Assessed value of Merged Entity (minority basis)	8.10 8.10	1.19 0.99	1.39. 1.16	1.29 1.08
Difference: Merged Entity less TCI (discount) /premium
- control basis		0.03	0.06.	0.05
- minority basis		0.06	0.10	0.08
Source: PKECA analysis

Table 37: Assessed fair market value of TCI Shares vs. Merged Entity Shares

Based on our analysis, a Merged Entity Share will be more valuable than a TCI Share and therefore Non Associated Shareholders are more advantaged by implementing the Proposal.

9.3 Other financial impacts of the Proposal

Earnings and dividends $9.3.1$

Earnings

The table below sets out an analysis of the assessed impacts of the Proposal on EBITDA per share, from view point of Non Associated Shareholders. Table 38: EBITDA per share, gearing and NTA per share - From view point of Non associated Shareholder

		TCI		Magko Shifty	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,		Difference: Increase/	Decrease
			(Undiluted)	(Diluted)	(Midpoint)	(Undiluted)	(Diluted)	(Midpoint)
			в	C.	D	$= B - A$	$= C - A$	$\pm D \cdot A$
No. TCI Shares involved
Not participate in purchase of Founders' shares	60,285,500
Participate in purchase of Founders' shares	69,285,500
Additional investment	Per share
Not participate in purchase of Founders' shares	\$0.00	0
Participate in purchase of Founders' shares - purchase price of Founders' shares	\$0.87	7,830,000
Funding cost of additional investment
Not participate in purchase of Founders' shares	pre-tax pa	0
Participate in purchase of Founders' shares	8.00%	626,400
EBITDA per share
Not participate in purchase of Founders' shares (\$)		0.141	0.20	0.17	0.19	0.06	0.03	0.04
Participate in purchase of Founders' shares (Note 1) (\$)		0.141	0.18	0.16	0.17	0.04	0.02	0.03
Source: PKFCA Analysis

Note 1: After allowing for increased earnings from additional shares and pre-tax funding interest cost)

Based on our analysis, EBITDA per Merged Entity Share will increase as compared with a TCI Share, gearing of the Merged Entity will be higher than TCI, but not overly high and there will be a substantial reduction in net tangible assets per Merged Entity Share as compared with a TCI Share.

TCI and STR Proposal - Independent Expert's Report

Set out below is the earnings (profit after tax) per share of TCI compared to the Merged Entity earnings per share. (the latter being calculated on the basis that there is no amortisation of any intangible assets of the Merged Entity):

Table 39: Impact on Earnings (profit after tax) per share

	Para Ref.	Undiluted	Diluted
		(3)	(3)
TCI FY2007 earnings per share	4.5	0.100	0.100
Assume Non Associated Shareholders - Participate in purchase of Founders' shares
Merged Entity FY2007 earnings per share	6.5	0.107	0.094
Earnings per share uplift/ (decline) (cents)		0.006	(0.006)
Earnings per share uplift/ (decline) (%)		6.5%	(6.4%)
Assume Non Associated Shareholders - Do not participate in the purchase of Founders' shares
Merged Entity FY2007 earnings per share		0.109	0.096
Earnings per share uplift/ (decline) (cents)		0.009	(0.004)
Earnings per share uplift/ (decline) (%)		$9.0\%$	(4.4%)

Source: PKFCA Analysis

Note 1: After allowing for increased earnings from additional shares, funding interest cost and tax deduction at 30% on funding interest cost.

PKFCA notes that Proposal:

• on an undiluted basis, will be earnings per share accretive for Non Associated Shareholders, regardless of whether or not a Non Associated Shareholder participates in the purchase of the 9 million Founders' Shares:
• on an undiluted basis:
• will slightly reduce earnings per share for Non Associated Shareholders if they do not participate in the purchase of the 9 million Founders' Shares; and
• will be earnings per share accretive for Non Associated Shareholders if they participate in the purchase of the 9 million Founders' Shares.

Dividends

PKFCA notes that both TCI and STR have paid dividends in the last financial year. TCI paid higher dividends as measured by dividend yield, however in our opinion the Proposal provides for a more diversified income base, a healthier capital structure and better growth opportunities, which will assist in creating more consistent earnings and dividends.

The Proposal will result in a substantial amount of intangibles being capitalised in the Merged Entity's balance sheet. Under the revised Australian Accounting Standards that are operative for annual reporting periods beginning on or after 1 January 2005, goodwill no longer needs to be amortised on an annual basis, but rather, the carrying value is subject to an annual review (or more often if an event occurs that suggests the value may be impaired) to ensure that it does not exceed its fair market value. The depreciable amount of an intangible asset (other than goodwill) with a finite useful life shall be allocated on a systematic basis over its useful life. An intangible asset (other than goodwill) with an indefinite useful life shall not be amortised. In accordance with AASB 136 "Impairment of Assets", an entity is required to test an intangible asset with an indefinite useful life for impairment by comparing its recoverable amount with its carrying amount annually; and whenever there is an indication that the intangible asset may be impaired.

Neither STR, TCI nor PKFCA has reviewed the allocation of the intangibles and it is possible that upon examination of this item there may be certain assets such as intellectual property, copyright and brand names, which would require amortisation.

Accordingly, any amortisation of the same would impact on the Merged Entity's reported profits and may impact on its ability to pay dividends.

Further, if goodwill or any intangible asset were found to be impaired and required writing down, the amount written down would be a charge to the earnings of the Merged Group at the time, which if it occurred, may have an adverse affect on profitability and consequently, impact upon dividends payable in that reporting period.

9.3.2 Impact upon financial position

PKFCA compared the impact upon the net tangible assets ("NTA") and gearing ratio of TCI as at 30 June 2006 compared to that of the Merged Entity (based on the Pro forma Balance Sheet):

Table 40: Impact on Financial Position

		Net Assets	Intangibles 1	NTA	NTA per share (undiluted)	NTA per share (diluted)
	Para Ref	(\$000s)	(\$000s)	(\$000s)	(3)	$$\mathbb{S}$$
TCI Merged Entity	4.9 6.6	18,576 97.971	900 113,000	17.676 (15,029)	0.16 (0.11)	0.16 (0.09)

Source: PKFCA Analysis

Note 1: Including deferred tax assets

	TCI	Morged/Entity - Million		Difference: Increase/		Decrease
		(Undiluted)	(Diluted)	(Midpoint)	(Undiluted)	(Diluted)	(Midpoint)
	А	в	с	Ð	=B-A	$= C - A$	$= D - A$
Gearing (interest-bearing debt: total assets)	0%	15%	15%	15%	15%	15%	15%
Net tangible asset backing per share (\$)	0.16	(0.11)	(0.01)	(0.06)	(0.27)	(0.17)	(0.22)

Note 1; After allowing for increased earnings from additional shares and pre-tax funding interest cost)

NTA

PKFCA notes that Non Associated Shareholders will experience a significant decrease in NTA on both a diluted and undiluted basis if the Proposal takes place due to the calculated goodwill arising as a result of the Proposal.

Future dilution

In our opinion, the Merged Entity Shares are more attractive than TCI Shares. It is therefore more likely that Merged Entity convertible securities will be converted. Should this occur, Merged Entity Shareholders would experience dilution of their shareholdings. In terms of NTA however, NTA per share would increase to the extent that the converting instruments were "in the money". This occurs

as a result of cash injections from option conversion which would reduce the extent of negative NTA in Merged Entity.

Gearing

For Non Associated Shareholders, the gearing (as measured by interest bearing liabilities: total assets (at book values)) will increase, which is disadvantage.

Interest cover and current ratio 9.3.3

PKFCA compared the impact upon the interest cover ratio and current ratio of TCI for the year ended and as at 30 June 2006 compared to that of the Merged Entity (based on the Merged Entity Forecast and Pro forma Balance Sheet):

Table 41: Financial Ratios

	Para Ref	TCI	Merged Entity
Interest Cover	4.9.6.6	na (Note 1)	10.4
Current Ratio	4.9.6.6	1.7	1.3
Source: PKFCA Analysis
Note 1: TCI is forecast to have no net interest expense in FY2007

While the gearing of the Merged Entity is higher than that of TCI (as at 30 June 2006), the FY2007 Forecast interest cover of the Merged Entity remains high, at over 10 times.

While the current ratio of the Merged Entity (1.3 times) is lower than that of TCI (1.7 times) (as at 30 June 2006), the Merged Entity current ratio remains acceptable.

9.4 Potential Market Value Implications

$9.4.1$ Share price & potential re-rating

We note that, since the Announcement, TCI shares have increased (based on a closing price 1 November 2006 of \$1.40) by approximately 40%. In our opinion this share price appreciation represents to some extent a re-rating of TCI in anticipation of implementing the Proposal. Should the Proposal not proceed, the TCI share price might depreciate in the absence of such re-rating. Further, we note that TCI would continue to suffer from a perceived overhang of shares owned by the Founding Shareholders that will act to depress its share price.

In our opinion, the Proposal has the potential to lead to a positive re-rating for the Merged Entity Shares in the market. Set out below are the factors which have the potential to contribute to a positive re-rating:

• market recognition due to:
• a continuation in strategy for the Merged Entity aspiration to become a leading technical and industrial services group; and
• an improved growth platform for the Merged Entity;
• the size and scale of the Merged Entity should improve trading liquidity; and
• the reduction in size of significant security holder blocks (refer to paragraph 9.4.2 below).

9.4.2 Liquidity and Volatility

Trading in TCI Shares is illiquid with a perceived overhang of shares owned by the Founding Shareholders. The Proposal may improve the liquidity of the Merged Entity Shares in comparison with the TCI Shares due to:

• the increased size and scale of the Merged Entity;
• the increased number of shareholders; and
• a more widely dispersed register of members.

In our opinion, any improvement in the liquidity of Shares is an advantage to Non Associated Shareholders, as it improves their ability to exit from what has been a volatile investment, should they wish to do so.

9.4.3 Increased market interest/ Potential target

In our opinion the Proposal will make the Merged Entity a more attractive investment than TCI alone and this facilitates the possible acquisition of the Merged Entity. However, Non Associated Shareholders should note that as at the date of this report, there is no offer to acquire all of the Non Associated Shareholders interests in either TCI or the Merged Entity and such an offer may not materialise.

The possibility of the Merged Entity being subject to an attractive takeover offer, whilst not certain, cannot be discounted given the mergers and acquisitions in Australia involving similar businesses; and

9.5 Ownership and control

The largest legal shareholders in TCI are the Founders whom collectively hold 45% of TCI Shares. The next largest shareholder in TCI holds 9.21% of TCI Shares.

Upon implementing the Proposal, the Founders will not have any shareholding in the Merged Entity whilst the next largest shareholder will hold approximately 8.3% (on an undiluted basis). Ownership and control therefore does not change materially upon implementation of the Proposal apart from the fact that the Founders will not have any shareholding in the Merged Entity.

9.6 Other advantages and disadvantages

$9.6.1$ Advantages for Shareholders

Attractive exit price/ Premium for control

As a result of implementing the Proposal, the Non Associated Shareholders effectively will obtain a premium for their agreement to the Proposal (refer paragraph 9.2.1), which is a significant advantage as compared with the likely discount for illiquidity and minority interest that may otherwise apply in the case of an individual Non Associated Shareholder wishing to sell their TCI Shares in the absence of the Proposal.

This premium would not be paid necessarily be paid under other scenarios.

Improved platform for further growth

Whilst TCI has sustained profitability in FY2006 despite decreasing revenues and the loss of the Optus contract, PKFCA is of the opinion that the Proposal best facilitates the growth prospects for TCI Shareholders going forward. Set out below are the key factors that support this view:

• the Proposal creates a more robust business entity as a result of greater diversification in terms of income streams and projects entered;
• the Proposal provides TCI Shareholders an opportunity to move away from reliance on Telecommunications operators capital expenditure Telecommunications operators operational expenditure, which, by its nature must occur for Telecommunications operators to sustain their operations;
• the result of the above provides a smoothing of the volatile cashflows generated by TCI;

• the Proposal will improve the working capital (due to a smoothing of cashflows) and balance sheet position of TCI Shareholders and provide potential clients more confidence in the Merged Entity to deliver on projects:
• the Proposal will create a larger scale entity with which to move into other markets, both geographically (such as south east Asia) and into other sectors (such as utilities and power);
• the potential for a re-rating of the Merged Entity and increased interest by the investment community would make securities in the Merged Entity a more attractive currency for effecting any further acquisitions, should the Merged Entity wish to undertake the same and finance the same either in whole or part via script:
• the Proposal improves the ability to shift resources such as capital, management team and staff from one business area to another when appropriate;
• the Proposal creates potential cost synergies, not the least of which is the sharing of corporate overheads;
• the Proposal may provide TCI with the benefit of STR's corporate infrastructure alleviating TCI resources currently dedicated to maintaining its public company status; and
• the Proposal provides more entrenchment of TCI into the clients with which TCI and STR have in common.

Increased diversification

Overall, the Proposal effects greater diversification in terms of servicing broader sectors including telecommunications, energy and utilities. The Merged Entity would have a national coverage including Adelaide in which TCI currently do not have an office premise located. The Merger brings about an enlarged business operations including contact centre, end-to-end solutions, recoverable works, specialist contracting, managed labour services and an entry into the fixed line infrastructure deployment and management.

Improved depth and breath of management and technical team

The Proposal will create a broader and deeper management and technical team which will be spread across a wider variety of businesses. This pooling of talent in the Merged Entity has the potential to create a larger critical mass of intellectual property to use in the strategy and operations of each business and the Merged Entity as a whole.

Improved cost of capital

The smoothing of cashflows and the larger and more diversified nature of the Merged Entity may assist it in securing cheaper cost of capital.

Improved ability to service clients

The Proposal will improve the size and scale of the Merged Entity's product and services offering, balance sheet and management and technical team. This increase ability to service clients may improve the business of the Merged Entity as compared with TCI on a stand alone basis.

$9.6.2$ Disadvantages for Shareholders

Risk/return profile

For investors willing to remain invested in TCI in its current form, exposures and risk/ return profile, the Proposal may create a Merged Entity which has a form, exposure and risk/return profile which is no longer suitable for them.

Forgone opportunity to benefit from improvement in TCI

TCI in its current form contains certain growth opportunities that may translate to increases in the share price and result in higher dividend payments. Should the Proposal proceed the Non Associated Shareholders will only benefit from a growth opportunities in TCI as part of a larger Merged Entity.

Exposure to integration risk

Unforeseen issues and complications may arise during the integration of STR and TCI which may result in a delay in the integration process or in expected strategic benefits not being fully achieved.

Adverse impact on net tangible assets per share and gearing

If the Proposal is implemented, the NTA per share and the gearing ratio are adversely affected.

Potential dilution in ownership

PKFCA believes that it is likely that the Merged Entity options arising from the Proposal will be exercised, thus diluting the then Existing merged Entity Shareholders.

9.7 Taxation consequences

Based on the tax report included in the Explanatory Memorandum, broadly speaking, there are no capital gains tax consequences for the Non Associated Shareholders.

9.7.1 Implications for the Shareholders of Rejecting the Proposal

The key implications for Shareholders if the Proposal was not to proceed would be the opportunity costs of the Proposal benefits and a potential decrease in the TCI share price. In addition, TCI may be required to pay a break fee to STR for the reimbursement of costs in the event TCI Shareholders do not approve the proposed capital reduction and share cancellation (as described in Section 8.2 of the Scheme Booklet).

Proposal benefits are outlined above.

Apart from the Proposal, PKFCA understands that there are currently no other realistic sale opportunities that are known to TCI.

Other alternatives for the Shareholders in absence of the Proposal are the status quo and to seek an alternative bidder. In our opinion all of these scenarios are not as favourable as the Proposal. Under the:

• status quo scenario: TCI would continue to suffer from high revenue and cashflow volatility, its reliance on Telco Capex in addition to foregoing possible Merger benefits; and
• seek an alternative bidder: we understand that TCI has been approached previously by various bidders and the likelihood of alternate transaction involving any likely bidders is not considered probable.

9.8 Analysis of any prejudice to TCI's ability to pay creditors

Set out below are key credit related financial ratios of TCI compared to that of the Merged Entity based on the TCI and Merged Entity Forecast FY2007 income statements, the TCI 30 June 2006 balance sheet and the Merged Entity proforma 30 June 2006 balance sheet:

Table 42: Financial Ratios

	Para Ref	TCI	Merged Entity
Interest Cover	4.9.6.6	na (Note 1)	10.4
Current Ratio Total Debt / Total Assets	4.9.6.6 4.9.6.6	1.7 0.0%	1.3 14.8%

Source: PKFCA Analysis

Note 1: TCI is forecast to have no net interest expense in FY2007

We note the following from the above:

• interest cover (calculated as EBITDA: Interest expense) of the Merged Entity (9.3 times) exceeds that required under the proposed facility (4.5 times) – refer to paragraph 6.7 above;
• under the proposed banking facility the Merged Entity will have facilities of \$63.8 million, which is well in excess of the borrowings in the Pro forma Balance Sheet - approximately \$26 million, (excluding Vendor Funding of \$10.0 million (or discounted value of \$8.6 million);
• working capital remains sound at 1.3 times;
• we have also reviewed the Forecast cashflows of each entity, and included the effects of the Proposal, together with the proposed Westpac facility and noted that the merged Entity would have unused facilities remaining after payment of all creditors other than Westpac; and
• whilst the Merged Entity would be more highly geared than TCI as a stand alone entity, as set out in Table 29 the Merged Entity is expected to generate strong net operating cash flows to service its debt levels and working capital requirements.

QUALIFICATIONS DECLARATIONS AND CONSENTS $10¹⁰$

$10.1$ Qualifications

PKFCA is the licensed corporate advisory arm of PKF New South Wales, Chartered Accountants and Business Advisers. PKF New South Wales provides advice in relation to all aspects of valuations and has extensive experience in the valuation of corporate entities.

Messrs Vince Fayad and Chris Tran are the executives of PKFCA primarily responsible for the preparation of this report.

Mr Vince Fayad B.Bus, CA, is a Director of PKFCA and the head of that practice. Mr Fayad is also a partner of PKF New South Wales. Mr Fayad is the Director responsible for this report. Mr Vince Fayad has over 25 years experience in a number of specialist corporate advisory activities including company valuations, due diligence investigations, preparation and review of business feasibility studies, public company floats, accounting, advising on Proposals and acquisitions, advising on independence expert reports, preparation of information memoranda and other corporate investigations.

Mr Chris Tran B.Bus, CFA, is a Manager of PKFCA. Mr Tran has assisted in the preparation of this report. Mr Tran has over eight years experience in professional practice specialising in a range of matters focusing on valuations, independent expert reports, financial investigations and economic appraisals.

Based on his experience, Mr Fayad is considered to have the appropriate experience and professional qualifications to provide the advice offered.

$10.2$ Independence

PKFCA is not aware of any matter or circumstance that would preclude it from preparing this report on the grounds of independence either under regulatory or professional requirements. In particular, PKFCA has had regard to the provisions of applicable pronouncements and other guidance statements relating to professional independence issued by Australian professional accounting bodies and ASIC.

PKFCA notes that PKF has provided assistance to Service Stream in relation to research and development tax concession claims. However, due to the nature and scale of services provided, PKFCA does not believe that this role presents a conflict of interest or impacts on our independence in connection to the Proposal.

PKFCA has not held and, at the date of this report, does not hold any shareholding in or other relationship with TCI. STR or any related entity that could be regarded as capable of affecting its ability to provide an unbiased opinion in relation to the Proposal. PKFCA considers itself to be independent in terms of PN 42 - Independence of Experts' Reports, issued by ASIC.

PKFCA will receive a fee in the order of \$90,000 (plus goods and services tax and any disbursements) based on time spent in respect of the preparation of this report and the associated reports in relation to the Forecasts and the Pro forma Information. PKFCA will not receive any fee contingent upon the outcome of the Proposal, and accordingly, does not have any pecuniary or other interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to the Proposal.

Three drafts of this report were provided to the Directors and their advisers. Certain changes were made to the report as a result of the circulation of the draft reports. However, no changes were made to the methodology, valuations, conclusions or recommendations made to the Non Associated Shareholders as a result of issuing the draft reports.

10.3 Disclaimer

This report has been prepared at the request of the Directors and was not prepared for any purpose other than that stated in this report. This report has been prepared for the sole benefit of the Directors and Non Associated Shareholders entitled to receive a copy of the Explanatory Memorandum. Accordingly, this report and the information contained herein may not be relied upon by anyone other than the Directors and Non Associated Shareholders without the written consent of PKFCA. PKFCA accepts no responsibility to any person other than the Directors and Non-Associated Shareholders.

The statements and opinions contained in this report are given in good faith and are based upon PKFCA's consideration and assessment of information provided by the Directors, executives and management of all of the entities.

APPENDIX 1: SOURCES OF INFORMATION

In preparing this report PKFCA had access to and relied upon the following principal sources of information:

• the Explanatory Memorandum (including earlier drafts); $\ddot{\phantom{a}}$
• annual reports and half yearly financials of TCI and STR for the previous 4 years;
• prospectuses and offer documents issued by either TCI or STR for the previous 4 years;
• press releases, public announcements (ASX announcements), media and other information in relation to TCI, STR and the Proposal;
• share market data and related information on TCI and STR securities
• share market and financial data on selected listed companies engaged in similar industries to TCI and STR sourced primarily from Bloomberg and IBISWorld;
• publicly available economic and industry information by major research bodies and industry participants in relation to the industries in which TCI and STR operate;
• other independent expert reports involving companies in the broader industry;
• Merged Entity Pro forma Balance Sheet as at 30 June 2006 and Merged Entity Forecast for the year ending 30 June 2007;
• TCI FY2006 and FY2007 Forecast including forecast cash flow statement and statement of financial performance for the 12 months ending 30 June 2007;
• TCI and STR monthly management accounts for the 3 months to 30 September 2006;
• STR FY2007 Forecast including forecast cash flow statement and statement of financial performance for the 12 months ending 30 June 2007
• various confidential board papers, presentations and management reports of TCI and STR; and
• details of TCI and STR Non Associated Shareholders and relevant registers.

In addition to the above, PKFCA has had various discussions with the management, officers and advisers of TCI and STR regarding the nature of their businesses, their operations, financial position and prospects.

APPENDIX 2: VALUATION METHODS

In conducting our assessment of the fair market value of the Company, the following commonly used business valuation methods have been considered:

Discounted Cash Flow Method

The discounted cash flow ("DCF") method is based on the premise that the value of a business or any asset is represented by the present value of its future cash flows. It requires two essential elements:

• the forecast of future cash flows of the business asset for a number of years (usually five to 10 years); and
• the discount rate that reflects the riskiness of those cash flows used to discount the forecast cash flows back to net present value ("NPV").

DCF is appropriate where:

• the businesses' earnings are capable of being forecast for a reasonable period (preferably five to 10 years) with reasonable accuracy;
• earnings or cash flows are expected to fluctuate significantly from year to year;
• the business or asset has a finite life;
• the business is in a 'start up' or in early stages of development;
• the business has irregular capital expenditure requirements;
• the business involves infrastructure projects with major capital expenditure requirements; or
• the business is currently making losses but is expected to recover.

Capitalisation of Future Maintainable Earnings Method

This method involves the capitalisation of estimated future maintainable earnings by an appropriate multiple. Maintainable earnings are the assessed sustainable profits that can be derived by the vendor's business and excludes any one off profits or losses. An appropriate earnings multiple is assessed by reference to market evidence as to the earnings multiples of comparable companies.

This method is suitable for the valuation of businesses with indefinite trading lives and where earnings are relatively stable or a reliable trend in earnings is evident.

Net Realisable Value of Assets

Asset based valuations involve the determination of the fair market value of a business based on the net realisable value of the assets used in the business.

Valuation of net realisable assets involves:

• separating the business or entity into components which can be readily sold, such as individual $\bullet$ business units or collection of individual items of plant and equipment and other net assets; and
• ascribing a value to each based on the net amount that could be obtained for this asset if sold.

The net realisable value of the assets can be determined on the basis of:

• orderly realisation: this method estimates fair market value by determining the net assets of the underlying business including an allowance for the reasonable costs of carrying out the sale of assets, taxation charges and the time value of money assuming the business is wound up in an orderly manner. This is not a valuation on the basis of a forced sale where the assets might be sold at values materially different from their fair market value;
• liquidation: this is a valuation on the basis of a forced sale where the assets might be sold at values materially different from their fair market value; or

going concern: the net assets on a going concern basis estimates the market value of the net assets but does not take into account any realisation costs. This method is often considered appropriate for the valuation of an investment or property holding company. Adjustments may need to be made to the book value of assets and liabilities to reflect their going concern value.

The net realisable value of a trading company's assets will generally provide the lowest possible value for The difference between the value of the company's identifiable net assets (including the business. identifiable intangibles) and the value obtained by capitalising earnings is attributable to goodwill.

The net realisable value of assets is relevant where a company is making sustained losses or profits but at a level less than the required rate of return, where it is close to liquidation, where it is a holding company, or where all its assets are liquid. It is also relevant to businesses which are being segmented and divested and to value assets that are surplus to the core operating business. The net realisable assets methodology is also used as a check for the value derived using other methods.

These approaches ignore the possibility that the company's value could exceed the realisable value of its assets.

Share Market Trading History

The application of the price that a company's shares trade on the ASX is an appropriate basis for valuation where:

• the shares trade in an efficient market place where 'willing' buyers and sellers readily trade the $\blacksquare$ company's shares; and
• the market for the company's shares is active and liquid.

Constant Growth Dividend Discount Model

The dividend discount model works best for:

• firms with stable growth rates:
• firms which pay out dividends that are high and approximate free cash flow to equity;
• firms with stable leverage; and
• firms where there are significant or unusual limitations to the rights of shareholders.

Special Value

Special value is the amount which a potential acquirer may be prepared to pay for a business in excess of the fair market value. This premium represents the value to the potential acquirer of potential economies of scale, reduction in competition or other synergies arising from the acquisition of the asset not available to likely purchases generally. Special value is not normally considered in the assessment of fair market value as it relates to the individual circumstances of special purchases.

APPENDIX 3: TCI COMPARABLE COMPANY DESCRIPTIONS

The following tables summarise the nature and scale of the activities of the identified comparable companies used in the valuation of TCI.

Table 43: Company descriptions

	Company	Description
AU	DOWNER EDI LIMITED	Downer EDI Limited provides engineering and infrastructure management services to the public and private rail, road, power, telecommunications, mining and resources sectors in Australia, New Zealand, Asia and the Pacific. Downer provides rolling stock services, drilling services for the exploration industry, mine planning and management services and highway maintenance.
AU	LEIGHTON HOLDINGS LIMITED	Leighton Holdings Limited offers a variety of project development and contracting services to public and private sector clients in the Asia-Pacific region. Leighton provides design management, civil engineering construction, building, mining, process engineering, telecommunications, waste management and infrastructure operation and maintenance and property development and management.
AU	TRANSFIELD SERVICES LIMITED	Transfield Services Limited provides a variety of operations and maintenance outsourcing services in Australia and New Zealand, which cover structural, mechanical, instrumentation, civil and electrical maintenance. The Group's customers operate within the power, rail, oil and gas, petrochemical, defence, water utility, telecommunication, and mineral processing sectors.
AU	UNITED GROUP LTD	United Group Limited is a diversified engineering, construction and maintenance company. The Company's operations include railway manufacturing, maintenance and engineering along with providing design, construction, operating and maintenance services in the mining, commercial property, water services, defence and petrochemicals industries.
AU	WORLEYPARSONS LTD	Worley Parsons Limited provides professional services through alliance and integrated service contracts to the energy, resource and complex process industries. The Company provides its services to industrial sectors such as oil and gas refining, petrochemicals and chemicals, minerals and metals, power and water and industrial and infrastructure.
AU	AUSENCO LIMITED	Ausenco Limited provides engineering and project management services to the global mining and minerals processing industry. The Company specializes in engineering, procurement, construction management, project management, and the operation of mineral processing plants.
US	BAKER (MICHAEL) CORP	Michael Baker Corporation provides engineering, construction, and operations and technical services to industrial and governmental customers in the United States and internationally. The Company's business units focus on the building, civil, energy, environmental, and transportation markets. Baker's services for Wireless Communications include: evaluation of potential tower and attachment sites, collection and evaluation of property data, site property surveys, preparation of final site plans and construction documents, structural analysis of existing structures, soils investigations and foundation design, mechanical, electrical and architectural design, landscaping and erosion control plans, acquisition of local jurisdictional approvals, calculation of construction quantities, and construction management/inspection services.
GR	BILFINGER BERGER AG	Bilfinger Berger AG provides construction and engineering services. The Company builds bridges, tunnels, highways, office buildings, hospitals, water purification and sewage treatment plants and other facilities, offers real estate development and management services, and operates concessions. Bilfinger operates subsidiaries in Europe, the United States, Asia, and Africa.
LN	HYDER CONSULTING PLC	Hyder Consulting Pic offers infrastructure consulting, design, financing, and project management services. The Company constructs bridges, water and sewer systems, highways, rail transportation systems, telecommunications infrastructure, defence projects, healthcare buildings, and alternative energy systems. Hyder operates internationally. Hyder Consulting provides a full location, civil and structural design and project management service for the communications infrastructure to support mobile and satellite communications networks. Hyder Consulting advises clients on the use of telemetry equipment within their businesses, involving site surveys, procurement management and implementation project management. We also take account of I/O requirements and power and communications options to provide clients with effective remote monitoring and measurement of geographically dispersed assets. Hyder Consulting offers a range of services to assist in assuring compliance with national and international guidelines relating to radio frequency emissions, including surveys, design of mitigation measures, computer modelling studies and the creation of employee safety programmes.

	Company	Description
US	MASTEC INC	MasTec, Inc. builds internal and external voice, video, data, Internet, and other computer and communications networks. The Company designs, installs, constructs, and maintains aerial, underground, and buried copper, coaxial, and fibre optic cable networks, as well as wireless antenna networks. Customers include telecommunications service providers and cable television operators.
CN	SNC-LAVALIN GROUP INC	SNC-Lavalin Group Inc., through subsidiaries, is active in the engineering, construction, and manufacturing sectors. The Company provides engineering, procurement, project management, and project financing services in the power, industrial, transport, infrastructure, buildings, telecommunications, defence, and environment sectors.
Source:	Bloombera

APPENDIX 4: TCI COMPARABLE COMPANY FINANCIAL INFORMATION

Table 44: Multiples

Company	Currency	Most Recent Reporting	Enterprise Value	Market Capitalisation as at 1 November 2006			Current multiple			1 year forecast multiple
		Date	local	local	AUD	EBITDA	EBIT	Sales	EBITDA	EBIT	Sales
			million	million	million	local	local	local	local	local	local
						(Times)	(Times)	(Times)	(Times)	(Times)	(Times)
DOWNER EDI LIMITED	AUD	06/2006	2,516	2,054		8.0	12.4	0.5	6.4	9.4	0.5
LEIGHTON HOLDINGS LIMITED	AUD	06/2006	5,685	6,103		7.3	17.2	0.7	6.1	12.3	0.5
TRANSFIELD SERVICES LIMITED	AUD	06/2006	2,374	1,790		19.2	31.3	1.2	10.4	15.3	1.0
UNITED GROUP LTD	AUD.	06/2006	2,234	2,069		15.7	19.3	1.0	11.4	13.5	0.8
WORLEY PARSONS LTD	AUD	06/2006	3,882	3,828		18.7	20.6	1.6	14.1	15.5	1.4
AUSENCO LTD	AUD	12/2005	260	270		32.0"	34.5	3.4	18.2	11.1	1.1
		LOCAL		AVERAGE (EX OUTLIERS)		13.8	22.5	1.4	11.1	12.9	0.9
		LOCAL		MEDIAN (EX OUTLIERS)		15.7	19.9	1.1	10.9	12.9	0.9
BAKER (MICHAEL) CORP	USD	12/2005	166	185	239	7.6	9.8	0.3	7.2	n/a	0.3
BILFINGER BERGER AG	EUR	12/2005	1.116	1,820	2,997	5.9	12.0	0.2	4.5	7.8	0.2
HYDER CONSULTING PLC	GBp	03/2005	105	109	270	14.1	19.0	0.6	8.3	12.0	0.6
MASTEC INC	USD	12/2005	887	688	888	16.4	24.7	1.0	12.4	16.3	0.9
SNC-LAVALIN GROUP INC	CAD	12/2005	4,293	4,522	5,154	15.0	18.1	1.1	16.3	19.4	0.9
		NON-LOCAL		AVERAGE (EX OUTLIERS)		11.8	16.7	0.7	9.7	13.9	0.6
		NON-LOCAL		MEDIAN (EX OUTLIERS)		14.1	18.1	0.6	8.3	14.2	0.6
		TOTAL		AVERAGE (EX OUTLIERS)		12.8	19.9	1.1	10.5	13.3	0.7
		TOTAL		MEDIAN (EX OUTLIERS)		14.6	19.0	1.0	10.4	12.9	0.8

Source: Bloomberg

Notes:

1. n/m = Not meaningful, n/a = not available.

2. The enterprise values were calculated by summing the total of the net borrowings at the company's most recent reporting date and the market capitalisation at 1 November 2006.

3. Earnings were taken from the last annual report. The earnings estimates were for the financial year ends following the latest reporting date.

4. Market Capitalisation is as at 1 November 2006.

5. The average multiples were calculated excluding any outliers marked *.

APPENDIX 5: MERGERS AND ACQUISITIONS COMPANY DESCRIPTIONS

Table 45: Transaction target company descriptions

Target Name	Description
AT&T CORP	AT&T Corp. offers networking services and products globally to large and small businesses, government entities, and consumers. The Company furnishes all local, regional, long distance, and international telecommunications services. AT&T also provides a range of networking solutions, including business continuity, security, virtual private networking, and voice over IP.
MCI INC	MCI Inc. provides business and residential communications services. The Company owns and operates network facilities throughout North America, Latin America, Europe, Africa, and the Asia-Pacific region. MCI Inc. is the successor by merger to Worldcom Inc.
BEZEQ ISRAELI TELECOMMUNICATION CORPORATION LTD	Bezeq Israeli Telecommunication Corporation Ltd. offers local, long-distance, and international telecommunications services in Israel. The Company also offers Internet access lines, calling cards, and high volume data transfer networks.
PAKISTAN TELECOMMUNICATION COMPANY LIMITED	Pakistan Telecommunication Company Limited provides fixed line domestic and international telephone services, telex, telegraph, fax and leased circuit services in Pakistan. The Company owns all public exchanges, the nationwide network of local telephone lines, principal long distance transmission facilities and international telephone gateways in Pakistan.
TELEFONICA 02 CZECH REPUBLIC	Telefonica 02 Czech Republic a.s. operates telephone and telecommunications networks throughout the Czech Republic. The Company offers telephone, telegraph, telex, voice, data transmission, and Internet access services. Telefonica also offers wireless telephone services and provides international telecommunications services.
TELINDUS GROUP NV	Telindus Group N.V. offers data and telecommunications network services. The Company designs, installs, secures, manages, audits, and maintains fixed and mobile networks. Telindus also manufactures high-performance modems and other network access products. The Company operates throughout the world.
NTL INC	NTL Inc conducts operations in the United Kingdom (UK) broadband communications and media sector. The Company provides cable television, cable telephony, and Internet access to residential customers, as well as voice, data, and managed solutions services for businesses. NTL Inc also supplies basic television channels to the UK television broadcasting market.
UNITED COMMUNICATION INDUSTRY PUBLIC COMPANY LIMITED	United Communication Industry Public Company Limited provides integrated telecommunication services and distributes telecommunication equipment. The Company conducts operations in three main business areas which are network solution and installation services, mobile phone and accessory distribution, and data communications services via optical fibre network.
CHINA RESOURCES PEOPLES TELEPHONE COMPANY LIMITED	China Resources Peoples Telephone Company Limited is an operator providing mobile voice and data communications services in Hong Kong. The Company provides a wide range of communication services including mobile voice, mobile data, and international call services as well as sells handsets.
TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED	Total Access Communication Public Company Limited provides cellular mobile telephone services under WorldPhone 800 and WorldPhone 1800 brand names throughout Thailand. The Company also sells cellular handsets and other telecommunications equipment through its WorldMedia network of retail stores.
NEXTEL PARTNERS. INC.	Nextel Partners, Inc. provides digital wireless communications services in midsized and smaller markets throughout the United States. The Company's digital mobile network utilizes a digital transmission technology called integrated digital enhanced network. Nextel offers digital mobile telephone service, direct connect service, and the ability to receive pages and short-text messages.

Target Name	Description
BHARTI AIRTEL LIMITED	Bhartí Airtel Limíted, a part of Bhartí Enterprises, provides telecommunications services throughout India. The Company provides GSM Mobile Services, broadband, fixed line telephone services, long distance services (international & national) and enterprise services.
O 2 PLC	O2 PLC provides mobile communication services in Europe. The Company supplies telecommunication services and products, including mobile Internet services.
ALAMOSA HOLDINGS INC	Alamosa Holdings, Inc. provides wireless personal communications services in the south-western and midwestern United States. The Company has the exclusive right to provide digital wireless personal communication services under the Sprint PCS brand name in its territory. Alamosa is also expanding its services in the Midwest and adding territory in the Northwest.
TELE CENTRO OESTE CELULAR PARTICIPACOES S.A.	Tele Centro Oeste Celular Participacoes S.A. provides cellular telecommunications services to the Western region of Brazil. The Company operates as a holding company for Telebrasilia Celular S.A., Telegoias Celular S.A., Telemat Celular S.A., Telems Celular S.A., Teleron Celular S.A. and Teleacre Celular S.A.
CELULAR CRT PARTICIPACOES S.A.	Celular CRT Participacoes S.A. provides cellular services to the Brazilian state of Rio Grande do Sul. Celular CRT is a subsidiary of Companhia Riograndense de Telecomunicacoes.
TELE SUDESTE CELULAR PARTICIPACOES S.A.	Tele Sudeste Celular Participacoes S.A. provides cellular telecommunications services to the Brazilian States of Rio de Janeiro, Espirito Santo, and Rio Grande do Sul. Tele Sudeste Celular operates as a holding company for Telerj Celular S.A. and Telest Celular S.A.
NETIA SA	Netia S.A. provides fixed-line telecommunications services in Poland. The Company offers switched fixed-line telephone services, ISDN, Internet access services, leased lines, and voice mail.
MOSCOW CITY TELEPHONE	Moscow City Telephone operates a telephone network in the Moscow Region and provides telecommunication services to private individuals, government agencies and industrial companies. The Company has a near-monopoly status in the region with over 90% of the market share. Moscow City Telephone actively pursues joint ventures with foreign and domestic partners.
INTRADO INC	Intrado Inc. provides wireless and wireline informed response technology for telecommunications providers and public safety agencies. The Company provides data management, network transaction, and notification services that address the demand for mission-critical communications.
TELINDUS GROUP NV	Telindus Group N.V. offers data and telecommunications network services. The Company designs, installs, secures, manages, audits, and maintains fixed and mobile networks. Telindus also manufactures high-performance modems and other network access products. The Company operates throughout the world.
TELEFONICA DATA BRASIL HOLDING	Telefonica Data Brasil Holding sells and develops packet switching and other data transmission services. The Company provides networks and serves as an investment vehicle for Telefonica S.A. and its other shareholders to make new data transmission and telecommunications investments.
TELEFONICA MOVILES SA	Telefonica Moviles, S.A. offers mobile telephone services in Spain, Morocco and Latin America. The Company provides a wide range of wireless services, including voice, enhanced calling features, international roaming, wireless internet and services. Telefonica Moviles is a subsidiary of Telefonica, S.A.
MOBILEONE LTD	MobileOne Limited provides mobile voice and data communications services in Singapore. The Company's services include mobile, mobile Internet-enable, roaming and international calling, radio paging, circuit-switched and packet-based data services.

Target Name	Description
ALIANT INC	Aliant Inc. holds interests in telecommunications, information technology, mobile satellite communications, and emerging businesses. The Company operates in the United States and Canada. Aliant's customers include public and private enterprises, governments, businesses, and consumers.
A & I SYSTEM CO LTD	A & I System Go., Ltd. is an information technology (IT) services provider. The Company provides network development and consulting services, and also develops software for customers. A & I is also an internet service provider as well as an application service provider.
UBIQUITEL INC.	UbiquiTel Inc. provides Sprint PCS digital communications services to midsize and smaller markets in the western and Midwestern United States.
MPOWER HOLDING CORPORATION	Mpower Holding Corporation is the parent company of Mpower Communications, Mpower Communications is a facilities- based broadband communications provider offering a full range of data, telephony, Internet access and web hosting services for small and medium-sized business customers.
Source: Bloomberg

APPENDIX 6: MERGERS AND ACQUISITIONS COMPANY FINANCIAL INFORMATION

Table 46: Transaction multiples

Completion Date	Acquirer	Target	Currency	Target Enterprise value (local)	Target Enterprise value (AUD)	EV/EBITDA Multiple
21 Nov 2005	AT&T INC	AT&T CORP	USD	29,291	39,797	4.54
9 Jan 2006	VERIZON COMMUNICATIONS INC	MCI INC	USD	9,050	11,998	4.03
11 Oct 2005	MULTIPLE ACQUIRERS	BEZEQ ISRAELI TELECOMMUNICATION CORPORATION LTD	ILS	18,290	5,259	5.25
12 Mar 2006	EMIRATES TELECOM CORPORATION	PAKISTAN TELECOMMUNICATION COMPANY LIMITED	PKR	538,908	n/a	10.33
20 Sep 2005	TELEFONICA SA	TELEFONICA O2 CZECH REPUBLIC	CZK	189,397	10,147	5.78
15 Feb 2006	BELGACOM SA	TELINDUS GROUP NV	EUR	577	928	25.44*
6 Mar 2006	NTL INC/OLD	NTL INC	USD	7,354	9.931	12.74
20 Oct 2005	THAI TELCO HOLDINGS LTD	UNITED COMMUNICATION INDUSTRY PUBLIC COMPANY LIMITED	THB	30,154	980	$21.87*$
29 Mar 2006	CHINA MOBILE LTD	CHINA RESOURCES PEOPLES TELEPHONE COMPANY LIMITED	HKD	3,436	627	6.42
8 Dec 2005	THAI TELCO HOLDINGS LTD	UNITED COMMUNICATION INDUSTRY PUBLIC COMPANY LIMITED	THB	33,879	1,096	$31.07$ *
22 Dec 2005	TELENOR ASA	TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED	USD	100,257	137,057	6.62
27 Jun 2006	SPRINT NEXTEL CORP	NEXTEL PARTNERS INC	USD	7,658	10,455	13.33
23 Dec 2005	VODAFONE GROUP PLC	BHARTI AIRTEL LIMITED	INR	966,750	29.384	33.86*
7 Mar 2006	TELEFONICA SA	O2 PLC	GBP	17,678	41.826	9.95
2 Feb 2006	SPRINT NEXTEL CORP	ALAMOSA HOLDINGS INC	USD	4.024	5,343	15.68
31 Mar 2006	VIVO PARTICIPACOES SA	TELE CENTRO OESTE CELULAR PARTICIPACOES S.A	BRL	1,935	1,248	2.98
31 Mar 2006	VIVO PARTICIPACOES SA	CELULAR CRT PARTICIPACOES S.A.	BRL	1,499	967	3.95
31 Mar 2006	VIVO PARTICIPACOES SA	TELE SUDESTE CELULAR PARTICIPACOES S.A	BRL	2,039	1,314	3.97
17 Jan 2006	NOVATOR TELECOM POLAND II SA	NETIA SA	PLN	1,830	766	5.58
3 Mar 2006	COMSTAR UNITED TELESYST	MOSCOW CITY TELEPHONE	USD	12,308	16,513	45.81*
5 Apr 2006	WEST CORP	INTRADO INC	USD.	389	534	10.68
15 Mar 2006	BELGACOM SA	TELINDUS GROUP NV	EUR	586	956	25.83*
30 Aug 2006	TELECOMUNICACOES DE SAO	TELEFONICA DATA BRASIL	BRL	820	503	4.78

Completion Date	Acquirer	Target	Currency	Target Enterprise value (local)	Target Enterprise value (AUD)	EV/EBITDA Multiple
1 Aug 2006	TELEFONICA SA	TELEFONICA MOVILES SA	EUR.	56,276	94,233	9.68
28 Oct 2005	TELEKOM MALAYSIA BHD	MOBILEONE LTD	SGD	2,474	1,953	8.41
10 Jul 2006	BCE INC	ALIANT INC	CAD	3,449	4,111	4.39
27 Apr 2006	PRIVATE INVESTOR	A & I SYSTEM CO LTD	JPY	10.544	122	14.19
3 Jul 2006	SPRINT NEXTEL CORP	UBIQUITEL INC	USD	1,545	2,081	14.35
7 Aug 2006	TELEPACIFIC COMMUNICATIONS	MPOWER HOLDING CORP	USD	166	218	10.47
	Average (ex. outliers)					8.18
	Median (ex outliers)					6.62

Source: Bloomberg

Notes:

$n/m = Not meaningful$ , $n/a = not available$ , $local = local currency$ .

The enterprise values were calculated by summing the total of the net borrowings at the company's most recent reporting date and the market capitalisation at transaction dates.

Earnings were taken from the last annual report prior to transaction date.

The average multiples were calculated excluding any outliers marked *.

APPENDIX 7: MERGED ENTITY COMPARABLE COMPANY FINANCIAL INFORMATION

Table 47: Merged entity comparable company multiples- additional to those in Table 43

Name	Description
ATENCHER
BROADCAST SERVICES AUSTRALIA	Broadcast Services Australia Limited provides satellite installation services along with contracting services to the telecommunications industry. The Company also supplies equipment and infrastructure services to the broadcast industry.
INTEGRATED GROUP LIMITED	Integrated Group Limited provides recruitment services and supplies casual and permanent staff to industrial and commercial sectors in Australia. The Company also provides marine support and associated services to the oil and gas exploration, construction, development and maintenance industries. The Group also offers general harbour services and contract maintenance.
SALMAT LTD	Salmat Limited is involved in business process outsourcing and customer contact solutions. The Company provides data management and processing services such as printing and mailing services, document design, barcode addressing, data formatting and database development. Salmat also provides delivery services via teleservices operations or letterbox delivery network.
SKILLED GROUP LTD	Skilled Group Limited provides contract labour services to various industries, commerce and government agencies. The Company supplies skilled tradesmen and professionals in industries including engineering, drafting, nursing and maintenance. The Company's employees are supplied to clients for hourly hire or for contract fees.
HPAL LTD	HPAL Limited provides information and image management services in Australia. HPAL's services include consultancy in services integration, data formatting and management, document collation and distribution, transaction management, format conversion and image storage and retrieval.
ACALLER
ALFRED MCALPINE PLC	Alfred McAlpine PLC finances, builds, and maintains a diverse range of facilities including schools, hospitals, airports and roads. The Company also offers consulting services and renews and maintains the country's electricity, gas, water and telecommunications infrastructures.
AWG PLC	AWG plc offers utility infrastructure maintenance services. The Company constructs, maintains, and manages infrastructure for the natural gas, water, telecommunications, and electricity distribution sectors, participates in projects with government, and develops commercial and residential property. AWG operates in Europe, South America, and Asia.
DYCOM INDUSTRIES INC	Dycom Industries, Inc. provides engineering, construction, and maintenance services to telecomm providers in the United States. In addition to its primary services, the Company performs underground utility locating and electric utility contracting services. Dycom also provides services related to the installation of integrated voice, data, and video networks in office buildings.
NIPPON DENWA SHISETSU COLTD	NIPPON DENWA SHISETSU CO., LTD. is a general contractor dealing mainly with telecommunication, electrical facilities, and civil engineering. Majority of orders come from NTT. The Company also operates real estate and information business.
TTK COLTD	TTK Co., Ltd. designs, installs, and maintains telecommunication facilities. The Company installs products such as integrated services digital network (ISDN) and local area network (LAN). TTK also constructs information infrastructure for cable television, the Internet, and wireless communication.
Source: Bloomberg

APPENDIX 8: MERGED ENTITY COMPARABLE COMPANY FINANCIAL INFORMATION

Table 48: Merged entity comparable company multiples

		Most Recent	Enterprise Value	Market Capitalisation as at 1 November 2006			Current multiple			1 year forecast multiple
Company	Currency	Reporting Date	local million	local million	AUD million	EBITDA (Times)	EBIT (Times)	Sales (Times)	EBITDA (Times)	EBIT (Times)	Sales (Times)
Downer EDI Limited	AUD	06/2006	2,516	2,054		8.0	12.4	0.5	6.4	9.4	0.5
Leighton Holdings Limited	AUD	06/2006	5,685	6,103		7.3	17.2	0.7	6.1	12.3	0.5
Transfield Services Limited	AUD	06/2006	2,374	1,790		19.2	31.3	1.2	10.4	15.3	1.0
United Group Ltd	AUD	06/2006	2,234	2,069		15.7	19.3	1.0	11.4	13.5	0.8
Broadcast Services Australia	AUD	06/2005	49	47		$4.0^{\circ}$	$4.5^*$	0.4	n/a	n/a	n/a
Integrated Group Ltd	AUD	06/2006	176	156		7.5	8.7	0.4	7.5	8.1	0.4
Salmat Ltd	AUD	06/2006	435	367		7.2	10.1	0.8	6.7	9.6	0.8
Skilled Group Ltd	AUD	06/2006	609	606		12.9	15.9	0.6	9.4	11.2	0.5
HPAL Ltd	AUD	12/2005	200	209		6.3	8.2	1.1	6.9	8.8	1.1
Average (ex. outliers)						10.5	13.1	0.8	8.1	11.0	0.7
Median (ex outliers)						7.8	12.4	0.7	7.2	10.4	0.7
Alfred McAlpine PLC	GBp	12/2005	505	542	1,336	18.2	26.3	0.5	10.5	12.7	0.4
AWG Plc	GBp	03/2006	5,499	2,234	5,503	9.9	14.6	$3.5^*$	10.0	15.3	$3.5^*$
Michael Baker Corporation	USD	12/2005	166	185	239	$7.6*$	9.8"	0.3	7.2	n/a	0.3
Dycom Industries Inc.	USD	07/2006	1,053	925	1,194	9.8	17.9	1.1	8.4	n/a	1.0
MasTec Inc	USD	12/2005	887	688	888	16.4	24.7	1.0	12.4	16.3	0.9
Nippon Denwa Shisetsu Co. Ltd	JPY	03/2006	30,359	26,319	290	21.3	34.7	0.6	6.7	n/a	0.4
SNC-Lavalin Group Inc.	CAD	12/2005	4,293	4,522	5.154	15.0	18.1	1.1	16.3	19.4	0.9
TTK Co. Ltd.	JPY	03/2006	14,360	15,601	172	10.9	14.1	0.5	n/a	n/a	n/a
Bilfinger Berger AG	EUR	12/2005	1,116	1,820	2,997	5.9''	12.0	0.2	$4.5*$	7.8	0.2
Hyder Consulting PLC	GBp	03/2005	105	109	270	14.1	19.0	0.6	10.1	12.0	0.6
Average (ex. outliers)						14.5	20.2	0.6	10.2	13.9	0.6
Median (ex outliers)						14.6	18.1	0.6	10.0	14.0	0.5

		Most Recent	Enterprise Value	Market Capitalisation as at 1 November 2006			Current multiple			1 year forecast multiple
Company	Currency	Reporting	local	local	AUD	EBITDA	EBIT	Sales	EBITDA	EBIT	Sales
		Date	million	million	million	(Times)	(Times)	(Times)	Times)	(Times)	(Times)
Total
Average (ex. outliers)						12.5	17.1	0.7	9.2	12.3	0.6
Median (ex outliers)						11.9	16.6	0.6	8.9	12.2	0.6

Source: Bloomberg

Notes:

$n/m = Not meaningful$ , $n/a = not available$ , $local = local currency$ .

The enterprise values were calculated by summing the total of the net borrowings at the company's most recent reporting date and the market capitalisation at 1 November 2006. Earnings were taken from the last annual report. The earnings estimates were for the 1 financial year ends following the latest reporting date.

Market Capitalisation is as at 1 November 2006.

The average multiples were calculated excluding any outliers marked *.

APPENDIX 9: FINANCIAL SERVICES GUIDE

This Financial Services Guide is issued in relation to an independent expert's report ("Report") prepared by PKF Corporate Advisory Services (NSW) Pty Ltd (ABN 70 050 038 170) ("PKFCA") at the request of the directors ("Directors") of Total Communications Infrastructure Limited ("TCI"), in relation to the proposed merger with Service Stream Limited ("STR") ("Proposal"). The Report is intended to accompany an Explanatory Memorandum ("Explanatory Memorandum") that is to be provided by the Directors to the TCI shareholders entitled to vote on the Proposal ("Non-Associated Shareholders").

Engagement

PKFCA has been engaged by the Directors to prepare the Report expressing our opinion, inter alia, as to whether or not the Proposal is in the best interest of the Non Associated Shareholders.

Financial Services Guide

PKFCA holds an Australian Financial Services Licence (License No: 247420) ("Licence"). As a result of our Report being provided to you, PKFCA are required to issue to you, as a retail client, a Financial Services Guide ("FSG"). The FSG includes information on the use of general financial product advice and is issued so as to comply with our obligations as holder of the Licence.

Financial services PKFCA is licensed to provide

The Licence authorises PKFCA to provide reports for the purposes of acting for and on behalf of clients in relation to proposed or actual mergers, acquisitions, takeovers, corporate restructures or share issues, to carry on a financial services business to provide general financial product advice for securities and certain derivatives (limited to old law securities, options contracts and warrants) to retail and wholesale clients.

PKFCA provides financial product advice by virtue of an engagement to issue the Report in connection with the issue of securities of another person.

Our Report includes a description of the circumstances of our engagement and identifies the party that has engaged us. You have not engaged us directly but will be provided with a copy of our Report (as a retail client) because of your connection with the matters in relation to which our Report has been issued.

Our Report is provided on our own behalf as an Australian Financial Services Licensee authorised to provide the financial product advice contained in the Report.

General financial product advice

Our Report provides general financial product advice only, and does not provide personal financial product advice, because it has been prepared without taking into account your particular personal circumstances or objectives (either financial or otherwise), your financial position or your needs.

Some individuals may place a different emphasis on various aspects of potential investments.

An individual's decision in relation to the Proposal described in the Explanatory Memorandum may be influenced by their particular circumstances and, therefore, individuals should seek independent advice.

Benefits that PKFCA may receive

PKFCA has charged fees for providing our Report. The basis on which our fees will be determined has been agreed with, and our fees will be paid by, the person who engaged us to provide the Report. Our fees have been agreed on either a fixed fee or time cost basis.

Remuneration or other benefits received by our employees

All our employees receive a salary. Employees may be eligible for bonuses based on overall productivity and contribution to the operation of PKFCA or related entities but any bonuses are not directly connected with any assignment and in particular are not directly related to the engagement for which our Report was provided.

Referrals

PKFCA does not pay commissions or provide any other benefits to any parties or person for referring customers to us in connection with the reports that PKFCA is licensed to provide.

Associations and relationships

PKFCA is the licensed corporate advisory arm of PKF New South Wales, Chartered Accountants and Business Advisers. The directors of PKFCA may also be partners in PKF New South Wales, Chartered Accountants and Business Advisers.

PKF New South Wales, Chartered Accountants and Business Advisers is comprised of a number of related entities that provide audit, accounting, tax and financial advisory services to a wide range of clients.

PKFCA's contact details are as set out on our letterhead.

Complaints resolution

As the holder of an Australian Financial Services Licence, PKFCA is required to have a system for handling complaints from persons to whom PKFCA provides financial product advice. All complaints must be in writing, addressed to The Complaints Officer, PKF Corporate Advisory Services (NSW) Pty Ltd, Level 10, 1 Margaret Street, Sydney NSW 2000.

On receipt of a written complaint PKFCA will record the complaint, acknowledge receipt of the complaint and seek to resolve the complaint as soon as practical.

If PKFCA cannot reach a satisfactory resolution, you can raise your concerns with the Financial Industry Complaints Service ("FICS"). FICS is an independent body established to provide advice and assistance in helping resolve complaints relating to the financial services industry. PKFCA is a member of FICS. FICS may be contacted directly via the details set out below.

Financial Industry Complaints Service Limited PO Box 579 Collins Street West Melbourne VIC 8007 Toll free: 1300 78 08 08 Facsimile: (03) 9621 2291 Email: www.fics@fics.asn.au

Total Communications Infrastructure Limited

ABN 46 072 369 870

All correspondence to:

1 N D

C/- Australian Company Secretaries Pty Limited Level 5, 255 George Street Sydney NSW 2000 Australia Enquiries (within Australia) 02 9252 1933 (outside Australia) 61 2 9252 1933 Facsimile 61 2 9252 2487 www.tciltd.com.au

Securityholder Reference Number (SRN)

I 1234567890

are appointing as your proxy.

If you are not appointing the Chairman of the Meeting as

your proxy please write here the full name of the individual or

body corporate (excluding the registered Securityholder) you

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

000001 Երիկ կերերեն կառան 000
TCI MR JOHN SMITH 1 FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Appointment of Proxy

I/We being a member/s of Total Communications intrastructure Limited and entitled to attend and vote hereby appoint

the Chairman of the Meeting OR (mark with an 'X')

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as m y/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 Total Communications Infrastructure Limited to be held at The Grace Hotel, 77
York Street, Syd

Χ

Voting directions to your proxy - please mark

• Sale of TCI Shares by the Ifem 1 Founding TCI Shareholders to Service Stream Limited Item 2 Financial assistance
• Item 3 Selective capital reduction
• Change of name to Service Item 4 Stream Limited
• Issue of TCI Options to Rod Item 5 Stanton
• Item 6 Issue of Replacement Options to STR Directors who will join the TCI Board

to indicate your directions

Removal of auditor

Appointment of auditor

the Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.
gaa boxda oo Moon ee Saday ah Moga ah dadka Dalka boxgay ee ah ee Dalboon ku qaalaa aaa garbeeda ah ee boxbool

* 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 3

Director/Company Secretary

Sole Director and

Ľ

Sole Company Secretary

In addition to signing the Proxy form in the above box(es) please provide the information below in case we need to contact you.

.
Saourihduaidea 2

Contact Name

$TCI$

Contact Daytime Telephone

Date

1 Your Address

This is your 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. Securityholders sponsored by a broker (in which case your reference number overleaf will commence with an 'x') should advise your broker of any changes. Please note, you cannot change ownership of your securities using this form.

$\overline{2}$ Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the individual or body corporate you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the full name of that individual or body corporate in the space provided. 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 securityholder of the company. Do not write the name of the issuer company or the registered securityholder in the space.

3 Votes on Items of Business

You may direct your proxy how to vote by placing a mark in one of the three 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 4

You are entitled to appoint up to two 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:

• (a) like on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of securities 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 have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney 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 signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

If a representative of a corporate Securityholder or proxy 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 or at www.computershare.com.

Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below no later than 48 hours before the commencement of the meeting at 2.00pm on Monday, 18 December 2006. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Documents may be lodged:

Registered Office - Level 5, 255 George Street, Sydney, NEW SOUTH WALES 2000 Registered Office - GPO BOX 4231 Sydney, NEW SOUTH WALES, 2001 +61 2 9252 2487

IN PERSON BY MAIL BY FAX

THE SECURITIES OFFERED PURSUANT TO THIS PROSPECTUS ARE NOT BEING OFFERED ON THE BASIS OF THE ELECTRONIC PROSPECTUS DISPLAYED AND SECURITIES WILL ONLY BE TRANSFERRED ON THE BASIS OF AN ENTITLEMENT AND APPLICATION FORM TO BE ISSUED TO ELIGIBLE SHAREHOLDERS TOGETHER WITH THIS PROSPECTUS.

PROSPECTUS Offer of Shares in Total Communications Infrastructure Limited ABN 46 072 369 870 ("TCI")

Offer by James Julian Cooney and Samantha Alexandra Grant (the "Offerors") of 4.5 million TCI Shares each, being 9 million TCI Shares in total

The last date for acceptance and payment in full for the Offer is 15 December 2006.

IMPORTANT: If you are not a resident of Australia, you are not entitled to accept this Offer.

This is an important document and requires your immediate attention. It should be read in its entirety. If you are in doubt about what to do, you should consult your professional adviser without delay.

Table of Contents

1.	Letter from James Cooney and Samantha Grant
2.	Action required by the Shareholders
3.	Details of the Offer
$\overline{4}$ .	The TCNSTR Merger
5.	Risks
6.	Effect of the Offer
7.	Additional Information
8.	Definitions

IMPORTANT NOTICE

This Prospectus is dated 10 November 2006 and was lodged with ASIC on that date. Neither ASIC nor ASX takes any responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

No TCI Shares will be offered on the basis of this Prospectus later than 13 months after the date of this Prospectus.

Important document

It is important that you carefully read this Prospectus in its entirety before deciding to invest in the Company and, in particular, that you consider the risk factors that could affect the financial performance of the Company. You should carefully consider these factors in light of your personal circumstances (including financial and taxation issues) and seek professional advice from your accountant, stockbroker, lawyer or other professional adviser before deciding whether to invest.

Conditions Precedent

This Offer is subject to the Shareholders passing the TCI Resolutions set out in detail in section 4.2 of this Prospectus and to the Scheme becoming effective (the "Conditions Precedent"). This Offer and the Acceptances received will therefore be of no force or effect and no contract for sale of the TCI Shares will have been formed at all until the Conditions Precedent are fulfilled.

Disclaimer

No person is authorised to give any information or to make any representation in connection with the Offer that is not contained in this Prospectus. Any information or representation not contained in this Prospectus may not be relied on as having been authorised by the Company or the Offerors in connection with the Offer. None of the Company, the Offerors or any other person warrants the future performance of the Company or any return on any investment made under this Prospectus, except as required by law and then, only to the extent so required.

Restrictions on the distribution of this Prospectus

This Prospectus does not constitute an offer of TCI Shares in any place in which, or to any person to whom, it would not be lawful to do so. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and any person into whose possession this Prospectus comes (including nominees, trustees or custodians) should seek advice on, and observe, those restrictions.

Accordingly, this Offer will not be extended, and no TCI Shares will be offered, to Shareholders having registered addresses outside Australia. This Prospectus is sent to those Shareholders for information purposes only.

Defined terms and abbreviations

Terms and abbreviations used in this Prospectus are defined in the section 8 of this Prospectus.

Summary of Important Dates

Date to determine your Entitlement to TCI Shares	7pm (Sydney time) on 15 November 2006
Expected date of dispatch of Prospectus and Entitlement and Acceptance Form	17 November 2006
Last day for acceptance and payment in full ("Closing Date")	5pm (Sydney time) on 15 December 2006
Expected Date that Scheme becomes Effective and Acceptances become binding	20 December 2006
Expected transfer	28 December 2006

These dates are subject to change and are indicative only. The Offerors reserve the right to amend this indicative timetable. In particular, the Offerors reserve the right, subject to the Corporations Act and the Listing Rules, to extend the Closing Date or to withdraw the Offer without prior notice. Any extension of the Closing Date w consequential effect on the date for the transfer of TCI Shares.

1. Letter from James Cooney and Samantha Grant

Dear Shareholder

We are pleased to invite you to participate in this Offer of 4.5 million TCI Shares each (totalling 9 million TCI Shares) (the "Offer"). This Prospectus outlines the details of the Offer.

This Offer is part of a larger interrelated series of transactions relating to the merger of TCI and STR. The merger is being effected by scheme of arrangement between Service Stream Limited and its shareholders (the "Scheme").

This Offer is subject to the Shareholders passing the TCI Resolutions set out in detail in section 4.2 of this Prospectus and to the Scheme becoming effective (the "Conditions Precedent"). This Offer and the acceptances received will therefore be of no force or effect and no contract for sale of the TCI Shares will have been formed at all until the Conditions Precedent are fulfilled.

If all the TCI Shares we have offered have not been sold and the TCI Resolutions have passed, they will be purchased by Service Stream Limited ABN 58 008 027 978 $("STR").$

Your Entitlement under the Offer to TCI Shares is set out on the accompanying Entitlement and Acceptance Form. Unless varied, the Closing Date for acceptance and payment is 5.00pm (Sydney time) on 15 December 2006.

We therefore draw to your attention the Notice of Meeting and Scheme Booklet sent to you with this Prospectus. These documents set out in detail the proposed transactions and the merger but do not form part of this Prospectus. Details of the Offer and other matters required by law to be disclosed are also set out in this Prospectus.

Yours faithfully

ka).
Ind

James Cooney

Samantha Grant

$\overline{2}$ . Action required by the Shareholders

This section does not apply to Shareholders with registered addresses outside Australia. Such Shareholders should refer to section 7.5 of this Prospectus.

$2.1$ What you may do

The number of TCI Shares to which you are entitled under the Offer (your "Entitlement") is shown on the accompanying Entitlement and Acceptance Form.

$2.2$ If you wish to take up all of your Entitlement

If you wish to take up your Entitlement in full, complete the accompanying Entitlement and Acceptance Form in accordance with the instructions set out on the form. Forward your completed Entitlement and Acceptance Form together with your Australian Dollar cheque or bank draft for the amount shown on the form to reach the Registry no later than 5.00 pm (Sydney time) on 15 December 2006. An accompanying reply paid envelope is provided for your convenience. Cheques or bank drafts should be made payable to Total Communications Infrastructure Limited - Share Sale Offer and crossed Not Negotiable.

All moneys received will be placed in a trust account and may not be accessed by the Offerors until transfer of the TCI Shares.

2.3 If you wish to take up part of your Entitlement and allow the balance to lapse

If you wish to accept part of your Entitlement and allow the balance to lapse, complete the accompanying Entitlement and Acceptance Form in respect of the number of TCI Shares you wish to take up in accordance with the instructions set out on the form. Forward your completed form together with your Australian Dollar cheque or bank draft for the amount due in respect of TCI Shares you intend to take up (being the number of TCI Shares you wish to accept multiplied by \$0.87) to reach the Registry no later than 5.00 pm (Sydney time) on 15 December 2006. An accompanying reply paid envelope is provided for your convenience. Cheques or bank drafts should be made payable to Total Communications Infrastructure Limited - Share Sale Offer and crossed Not Negotiable.

$2.4$ If your Entitlement is not taken up

If you do nothing, your Entitlement that is not taken up by 15 December 2006 will lapse.

$2.5$ Payment

Acceptances for TCI Shares must be accompanied by payment in full of \$0.87 per TCI Share.

Payment will only be accepted in Australian currency and by way of cheque or bank draft. Cheques or bank drafts should be made payable to Total Communications Infrastructure Limited - Share Sale Offer and crossed Not Negotiable.

Please do not forward cash. Receipts for payment will not be provided.

2.6 Enquiries

For further information please call Mark Stackpool (the Company CFO) at (02) 9478 9999 or Stephe Wilks (the Director with day to day carriage of the proposed merger) at (02) 9226 9839. You should also consult your professional advisers if you are in any doubt.

$3.$ Details of the Offer

$3.1$ The Offer

Subject to the Conditions Precedent, the Offerors are each making an offer of 4.5 million TCI Shares (9 million TCI Shares in total) to Shareholders who are registered as at 7.00 p.m. (Sydney Time) on 15 November 2006, except those Shareholders who have a registered address in a country other than Australia.

This Offer and the Acceptances received will be of no force or effect and no contract for sale of the TCI Shares will have been formed at all until the Conditions Precedent are fulfilled.

The Offer Price for each TCI Share offered under this Offer is \$0.87 per TCI Share.

The total number of TCI Shares to be offered pursuant to the Offer is 9 million. The number of TCI Shares to which you are entitled is shown on the accompanying personalised Entitlement and Acceptance Form.

The Offer will be open for receipt of acceptances until 5.00 p.m. (Sydney time) on the Closing Date. The Closing Date may be varied without notice, but only in accordance with the Listing Rules. TCI Shares must be paid for in full on acceptance.

$3.2$ Acceptance moneys held on trust

Acceptance monies for the TCI Shares will be held in a trust account until transfer of the TCI Shares. Any interest earned on acceptance monies will be retained by the Offerors. If the Offer does not proceed, all acceptance monies will be returned in full as soon as possible to accepting Shareholders, with any interest earned in the trust account.

$3.3$ Transfer and dispatch of Shareholding statements

Subject to the Conditions Precedent being satisfied, the transfer of TCI Shares, to TCI Shareholders who have validly taken up their entitlement of TCI Shares, is expected to take place on 28 December 2006. Shareholder statements for TCI Shares will be dispatched by TCI upon completion of the transfer.

$3.4$ Transfer ex dividends

The TCI Shares are offered ex dividend. No dividends in respect of the year ended 30 June 2006 will be paid in respect of the TCI Shares sold pursuant to this Offer.

$3.5$ Market prices of TCI Shares

The lowest and highest market sale prices of Shares on the ASX during the three months immediately preceding 7 November 2006, and the respective dates of those sales, were:

• $\left( a\right)$ Highest: \$1.50 on 17 October 2006; and
• $(b)$ Lowest: . \$1.01 on 8 and 10 August 2006.

The last sale price for Shares on the ASX on 7 November 2006 was \$1.44.

3.6 Overseas Shareholders

The Prospectus and Entitlement and Acceptance Form may only be accepted by Shareholders with registered addresses in Australia only. Entitlements of Shareholders with registered addresses outside Australia will be dealt with as set out in section 7.5 of this Prospectus.

$3.7$ Taxation

Shareholders should be aware that there are taxation implications for acquiring TCI Shares pursuant to this Prospectus. These taxation implications will vary between different Shareholders and Shareholders should consult their professional tax advisor in relation to the taxation implications.

None of the Offerors, the Company or any of its officers, employees, agents and advisors accepts any liability or responsibility in respect of the taxation consequences connected with participation in the Offer.

If the Conditions Precedent are not fulfilled 3.8

Although the Offerors have no reason to believe that the Conditions Precedent will not be satisfied, if the Offerors become aware that either of the Conditions Precedent will not be fulfilled or waived or that the Scheme will not proceed, then the Offerors will cancel the Offer and refund all acceptance monies received from the Offer in accordance with the Corporations Act.

3.9 Withdrawal of Prospectus

The Offerors may at any time decide to withdraw this Prospectus, in which case the Offerors will repay, as soon as practicable, all acceptance monies for TCI Shares received pursuant to this Prospectus.

$\overline{4}$ . The TCNSTR Merger

4.1 Background

Under the proposed Scheme, TCI will acquire all of the shares in STR. STR Shareholders will receive two New TCI Shares for every five STR Shares they own.

After the Scheme takes effect, the TCI Board will comprise seven directors, being the five current directors of STR and two directors nominated by TCI. After the allotment of New TCI Shares to STR Shareholders and the cancellation of the Founding TCI Shareholders' TCI Shares, the share register of TCI will comprise:

• as to 50.5%, TCI Shareholders who are currently STR Shareholders; and
• as to 49.5%, existing TCI Shareholders

(assuming that all 9 million TCI Shares offered under this Prospectus have been taken up by TCI Shareholders and also assuming that STR Shareholders approve the issue of 1 million STR Shares to each of Patrick Flannigan (Managing Director of STR and the proposed Managing Director of the Merged Group) and Michael Doery (CFO of STR and the proposed CFO of the Merged Group) at the STR Annual General Meeting).

Following Implementation of the Scheme, TCI will change its name to "Service Stream Limited".

The Merger is described in more detail in the accompanying Notice of Meeting. The Notice of Meeting does not form part of this Prospectus.

The Offerors now live in the United Kingdom and are pursuing unrelated business ventures in Europe. Together they hold approximately 45% of TCI Shares, being 49,324,308 shares. Subject to the approval of Shareholders they have agreed with STR:

• to make this Offer to other TCI Shareholders at \$0.87 per TCI Share; and $(a)$
• to sell the balance of their shareholding (including any TCI Shares not taken (b) up by existing TCI Shareholders or any other party, such as an underwriter) to STR at \$1.0137 per share.

STR will become the registered and beneficial owner of the balance of the Offerors' shares shortly after the TCI General Meeting at which Shareholders approved the acquisition (see section 4.2 below).

Payment for the shares by STR will be made subsequently in two tranches:

• $(a)$ the full amount owing, less \$10 million, will be payable five Business Days after the Scheme becomes Effective ("Initial Payment"); and
• $(b)$ the remaining \$10 million will be payable, interest free, two years after the Initial Payment is made ("Second Payment") – in some circumstances this period may be reduced to no less than one year.

If the Scheme does not take effect for any reason, the TCI Shares sold to STR by the Offerors can be re-transferred to the Offerors, by exercise of put or call options, for \$1.0137 per share.

TCI will seek shareholder approval for the grant of financial assistance in respect of STR's acquisition of TCI Shares from the Founding TCI Shareholders. The proposed financial assistance comprises:

• $(a)$ financial accommodation from Westpac to fund the Initial Payment payable by STR:
• $(b)$ a first ranking fixed and floating charge over the Merged Group's assets to be granted to Westpac to secure the financial accommodation from Westpac to fund the Initial Payment; and
• $(c)$ a second ranking fixed and floating charge over the assets of TCI and all the subsidiaries of the Merged Group in favour of the Founding TCI Shareholders to secure payment by STR of the Second Payment for the TCI Shares.

The TCI Shares acquired by STR will be cancelled pursuant to a selective capital reduction, subject to the approval of TCI Shareholders and STR. There will not be any amount payable to STR on cancellation of these shares.

$4.2$ The TCI Shareholders' meeting and TCI Resolutions

The meeting for TCI Shareholders to be held on 18 December 2006 in accordance with the Notice Of Meeting will consider resolutions in relation to the following:

• $(a)$ the acquisition by STR of TCI Shares from the Founding TCI Shareholders;
• $(b)$ the grant of financial assistance in respect of TCI's proposed grant of first ranking security and a cross guarantee to Westpac and grant of second ranking security to the Founding TCI Shareholders (see section 4.1 above);

and, subject to the implementation of the Scheme:

• (c) the selective capital reduction and cancellation of the TCI Shares held by STR:
• the issue of TCI Share options to current and proposed TCI Directors; $(d)$
• $(e)$ the approval of contracts of employment with certain STR Directors;
• $(f)$ the issue of TCI Shares to certain current and proposed TCI Directors;
• a change in the auditor of TCI from its existing auditor to Deloitte; and $(g)$
• $(h)$ the change of TCI's name to "Service Stream Limited".

The resolutions in relation to the matters set out at (a), (b), (c) and (d) above are the TCI Resolutions which are Conditions Precedent to the Offer.

$5.$ Risks

$5.1$ General

There are a number of factors, both specific to the Company and of a general nature, which may affect the future operating and financial performance of the Company and the value of an investment in the Company.

Some of these factors can be mitigated by the use of safeguards and appropriate commercial action. However, many are outside the control of the Company and cannot be mitigated.

This section describes certain risks associated with an investment in the Company. Prior to making an investment decision, Shareholders should carefully consider the following risk factors, as well as the other information contained in this Prospectus.

$5.2$ Specific risks

See section 5 of the Scheme Booklet in relation to the general and specific risks attached to the Merger. A Shareholder's potential exposure to these risks may be increased by participating in this Offer, as the Shareholder's total investment in the Company will have increased.

In addition to the risks set out in the Scheme Booklet, the directors of TCI have informed the Offerors that they also see the following specific risks for TCI, which may affect Shareholders' investment in TCI or the market price of TCI Shares:

• $(a)$ After the Merger, TCI will be controlled at board and management level, by personnel who were STR personnel prior to the Merger.
• $(b)$ TCI has established relationships with its customers. There is a possibility that the customers of TCI will not approve of the Merger and withdraw their custom. TCI relies heavily on a small number of customers and accordingly the loss of a customer could have a material impact upon TCI. As at the date of this notice, TCI is not aware of any negative reaction whatsoever from any of its customers to the announcement of the proposed Merger.

6. Effect of the Offer

6.1 Offered capital

This is a transfer of TCI Shares. Accordingly the Offer on its own will not affect the issued capital of TCI. The Notice of Meeting sets out in detail the proposed Merger and its effect on TCI. The Notice of Meeting does not form part of this Prospectus.

$7.$ Additional Information

$7.1$ Nature of this Prospectus

This Prospectus is issued under the special prospectus content rules for continuously quoted securities in section 713 of the Corporations Act. This enables holders of securities in listed disclosing entities, such as the Company, to issue a prospectus with modified disclosure requirements if:

• $(a)$ the securities offered by the prospectus are in a class of securities that have been quoted securities at all times in the 12 months before the date of the prospectus; and
• $(b)$ the Company is not subject to certain exemptions or declarations prescribed by the Corporations Act.

Securities are quoted securities if:

• $(c)$ the Company is included in the official list of ASX; and
• $(d)$ the Listing Rules apply to the Company and those securities.

The information in this Prospectus principally concerns the terms and conditions of the Offer and the information necessary to make an informed assessment of:

• (e) the effect of the Offer on the Company; and
• $(f)$ the rights and liabilities attaching to the TCI Shares offered by this Prospectus.

This Prospectus is intended to be read in conjunction with information in relation to the Company in the Scheme Booklet and the Notice of Meeting and the publicly available information which has been notified to ASX (see section 7.3 below) and does not include all of the information that would be included in a prospectus for an initial public offering of securities in an entity that is not already listed on a stock exchange. Shareholders should therefore also have regard to the other publicly available information in relation to the Company before making a decision whether or not to invest in the TCI Shares. The Scheme Booklet and the Notice of Meeting do not form part of this Prospectus.

$7.2$ Disclosing Entity

The Company is a disclosing entity under the Corporations Act. It is subject to regular reporting and disclosure obligations under the Corporations Act and the Listing Rules.

These obligations require the Company to notify ASX of information about specified events and matters as they arise for the purposes of ASX making that information available to the stock market conducted by ASX. In particular, the Company has an obligation under the Listing Rules (subject to certain limited exceptions) to notify ASX immediately of any information of which it becomes aware concerning the

Company which a reasonable person would expect to have a material effect on the price or value of securities in the Company.

The Company is also required to prepare and lodge with ASIC both yearly and half yearly financial statements accompanied by a Directors' statement and report and an auditor's report.

All announcements made by the Company are available from ASX.

7.3 Other documents

Copies of any documents in relation to the Company which are lodged with ASIC may be obtained from, or inspected at, an ASIC office. Alternatively, you are also able to review any of these documents on the Company's web site being http://www.tciltd.com.au.

The Offerors will provide a copy of any of the following documents, free of charge, to any person who requires a copy during the application period in relation to this Prospectus:

• $(a)$ the financial statements of the Company for the year ended 30 June 2006, being the most recent audited financial statements for a financial year lodged in relation to the Company;
• $(b)$ any other financial report in relation to the Company lodged with the ASIC in the period starting after lodgement of that last annual financial report and ending before the issue of this Prospectus; and
• $(c)$ any announcements made by the Company to the ASX since the date of lodgement of the financial statements for the year ended 30 June 2006. Details of these announcements are as follows:

23 October 2006	STR's ann: Progress of Merger
-27 October 2006	STR - TCI Merger Timetable

$7.4$ Rights attaching to TCI Shares

Holders of TCI Shares will participate equally with holders of all other Shares in all respects.

The Rights attaching to Shares are set out in the Constitution. The following paragraphs contain a summary of the principal rights attaching to Shares, including TCI Shares. This summary does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of holders of TCI Shares, which can involve complex questions of law arising from the interaction of the Constitution and statutory and common law requirements.

Voting $(a)$

At a general meeting every member present in person or by proxy, attorney or (where the member is a body corporate) by representative, has one vote on a show of hands and on a poll has one vote for each Share held.

$(b)$ Dividends and Reserves

The profits of the Company which the Directors from time to time determine to distribute by way of dividend are divisible amongst the Shareholders in proportion to the amounts paid up on the Shares held by them.

$(c)$ Issue of further Shares

The Directors may (subject to the Constitution, the Listing Rules and the Corporations Act) allot or otherwise issue further shares in the capital of the Company on such terms and conditions as they see fit.

$(d)$ Transfer of Shares

Subject to the Compliance Rules, Shares in the Company are freely transferable. The Company may refuse to register a transfer where permitted by do so by the Corporations Act.

$(e)$ General meetings and notices

General meetings may be convened by any Director and in the manner provided for in the Corporations Act and the Listing Rules.

$(f)$ Winding up

Members will be entitled on a winding up to share in any surplus assets of the Company in proportion to the Shares held by them.

$7.5$ Overseas Shareholders

This Prospectus and accompanying Entitlement and Acceptance Form does not, and is not intended to, constitute an offer of TCI Shares in any place outside Australia in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus or that form. The distribution of this Prospectus and the accompanying form in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus and the accompanying form should seek advice on and observe those restrictions. Any failure to comply with those restrictions may constitute a violation of applicable securities laws.

The Offerors have decided that it is unreasonable to make offers under this Prospectus to Shareholders with registered addresses outside Australia having regard to the number of Shareholders in those places, the number and value of the TCI Shares they would be offered and the cost of complying with the legal and regulatory requirements in those places. Accordingly, the Offer is not being extended to, and does not qualify for distribution or sale, and no TCI Shares will be offered to

Shareholders having registered addresses outside Australia. This Prospectus is sent to those Shareholders for information purposes only.

7.6 Directors' interests

Other than as set out below or elsewhere in this Prospectus, no Director or proposed Director, and no firm in which a Director or proposed Director is a partner, holds, or held at any time during the last 2 years before the date of this Prospectus, any interest in:

• the formation or promotion of the Company; $(a)$
• any property acquired or proposed to be acquired by the Company in $(b)$ connection with its formation or promotion or in connection with the Offer; or
• the Offer. $(c)$

In addition, as far as the Offerors are aware, no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any Director or proposed Director of the Company:

• to induce them to become, or to qualify them as, a Director; or $(d)$
• $(e)$ for services rendered by them in connection with the formation or promotion of the Company or in connection with the Offer.

At the date of this Prospectus, each of the TCI's Directors' interests in TCI Shares are set out in the table below:

	AND CONTRACTOR TO Shares and the contractor of the contractor
Jim Cooney	49,324,308
Rod Stanton	400.000
Mark Stackpool	300,000
Trevor Duff	58,000
Ian Thorley	100.000
Stephe Wilks

7.7 Advisers' interests

Other than as set out below or elsewhere in this Prospectus, no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, and no promoter of the Company named in this Prospectus holds, or held at any time during the last 2 years before the date of this Prospectus, any interest in:

• $(a)$ the formation or promotion of the Company;
• $(b)$ any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the Offer, or
• $(c)$ the Offer,

and no amounts have been paid or agreed to be paid and no benefit has been given or agreed to be given to any of these persons for services rendered by them in connection with the formation or promotion of the Company or in connection with the Offer.

7.8 Consents

Each of the parties referred to in this section:

• $(a)$ has not authorised or caused the issue of this Prospectus;
• (b) does not make, or purport to make, any statement in this Prospectus other than as specified in this section;
• $(c)$ has not made any statement on which a statement in this Prospectus is based, other than as specified in this section; and
• $(d)$ to the maximum extent permitted by law, expressly disclaims all liability in respect of, makes no representation regarding, and takes no responsibility for, any part of this Prospectus other than the reference to its name and the statement (if any) included in this Prospectus with the consent of that party as specified in this section.

TCI has given and, at the time of lodgement of this Prospectus, has not withdrawn its written consent to the statements made by, or statements attributed to, TCI in this Prospectus in the form and context in which those statements are included.

Computershare Investor Services has given and, at the time of lodgement of this Prospectus, has not withdrawn its written consent to being named in this Prospectus as the share registry of the Company in respect of the Offer in the form and context in which it is named.

8. Definitions

ASIC means the Australian Securities and Investments Commission.

ASX means Australian Stock Exchange Limited ACN 008 624 691 or the market conducted by it.

Closing Date means 5pm (Sydney time) on 15 December 2006, subject to the Company varying this date in compliance with the Listing Rules.

Company or TCI means Total Communications Infrastructure Limited ABN 46 072 369 870, or if the context requires, the Company and its Subsidiaries.

Compliance Rules means any and all relevant or applicable provisions of:

• Corporations Act; (a)
• $(b)$ Corporations Regulations;

• the Listing Rules; $(c)$

• $(d)$ the operating rules of ASX Settlement and Transfer Corporation Pty Limited and Australian Clearing House Pty Limited;

• the Constitution; and $(e)$
• $(f)$ any practice note, policy statement, class order, declaration, guideline, policy or procedure pursuant to the provisions of which either ASIC or ASX is authorised or entitled to regulate, implement or enforce, either directly or indirectly, the provisions of any of the foregoing statutes, regulations, rules, deeds or agreements or any conduct or proposed conduct of any person pursuant to any of the abovementioned statutes, regulations, rules, deeds or agreements.

Computershare Investor Services means Computershare Investor Services Pty Limited ACN 078 279 277 of Yarra Falls, 452 Johnston Street, Abbotsford, Victoria 3067.

Conditions Precedent means the passing of the TCI Resolutions and the Scheme becoming Effective.

Constitution means the constitution of the Company, as amended from time to time.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

Disclosing Entity means the meaning given by section 111AC of the Corporations Act.

Effective means when used in relation to the Scheme, the coming into effect, pursuant to section 411(10) of the Corporations Act, of the order of the court made under section $411(4)(b)$ in relation to the Scheme, but in any event at no time before office copies of the orders of the court are lodged with ASIC.

Entitlement means the number of TCI Shares to which Shareholders are entitled under this Offer.

Entitlement and Acceptance Form means the Entitlement and Acceptance Form enclosed with this Prospectus.

Offer Price means \$0.87 per TCI Share.

Listing Rules means the Listing Rules of ASX and any other rules of ASX which are applicable while the Company is admitted to the official list of ASX, each as amended or replaced from time to time, except to the extent of any express written waiver by ASX.

Merger means the Merger of STR and TCI involving TCI acquiring all of the STR Shares pursuant to the Scheme.

New TCI Shares means the Shares to be issued under the Scheme.

Notice of Meeting means the Notice of General Meeting of the Shareholders, that accompanies this Prospectus.

Offer means the offer of TCI Shares to Shareholders pursuant to this Prospectus.

Offerors means James Julian Cooney and Samantha Alexandra Grant.

Prospectus means this Prospectus dated 10 November 2006.

Registry means Computershare Investor Services.

Scheme means the scheme of arrangement under section 411 of the Corporations Act between STR and its shareholders, the terms of which are set out in Appendix 1 to the Scheme Booklet.

Shares means fully paid ordinary Shares in the capital of the Company.

Shareholders or TCI Shareholders means the holders of shares on issue at the date of this Offer.

STR means Service Stream Limited ACN 008 027 978 of Level 12, 555 Lonsdale Street, Melbourne, Victoria.

STR Shareholders means each person who is registered in the STR register of shareholders from time to time as the holder of a STR Share.

STR Shares means a fully paid ordinary share in STR.

TCI Resolutions means Resolutions 1, 2 and 3 referred to in the attached Notice of Meeting and set out in section 4.2 (a), (b) and (c) of this Prospectus.

TCI Shares means the Shares to be offered pursuant to this Prospectus.

Offerors' consents

James Cooney and Samantha Grant have consented to the lodgement and issue of this Prospectus.

James Julian Cooney

Samantha Alexandra Grant

Corporate Directory Registered Office

Total Communications Infrastructure Limited C/- Aust Comp Secretarial Services Pty Ltd Level 5, 255 George Street SYDNEY NSW 2000

Share Registry

Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street ABBOTSFORD VICTORIA 3067

Please return completed form to: Computershare Investor Services Pty Limited GPO Box 52 Melbourne Victoria 8060 Australia Enquiries (within Australia) 1300 652 586 (outside Australia) 61 3 9415 4602 Facsimile 61 3 9473 2529 web.queries@computershare.com.au www.computershare.com

Securityholder Reference Number (SRN)

Ssuer

XXX,XXX,XXX

XXX.XXX.XXX

I 1234567890

$IND$

Entitlement Transfer and Acceptance Form

Entitlement Sale closing 5:00pm (Sydney Time) on 15 December 2006

Entitlement Sale of 3 Shares for every 20 Shares registered and entitled to participate at A the record date 15 November 2006 at an offer price of A\$0.87 per Share. This Entitlement is not tradeable.

Important:

• This document is of value and requires your immediate attention. If you do not understand it, or are in doubt as to how to deal with it, you should consult your accountant, stockbroker, solicitor or other professional adviser immediately.
• This Entitlement Transfer and Acceptance Form should not be relied upon as evidence of the current entitlement of the person named in this Entitlement Transfer and Acceptance Form.
• Receipt of this form by 5:00pm (Sydney Time) on 15 December 2006 with your payment will constitute acceptance in accordance with the terms of the Prospectus dated 10 November 2006.

To be completed by securityholder

E.		Number of Shares Accepted

Subregister

20 basis

Existing Shares entitled to

15 November 2006

participate at Record Date on

Entitlement to Shares on a 3 for

	, ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	.
		.
		**
.

I/We enclose my/our payment for the amount shown below being payment of A\$0.87 per Share. I/We hereby authorise you to register me/us as the holder(s) of the Share transferred to me/us, and I/we agree to be bound by the Constitution of the Company.

C

	TCI				Please see overleaf regarding transfer and completion guidelines	332283 09KVKC
	www.tciltd.com.au	Pin cheque(s) here. Do not staple. Number of Shares Accepted B		C	Amount enclosed at A\$0.87 per Share
D	ABN: 00 000 000 00 Payment Details			A\$.
	Drawer	Cheque Number	BSB Number	Account Number	Amount of cheque
					IAS.
	Make your cheque or bank draft payable to Total Communications Infrastructure Limited - Share Sale Offer
E	Enter your contact details Contact Name				Telephone Number - Business Hours / After Hours
F	Sign here - this section must be signed before we can process the form (please see overleaf for further details) Individual or Securityholder 1		Individual or Securityholder 2		Individual or Securityholder 3
	Sole Director and Sole Company Secretary	Director			Director/Company Secretary

Securityholder Entitlement details

$_{\rm 0000000}$ հիկկրիկիկիսիկիսկի 000
000
SAM MR JOHN SMITH 1 FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Use a black pen.
Print in CAPITAL letters inside the grey areas.

www.tciltd.com.au

ABN: 46 072 369 870

How to complete the Entitlement Transfer and Acceptance Form

Please complete all relevant sections of the Entitlement Transfer and Acceptance Form using BLOCK LETTERS in black ink. Note that photocopies will not be accepted.

These instructions are cross-referenced to each section of the Entitlement Transfer and Acceptance Form.

This form may not used to effect an address change. Please contact Computershare Investor Services Pty Limited on 1300 850 505 for an appropriate form, or download a Change of Address Notification form from www.computershare.com.

CHESS holders must contact their Controlling Participant

Lodgement of Acceptance

Acceptance Forms must be received at the Melbourne office of Computershare Investor Services Pty Limited by no later than 5:00pm (Sydney Time) on 15 December 2006. Return the Entitlement Transfer and Acceptance Form with cheque(s) attached to:

Total Communications Infrastucture Limited OR Computershare Investor Services Pty Limited GPO Box 52 MELBOURNE VIC 8060

Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street ABBOTSFORD VIC 3067

Privacy Statement

Personal information is collected on this form by Computershare Investor Services Pty Limited ("CIS"), as registrar for the company, for the purpose of maintaining registers of securityholders, facilitating distribution payments and other corporate actions and communications. Your personal information may be disclosed to our related bodies corporate, to external service companies such as print or mail service providers, or as otherwise required or permitted by law. If you would like details of your personal information held by CIS, or you would like to correct information that is inaccurate, incorrect or out of date, please contact CIS. In accordance with the Corporations Act 2001, you may be sent material (including not to receive marketing material by contacting CIS. You can contact CIS using the details provided on the front of this form or E-mail privacy@computershare.com.au

If you have any enquiries concerning your entitlement, please contact Computershare Investor Services Pty Limited on 1300 652 586.