VERIS LIMITED - Capital/Financing Update 2008

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E C T U S
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For the offer of 40,000,000 Shares at an issue price of 20 cents each to raise $8,000,000.

IMPORTANT INFORMATION

This is an important document that should be read in its entirety.

If you do not understand it you should consult your professional advisers without delay. The Shares offered by this Prospectus should be considered speculative.

Emerson Stewart Group Ltd

ACN 122 958 178

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Corporate Adviser and Broker to the Offer

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IMPORTANT NOTICE

This Prospectus is dated 8 May 2008 and was lodged with the ASIC on that date. The ASIC and its officers take no responsibility for the contents of this Prospectus or the merits of the investment to which the Prospectus relates.

The expiry date of this Prospectus is at 5.00pm WST on that date that is 13 months after the date this Prospectus was lodged with the ASIC (Expiry Date) . No securities may be issued on the basis of this Prospectus after the Expiry Date.

Application will be made to ASX within 7 days after the date of this Prospectus for Official Quotation of the Shares the subject of this Prospectus.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer.

It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Shares the subject of this Prospectus should be considered speculative.

WEBSITE – ELECTRONIC PROSPECTUS

A copy of this Prospectus can be downloaded from the website of the Company at www.emersonstewart.com . Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an application form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company. Please also refer to Section 3.14.

EXPOSURE PERIOD

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. Potential investors should be aware that this examination may give rise to the need for this Prospectus to be reviewed in accordance with Section 724 of the Corporations Act.

Applications for securities under this Prospectus will not be processed by the Company until after the expiry of the Exposure Period. No preference will be conferred on persons who lodge applications prior to the expiry of the Exposure Period.

E m e r s o n S t e w a r t G r o u p L t d P

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CORPORATE DIRECTORY

Directors

Steven Cole

non-executive independent chairman

Dario Amara managing director/chief executive

Angelo Dabala executive director/director energy

Corporate Adviser

Argonaut Capital Limited Level 30, Allendale Square PERTH WA 6000

Broker to the Offer

Argonaut Securities Pty Limited Level 30, Allendale Square PERTH WA 6000 Telephone: (08) 9224 6888 Facsimile: (08) 9225 5511

James Cullen

non-executive director

David Richardson non-executive director

Company Secretary

Christopher Mews

Registered Office

Level 110, Old Swan Brewery 171 Mounts Bay Road PERTH WA 6000 Telephone: (08) 9424 9555 Facsimile: (08) 9485 1339

Website

Solicitors to the Company

Steinepreis Paganin Lawyers and Consultants Level 4, Next Building 16 Milligan Street PERTH WA 6000

Auditors

PKF Level 7, BGC Centre 28 The Esplanade PERTH WA 6000

Investigating Accountant

PKF Corporate Advisory Services (WA) Pty Ltd Level 7, BGC Centre 28 The Esplanade PERTH WA 6000

www.emersonstewart.com

Share Registry*

[email protected]

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153 Telephone: (08) 9315 2333 Facsimile: (08) 9315 2233

This entity is included for information purposes only. It has not been involved in the preparation of this Prospectus.

CORPORATE DIRECTORY

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1.	CHAIRMAN AND CHIEF EXECUTIVE’S LETTER	3
2.	INVESTMENT OVERVIEW	4
3.	DETAILS OF THE OFFER	11
4.	BUSINESS OVERVIEW	14
5.	DIRECTORS, SENIOR MANAGEMENT AND CORPORATE GOVERNANCE	22
6.	FINANCIAL INFORMATION	26
7.	INVESTIGATING ACCOUNTANT’S REPORT	41
8.	KEY RISKS	50
9.	MATERIAL CONTRACTS	53
10.	ADDITIONAL INFORMATION	58
11.	DIRECTORS’AUTHORISATION	63
12.	GLOSSARY	64

CONTENTS

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1. CHAIRMAN AND CHIEF EXECUTIVE’S LETTER

Dear Investor

It is our pleasure to provide you with the opportunity to become a Shareholder of Emerson Stewart Group Ltd.

Emerson Stewart is a progressive engineering and project management group that provides advisory, project implementation and development services across the resources, infrastructure and energy sectors. In preferring to work with its clients within a collaborative framework to deliver a results-orientated service, Emerson Stewart’s remuneration is commonly aligned with the achievement of project outcomes.

The number and value of projects within these sectors that are underway or planned in Australia, and globally, are believed to be at unprecedented levels. In particular, Western Australia stands out in Australia and Emerson Stewart is well positioned to capitalise upon this strategic opportunity.

Since its inception in 2005, the success of Emerson Stewart has been attributable to its people. The future of Emerson Stewart also will be dependent on their commitment, experience and professionalism. The culture within Emerson Stewart, and its progressive approach to attracting and retaining talented professionals, will assist in its growth aspirations.

Emerson Stewart has a well defined vision and a measurable and achievable implementation plan to deliver shareholder value through organic and targeted acquisitive growth. Emerson Stewart is committed to increasing the scale and scope of its operations through enhanced operational capabilities and an extended geographical footprint.

This Prospectus contains detailed information about the Offer, the financial and operating performance of Emerson Stewart and the risks associated with investing in the Company’s Shares. We encourage you to read the Prospectus carefully before making an investment decision.

Along with our fellow Directors, we commend the Offer to you. We look forward to welcoming you as a Shareholder and sharing with you the future of Emerson Stewart.

Yours faithfully

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STEVEN COLE CHAIRMAN

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DARIO AMARA MANAGING DIRECTOR/CHIEF EXECUTIVE

8 May 2008

CHAIRMAN AND CHIEF EXECUTIVE’ S LETTER

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Nellie Ward Emerson (1892-1956)

Born in Melbourne, Australia and moved to Albany, Western Australia in 1911. She was the Matriarch of the Family who developed tourism, saw milling and boat building businesses in the South West region of Western Australia. She was a very active and important part of the community.

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William James Stewart (1855-1924)

Born in Dublin, Ireland and emigrated to Adelaide, Australia in 1857. Together with George Throssell established “Throssell, son and Stewart” in 1886 which became a significant retail group in Country Western Australia. (George Throssell went on to become the Premier of Western Australia). William served as Mayor of Toodyay for five more terms and Mayor of Northam for one term.

Both Nellie Ward Emerson and William James Stewart were well known for their strong characters and for their service to the communities in which they lived. Emerson Stewart is inspired by them.

Courage integrity determination humility confidence honesty

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INVESTMENT OVERVIEW

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2. INVESTMENT OVERVIEW

2.1 Emerson Stewart

2.1.1 Service provider to the resources, infrastructure and energy sectors

Established in 2005 and based in Perth, Western Australia, Emerson Stewart provides advisory, project implementation and development services across three business lines:

• Resources: all commodities

Infrastructure: urban development; buildings; water and waste water; roads and highways; telecommunications
Energy: power generation; power distribution.

Emerson Stewart’s service offering includes:

Advisory	Project Implementation
Feasibility studies	Execution strategies
Technology sourcing	Project management
Risk management	Construction management
Peer reviews	Self performance
Implementation strategies and plans	Design management
Project audits	Engineering design (selected)
Cost plans and budgets	Procurement and expediting
Value improvement	Owners' representation
Regulatory/statutory	Commissioning
Approvals and compliance	Health, safety and environmental management
	Planning and scheduling
Development*	Program management
Build, own and operate	Asset and facilities management
Build, own, operate and transfer
Lease back

Potential growth areas

2.1.2 Substantial growth opportunities

There is increasing demand for Emerson Stewart’s services as a result of strong growth in the resources, infrastructure and energy sectors in Australia and internationally.

Emerson Stewart is well placed to capture growth within each of its business lines in Western Australia and elsewhere. Emerson Stewart has commenced ‘client-led’ geographic expansion with projects for Australian clients in other areas of Australia and Asia.

Acquisitive growth is a key element in Emerson Stewart’s strategic plan. Following listing, Emerson Stewart intends to seek strategic acquisitions that complement its existing business lines and service offering, enhance scale and geographic footprint and provide access to lower cost labour environments.

2.1.3 Experienced and effective leadership

Emerson Stewart’s executive leadership team has a combined experience in excess of 120 years in engineering, construction, project management and project development across the resources, infrastructure and energy sectors in Australia and internationally. It is augmented by a relevant and diverse non-executive team at Board level.

The combined leadership group not only has extensive operational expertise but a strong record of achievement in developing businesses, executive management and board governance, in the local, national and global environments.

INVESTMENT OVERVIEW

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INVESTMENT OVERVIEW

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2.1.4 Strong financial profile

Since its establishment, the Emerson Stewart business has grown its revenue base quickly. That growth profile continues with the Company’s revenue and EBIT Forecasts for the financial year ended 30 June 2008 and the half year to 31 December 2008.

Emerson Stewart increasingly engages with clients on a fee structure reflecting a blended reimbursable and performance incentive mix.

Emerson Stewart’s reporting and management systems provide cost and efficiency advantages by allowing executive focus on cost management and contract performance.

2.2 Key risks

Although the following key risks are identified, Emerson Stewart has developed strategies to mitigate against the majority of these risks eventuating. Emerson Stewart is currently in the process of formalising its risk management plan in accordance with AS/NZS4360:2004 principles.

Reliance on key clients Emerson Stewart derives a large proportion of its revenue from contracts with a relatively small number of clients with whom it has developed an ongoing relationship
Reliance on key management Key management oversees the day-to-day operations and strategic management of Emerson Stewart
Failure to win new projects The Company’s performance is influenced by its ability to win new projects and complete these projects in a timely and professional manner
Skilled labour constraints Emerson Stewart relies on its HR strategy (team+) to attract, retain, motivate and train highly skilled and qualified employees, who are required to continue to grow Emerson Stewart
Acquisition risk The Company intends to acquire businesses that are complementary to its existing operations, the completion and integration of which involves operational and financial risks
Duration of engagements Emerson Stewart has a number of short duration engagements, which is not atypical for this industry sector
Downturn in demand for services Growth depends substantially on continuation of demand for advisory, project implementation and development services
Early termination or delay in commencement or progress of projects The Forecasts are partly based on clients’ projects continuing to completion and projects commencing and progressing in a timely manner
Limited history The Emerson Stewart business has only been in operation since 2005

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INVESTMENT OVERVIEW

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Payment delays and failure to receive payment Counterparty risk has potential to impact on the Company’s financial operations
Contractual disputes and litigation Emerson Stewart may in the future have disputes with clients or others
Management of growth To effectively manage its growth, Emerson Stewart will need to continue to develop and maintain its operational and financial systems and continue to train, expand and manage its employee base
Performance of subcontractors Emerson Stewart contracts alongside and/or subcontracts to third parties in certain cases and may be exposed to liability for the non-performance of those third parties
Disruption of business operations Emerson Stewart and its clients are exposed to a range of operational risks relating to both current and future operations
Additional requirements for capital The Company may in the future require further financing in addition to amounts raised under this Prospectus
Competition risk The activities or actions of competitors may, positively or negatively, affect the operating and financial performance of the Company’s projects and business
Professional indemnity and industrial accidents The services provided by Emerson Stewart involve economic and physical risk both to property and persons
Insurance risks The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company
Economic risks General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s activities, as well as on its ability to fund those activities
Market conditions The market price of the Shares can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general, for particular market sectors or for the Company itself.

2.3 Summary financial information

The following table summarises the pro-forma historical Income Statement for the financial year ended 30 June 2007, the pro-forma Forecast Income Statement for the financial year ended 30 June 2008 and the Forecast Income Statement for the half year to 31 December 2008. The table should be read in conjunction with the more detailed material set out in Section 6.

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INVESTMENT OVERVIEW

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

	Pro-forma	Pro-forma	Forecast
	Historical	Forecast	Half Year
	FY 2007	FY 2008	HY 2009
Revenue	4,407,058	9,700,837	11,349,036
Operating costs (including depreciation)	(4,187,954)	(7,677,771)	(9,033,985)
EBIT	219,104	2,023,066	2,315,051
Net interest	59,384	173,507	301,292
PBT	278,488	2,196,573	2,616,343
Tax	(99,566)	(755,061)	(784,903)
NPAT	178,922	1,441,512	1,831,440
Acquisition costs*	-	(1,226,709)	-
Net profit after acquisition costs	-	214,803	-

Comprises impairment of goodwill on reverse acquisition and share-based success fee payment on acquisition of Emerson Stewart Limited; refer to Section 6 for full details.

2.4 Dividend policy

The Company intends to distribute to Shareholders approximately 40% of net profit after tax in the form of fully franked dividends, subject to general business and financial conditions, the Company’s taxation position, its working capital and future capital expenditure requirements, the availability of sufficient franking credits and any other factors the Board considers relevant.

To the extent that dividends are paid, the Company expects an interim dividend to be payable annually in March for the six month period ending 31 December and a final dividend payable annually in October for the six month period ending 30 June. The Directors anticipate that the first dividend to Shareholders will be declared in respect of the period ending 30 June 2009 and will be payable in October 2009. The Board may review this dividend policy from time to time and, subject to the prevailing circumstances, may change this policy.

A dividend reinvestment plan ( DRP ) has not been established at this time but the Board may review the appropriateness of implementing a DRP to coincide with the payment of the first dividend.

2.5 Purpose of the Offer

The purpose of the Offer is to:

Raise funds for growth opportunities and acquisitions
Provide the Company with greater access to working capital
Provide an opportunity for the Company’s employees to participate in the ownership of the Company.

2.6 Use of proceeds

The proceeds of the Offer are intended to be used as follows:

Uses	$ million
Funds for growth opportunities and acquisitions	5.3
Fees and expenses of the Offer	0.7
Additional working capital	2.0
Total	8.0

Emerson Stewart intends to seek one or more strategic acquisitions within 12 to 18 months of listing. The Company anticipates that the acquisition or acquisitions will be funded with a combination of cash and Shares. Emerson Stewart intends to utilise the $5.3 million designated for growth opportunities and acquisitions for that purpose. Emerson Stewart is presently not in a position to more specifically allocate that $5.3 million.

Refer to Section 3.5 for information regarding the use of proceeds if the Offer is not fully subscribed.

INVESTMENT OVERVIEW

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2.7 Ownership structure

The ownership structure of the Company, immediately prior to and at completion of the Offer is summarised in the table below. On completion of the Offer, assuming it is fully subscribed, the Shares available to investors under the Offer will represent approximately 32% of issued capital (undiluted).

If the Offer is only subscribed to the minimum subscription of $6 million, new investors will represent approximately 26% of the issued capital (undiluted).

		Pre Offer	Post Offer	(undiluted)	Post Offer	(diluted)
Shareholder	% ownership		% ownership	Shares(m)	Options(m)+*	% ownership
Dario Amara		41.1%	27.8%	34.4	3.0	28.0%
Angelo Dabala		37.4%	25.3%	31.3	1.0	24.1%
Other Key Executives		-	-	-	5.0	3.7%
Argonaut Group		3.1%	2.1%	2.6	-	2.0%
Other Existing Shareholders		18.3%	12.4%	15.3	-	11.5%
New Shareholders		-	32.4%	40.0	-	29.9%
ESOP		-	-	-	1.0	0.8%
Total		100.0%	100.0%	123.6	10.0	100.0%

Options granted to key executives are subject to vesting hurdles
Assumes 1 million Options are granted under the ESOP at or about the time of completion of the Offer

All Shares rank equally in all respects.

2.8 Enquiries

All enquiries related to this Prospectus should be directed to the Broker to the Offer, Argonaut, on (08) 9224 6888.

If you are unclear in relation to any matter as to whether Shares in the Company are a suitable investment for you, you should seek professional advice from your accountant, financial adviser, stockbroker or other professional adviser.

Applicants who require additional copies of this Prospectus can contact Argonaut or visit the website www.emersonstewart.com to download a copy of this Prospectus.

INVESTMENT OVERVIEW

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

3. DETAILS OF THE OFFER

3.1 The Offer

By this Prospectus, the Company offers for subscription up to 40 million Shares at an issue price of 20 cents each to raise up to $8 million.

The Shares offered under this Prospectus will rank equally with the existing Shares on issue.

3.2 Applications

Applications for Shares offered under this Prospectus must be made using the Application Form.

Payment for the Shares must be made in full at the issue price of 20 cents per Share. Applications for Shares must be for a minimum of 10,000 Shares and thereafter in multiples of 1,000 Shares. Completed Application Forms and accompanying cheques must be mailed to:

Argonaut Securities Pty Limited

GPO Box 2553 PERTH WA 6001

or delivered to:

Argonaut Securities Pty Limited Level 30, Allendale Square 77 St Georges Terrace PERTH WA 6000

Cheques should be made payable to:

“Emerson Stewart Group Ltd – Share Offer Account”

and crossed:

“Not Negotiable” .

Completed Application Forms must reach one of the above addresses by no later than 6 June 2008 ( Closing Date ), unless the Offer is extended at the Board’s discretion.

The Company reserves the right to close the Offer early.

3.3 Oversubscriptions

The Company will not accept oversubscriptions.

3.4 Allotment and allocation policy

Subject to ASX granting conditional approval for the Company to be admitted to the Official List, allotment of Shares offered by this Prospectus will take place as soon as practicable after the Closing Date. Prior to allotment, all application monies shall be held by the Company on trust. The Company, irrespective of whether the allotment of Shares takes place, will retain any interest earned on the application monies.

The Board reserves the right at its discretion to allot Shares in full for any application, or to allot any lesser number, or to decline any application. Where the number of Shares allotted is less than the number applied for, or where no allotment is made, the surplus application monies will be returned by cheque to the applicant within 7 days of the allotment date. Preference will be given to clients of Argonaut.

3.5 Minimum subscription

The minimum subscription to be raised pursuant to this Prospectus is $6 million.

DETAILS OF THE OFFER

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If the minimum subscription has not been raised within 4 months after the date of this Prospectus, all applications will be dealt with in accordance with the Corporations Act.

Should the Company only raise the minimum subscription, the proceeds of the Offer are intended to be used as follows:

Uses	$ million
Funds for growth opportunities and acquisitions	3.4
Fees and expenses of the Offer	0.6
Additional working capital	2.0
Total	6.0

If the amount subscribed under the Offer is between $6 million and $8 million, then the funds available for future growth opportunities will proportionately vary between $3.4 and $5.3 million. As the Forecasts are predicated on the assumption that there will be no acquisitive growth completed prior to 31 December 2008, it is not anticipated that any diminution in the amount of funds available for future growth opportunities will impact upon the Forecasts.

3.6 ASX listing

The Company will apply to ASX within 7 days after the date of this Prospectus for admission to the Official List and for Official Quotation of the Shares offered under this Prospectus. If ASX does not grant permission for Official Quotation of the Shares within 3 months after the date of this Prospectus, or such longer period as is permitted by the Corporations Act, all applications will be dealt with in accordance with the Corporations Act.

3.7 Applicants outside Australia

This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. No action has been taken to register or qualify these Shares or otherwise permit a public offering of the Shares the subject of this Prospectus in any jurisdiction outside Australia.

It is the responsibility of applicants outside Australia to obtain all necessary approvals for the allotment and issue of the Shares pursuant to this Prospectus. The return of a completed Application Form will be taken by the Company to constitute a representation and warranty by the applicant that all relevant approvals have been obtained.

3.8 Broker to the Offer

Argonaut has been appointed as Broker to the Offer.

3.9 Underwriting

The Offer is not underwritten.

3.10 Commissions on Application Forms

The Company will pay the Broker to the Offer, Argonaut, a commission of 4% (exclusive of goods and services tax) of the amount raised by Argonaut under the Offer. Out of the commission, Argonaut may pay other licensed securities dealers or Australian Financial Services licensees in respect of valid applications lodged and accepted by the Company and bearing the stamp of the licensed securities dealer or Australian Financial Services licensee. Payments will be subject to the receipt of a proper tax invoice from the licensed securities dealer or Australian Financial Services licensee.

3.11 CHESS

The Company will apply to participate in the Clearing House Electronic Subregister System ( CHESS ). CHESS is operated by ASX Settlement and Transfer Corporation Pty Ltd ( ASTC ), a wholly owned subsidiary of ASX, in accordance with the Listing Rules and the ASTC Settlement Rules.

DETAILS OF THE OFFER

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

Under CHESS, the Company will not issue certificates to investors. Instead, Shareholders will receive a statement of their holdings in the Company. If an investor is broker sponsored, ASTC will send a CHESS statement.

3.12 Risk factors

Prospective investors in the Company should be aware that subscribing for Shares the subject of this Prospectus involves a number of risks. These risks are set out in Section 8 of this Prospectus and investors are urged to consider those risks carefully (and if necessary, consult their professional adviser) before deciding whether to invest in the Company.

The risk factors set out in Section 8, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the Shares. Accordingly, an investment in the Company should be considered speculative.

3.13 Privacy statement

If you complete an application for Shares, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder and to facilitate distribution of payments and corporate communications to you as a Shareholder.

The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your Shares in the context of takeovers; regulatory bodies (including the Australian Taxation Office), authorised securities brokers, print service providers, mail houses and the Share Registry.

You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the Share Registry at the relevant contact number set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASTC Settlement Rules. You should note that if you do not provide the information required on the application for Shares, the Company may not be able to accept or process your application.

3.14 Electronic Prospectus

Pursuant to Class Order 00/044, the ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic prospectus and electronic application form on the basis of a paper prospectus lodged with the ASIC, and the publication of notices referring to an electronic prospectus or electronic application form, subject to compliance with certain conditions.

If you have received this Prospectus as an electronic prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please email the Company at [email protected] and the Company will send you, for free, either a hard copy or a further electronic copy of the Prospectus or both. Alternatively, you may obtain a copy of the Prospectus from the Company’s website at www.emersonstewart.com .

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

3.15 Taxation

The acquisition and disposal of Shares in the Company will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Shares from a taxation viewpoint and generally.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisers accept no liability and responsibility with respect to the taxation consequences of subscribing for Shares under this Prospectus.

DETAILS OF THE OFFER

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4. BUSINESS OVERVIEW

4.1 Emerson Stewart background

Emerson Stewart provides advisory, project implementation and development services, with its offering including:

Advisory	Project Implementation
Feasibility studies	Execution strategies
Technology sourcing	Project management
Risk management	Construction management
Peer reviews	Self performance
Implementation strategies and plans	Design management
Project audits	Engineering design (selected)
Cost plans and budgets	Procurement and expediting
Value improvement	Owners' representation
Regulatory/statutory	Commissioning
Approvals and compliance	Health, safety and environmental management
	Planning and scheduling
Development*	Program management
Build, own and operate	Asset and facilities management
Build, own, operate and transfer
Lease back

Potential growth areas

Emerson Stewart’s initial focus was on advisory and project implementation services for minerals projects of midsized Western Australian-based resources groups. Groups of that size do not typically retain in-house the expertise or resources to effectively develop and deliver projects, providing scope for Emerson Stewart to integrate its services into projects and add significant value.

In late 2007, Emerson Stewart reorganised its operations into three business lines:

Resources: all commodities
Infrastructure: urban development; buildings; water and waste water; roads and highways; telecommunications
Energy: power generation; power distribution.

In January 2008, Howard Capital Group Ltd acquired the operating entity Emerson Stewart Limited. In April 2008, Howard Capital Group Ltd was renamed Emerson Stewart Group Ltd. It is Emerson Stewart Group Ltd that is making the Offer and seeking admission to and listing on ASX.

Group Structure

Emerson Stewart Group Ltd Emerson Stewart Limited Xemi Pty Ltd (dormant)

BUSINESS OVERVIEW

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BUSINESS OVERVIEW

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4.2 Emerson Stewart business model

Emerson Stewart was established using a business model that differentiated it from traditional engineering houses in terms of both the services offered and the level of alignment with its clients’ commercial imperatives.

Unlike many of its competitors, Emerson Stewart’s business model is built on outcomes-based collaborations with its clients and limiting its offering to niche service areas. Those collaborations are most effective where Emerson Stewart integrates its personnel with a client’s project team. Integration with clients places Emerson Stewart in the best position to limit risk and optimise project outcomes. To further align with its clients’ interests, Emerson Stewart increasingly structures its remuneration to combine both reimbursable and performance-benchmarked incentive payments, such as performance incentives for project completion on time and within budget.

A critical element of Emerson Stewart’s business model is its risk assessment process. For each project and client relationship, Emerson Stewart assesses the risks associated with that project or client and determines its ability to manage or mitigate those risks. The three principal factors in Emerson Stewart’s assessment process are:

The probability of a particular event occurring
The magnitude of the consequences should that event occur
The remuneration or reward available to Emerson Stewart.

Certain contracting styles (such as lump sum contracting) and types of work (such as resource asset audits for inclusion in fund raising disclosure documents) typically fall outside Emerson Stewart’s acceptable risk/reward parameters. Emerson Stewart’s preferred client integration model flows from its risk assessment process.

4.2.1 Growth opportunities

Emerson Stewart is well placed to capitalise on organic growth opportunities. Each of Emerson Stewart’s targeted industry sectors (in Australia and internationally) is experiencing a sustained increase in project development.

The establishment of distinct business lines has enabled Emerson Stewart to apply its model and the skills and experience of its leadership team and professionals across three complementary sectors. Emerson Stewart continues to win new work and grow within each of its business lines.

While each business line is driven by its own targets, projects in each of the resources, infrastructure and energy sectors often encompass elements from at least one of the other sectors. By way of example, a typical resources project will have associated infrastructure and energy needs. Those interrelationships have provided and will continue to provide Emerson Stewart with significant business development and service cross-selling opportunities across its business lines.

In terms of growing its geographic footprint, Emerson Stewart has commenced ‘client-led’ expansion with projects completed and ongoing for Australian clients in other areas of Australia and Asia.

While its target sectors all provide substantial organic growth opportunities for Emerson Stewart, acquisitive growth is a key element of Emerson Stewart’s business model and strategic plan. However, Emerson Stewart does not intend to be an aggregator of disparate services businesses. Rather, following listing, Emerson Stewart intends to make strategic acquisitions that:

Complement: business lines; service offering
Enhance: scale in targeted sectors; operational capability; geographic footprint
Diversify risk profile: across sectors; across regions
Access: alternative labour sources and bases within lower cost environments
Avoid: services that do not fit within Emerson Stewart’s model or risk parameters.

Emerson Stewart will particularly target acquisitions that will increase its participation in the ‘project value chain’ that is applicable to each of the resources, infrastructure and energy sectors.

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To date, Emerson Stewart has limited its involvement in the project value chain to the concept, engineering and construction, and commissioning phases. As the infrastructure and energy business lines (in particular) continue to develop, Emerson Stewart has identified opportunities to expand its exposure to the ownership, operation and maintenance phases. Those opportunities align not only with Emerson Stewart’s capabilities but also its acceptable risk profile. Total solutions for energy projects, including Build, Own and Operate and Build, Own, Operate and Transfer solutions, and the lease back of infrastructure associated with resources projects represent potential areas of future expansion and growth.

4.2.2 Systems, plans and procedures

Emerson Stewart utilises a comprehensive range of proven systems, plans and procedures for managing its business and projects of all sizes, scopes and complexities. All of its projects are constantly benchmarked by performance and results.

Emerson Stewart refers to its complete business management system as “The Way We Work” ( TW3 ). Emerson Stewart continuously works with clients, contractors and suppliers’ systems, project controls and procedures from every level and business sector. The TW3 system, comprising business systems, plans and procedures, forms the basis of a quality management system that complies with the requirements of ISO9001 and is planned to meet the requirements of ISO14001 (environmental management) and OHSAS18000 (occupational health and safety management).

The TW3 system is built on industry standard open information technology. TW3 is largely web based and is accessible from anywhere in the world. Emerson Stewart’s strong preference is to use ‘off the shelf’ and standard industry systems to ensure independent and global support.

4.3 Resources business line

4.3.1 Mineral commodities industry overview

The mineral commodities (resources) industry is experiencing a sustained period of increased project development. In November 2007, ABARE reported that there were 91 ‘advanced’ (under construction or committed to) major (typically, those with greater than $40 million of capital expenditure) in Australia with an estimated capital cost of $57.9 billion. In Western Australia, there were 37 advanced projects with estimated capital cost of $42.0 billion. A further 214 major projects were at less advanced stages across Australia. The map on the following page provides a graphical representation of the major projects under development in Australia.

The iron ore industry within Western Australia continues to enjoy unprecedented growth. Exploration expenditure is at an all time high of $320 million for 2006-07, a doubling of the previous year. Demand for iron ore is at unprecedented levels and contemporary prices continue to increase significantly, largely driven by Chinese demand. Exploration expenditure is an indicator of the level of confidence within the industry regarding the sustainability of growth.

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Source: ABARE

In past periods, material aggregate growth in iron ore projects was limited to the operations of the major producers. However, the unprecedented level of demand for iron ore (and associated price increase) has resulted in a series of projects held by smaller, developing companies. One example is Territory Resources’ project in the Northern Territory, where Emerson Stewart provided project management services. The increased demand has enabled major project developments in magnetite iron ore to proceed, despite the significant associated processing and infrastructure development costs. Emerson Stewart believes it is well placed to continue to service and grow with this demand.

Gold and base metals have also experienced sustained price increases. Consequently, during the past two years, there have been significant increases in exploration expenditure and project development in these industries. This demand is expected to be sustained in the medium term.

4.3.2 Emerson Stewart Resources

Emerson Stewart’s resources business line targets the mining and minerals sectors, principally projects in Western Australia and the international operations of Australian companies. Established as Emerson Stewart’s foundation business line, it has been engaged on projects encompassing iron ore, gold, copper, antimony, vanadium, nickel and coal.

The business line’s past and current clients include: Australasian Resources; Crescent Gold; Gindalbie Metals; INPEX; Midwest Corporation; OMG; Straits Resources; Territory Resources; and Windimurra Vanadium.

Emerson Stewart’s preference is to enter into strategic alliances and umbrella service agreements with mineral producers. Under those arrangements, the business line integrates its personnel with its clients to provide project and construction management services.

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Emerson Stewart continues to focus on the establishment and maintenance of relationships within the resources sector. An example of the business line’s approach is its ongoing relationship with a medium-sized minerals group with projects and interests across Australia and in Asia.

Key Emerson Stewart personnel have worked with this group for up to approximately 10 years. The business line has provided the group with project development and project management services for the expanding global thermal coal markets. Currently, Emerson Stewart provides overall project management services for the significant expansion of a coal processing development project in Indonesia. The group has expressed its intention to utilise the business line’s services on an integrated basis for future project development both within Australia and internationally. The group’s projects include a major development in the north west of Western Australia that is scheduled to receive approval during 2008.

Emerson Stewart continually reviews projects under development and prospective future projects in order to appropriately deploy key personnel and target business development opportunities.

4.4 Infrastructure business line

4.4.1 Infrastructure industry overview

The infrastructure sector differs from resources investment in that its requirements are commonly highly predictable, take a long time to develop and a long time to implement. Demand for urban infrastructure is growing strongly, driven by two trends: greater integration; and urbanisation.

One impact of globalisation is greater integration of urban infrastructure; typically water, energy and, particularly, transportation. Urbanisation is increasing with more people living in cities than in rural areas. While estimates vary for the amount of investment in infrastructure that is required in Australia, in the next 25 years, significant additional investment will be made in water, power, gas transmission and distribution, road and rail and air and sea port infrastructure.

The Federal Labor Government is expected to make significant spending commitments on large-scale infrastructure projects, including roads and rail, water desalination plants, affordable housing and broadband networks.

In addition, in coming years the State governments are also expected to commit significant expenditure to infrastructure projects.

The following table illustrates that infrastructure projects will be a key driver of economic activity and jobs growth in coming years in Western Australia.

Western Australia’s Infrastructure Boom

Western Australia’s Infrastructure Boom
Major infrastructureprojects	$ billion
Fiona Stanley Hospital	1.80
Subiaco Sport Stadium	1.10
Southern Desalination Plant	0.95
Perth Bunbury Highway	0.65
East Perth Museum	0.50
Central Tertiary Hospital	0.50
Alkimos Wastewater Scheme	0.40
Perth Arena	0.35
Perth waterfront stage 1	0.30

Source: Western Australian Department of Treasury and Finance

The projects in the table above are in addition to the construction of office towers and apartments in the Perth central business district, new towns and communities in the urban fringe, railways and ports in the Pilbara, houses and shopping centres in the suburbs and mineral processing plants across Western Australia.

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4.4.2 Emerson Stewart Infrastructure

Emerson Stewart’s infrastructure business line provides advisory, engineering and construction management services to both public and private clients. The business line is targeting the following market sectors:

Property
Transportation
Water and waste water
Telecommunications.

The business line was established in November 2007 and has already secured a series of large projects at Brookdale, Keralup and Mundijong, Western Australia for clients including the Western Australian Department of Housing and Works, Peet and Stockland.

The business line’s strategy is to progressively expand its model into South East Asia. To assist in the delivery of this strategy, Emerson Stewart has executed a Memorandum of Understanding with Malaysian engineering group Konsultant Proses ( KONPRO ). KONPRO is a well-established practice and offers opportunities to lower delivery cost and introduce Emerson Stewart to new geographic and market sectors.

During the 2008 calendar year, Emerson Stewart Infrastructure’s strategy includes increasing its market share in Western Australia, establishing a presence in the east coast market and establishing a South East Asian office as an operations hub to support its growth plans.

4.5 Energy business line

4.5.1 Energy industry overview

To meet ever increasing electricity demand over the next 25 years, Australian electricity generation is expected to grow substantially. Servicing this growth in demand will require significant capital investment in new generation capacity.

4.5.2 Emerson Stewart Energy

Emerson Stewart’s energy business line primarily focuses on developing and managing energy assets for the generation of electricity from gas and renewable resources, which also responds to low carbon and environmentally-friendly opportunities and to low carbon capital requirements.

Given the expected increases in electricity demand, Emerson Stewart anticipates strong growth in the demand for groups experienced in the development and delivery of energy assets.

Emerson Stewart’s initial targets in the energy sector include projects for gas-fueled, dual fuel (gas/fuel oil) and LNG-fuelled power stations ranging from 5-100 MW capacity. The principal focus will be on ‘island’ power stations, which are not connected to the electricity grid. Other opportunities exist in relation to waste heat recovery and fuel oil-to-gas conversions where even small improvements in efficiency can lead to substantial savings and reduced greenhouse gas emissions. Initial targets for renewable energy projects include small-to-medium (5-1000 KW) renewable power systems for the commercial and industrial market. The focus will be on wind power systems, which offer low environmental impact, quick project builds and supplement existing power systems.

The business line has identified a number of target projects and is establishing a presence in its two key areas.

During the 2008 calendar year, the business line’s targets are to secure one non-renewable and one renewable project and commence execution of those projects. Emerson Stewart will make use of the skills and capabilities of the resources and infrastructure business lines to deliver detailed asset development and other services necessary to provide package solutions. That approach will minimise the business line’s direct overheads.

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5. DIRECTORS, SENIOR MANAGEMENT AND CORPORATE GOVERNANCE

5.1 Directors

Steven Cole LLB (Hons) FAICD

non-executive independent chairman

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Steven Cole has 35 years’ professional, corporate and business experience through senior legal consultancy, as well as a range of executive management and non-executive appointments.

Steven’s extensive boardroom and board sub-committee experience includes ASX-listed, statutory, proprietary and not-for-profit organisations covering the industrial, financial, educational, professional services, health and resources sectors.

In particular, Steven has a wealth of leadership experience of professional services organisations having held senior executive management roles with major law firms Parker & Parker and Allens Arthur Robinson before retiring from legal practice in 2007.

His current corporate appointments include:

Chairman of ASX-listed companies Paramount Mining Corporation and Solco
Chairman of two private investment trust companies with over $20 million under management
Deputy chairman of the Professional Standards Councils around Australia (statutory authorities governing professional standards)
Vice president of the Australian Institute of Company Directors (Western Australian division)
Deputy chairman of Brightwater Care Group Inc, a major charitable non-governmental organisation.

Dario Amara BEng (Distn) FIEAust CPEng Registered Builder

managing director/chief executive

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Dario Amara is an engineer with extensive business experience gained over 29 years in the Australian and international markets and across the resources and infrastructure sectors.

For the past 16 years, he has occupied senior executive roles with major construction and engineering groups. Dario has a record of achievement in establishing, growing and rejuvenating businesses and strategic leadership.

Prior to co-founding Emerson Stewart, Dario successfully led GRD Minproc as managing director/chief executive and John Holland Asia as chief executive officer.

He is currently a non-executive director of Austal and non-executive chairman of Mission Biofuels (both ASX listed), chairman of the City of Perth Heritage Appeal and a board member of the Perth International Arts Festival.

Dario has also served as chairman of the West Australian Opera Company and the Art Gallery of Western Australia.

DIRECTORS, SENIOR MANAGEMENT AND CORPORATE GOVERNANCE

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Angelo Dabala MAICD

executive director/director energy

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Angelo Dabala has more than 26 years’ experience in the energy and resources sectors. Angelo has worked on resource industry projects globally, in onshore and offshore oil and gas, power generation, alumina, mineral sands, gold, brewing, food and manufacturing.

Prior to co-founding Emerson Stewart, Angelo co-founded engineering consulting group PCT Engineers where he served as managing director.

In 1992, PCT Engineers was recognised as one of Australia's 100 fastest growing private companies. In 2007, PCT Engineers was sold to GHD.

In 1996-97, Angelo held the position of President of the Institute of Instrumentation and Control of Australia.

James Cullen BCom CA FFin FAICD

non-executive director

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James Cullen is a qualified Chartered Accountant with extensive commercial experience covering several industries and countries.

From 1994 to 2007, James was managing director of PCH, an ASX-listed Australian company providing a range of industrial services to numerous industry sectors. These sectors included mining and processing, oil and gas, petrochemicals, pharmaceuticals, infrastructure, commercial and residential.

PCH grew from a small Perth-based supplier into a highly regarded international multidisciplined contractor. The company built a market-leading position in the Australian natural resources sector, servicing clients such as BHP Billiton, BP, Rio Tinto, Shell and Woodside. Internationally, PCH developed successful businesses in Asia, the Arabian Gulf and Caspian Sea regions, largely servicing construction and maintenance activity in the oil and gas and natural resource sectors.

James was previously involved in the motion picture industry in Los Angeles, California in management, financial and company director capacities. Prior to that, he worked for Price Waterhouse (now PricewaterhouseCoopers) in Australia, New Zealand and the United States of America, servicing a multitude of clients in numerous industries.

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David Richardson MIEAust

non-executive director

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David Richardson is a mechanical engineer with 24 years’ experience in the resources industry. David has vast commercial experience in the conception and execution of resource and infrastructure projects. He has a strong technical and contractual understanding of the resources and renewable energy sectors.

He co-founded Toussaint and Richardson, a company that specialised in design and execution of process plant projects in the resources sector.

David has extensive involvement in project and design management at both a senior executive and director level. He has participated in joint venture committees and alliance boards as both a director and sponsor.

Following the 2000 sale of Toussaint and Richardson to WorleyParsons, David served as an executive director of WorleyParsons. In 2003, he established WorleyParsons’ Mining and Metals division prior to that company’s ASX listing.

Since 2003, David has pursued various projects and investments in the agriculture and forestry industries and is a non-executive director of ASX-listed renewable energy group Solco, having recently stepped down as Solco’s managing director.

5.2 Senior management

In addition to the executive Directors, the Company has the following senior management.

Marino Evangelisti BEng MIEAust CPEng director infrastructure

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Marino Evangelisti is a qualified civil engineer with over 25 years’ experience in the consulting industry in Australia and overseas.

Marino has held senior executive roles in engineering design and management and the construction of civil infrastructure associated with urban development, transportation and mining projects.

Prior to taking up the position of director infrastructure at Emerson Stewart, he successfully led the engineering group of Parsons Brinckerhoff in Western Australia.

Through his involvement in the consulting industry, Marino has extensive personal contacts at all levels of Federal, State and Local Government and a wide cross section of industry-based relationships in Western Australia.

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John Morhall BSc (Hons) LLB (Hons) CEng FIMechE FIEAust CPEng FAusIMM MIAMA

director resources

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John Morhall is an engineer with extensive commercial and leadership experience gained over 40 years in both Australian and international markets in the resources sector.

John has held senior roles associated with resources in the mining and engineering industries, and in government. He has worked internationally in both mining and in oil and gas with a strong track record of achievement.

Prior to joining Emerson Stewart, John served as the chief executive officer of the Hancock Group of Companies and as general manager of Signet Engineering. Between 1989 and 1994, John served as chief executive officer of the Western Australian Departments of State Development and Resources Development.

5.3 Organisational structure

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----- Start of picture text -----

MANAGING DIRECTOR / CHIEF EXECUTIVE
Dario Amara
BUSINESS LINES
Director Resources Director Infrastructure Director Energy
John Morhall Marino Evangelisti Angelo Dabala
SUPPORT
CFO Manager Team+ Manager TW3
Claire Ingham (acting) Rebecca Savy Onn Chan
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5.4 Corporate governance

The Directors monitor the business affairs of the Company on behalf of Shareholders and have formally adopted a Corporate Governance Charter, which is designed to encourage Directors and other Emerson Stewart personnel to focus their attention on accountability, risk management and ethical conduct. The Company has adopted the following policies, protocols and corporate governance structures:

Structure of Board and Committees
Nominations and Remuneration Committee Charter
Audit and Risk Management Committee Charter
Board Members’ Code of Conduct
Conflict of Interest Protocol
Group Code of Conduct/Values
Risk Management Policy
Policy on the Trading of Company’s Shares
Release of Price Sensitive Information
Board Calendar (Strategic Governance Issues)
Board and Management Performance Enhancement Policy.

The Corporate Governance Charter was prepared with regard to the Principles of Good Corporate Governance and Best Practice Recommendations released by the ASX Corporate Governance Council in March 2003 so as to ensure that its practices are largely consistent with those Recommendations from time to time. The Corporate Governance Charter will be reviewed and adjusted, as required, on an on-going basis including in line with ASX Corporate Governance Council amendments to the Recommendations. A full copy of the Corporate Governance Charter can be downloaded from the Company’s website at www.emersonstewart.com .

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6. FINANCIAL INFORMATION AND FORECASTS

6.1 Overview

This Section provides a summary of the historical and forecast financial information of the Company and its controlled entities. All financial information presented in this Section should be read in conjunction with the Investigating Accountant’s Report (Section 7), the Key Risks (Section 8) and other information contained within this Prospectus.

Unless otherwise stated, the financial information has been prepared in accordance with the accounting policies summarised in Note 1 of Section 6.11. The accounting policies comply with Australian equivalents to International Financial Reporting Standards ( IFRS ).

The Directors are responsible for the inclusion of all historical and pro-forma financial information, and forecast financial information in this Prospectus, including assumptions thereon.

The financial information comprises:

(a) Pro-forma Income Statement for the year ended 30 June 2007 ( FY 2007 ). This information has been prepared from the audited results of the entities making up the Emerson Stewart group, being Emerson Stewart Group Ltd, Emerson Stewart Limited and Xemi Pty Ltd (dormant) for this period and aggregated ( Pro-forma Historical FY 2007 );
(b) Pro-forma Income Statement for the year ending 30 June 2008 (FY 2008) . This information has been prepared based on the unaudited actual performance of the entities making up the Emerson Stewart group for the 9 months ended 31 March 2008 and forecast performance of the consolidated group for the remaining 3 months from 1 April 2008 to 30 June 2008 ( Pro-forma Forecast FY 2008 );
(c) Forecast Income Statement of Emerson Stewart Group Ltd for the half year to 31 December 2008 ( Forecast Half Year HY 2009 ); and
(d) the reviewed historical balance sheet of Emerson Stewart Group Ltd, then known as Howard Capital Group Ltd, as at 31 December 2007 and the reviewed pro-forma balance sheet of the consolidated group as at 31 December 2007, assuming that the proposed transactions set out in Note 2 of Section 6.11 were completed as at 31 December 2007 (Pro-forma Balance Sheet) .

6.2 Basis of preparation of historical financial information

Emerson Stewart Group Ltd, then known as Howard Capital Group Ltd, was incorporated on 1 December 2006 as a pre-IPO capital raising vehicle with approximately 250 shareholders and a paid up capital of $2 million. It had no operating business prior to acquiring Emerson Stewart Limited on 29 January 2008.

The Pro-forma Historical FY 2007 financial information has been prepared to promote comparability between the historical financial information and the forecast financial information.

The Pro-forma Balance Sheet presents the actual reviewed balance sheet of Emerson Stewart Group Ltd, then known as Howard Capital Group Ltd, as at 31 December 2007 adjusted for the post balance sheet impact of the acquisition of Emerson Stewart Limited and the proposed transactions set out in Note 2 of Section 6.11 as at 31 December 2007.

Emerson Stewart Group Ltd, then known as Howard Capital Group Ltd, has been audited by PKF from 1 December 2006 to 30 June 2007. In this respect, PKF has issued an unqualified audit opinion on the Company’s financial statements for this period from 1 December 2006 to 30 June 2007. PKF has also independently reviewed the Company’s financial statements for the 6-month period to 31 December 2007.

Emerson Stewart Limited has been audited by Sygnum Assurance Services for the financial year ended 30 June 2007 and PKF Corporate Advisory Services (WA) Pty Ltd has independently reviewed the audit work papers of

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Sygnum Assurance Services in relation to its audit of Emerson Stewart Limited for the financial year ended 30 June 2007.

PKF Corporate Advisory Services (WA) Pty Ltd has also independently reviewed:

(a) Pro-forma Historical FY 2007;
(b) Pro-forma Forecast FY 2008;
(d) Forecast Half Year HY 2009; and
(e) Pro-forma Balance Sheet.

The historical financial information does not include any costs associated with operating as a listed public company.

The financial information in this Section has been prepared in accordance with IFRS and should be read in conjunction with the information and accounting policies set out in Note 1 of Section 6.11 and other information contained within this Prospectus.

The financial information contained in this Prospectus is presented in an abbreviated form and does not contain all the disclosures that are usually provided in an Annual Report prepared in accordance with the requirements of the Corporations Act and IFRS.

6.3 Basis of preparation of Forecasts

The information in this Section is intended to assist potential investors to understand the basis of preparation for the Forecasts, including the underlying general and specific Directors’ assumptions on which they are based. The Directors have prepared the Forecasts based on the Directors’ assessment of current operating and economic conditions existing as at the date of the Prospectus, including a number of assumptions regarding future events and actions that, at the date of this Prospectus, the Directors reasonably expect to take place or occur. These events or actions may or may not take place or occur as reasonably expected. The Directors believe that they have prepared the Forecasts with due care and attention and consider all assumptions to be reasonable when taken as a whole.

The Forecasts are, by their very character, predictive in nature and subject to uncertainties, contingencies and unexpected risks, circumstances and events, many of which are outside the control of the Company and its Directors. Also, risks, circumstances and events may or may not occur or take place as anticipated, or may or may not occur or take place within the timeframe anticipated. Assumptions upon which the Forecasts are based likewise are subject to significant uncertainties and contingencies, notwithstanding that these assumptions may be reasonably based.

Actual results are likely to differ from the Forecasts and those differences may be material.

Accordingly, neither the Company nor its Directors can give any assurance that the Forecasts or any prospective statement contained in this Prospectus will be achieved, or that any assumptions upon which the Forecasts or any prospective statements are based will prove to be correct.

Events and outcomes may differ in quantum and timing from the assumptions, with the potential for material consequential impact on the Forecasts.

The Forecasts should be read in conjunction with the general assumptions outlined below, the specific assumptions underlying the Forecasts set out below, the sensitivity analysis set out in Section 6.9, the Investigating Accountant’s Report set out in Section 7, the Key Risks set out in Section 8 and other information contained in this Section and the Prospectus.

Prospective investors and applicants for Shares under this Prospectus must understand the predictive character of the Forecasts and the underlying assumptions upon which they are based, and the risks in placing undue reliance on those Forecasts and those assumptions.

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6.4 Assumptions

The material assumptions made by the Directors in preparing the Forecasts are set out below.

(a) General assumptions

The general assumptions are:

(i) the Offer is fully subscribed and proceeds are received on or around 1 July 2008;
(ii) there are no other material asset or business acquisitions, disposals, restructuring of the business or corporate structure by Emerson Stewart during the forecast period;
(iii) there are no material amendments to any existing material agreements relating to Emerson Stewart;
(iv) there is no significant change in the competitive environment in which Emerson Stewart operates;
(v) there is no material change in the economic, political and business environment in which Emerson Stewart operates;
(vi) there is no change to Emerson Stewart’s funding or capital structure other than as outlined in this Prospectus and as necessitated by operational requirements in the form of additional financing or lease arrangements;
(vii) there is no loss of key management or executive personnel;
(viii) there are no material workforce disturbances;
(ix) Emerson Stewart is not subject to any material litigation process;
(x) there are no material contingent liabilities that will arise or be realised to the detriment of Emerson Stewart;
(xi) there is no significant change in the legislative regimes and regulatory environments (including taxation) in the jurisdictions in which Emerson Stewart or its key customers or suppliers operate that will materially impact on the forecast financial information;
(xii) accounting policies will remain consistent with those adopted in preparing the IFRS consolidated balance sheet at 31 December 2007 as set out in Note 1 of Section 6.11 below;
(xiii) there are no material changes in IFRS or other mandatory professional reporting requirements; and
(xiv) no risk factor referred to in Section 8, either alone or in conjunction with other factors or circumstance, that is material to the achievement of the Forecasts will adversely impact upon Emerson Stewart or the Forecasts.
(b) Specific assumptions

The specific assumptions are set out below:

Revenue

(i) the Forecasts are based on the continuity of work under current contracts in place ( Secured Work ); the expectation of being offered additional work under the contracts the subject of the Secured Work ( Growth Work ); and new work yet to be contracted ( Pipeline Work ). For Forecast Half Year HY 2009, Secured Work represents approximately 35% of revenue, Growth Work represents approximately 24% of revenue and revenue from Pipeline Work represents approximately 41%. The Directors note that there is a higher volatility attached to revenue from Pipeline Work than from Secured Work and Growth Work.

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The Forecasts are also based on Directors’ assessment of present economic and operating conditions;

(ii) as revenue is derived from three business lines, being resources, infrastructure and energy, the risk of sub Forecast performance by one business line may be offset by the performance of the other business lines;
(iii) no performance bonuses to which Emerson Stewart may become entitled under a number of its contracts it may have with its clients have been included in the Forecasts;
(iv) there is no material diminution in the demand in Australia and internationally for the Company’s engineering and project management services;
(v) there will be sufficient management and staff within Emerson Stewart’s workforce to ensure the delivery of both secured and unsecured projects, and where additional personnel will be required, the Company is able to secure the services of additional management and staff within a reasonable time frame;
(vi) the timing of Forecast revenue is based on expected timetables for project completion and the assumption that all contracts will complete within expected timeframes;

Others

(vii) the Forecasts have been derived from a formal budget-setting process and incorporate and assess expected performance in terms of growth and profitability. The budget-setting process considers the historical performance of the business lines, adjusted for the forecast level of activity and performance expected to be achieved;
(viii) the anticipated increased cost structure from the change to a listed public company has been incorporated in the Forecasts;
(ix) no CPI increases and no increase in charge out rates of individual personnel have been factored into the Forecasts;
(x) there are no material changes to the scope of existing contracts and contract margins will be maintained substantially in accordance with historic trends;
(xi) depreciation rates will be consistent with prior years, unless amended by the application of IFRScompliant policies;
(xii) there are no changes to the tax compliance costs arising from entering the tax consolidated group;
(xiii) there is no material impairment of assets as at 31 March 2008 and during the ensuing 9-month period expiring 31 December 2008 except for the expected impairment of goodwill of approximately $0.8 million arising from the reverse aquisition accounting treatment of the acquisition of Emerson Stewart Limited;
(xiv) no new business acquisitions occur prior to 1 January 2009; and
(xv) net funds from existing cash and the Offer will be deposited into an interest bearing account during the forecast period. Interest is calculated using the advertised HSBC rate of 6.7% for balances over $100,000 for most of the forecast period.

6.5 Methodology in determining Forecasts

The following is an abridged summary describing the methodology of determining Forecasts utilised by the Company.

(a) Generally for Pro-forma Forecast FY 2008 and Forecast Half Year HY 2009:

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(i) forward predictions of revenue were assessed by the Company’s executive and management and presented to the Board for approval;
(ii) full recognition of future revenue value was given with respect to Secured Work (ie, work under current contracts in place) on a contract-by-contract basis and determined on the basis of charge out rates and reimbursability;
(iii) recognition was then also given to revenue predicted to arise from Growth Work (ie, additional work, by way of contract scope variation, realistically predicted to arise from Secured Work) and Pipeline Work (ie, work yet to be contracted) over the relevant period. This prediction of revenue from Growth Work and Pipeline Work was then benchmarked against the Company’s historical performance data and experience over FY 2007 and 9 months of FY 2008 to 31 March 2008 (Historical Trend Analysis , which has proven over these periods to be consistent and reliable ) , and adjusted (as appropriate) to be the lesser of actual prediction, and the average of the Historical Trend Analysis for Growth Work revenue, in proportion to total revenue, for the relevant period;
(iv) consistent with the Emerson Stewart business model described in Section 4.2, an assessment was also made, in a business development context, as to the likelihood of Emerson Stewart being able to secure prospective new work arising from emerging projects that are within the domain of Emerson Stewart. This Pipeline Work was then assessed against a number of objective and subjective criteria (which historically also have been relatively consistently applied by the Company in a comparable manner during FY 2007 and the relevant 9 month period of FY 2008) to determine:
The likelihood of the relevant project progressing within the relevant timeframe (the “GO” factor)
The prospective value of services that Emerson Stewart realistically could provide in connection with the project
The prospect of Emerson Stewart being successful in being appointed to deliver services in connection with the project (the “GET” factor).

The outcome of this analysis was then assessed and adjusted, with Emerson Stewart only having regard to those projects that had a combination of the “GO” and GET” factors of above 50%.

Then, by way of further validation of the process, this revenue from Pipeline Work was further tested against the Historical Trend Analysis (refer (iii) above). If the revenue from Pipeline Work for any business line exceeded the average of the Historical Trend Analysis, then that revenue from Pipeline Work was further discounted so as not to exceed the average percentage of the Historical Trend Analysis.

(b) Special further consideration for Pro Forma Forecast FY 2008 only

Due to the relatively short period between the date of this Prospectus and 30 June 2008, and the inherent uncertainty of predicting the timing of booking revenue in such a narrow time period, no revenue from Pipeline Work and only 50% of predicted Growth Work revenue has been included in formulating Pro Forma Forecast FY 2008.

Based on the considerable breadth of experience of a number of the Directors in the consulting engineering business, including their prior work experiences with other consulting engineering service providers, the Board is satisfied as to the integrity of this methodology based on industry norms and practices. The consistency of the Historical Trend Analysis and the capping of the Forecasts so as not to exceed the Historical Trend Analysis further supports the reasonableness of the application of, and reliance upon, this methodology.

FINANCIAL INFORMATION

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

6.6 Summary of Pro-forma Historical and Forecast Income Statements

The Pro-forma Historical Income Statement for the year ended 30 June 2007 and the Pro-forma Forecast Income Statements for the year ending 30 June 2008 and the half year ending 31 December 2008 are set out as follows:

	Pro-forma	Pro-forma	Forecast
	Historical	Forecast	Half Year
	FY 2007	FY 2008	HY 2009
	$	$	$
Revenue from ordinary activities	4,407,058	9,700,837	11,349,036
Other income	-	-	-
Expenses from ordinary activities	(4,173,140)	(7,651,355)	(8,958,897)
Profit from ordinary activities before interest,
depreciation and amortisation and income
tax expense	233,918	2,049,482	2,390,139
Depreciation and amortisation	(14,814)	(26,416)	(75,088)
Profit from ordinary activities before interest
and income tax expense	219,104	2,023,066	2,315,051
Net interest income	59,384	173,507	301,292
Net profit before income tax expense	278,488	2,196,573	2,616,343
Income tax benefit/(expense)	(99,566)	(755,061)	(784,903)
Net profit after tax	178,922	1,441,512	1,831,440
Costs on acquisition*	-	(1,226,709)	-
Net profit after acquisition costs	-	214,803	-

Costs of acquisition comprise impairment of goodwill on reverse acquisition of $826,709 and a $400,000 share-based success fee payment on the acquisition of Emerson Stewart Limited.

6.7 Management discussion of the historical financial information and Forecasts

Key factors that affected the historical performance of the aggregated entity are:

(a) market acceptance and demand for Emerson Stewart’s service offering accounted for the majority of the increase in income that was achieved in the first 9 months of FY 2008, in comparison with FY 2007;
(b) expansion of the business necessitated increasing the number of personnel to meet the demands of clients and to maintain high quality service accounted for a large proportion of the cost of sales increase;
(c) income tax expense was incurred as prior period tax losses had been fully utilised; and
(d) growth of Australian resources, infrastructure and energy markets due to strong economic conditions.

6.8 Reliability of Forecasts

The Forecasts contain information that:

(a) is predictive in nature;

(b) may be affected by inaccurate assumptions or by known or unknown risks and uncertainties; and
(c) may differ materially from results ultimately achieved.

6.9 Sensitivity analysis

The Forecasts are based on certain assumptions about future events and are sensitive in varying degrees to movements in a number of criteria. A summary of the likely impact of movements in these criteria on Forecast Half Year HY 2009 is set out below. Due to the relatively short period between the lodging of the Prospectus and 30 June 2008, it is considered that prospective variations with assumptions concerning Pro Forma Forecast FY 2008 are unlikely to have a material impact as to warrant the need for a separate sensitivity analysis. The changes in key assumptions set out below are not intended to be indicative of the complete range of variations that may occur.

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Earnings are influenced by movements in a number of key business drivers and assumptions including:

(a) revenue from Secured Work and Growth Work failing to materialise to the extent predicted (largely arising from abandonment of, or delays in commencement of projects upon which Emerson Stewart was relying);
(b) revenue from Pipeline Work failing to materialise to the extent predicted;
(c) the availability of skilled labour; and
(d) overhead expenses varying from those predicted.

Extreme care should be taken in interpreting this information. This analysis treats each movement in an assumption in isolation from possible movements in other assumptions, which may not be the case. Movements in one assumption may have offsetting or compounding effects on other variables, the results of which are not reflected in the analysis. In addition, it is possible that more than one assumption may move at any one point in time, giving rise to cumulative effects that are not reflected in this analysis. Typically, management of Emerson Stewart would respond to any material adverse change in conditions by taking appropriate action to minimise, to the extent possible, any adverse effects. The effects of any such mitigating action have been excluded from this analysis.

Sensitivity Criteria		EBIT Impact on Forecast Half Year HY 2009	EBIT Impact on Forecast Half Year HY 2009	EBIT Impact on Forecast Half Year HY 2009
	+%	+$000s	-%	-$000s
10% Change in revenue from
Secured Work and Growth Work*	2.9%	485	-0.9%	(225)
10% Change in Pipeline Work+	2.2%	351	-0.2%	(104)
10% Change in availability of skilled labour**	N/A	N/A	-1.8%	(421)
10% Change in overhead expenditure	-1.1%	(126)	1.0%	115

Notes:

Increasing and decreasing revenue from Secured Work and Growth Work includes a corresponding increase and decrease in costs of contractors required to carry out that work; all other costs remain unchanged.
- Increasing and decreasing revenue from Pipeline Work includes a corresponding increase and decrease in costs of contractors required to carry out that work; all other costs remain unchanged.
**Decreasing the availability of skilled labour brings about a corresponding decrease in revenue, which reflects the inability to achieve the same level of revenue without the required labour.

FINANCIAL INFORMATION

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

6.10 Historical and pro-forma consolidated balance sheets

Set out below is the reviewed historical balance sheet of Emerson Stewart Group Ltd, previously known as Howard Capital Group Ltd, as at 31 December 2007, and the reviewed Pro-forma Balance Sheet for Emerson Stewart, assuming that the pro-forma transactions as set out in Note 2 of Section 6.11 were completed as at 31 December 2007.

		Reviewed	Reviewed
		31 December	Pro-forma
		2007	Consolidated
			31 December
			2007
	NOTE	$	$
Current Assets
Cash and cash equivalents	3	2,144,401	10,347,231
Trade and other receivables	4	6,990	792,547
Work in progress	5	-	424,066
Other current assets		-	6,771
Total Current Assets		2,151,391	11,570,615
Non-current Assets
Plant and equipment	6	-	44,410
Deferred tax assets		-	21,965
Intangible assets		-	1,869
Total Non-current Assets		-	68,244
Total Assets		2,151,391	11,638,859
Current Liabilities
Trade and other payables	7	4,100	994,212
Short term provisions		-	38,407
Current tax liabilites		-	320,698
Total Current Liabilities		4,100	1,353,317
Non-current Liabilities
Deffered tax liabilities		-	127,220
Total Non-current Liabilities		-	127,220
Total Liabilities		4,100	1,480,537
Net Assets		2,147,291	10,158,322
Equity
Issued capital	8	2,154,515	10,742,861
Accumulated loss	9	(7,224)	(584,539)
		2,147,291	10,158,322

FINANCIAL INFORMATION

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6.11 Notes to the historical information

Note 1: Significant accounting policies

Accounting policies

(a) Principles of consolidation

A controlled entity is any entity where Emerson Stewart has the power to control the financial and operating policies of the entity so as to obtain benefits from its activities.

All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where a controlled entity has entered the consolidated group during the year, its operating results have been included from the date control was obtained.

(b) Income tax

The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the Income Statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or that may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Emerson Stewart and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the Tax Consolidation Regime. Each entity in the group recognises its own current and deferred tax liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity. The group has formed an income tax consolidated group to apply from 1 February 2008.

(c) Work in progress

Work in progress in the financial statements is measured with the hours spent by the employees at the per diem rates.

(d) Plant and equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by the Directors to ensure that it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the

FINANCIAL INFORMATION

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

expected net cash flows that will be received from the assets’ employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight line basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Class of fixed asset Depreciation rate Plant and equipment 7.5 – 50%

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the Income Statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(e) Financial instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition, these instruments are measured as set out below.

Financial assets at fair value through Income Statement

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management and within the requirements of AASB 139: Financial Instruments: Recognition and Measurement. Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the Income Statement in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Held-to-maturity investments

These investments have fixed maturities, and it is the group’s intention to hold these investments to maturity. Any held-to-maturity investments held by the group are stated at amortised cost using the effective interest rate method.

Available-for-sale financial assets

Available-for-sale financial assets include any financial assets not included in the above categories. Available-forsale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Derivative instruments

Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the Income Statement unless they are designated as hedges.

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Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the Income Statement.

(f) Impairment of assets

At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Income Statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

(g) Employee benefits

Provision is made for Emerson Stewart’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within 1 year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than 1 year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

(h) Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(i) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

(j) Revenue

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

All revenue is stated net of the amount of goods and services tax (GST) .

(k) Reverse acquisition

Emerson Stewart Limited, a legal subsidiary, having been identified as the acquirer pursuant to Accounting Standard AASB 3, was responsible for the reverse acquisition of the Company and, as required by the Standard, the business combination has been accounted for by applying the purchase method. The pro-forma consolidated financial statements reflect the “continuing financial statements” of the legal subsidiary.

(l) Receivables

Receivables are recorded at amounts due less any provisions for doubtful debts.

FINANCIAL INFORMATION

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

(m) Payables

Liabilities for trade payables and other amounts are carried at cost that is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to Emerson Stewart. These amounts are unsecured and usually paid within 30 days of recognition.

(n) Goodwill

Goodwill representing the excess of the cost of acquisition over the fair values of the identifiable assets, liabilities and contingent liabilities acquired in a business combination, is recognised as an asset and not amortised, but tested for impairment annually and whenever there is an indication that the goodwill may be impaired. Any impairment is recognised immediately in the Income Statements, and is not subsequently reversed.

(o) Share-based payments

The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity. The amount recognised is adjusted to reflect the actual number of share options that vest, except for those that fail to vest due to market conditions not being met. The fair value of options is determined using an independent valuation.

(p) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

(q) Critical accounting estimates and judgements

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key estimates — Impairment

The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Note 2: Pro-forma transactions

The pro-forma consolidated balance sheet at 31 December 2007 reflects the following transactions and events as if they had occurred at that date:

(a) the issue to public subscribers by the Company of 40 million Shares at an issue price of $0.20 each to raise $8 million pursuant to this Prospectus;
(b) the issue by the Company of 62,500,000 Shares of $0.16 each pursuant to the acquisition of the entire share capital in each of Emerson Stewart Limited and Xemi Pty Ltd via a reverse acquisition under AASB 3 ‘Business Combinations’;
(c) the application of part proceeds of the Offer against the costs associated with the Offer estimated to be $651,143; and
(d) cost of acquisition of Emerson Stewart Limited of $500,000, ($100,000 paid in cash prior to 31 December 2007, and $400,000 in Shares issued) to Argonaut Capital Limited is expensed based on the early adoption of AASB 3 ‘Business Combinations’.

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	Reviewed	Reviewed
	31 December	Pro-forma
	2007	Consolidated
		31 December
		2007
Note 3: Cash and cash equivalents	$	$
Cash and cash equivalent	2,144,401	10,347,231
Adjustments arising in the preparation of the pro-forma
cash balance are summarised as follows:
Actual balance as at 31 December 2007		2,144,401
Cash aquired from Emerson Stewart		853,973
Funds raised from the issue of 40,000,000 Shares		8,000,000
Capital raising costs		(651,143)
		10,347,231
Note 4: Trade and Other Receivables
Trade receivables	-	785,557
Sundry receivables	6,990	6,990
Total Current Receivables	6,990	792,547
Note 5: Work In Progress
Work in progress at cost	-	424,066
Total Inventories	-	424,066
Note 6: Property, Plant and Equipment
Plant and equipment	-	72,568
Total Gross Fair Value	-	72,568
Accumulated Depreciation
Plant and equipment	-	28,158
Total Accumulated Depreciation	-	28,158
Total book value of property, plant and equipment	-	44,410
Note 7: Trade and Other Payables
Trade and other payables	4,100	994,212
Adjustments arising in the preparation of the pro-forma
trade and other payables balance are summarised as follows:
Actual balance as at 31 December 2007		4,100
Trade creditors assumed from Emerson Stewart following reverse acquisition		511,996
Sundry creditors assumed from Emerson Stewart following reverse acquisition		478,116
		994,212

FINANCIAL INFORMATION

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

	Reviewed	Reviewed	Reviewed
	31	December	Pro-forma
		2007	Consolidated
			31 December
			2007
Note 8: Equity		$	$
Issued capital	2,154,515		10,742,861
Adjustments arising in the preparation of the issued
capital balance are summarised as follows:
Actual balance as at 31 December 2007			2,154,515
Existing equity in Emerson Stewart			20,004
Cost of reverse business combination			2,974,000
Elimination of existing equity in Howard Capital Group on consolidation			(2,154,515)
Success fee on acquisition of Emerson Stewart Limited issued as Shares			400,000
Proceeds from capital raising			8,000,000
Less costs of capital raising			(651,143)
			10,742,861
Note 9: Retained earnings
Accumulated losses		(7,224)	(584,539)
Adjustments arising in the preparation of the accumulated
losses balance are summarised as follows:
Actual balance as at 31 December 2007			(7,224)
Elimination of existing accumulated losses in Howard Capital Group
on consolidation			7,224
Retained earnings arising from the reverse acquisition of Emerson Stewart			642,170
Write off of goodwill			(826,709)
Success fee on acquisition of Emerson Stewart Limited			(400,000)
			(584,539)

Note 10: Commitments

As at 31 December 2007, the Company has no material commitments.

Note 11: Contingent assets and liabilities

As at 31 December 2007, there are no contingent assets or liabilities.

Note 12: Subsequent events

Since 31 December 2007, there has not been any matter or circumstance not otherwise dealt with in the Forecasts that has significantly affected or may significantly affect the Company.

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FINANCIAL INFORMATION

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

8 May 2008

The Directors Emerson Stewart Group Limited Level 110, Old Swan Brewery 171 Mounts Bay Road Perth WA 6000

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Dear Sirs

Investigating Accountant’s Report

1 INTRODUCTION

The Directors of Emerson Stewart Group Limited (“ESW or “the Company”) have requested PKF Corporate Advisory Services (WA) Pty Ltd (“PKFCA”) to prepare an Investigating Accountant’s Report (“the Report”) for inclusion in a prospectus to be dated on or around 8 May 2008 (‘Prospectus”), relating to the offer of 40,000,000 shares at an issue price of $0.20 each, to raise $8,000,000 (“the Offer”). The Offer has not been underwritten.

All the terms used in this Report have the same meaning as the terms used and defined in the Prospectus unless otherwise defined in this Report.

2 BACKGROUND

Howard Capital Group Ltd (“HCG”) was incorporated on 1 December 2006 as a pre-IPO capital raising vehicle with approximately 250 shareholders and a paid up capital of approximately $2 million.

HCG has been audited by PKF Chartered Accountants (“PKF”) for the period of incorporation from 1 December 2006 to 30 June 2007. In this respect, PKF has issued an unqualified audit opinion on the financial statements for the period from 1 December 2006 to 30 June 2007 and has reviewed the financial statements for the 6 month period ended 31 December 2007.

In January 2008, HCG acquired Emerson Stewart Limited (“ES”). HCG was renamed Emerson Stewart Group Limited in April 2008.

ES has been audited by Sygnum Assurance Services (“SAS”) for the financial year ended 30 June 2007 and PKFCA has independently reviewed the audit papers of SAS in relation to its audit of ES for the year then ended.

ESW is an engineering and project management group that provides advisory, implementation and development services to resources, infrastructure and energy sectors, principally in Western Australia. ESW’s operations are organised into three business lines:

Resources: all commodities;
Infrastructure: urban development; buildings; water and waste water; roads and highways, telecommunication; and
Energy: power generation; power distribution.

INVESTIGATING ACCOUNTANT’ S REPORT

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3 FINANCIAL INFORMATION

3.1 Pro-Forma Historical Income Statement

The pro-forma historical income statement for the year ended 30 June 2007 has been prepared from the audited results of the entities comprising the Emerson Stewart Group, being ESW, ES and Xemi Pty Ltd (dormant) for the year then ended and aggregated.

3.2 Balance Sheets

The balance sheets include the reviewed historical balance sheet of HCG as at 31 December 2007 and the reviewed pro-forma balance sheet of the consolidated group as at 31 December 2007, assuming that the proposed transactions disclosed in this Prospectus were completed as at 31 December 2007.

The pro-forma balance sheet of the consolidated group as at 31 December 2007 is prepared in accordance with AASB 3 “Business Combinations”. The acquisition of ES by HCG is determined to be a reverse acquisition and AASB 3 Appendix B Application Supplement on reverse acquisitions has been applied in the compilation of the pro-forma balance sheet.

3.3 Forecast Financial Information

The forecast financial information includes:

pro-forma forecast income statement for the year ending 30 June 2008. This information has been prepared based on the unaudited actual performance of the entities comprising the Emerson Stewart Group for the 9 months ended 31 March 2008 and forecast performance of the consolidated group for the remaining 3 months from 1 April 2008 to 30 June 2008; and
forecast income statement of the consolidated group for the half year to 31 December 2008.

The forecast financial information is collectively to be referred to as ‘Directors’ Forecasts’.

4 SCOPE

We have been requested to prepare a Report considering the financial information noted in sections 3.1 to 3.3 above. Our Report only covers the Sections of the Prospectus referred to in this Report. The financial information has been prepared subject to the recognition and measurement requirements (but not the disclosure requirements) of Australian equivalents to International Financial Reporting Standards (“IFRS” or “Australian Accounting Standards”), as currently interpreted.

The Directors of the Company are responsible for the preparation and presentation of the financial information, including the best estimate assumptions upon which the Directors’ Forecasts are based. The financial information has been prepared for inclusion in the Prospectus. We disclaim any responsibility for any reliance on this Report or the financial information to which it relates for any purpose other than for which it was prepared.

4.1 Review of Pro-forma Historical Income Statement

We have performed a review of the pro-forma historical income statement for the year ended 30 June 2007 as detailed in Section 6 of the Prospectus.

We have performed our review in order to state whether on the basis of the procedures described, anything has come to our attention that would cause us to believe that the pro-forma historical income statement is not presented fairly in accordance with the recognition and measurement requirements (but not the disclosure requirements) of applicable Australian Accounting Standards and other mandatory professional reporting requirements in Australia.

INVESTIGATING ACCOUNTANT’ S REPORT

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

Our review was performed in accordance with Australian Auditing Standard AUS 902 “Review of Financial Reports”. Our review was limited to enquiries of the Company’s directors, management and others, a review of the material documents, analytical procedures applied to the financial data, the performance of limited verification procedures and comparison for consistency in application of the Australian Accounting Standards.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit on the historical financial information of the entities that make up the Emerson Stewart group and accordingly we do not express an audit opinion on the pro-forma historical income statement.

4.2 Review of Balance Sheets

We have performed a review of the historical balance sheet of HCG as at 31 December 2007 and the pro-forma balance sheet of the consolidated group as at 31 December 2007 as detailed in Section 6 of the Prospectus.

The purpose of the pro-forma balance sheet is to demonstrate the financial effect of the pro-forma transactions and assumptions disclosed in Section 6 of the Prospectus, assuming they had taken place on 31 December 2007.

We have performed our review in order to state whether on the basis of the procedures described, anything has come to our attention that would cause us to believe that the pro-forma balance sheet is not presented fairly in accordance with the recognition and measurement requirements (but not the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia, assuming the transactions and assumptions set out in Section 6 of the Prospectus had taken place on 31 December 2007.

Our review was performed in accordance with Australian Auditing Standard AUS 902 “Review of Financial Reports”. Our review was limited to enquiries of the Company’s directors, management and others, a review of the material documents, analytical procedures applied to the financial data, the performance of limited verification procedures, comparison for consistency in application of the Australian Accounting Standards, and a review of the reasonableness of the pro forma transactions and assumptions upon which the pro-forma balance sheet was prepared.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit of the historical balance sheet of HCG and the pro-forma balance sheet of the consolidated group and accordingly we do not express an audit opinion on the balance sheets.

4.3 Review of Directors’ Forecasts

We have performed a review of the Directors’ Forecasts as set out in Section 6 of the Prospectus, including the best estimate assumptions underlying the Directors’ Forecasts as outlined in Section 6 of the Prospectus and the sensitivity analysis of the Directors’ Forecasts also set out in Section 6 of the Prospectus.

Our review was performed in accordance with Australian Auditing Standards ASAE 3000 “Assurance Engagements Other than Audits or Reviews of Historical Financial Information” and ASIC Regulatory Guide RG 170 “Prospective Financial Information”. Our review procedures consisted primarily of enquiry into the process and basis of preparation, review of material contracts and analytical review procedures we considered necessary. These procedures included discussions with Directors’ and personnel and have been completed to form an opinion on whether anything has come to our attention which causes us to believe that:

the best estimate assumptions do not provide a reasonable basis for the preparation of the Directors’ Forecasts;
whether in all material respects, the Directors’ Forecasts are not properly prepared on the basis of the best estimate assumptions; and
the Directors’ Forecasts are not presented fairly in accordance with the recognition and measurement principles prescribed under IFRS and the accounting policies as disclosed in Section 6 of the Prospectus, so as to present a position which is not consistent with the Company’s current and future operations.

INVESTIGATING ACCOUNTANT’ S REPORT

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The Directors’ Forecasts have been prepared by the Directors to provide investors with a guide to the Company’s potential future financial performance based on the achievement of certain economic, operating and trading assumptions about future events and actions that have not yet occurred and may not necessarily occur.

There is a considerable amount of subjective judgement involved in the preparation of the Directors’ Forecasts and actual results may differ materially from the Directors’ Forecasts and may be positive or negative. Accordingly investors should have regard to the risk factors detailed in Section 8 of the Prospectus and sensitivity analysis as set out in Section 6 of the Prospectus.

The scope of our review of the Directors’ Forecasts, which are based on the best estimate assumptions, is substantially less than an audit conducted in accordance with the Australian Auditing Standards and as such a review of this nature provides less assurance than an audit. Accordingly, we do not express an audit opinion on either the Directors’ Forecasts or the supporting assumptions adopted by the Directors in the Prospectus or whether they will be achieved.

5 STATEMENTS

5.1 Pro-Forma Historical Income Statement

Based on the scope of our review, which is not an audit, nothing has come to our attention that causes us to believe that the pro forma historical income statement for the year ended 30 June 2007 as set out in Section 6 of the Prospectus does not present fairly in accordance with the recognition and measurement requirements (but not the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia.

5.2 Balance Sheets

Based on the scope of our review, which is not an audit, nothing has come to our attention that causes us to believe that the historical balance sheet of HCG as at 31 December 2007 and the pro-forma balance sheet of the consolidated group as at 31 December 2007 as set out in Section 6 of the Prospectus, assuming the proposed transactions and assumptions had taken place on 31 December 2007, does not present fairly in accordance with the recognition and measurement requirements (but not the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia.

5.3 Directors’ Forecasts

Based on the scope of our review, which is not an audit, and our investigation of the reasonableness of the Directors’ best estimate assumptions used in preparing the Directors’ Forecasts, nothing has come to our attention that causes us to believe that:

the best estimate assumptions as detailed in Section 6 of the Prospectus do not provide a reasonable basis for the preparation of the Directors’ Forecasts;
in all material respects, the Directors’ Forecasts are not properly prepared on the basis of the best estimate assumptions; and
the Directors’ Forecasts are not presented fairly in accordance with the recognition and measurement principles prescribed under IFRS and the accounting policies as disclosed in Section 6 of the Prospectus as applied in Australia for presenting forecasts in a Prospectus.

The Directors’ Forecasts have been prepared by the Directors using a set of assumptions, which reflect their judgement based on present circumstances as to both the more probable set of operating and economic conditions and the course of action the Company is more probably likely to take. These assumptions are subject to uncertainty and the outcome may be outside the control of the Directors of the Company. While evidence may be available to support the assumptions on which the Directors’ Forecasts are based, such evidence is generally future orientated and therefore embody a significant level of uncertainty. Accordingly, actual results may vary materially from the Directors’

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Forecasts, as it is often the case that some events and circumstances do not occur as expected, or are not anticipated. In addition, even if the events or circumstances do occur, the actual results may vary from those forecasts.

Accordingly, we are not in a position to, and do not express an opinion as to whether the actual results of the Company will approximate those in the Directors’ Forecasts because assumptions regarding future events by their nature are not capable of independent substantiation. Investors should have regard to the risk factors detailed in Section 8 of the Prospectus and sensitivity analysis as set out in Section 6 of the Prospectus.

6 SUBSEQUENT EVENTS

To the best of our knowledge and belief, and based on the work we have performed in relation to the scope of work set out in Section 4 of this Report, there have been no material transactions or events, other than those included in the Prospectus, which would require a comment on, or adjustment to, the financial information referred to in our Report or that would cause the financial information included in the Prospectus to be misleading.

7 DECLARATION

PKF Corporate Advisory Services (WA) Pty Ltd is responsible for this Report. The financial information presented in Section 6 of the Prospectus has been prepared by the Company and is the responsibility of the Directors of the Company. This Report is strictly limited to the matters contained herein and is not to be read as extending by implication or otherwise to any other matter.

Other than the services provided by PKF to HCG as disclosed in Section 2 of this Report, PKF Corporate Advisory Services (WA) Pty Ltd does not have any interest that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to this matter.

Except for fees relating to this Report, which are based on normal commercial terms, PKF Corporate Advisory Services (WA) Pty Ltd does not have any interest in the Company nor in the outcome of the Offer.

PKF Corporate Advisory Services (WA) Pty Ltd has not made, and will not make, any recommendation through the issue of the Report to potential investors of the Company as to the merits of the investment.

The nature of this Report is such that it should be given by an entity which holds an Australian Financial Services Licence under the Financial Services Reform Act 2001. PKF Corporate Advisory Services (WA) Pty Ltd holds an appropriate Australian Financial Services Licence. Appendix 1 contains our Financial Services Guide.

Consent for the inclusion of this Report in the Prospectus in the form and context in which it appears has been given. At the date of this Report, this consent has not been withdrawn.

Yours faithfully

Neil Smith Director

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Appendix 1 – Financial Services Guide

Issue date: 8 May 2008

Financial Services Guide

What is a Financial Services Guide?

The purpose of the Financial Services Guide (“FSG”) is to assist you in deciding whether to use any of the general financial product advice provided by PKF Corporate Advisory Services (WA) Pty Ltd (“PKFCA”) (ABN 68 009 423 152). PKFCA is a holder of an Australian Financial Services Licence (“AFSL”) No. 240566. The contents of this FSG include:

who PKFCA is and how we can be contacted;
what services PKFCA is authorised to provide under our AFSL;
how PKFCA (and any other relevant parties) is remunerated in relation to any general financial product advice PKFCA may provide;
details of any potential conflicts of interest; and
details of PKFCA’s internal and external dispute resolution systems and how you can access them.

Information About Us

We have been engaged by the Directors of Emerson Stewart Group Limited (“ESW” or “the Company”) to give general financial product advice in the form of a report to be provided to you in connection with an investigating accountant’s report. A copy of this report is included in the Prospectus prepared by the Company. You are not the party or parties who engaged PKFCA to prepare the report.

PKFCA is a corporate advisory company owned by partners of the Western Australian partnership of PKF Chartered Accountants and Business Advisers (“PKF”). The directors of PKFCA may also be partners in the Western Australian partnership of PKF.

The Western Australian partnership of PKF and its related entities provide services primarily in the areas of external audit, internal audit, tax, consulting and through PKFCA, corporate advisory services.

The financial product advice in our report is provided by PKFCA and not by the West Australian partnership of PKF or its related entities.

We do not have any formal associations or relationships with any other entities that are issuers or sellers of financial products, other than PKF Financial Services Pty Ltd. However, you should note that PKFCA and the West Australian partnership of PKF (and its related bodies corporate) may from time to time provide professional services to financial product issuers or sellers in the ordinary course of business.

What financial services are we licensed to provide?

The AFSL that we hold authorises us to provide financial product advice in respect of securities only in the capacity of providing 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.

Information about the general financial product advice we provide

The financial product advice provided in our report is known as “general advice” because it does not take into account your personal objectives, financial situation or needs. You should consider whether the general advice contained in our report is appropriate for you, having regard to your own personal objectives, financial situation or needs.

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If our advice is being provided to you in connection with the acquisition or potential acquisition of a financial product issued or sold by another party, we recommend you obtain and read carefully the relevant offer document provided by the issuer or seller of the financial product. The purpose of the offer document is to help you make an informed decision about the acquisition of a financial product. The contents of the offer document will include details such as the risks, benefits and costs of acquiring the particular financial product.

How are we and our employees remunerated?

Our fees are usually determined on an hourly basis; however they may be a fixed amount or derived using another basis. We may also seek reimbursement of any out of pocket expenses incurred in providing the services.

Fee arrangements are agreed with the party or parties who actually engage us, and we confirm our remuneration in a written letter of engagement to the party or parties who engage us.

Neither PKFCA nor its Directors and officers, nor any related bodies corporate or associates and their Directors and officers, receives any commissions or other benefits, except for the fees for the services rendered to the party or parties who engage us. Our fee is expected to be in the range of $60,000. You have a right to request further information with regards to remuneration received by PKFCA or its representatives.

All of our employees receive a salary. Our employees are eligible for annual salary increases and bonuses based on overall performance but do not receive any commissions or other benefits arising directly from services provided by you. The remuneration paid to our Directors reflects their individual contribution to the company and covers all aspects of performance. Our Directors do not receive any commissions or other benefits in connection with our advice.

We do not pay commissions or provide other benefits to other parties for referring prospective clients to us.

Responsibility

The liability of PKFCA is limited to the contents of this FSG and the report referred to in this FSG.

Distribution

PKFCA authorises the distribution of this FSG.

What should you do if you have a complaint?

If you have any concerns regarding this report, you may wish to advise us. Our internal complaints handling process is designed to respond to your concerns promptly and equitably. Please address your complaint in writing to:

The Complaints Officer PO Box Z5066 St George’s Terrace PERTH WA 6831

If you are not satisfied with the steps we have taken to resolve your complaint, you may contact the Financial Industry Complaints Service (“FICS”). FICS provides free advice and assistance to consumers to help them resolve complaints relating to members of the financial services industry. Complaints may be submitted to FICS at:

Financial Industry Complaints Service PO Box 579 Collins Street West MELBOURNE VIC 8007 Telephone: 1300 780 808 Fax: +61 (03) 9621 2291

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If your complaint relates to the professional conduct of a person who is a Chartered Accountant, you may wish to lodge a complaint in writing with the Institute of Chartered Accountants in Australia (“ICAA”). The ICAA is the professional body responsible for setting and upholding the professional, ethical and technical standards of Chartered Accountants and can be contacted at:

The Institute of Chartered Accountants

GPO Box Z5385 St Georges Terrace PERTH WA 6831 Telephone (08) 9420 0400 Fax (08) 9321 5141

Specific contact details for lodging a complaint with the ICAA can be obtained from their website at:

http://www.icaa.org.au/about/index.cfm

The Australian Securities and Investment Commission (“ASIC”) regulates Australian companies, financial markets, financial services organisations and professionals who deal and advise in investments, superannuation, insurance, deposit taking and credit. Their website contains information on lodging complaints about companies and individual persons and sets out the types of complaints handled by ASIC. You may contact ASIC as follows:

Info Line: 1300 300 630

Email: [email protected] Internet: http://www.asic.gov.au/asic/asic.nsf

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KEY RISKS

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8. KEY RISKS

Although the following key risks to an investment in the Shares are identified, Emerson Stewart has developed strategies to mitigate against the majority of these risks eventuating. Emerson Stewart is currently in the process of formalising its risk management plan in accordance with AS/NZS4360:2004 principles.

8.1 Reliance on key clients

The Company derives a large proportion of its revenue from contracts with a relatively small number of clients with whom it has developed an ongoing relationship. In the event that any of these clients reduce their operations, terminate the relationship, default on a contract or fail to enter into new contracts with the Company, this may have an adverse impact on the financial performance or financial position of the Company.

8.2 Reliance on key management

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if key personnel cease their engagement with Emerson Stewart.

8.3 Failure to win new projects

Emerson Stewart’s performance is influenced by its ability to win new projects and complete these projects in a timely manner. The failure to win new projects may adversely impact the Company’s financial performance. As set out in Section 6, revenue from Pipeline Work, which incorporates revenue from new projects, represents 41% of the revenue included in Forecast Half Year HY 2009.

Further, where existing or new projects are delayed, the recognition of revenue for those contracts may be deferred to later periods. This deferral may impact the Company’s financial performance in particular financial periods, including the Company’s ability to meet the Forecasts.

8.4 Skilled labour constraints

Emerson Stewart relies on its team+ strategy to attract, retain, motivate and train highly skilled and qualified employees. If Emerson Stewart fails to retain existing employees and recruit and retain additional personnel at appropriate labour costs, this may have an adverse effect on the Company’s ability to achieve the Forecasts. In addition, increased labour and recruitment costs are being experienced as a result of the general increased demand and competition for skilled labour in Australia.

Historically, Emerson Stewart has been able to pass on increases in labour costs to its clients through contract pricing. However, should personnel be retained at higher labour costs that cannot be passed on to clients, this may adversely affect the financial performance of the Company.

8.5 Acquisition risk

The Company intends to acquire businesses that are complementary to its existing operations. To finance such acquisitions, the Company may need to raise additional debt or equity capital. Growth through acquisition entails numerous operational and financial risks. These risks include, but are not limited to, poor integration of the acquired businesses, entry into market segments with more risk than existing operations and loss of managerial focus on existing businesses.

8.6 Duration of engagements

Emerson Stewart has a number of short duration engagements, which is not atypical for a company providing the services offered by Emerson Stewart. A downturn in the resources industry could result in a loss of projected revenues should these engagements expire and not be renewed or replaced with other engagements.

8.7 Downturn in demand for services

The future growth of the Company is dependent on the continuation of demand for advisory, project implementation and development services. Demand could be adversely impacted by a reduction in activity in the key sectors of resources, infrastructure and energy. A reduction in the demand for Emerson Stewart’s services

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may also arise where existing or potential clients decide to perform the services supplied by Emerson Stewart through in-house personnel. A decrease in demand or a decline in the trend of outsourcing may negatively impact the growth prospects of the Company and its financial performance.

8.8 Early termination or delay in commencement or progress of projects

The Forecasts are partly based on Emerson Stewart’s clients’ projects continuing to completion, and projects commencing and progressing in a timely manner. The quantum of any adverse effect will vary based on a number of factors, including but not limited to the value of the project and the timing of any such termination or delay in commencement or progress of the project.

8.9 Limited history

Emerson Stewart has only been in operation since 2005.

8.10 Payment delays and failure to receive payment

Whilst Emerson Stewart undertakes financial reviews of contracting parties, there are risks, including credit and insolvency risks of a contracting party, that can impact on the Company’s financial operations.

8.11 Contractual disputes and litigation

Although Emerson Stewart is not currently involved in any material contractual disputes or litigation with its clients or others, there is a risk that it may in the future become involved in such disputes. The adverse outcome of a dispute in respect of a material contract or claim may have an adverse impact on the Company’s financial performance or position.

8.12 Management of growth

The Company expects to continue to experience growth in the scope and scale of its operating activities and employee and/or contractor numbers. To effectively manage its growth, the Company will need to continue to develop and maintain its operational and financial systems and continue to train, expand and manage its employee base.

8.13 Performance of subcontractors

Emerson Stewart contracts alongside and/or subcontracts to third parties in certain cases. It may be exposed to liability where those third parties do not perform their obligations under those contracts, in which case Emerson Stewart may also have liability for that non-performance or be required to source resources from additional providers. To mitigate these risks, Emerson Stewart may seek to include provisions limiting its liability under the relevant contract and to ensure that the third party contractors are competent, creditworthy and of sound reputation.

8.14 Disruption of business operations

Emerson Stewart and its clients are exposed to a range of operational risks relating to both current and future operations. Such operational risks include loss or damage to operating assets and equipment, equipment failures or breakdowns, human error, accidents, information system failures, external services failure, industrial action or disputes, inclement weather (including cyclones) and natural disasters. While Emerson Stewart endeavours to take appropriate action to mitigate these operational risks and insure against many of them, it cannot completely remove all possible risks that may have an adverse impact on the financial performance and/or financial position of the Company.

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8.15 Additional requirements for capital

The Company may require in the future further financial resources in addition to amounts raised under the Offer. Any additional equity financing will relatively dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the growth, scale or scope of its operations.

8.16 Competition risk

The industry in which Emerson Stewart is involved is subject to domestic and global competition. Although Emerson Stewart will undertake all reasonable due diligence in its business decisions and operations, the activities or actions of its competitors may, positively or negatively, affect the operating and financial performance of its projects and business.

8.17 Professional indemnity and industrial accidents

The services provided by Emerson Stewart involve risk both to property and persons. A serious accident may occur, causing damage, injury or death, which may have operational and financial implications. There can be no guarantee that Emerson Stewart will not be exposed to the consequences of an industrial accident in the future.

8.18 Insurance risks

Emerson Stewart prudentially insures its assets and operations in accordance with reasonable industry practice. However, in certain circumstances, such insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and performance of the Company.

Insurance against all relevant risks is not always available and even where available the premium costs for some risks, or levels of cover, can be prohibitive.

8.19 Economic risks

General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s activities, as well as on its ability to fund those activities. Further, share market conditions may affect the value of the Company’s Shares regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

General economic outlook
Interest rates and inflation rates
Currency fluctuations
Changes in investor sentiment toward particular market sectors
The demand for, and supply of, capital
Terrorism or other hostilities.

8.20 Market conditions

The market price of the Shares can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

8.21 Investment speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial position or performance of the Company and the value of the Shares offered under this Prospectus. Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares.

Potential investors should consider that an investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.

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9. MATERIAL CONTRACTS

9.1 Material service agreements

Emerson Stewart currently has the following material services agreements on foot:

(a) an agreement between Stockland Development Pty Ltd (as principal) and Emerson Stewart, the formal documentation of which is in the process of being executed;
(b) an agreement between Peet Limited (as principal) and Emerson Stewart, the formal documentation of which is in the process of being executed;
(c) an agreement between Straits Resources Limited (as principal) and Emerson Stewart effective 21 April 2008; and
(d) an agreement between Windimurra Vanadium Proprietary Limited (as principal) and Emerson Stewart effective 22 March 2008.

Each of the above agreements contains the following terms:

(a) that the principal must not, during the term of the agreement, employ or engage (or indicate its willingness to do so), any personnel employed or engaged by Emerson Stewart (including their employees and contractors);
(b) as consideration for the performance of the services, Emerson Stewart will be paid fees (at rates agreed on a time cost basis) and reimbursable expenses;
(c) Emerson Stewart will submit claims for payment at such times agreed between the parties, with the relevant claim being paid by the principal within 30 days of being received;
(d) the principal’s right to immediate termination in the event of default (and failure to remedy such default) by Emerson Stewart;
(e) standard confidentiality provisions; and
(f) various other terms that are considered ordinary commercial terms, typical for contracts of this nature.

9.2 Other service agreements

The Company has entered into numerous other service agreements as part of its business. However, these service agreements are not considered to be material for the purposes of this Prospectus or the Offer.

9.3 Executive service agreements

The Company has entered into executive services agreement (Executive Agreements) with the executive Directors and senior managers of the Company.

Pursuant to the Executive Agreements, Dario Amara has been engaged to act as managing director/chief executive of the Company, Angelo Dabala has been engaged to act as executive director/director energy, John Morhall as director resources and Marino Evangelisti as director infrastructure (Executives) .

Marino Evangelisti’s engagement is in the form of a consultancy agreement with a related entity on substantially the same terms as the other Executive Agreements. The base fee payable under that Exectutive Agreement is $270,000.

The initial term of the Executive Agreements expires on 30 June 2011.

The Company will provide to the Executives a salary that will be reviewed by the Board annually. The salary packages (inclusive of statutory superannuation entitlements) for the Executives are as follows:

Dario Amara $325,000
Angelo Dabala $250,000

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• John Morhall $250,000.

The Company is also required to reimburse the Executives for any expenses incurred by them in the course of their employment or engagement and reasonable expenses additionally incurred during the performance of the Executives’ duties and functions.

In addition to salary payable, the Executives are entitled to a short term incentive bonus (STIB) and a long term incentive bonus.

The long term incentive bonus will be payable in the form of Executive Options. Under the Executive Agreements, each Executive may receive up to the following:

Executive	Executive Options
Dario Amara	3,000,000
Angelo Dabala	1,000,000
Other Key Executives	5,000,000

The terms of the Executive Options are outlined in Section 9.4 below.

The STIB will be calculated as a percentage of a bonus pool, capped at 40% of EBIT performance above targets set by the Board from time to time, and will be dependent on the Executive achieving various key performance indicators for their relevant business line. The chief executive’s STIB will be calculated on a combination of each business line’s performance and the Company’s performance as a whole. The STIB for each Executive is capped at 100% of their salary.

In the event the Executive has fundamentally lost the trust and confidence of the Board the Board may terminate the Executive Agreement, at any time, by giving the Executive not less than 6 months notice in writing. On termination in these circumstances, the Executive is entitled to the salary payable to him for the remainder of the initial term (subject to the limitations on termination provisions in the Corporations Act).

The Executive Agreements may be terminated immediately by the Company in certain circumstances, for example, in the case of serious misconduct or gross negligence, and may also be terminated by either party by providing 6 months notice in writing, provided that notice expires after the initial term. On termination of an Executive Agreement in these circumstances, the Executive will be entitled to salary up to and including the date of termination.

The Executive Agreements contain other standard terms for agreements of this nature including non-competition and confidentiality provisions.

9.4 Options granted to Executives

The general terms and conditions of the Executive Options are as follows:

(a) subject to paragraph (s) following, it is a condition precedent to the vesting of the Executive Options that the relevant Executive remains engaged with the Company for the initial term of the Executive’s Executive Agreement;

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(b) upon vesting, each Executive Option gives the optionholder the right to subscribe for one Share. To obtain the right given by each Executive Option, the optionholder must exercise the Executive Options in accordance with the terms and conditions of the Executive Options;
(c) with the exception of 3,000,000 of the Executive Options, which expire at 5:00pm (WST) on 30 June 2013, the Executive Options expire at 5:00pm (WST) on 31 December 2011 (or earlier in the event of paragraphs (q) and (r)) (Option Expiry Date) . Any Executive Options not exercised before the Option Expiry Date will automatically lapse on the Option Expiry Date.
(d) the amount payable upon the exercise of each Executive Option will be 24 cents (with the exception of 3,000,000 of the Executive Options referred to in paragraph (c) above, in respect of which the amount payable will be 20 cents) (Exercise Price) ;
(e) the vesting of 50% of the 3,000,000 Executive Options referred to in paragraph (c) above is also subject to attainment of designated special key performance indicators at the scheduled time of their vesting;
(f) the Executive Options held by each optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion;
(g) an optionholder may exercise their Executive Options by lodging with the Company, before the Option Expiry Date:
(i) a written notice of exercise of Executive Options specifying the number of Executive Options being exercised; and
(ii) a cheque or electronic funds transfer for the Exercise Price for the number of Executive Options being exercised (Exercise Notice) ;
(h) an Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds;
(i) within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Executive Options specified in the Exercise Notice;
(j) the Executive Options are not transferable;
(k) all Shares allotted upon the exercise of Executive Options will upon allotment rank pari passu in all respects with other Shares;
(l) the Company will not apply for quotation of the Executive Options on ASX. However, the Company will apply for quotation on ASX of all Shares allotted pursuant to the exercise of Executive Options within 10 Business Days after the date of allotment of those Shares;
(m) if at any time the issued capital of the Company is reconstructed, all rights of an optionholder are to be changed in a manner consistent with the Corporations Act and the Listing Rules at the time of the reconstruction;
(n) there are no participating rights or entitlements inherent in the Executive Options and optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Executive Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 Business Days after the issue is announced. This will give optionholders the opportunity to exercise their Executive Options prior to the date for determining entitlements to participate in any such issue;

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(o) in the event the Company proceeds with a pro rata issue (except a bonus issue) of securities to Shareholders after the date of issue of the Executive Options, the exercise price of the Executive Options will be reduced in accordance with the formula set out in Listing Rule 6.22.2;
(p) in the event the Company proceeds with a bonus issue of securities to Shareholders after the date of issues of the Executive Options, the number of securities over which an Executive Option is exercisable may be increased by the number of securities that the optionholder would have received if the Executive Option had been exercised before the record date for the bonus issue;
(q) subject to the Listing Rules, in the event that:
(i) a takeover becomes unconditional;
(ii) a scheme of arrangement is approved by a court of competent jurisdiction; or
(iii) the Company becomes subject to an event the effect of which is that a person, who was not in control of the Company before the event, becomes in control of the Company after the event (Capital Event) , to the extent the Executive Options have not yet vested, a proportion of the Executive Options may at the discretion of the Board (to be exercised by notice in writing to the relevant Executive) be deemed to have vested on a date (nominated by the Board) before the proposed Capital Event, with the Option Expiry Date accelerated to within 30 days after their vesting;
(r) where an Executive ceases employment for any reason whatsoever (including without limitation resignation or termination for cause) (Ceasing Date) and the Executive Options have vested, the Executive will be entitled to exercise Executive Options in accordance with the terms of the Executive Options, for a period of up to 60 days after the Ceasing Date, after which the Executive's Executive Options will lapse immediately and all rights in respect of those Executive Options will thereupon be lost; and
(s) if the Executive dies, is or becomes incapacitated by illness or injury that prevents the Executive from performing his duties under his Executive Agreement, resigns employment on the basis of retirement from the workforce or is made redundant by the Company, prior to the vesting of the Executive Options, the Board is to determine that the Executive Options held by that Executive do not lapse and may vest and later be exercised by the Executive, within such time (that time being no later than the Option Expiry Date) and on such terms as is reasonably determined by the Board and notified in writing to the Executive. Executive Options which have not been exercised by the end of that period lapse immediately and all rights in respect of these Executive Options will thereupon be lost.

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10. ADDITIONAL INFORMATION

10.1 Rights attaching to Shares

The rights, privileges and restrictions attaching to Shares can be summarised as follows.

10.1.1 General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company.

Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution of the Company.

10.1.2 Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of shares, at general meetings of shareholders or classes of shareholders:

(a) each shareholder entitled to vote may vote in person or by proxy, attorney or representative;
(b) on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and
(c) on a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder shall, in respect of each fully paid share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares shall have such number of votes as bears the same proportion to the total of such shares registered in the shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

10.1.3 Dividend rights

Subject to the rights of persons (if any) entitled to shares with special rights to dividends the Directors may declare a final dividend out of profits in accordance with the Corporations Act and may authorise the payment or crediting by the Company to the Shareholders of such a dividend. The Directors may authorise the payment or crediting by the Company to the Shareholders of such interim dividends as appear to the Directors to be justified by the profits of the Company. Subject to the rights of persons (if any) entitled to shares with special rights as to dividend all dividends are to be declared and paid according to the amounts paid or credited as paid on the shares in respect of which the dividend is paid. Interest may not be paid by the Company in respect of any dividend, whether final or interim.

10.1.4 Winding up

If the Company is wound up, the liquidator may, with the authority of a special resolution of the Company, divide among the shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the shareholders or different classes of shareholders. The liquidator may, with the authority of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no shareholder is compelled to accept any shares or other securities in respect of which there is any liability. Where an order is made for the winding up of the Company or it is resolved by special resolution to wind up the Company, then on a distribution of assets to members, shares classified by ASX as restricted securities at the time of the commencement of the winding up shall rank in priority after all other shares.

10.1.5 Transfer of Shares

Generally, Shares in the Company are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act or the Listing Rules.

ADDITIONAL INFORMATION

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

10.1.6 Variation of rights

Pursuant to Section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to Shares.

If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up may be varied or abrogated with the consent in writing of the holders of three-quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

10.2 Employee share option plan

The Company has developed an employee incentive option scheme (ESOP) to attract, motivate and retain employees. The ESOP has also been adopted to encourage employees to participate in the Company through Share ownership.

Eligible participants include full or part time employees of the Company (or an associated body corporate) but excludes Directors of the Company.

Under the ESOP, eligible employees may be issued options, for no consideration, to subscribe for Shares in the Company. The terms and conditions of the options issued under the ESOP will be decided by the Board in its absolute discretion.

The formula by which eligible employees will be entitled to options shall be at the absolute discretion of the Directors and shall take into account skills, experience, length of service with the Company, remuneration level and such other criteria as the Directors consider appropriate in the circumstances.

10.3 Disclosure of interests

Directors are not required under the Constitution to hold any Securities. However, each of the non-executive Directors intends to apply for Shares in the Offer either directly or through related interests. As at the date of this Prospectus, the Directors have relevant interests in Securities as follows:

Director				Options
	Direct	Indirect	Direct	Indirect
Steven Cole	NIL	NIL	NIL	NIL
Dario Amara	NIL	34,375,000	NIL	3,000,000
Angelo Dabala	NIL	31,250,000	NIL	1,000,000
James Cullen	NIL	NIL	NIL	NIL
David Richardson	NIL	NIL	NIL	NIL

10.4 Remuneration

The Constitution provides that the remuneration of non-executive Directors will be not more than the aggregate fixed sum determined by a general meeting. The aggregate remuneration for non-executive Directors has been set at an amount not to exceed $250,000 per annum.

The annual remuneration (inclusive of statutory superannuation entitlements) payable to each of the nonexecutive Directors at the date of this Prospectus is as follows:

Director	Annual Remuneration
Steven Cole	$60,000
James Cullen	$40,000
David Richardson	$40,000

The non-executive Directors are also entitled to fees or other amounts as the Board determines where they perform special duties or otherwise perform services outside the scope of the ordinary duties of a Director. Directors may also be reimbursed for reasonable expenses incurred in attending Board or committee meetings, on Company business or carrying out their duties.

Refer to Section 9.3 for details of executive Director remuneration.

ADDITIONAL INFORMATION

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10.5 Deeds of indemnity, insurance and access

The Company has entered into a deed of indemnity, insurance and access with each of its Directors. Under these deeds, the Company agrees to indemnify each Director to the extent permitted by the Corporations Act against any liability arising as a result of the Director acting in the capacity as a director of the Company. The Company is also required to maintain insurance policies for the benefit of each Director and must also allow the Directors to inspect Company documents in certain circumstances.

10.6 Fees and benefits

Other than as set out below or elsewhere in this Prospectus, no:

(a) Director of the Company;
(b) 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; or
(c) promoter of the Company,

has, or had within 2 years before lodgement of this Prospectus with the ASIC, any interest in:

(i) the formation or promotion of the Company;
(ii) any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the offer of Shares under this Prospectus; or
(iii) the offer of Shares under this Prospectus, and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of those persons as an inducement to become, or to qualify as, a Director of the Company or for services rendered in connection with the formation or promotion of the Company or the offer of Shares under this Prospectus.

PKF has acted as auditor to the Company in the 24 months preceding lodgement of this Prospectus with the ASIC and has received audit fees of $13,500. During the 24 months preceding lodgement of this Prospectus with the ASIC, PKF has not received any other fees from the Company.

PKF Corporate Advisory Services (WA) Pty Ltd has acted as Investigating Accountant and has prepared an Investigating Accountant’s Report, which has been included in Section 7 of this Prospectus. The Company estimates it will pay PKF a total of $60,000 for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, PKF Corporate Advisory Services (WA) Pty Ltd has not received any other fees from the Company.

Steinepreis Paganin has acted as the solicitors to the Company in relation to the Offer and has been involved in due diligence enquiries on legal matters. The Company estimates it will pay Steinepreis Paganin $50,000 for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, Steinepreis Paganin has received $21,000 for other legal services provided to the Company.

The Argonaut Group, comprising Argonaut Limited and its subsidiaries, has acted in various roles including acting as corporate and financial adviser to the Company and as Broker to the Offer. The Argonaut Group has the following interests:

The Argonaut Group holds 2,626,000 Shares in the Company
Argonaut Capital Limited, as corporate adviser, is being paid a corporate advisory fee of $20,000 per month from and including March 2008 (estimated to be $80,000). Argonaut Capital Limited will be paid a management fee of 1% of the amount raised under the Offer, being a maximum of $80,000. Additionally, Argonaut Capital Limited may provide corporate advice on an ‘as required’ basis for a 4-month period from the listing date for a potential fee of $10,000 per month

ADDITIONAL INFORMATION

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

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Argonaut Securities Pty Limited, as Broker to the Offer, will receive a capital raising fee of 4% of the amount raised by Argonaut under the Offer, being a maximum of $320,000
The Argonaut Group, its directors and its staff intend to participate in the Offer
Argonaut Capital Limited acted as the Company’s corporate adviser in relation to the January 2008 acquisition of Emerson Stewart Limited and received fees of $100,000 in cash and $400,000 in Shares in the Company
During the 24 months preceding lodgement of this Prospectus with the ASIC, the Argonaut Group has not received any other fees from the Company.

10.7 Consents

Each of the parties referred to in this Section:

(a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this Section; and
(b) to the maximum extent permitted by law, expressly disclaim and take no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section.

PKF has given its written consent to being named as auditor to the Company in this Prospectus. PKF has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

PKF Corporate Advisory Services (WA) Pty Ltd has given its written consent to being named as Investigating Accountant in this Prospectus and to the inclusion of the Investigating Accountant’s Report in Section 7 in the form and context in which the report is included. PKF Corporate Advisory Services (WA) Pty Ltd has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Steinepreis Paganin has given its written consent to being named as the solicitor to the Company in this Prospectus. Steinepreis Paganin has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Security Transfer Registrars Pty Ltd has given its written consent to being named the Company’s Share Registry in this Prospectus. Security Transfer Registrars Pty Ltd has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Argonaut Capital Limited has given its written consent to being named as the corporate adviser to the Company in this Prospectus. Argonaut Capital Limited has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Argonaut Securities Pty Limited has given its written consent to being named as the Broker to the Offer in this Prospectus. Argonaut Securities Pty Limited has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

ADDITIONAL INFORMATION

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Sygnum Assurance Services has given its written consent to the inclusion of its name and reference to the audited financial statements of Emerson Stewart Limited for the annual periods ending 30 June 2006 and 30 June 2007, and the reviewed financial statements for the six month period ending 31 December 2007, in the form and context in which they are included. Sygnum Assurance Services has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

10.8 Restricted Shares

ASX may require that certain existing security holders enter into agreements that restrict dealings in Shares held by them. If ASX does not impose escrow restrictions upon any Shares, Dario Amara and Angelo Dabala have undertaken to enter into voluntary restriction agreements restricting the disposal of their respective shareholdings until 31 January 2010. These agreements will be entered into in accordance with the Listing Rules.

10.9 Expenses of the Offer

The total expenses of the Offer are estimated to be approximately $651,143 and are expected to be applied towards the items set out in the table below:

Item of Expenditure	Amount
ASIC fees	$2,010
ASX fees	$45,133
Advisers’ fees	$590,000
Printing	$5,000
Miscellaneous	$9,000
TOTAL	$651,143

10.10 Litigation

As at the date of this Prospectus, the Company is not involved in any material legal proceedings and the Directors are not aware of any material legal proceedings pending or threatened against the Company.

ADDITIONAL INFORMATION

E m e r s o n S t e w a r t G r o u p L t d P r o s p e c t u s

11. DIRECTORS’ AUTHORISATION

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors. In accordance with Section 720 of the Corporations Act, each Director has consented to the lodgement of this Prospectus with the ASIC.

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Steven Cole Chairman of Directors For and on behalf of Emerson Stewart Group Ltd

DIRECTORS’ AUTHORISATION

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12. GLOSSARY

A$ or $ means an Australian dollar.

ABARE means the Australian Bureau of Agricultural and Resource Economics.

Application Form means the application form accompanying this Prospectus relating to the Offer.

Argonaut means, as applicable, Argonaut Capital Limited (ACN 099 761 547; AFSL 221 476) or Argonaut Securities Pty Limited (ACN 108 330 650; AFSL 274 099).

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited (ACN 008 624 691) or the Australian Securities Exchange (as the context requires). Board means the board of Directors as constituted from time to time.

Business Day means a week day when trading banks are ordinarily open for business in Perth, Western Australia. Company means Emerson Stewart Group Ltd (ACN 122 958 178).

Closing Date means the closing date of the Offer as set out in Section 3.

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company at the date of this Prospectus.

EBIT means earnings before interest and taxes.

Emerson Stewart means the Company, and as applicable, includes Emerson Stewart Limited.

Emerson Stewart Limited means Emerson Stewart Limited (ACN 115 673 231).

ESOP means the employee share option plan set out in Section 10.2.

Executive Option means an option to acquire a Share on the terms and conditions set out in Section 9.4 of this Prospectus.

Exposure Period means the period of 7 days after the date of lodgement of this Prospectus, which period may be extended by the ASIC by not more than 7 days pursuant to Section 727(3) of the Corporations Act.

Forecasts mean the financial forecasts for the Company referred to in Section 6.

KW means kilowatt.

Listing Rules means the official listing rules of ASX.

MW means megawatt.

NPAT means net profit after tax.

Offer means the offer to Shareholders and investors to apply for Shares set out in Section 3 of this Prospectus.

Official List means the Official List of ASX.

Official Quotation means official quotation by ASX in accordance with the Listing Rules.

Option means an option to acquire a Share on the terms and conditions set out in Section 9 of this Prospectus. PBT means profit before tax.

Prospectus means this prospectus.

Securities means Shares and Options.

Share means a fully paid ordinary share in the capital of the Company.

Share Registry means Security Transfer Registrars Pty Ltd (ACN 008 894 488).

Shareholder means a holder of Shares.

TW3 means the business management system referred to in Section 4.2.2.

WST means Western Standard Time, Perth, Western Australia.

GLOSSARY

A P P L I C AT I O N F O R M

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ACN 122 958 178

THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN DOUBT AS TO HOW TO DEAL WITH IT, PLEASE CONTACT YOUR STOCKBROKER OR LICENSED PROFESSIONAL ADVISER . Before completing this Application Form, you should read the Prospectus dated 8 May 2008 and the instructions overleaf. No Shares will be issued pursuant to the Prospectus later than 13 months after the date of the Prospectus.

Broker Stamp/Adviser Code Share Registrar use only

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PLEASE READ ALL INSTRUCTIONS ON THE REVERSE OF THIS FORM

A I/We apply for
Shares at $0.20 per Share in EMERSON STEWART GROUP LTD or such lesser number of Shares which may be allocated to me/us by the Directors.
B I/We lodge full application of monies of:

A$

C Full Name (please print using BLOCK LETTERS)

Joint Applicant #2 or

Joint Applicant #3 or D Postal Address (please print using BLOCK LETTERS) Street Number Street Name City/Suburb/Town State Postcode E Contact name Home telephone number Work telephone number F ACN/ARBN (for companies only) Email address G Tax file number or exemption Applicant 2 Applicant 3 H CHESS HIN (if applicable)

PAYMENT DETAILS

Please enter details of the cheque(s) that accompany this application I Cheque Details Drawer Bank Branch Amount of cheque | | | Drawer Bank Branch Amount of cheque | | |

Declaration and Statements:

By lodging this Application Form:

I/We declare that all details and statements made by me/us are complete and accurate;

I/We agree to be bound by the terms and conditions set out in the Prospectus and by the Constitution of the Company;

I/We acknowledge that the Company will send me/us a paper copy of the Prospectus and any Supplementary Prospectus (if applicable) free of charge if I/we request so during the currency of the Prospectus;

I/We authorise the Company to complete and execute any documentation necessary to effect the issue of Shares to me/us; and I/We have received personally a copy of the Prospectus accompanied by or attached to this Application Form or a copy of the Application Form or a direct derivative of the Application Form before applying for Shares.

I/We acknowledge that returning the Application Form with the application monies will constitute my/our offer to subscribe for Shares in EMERSON STEWART GROUP LTD and that no notice of acceptance of the application will be provided.

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TO MEET THE REQUIREMENTS OF THE CORPORATIONS ACT, THIS FORM MUST NOT BE HANDED TO ANY PERSON UNLESS IT IS ATTACHED TO OR ACCOMPANIED BY THE PROSPECTUS DATED 8 MAY 2008 AND ANY RELEVANT SUPPLEMENTARY PROSPECTUS.

This Application Form relates to the Offer of Fully Paid Shares in EMERSON STEWART GROUP LTD pursuant to the Prospectus dated 8 May 2008.

APPLICATION FORM

Please complete all parts of the Application Form using BLOCK LETTERS. Use correct forms of registrable name (see below). Applications using the wrong form of name may be rejected. Current CHESS participants should complete their name and address in the same format as they are presently registered in the CHESS system.

Insert the number of Shares for which you wish to apply. The application must be for a minimum of 10,000 Shares and thereafter in multiples of 1,000 Shares. The applicant(s) agree(s) upon and subject to the terms of the Prospectus to take any number of Shares equal to or less than the number of Shares indicated on the Application Form that may be allotted to the applicants pursuant to the Prospectus and declare(s) that all details of statements made are complete and accurate.

No notice of acceptance of the application will be provided by the Company prior to the allotment of Shares. Applicants agree to be bound upon acceptance by the Company of the application.

Please provide us with a telephone contact number (including the person responsible in the case of an application by a company) so that we can contact you promptly if there is a query in your Application Form. If your Application Form is not completed correctly, it may still be treated as valid. There is no requirement to sign the Application Form. The Company’s decision as to whether to treat your application as valid, and how to construe, amend or complete it shall be final.

PAYMENT

Applications for Shares must be accompanied by the application money of $0.20 per Share (in Australian currency). Cheques should be made payable to EMERSON STEWART GROUP LTD – SHARE OFFER ACCOUNT and crossed “Not Negotiable”. Do not forward cash as receipts will not be issued.

LODGING OF APPLICATIONS

Completed Application Forms and cheques must be: Posted to: OR Delivered to: EMERSON STEWART GROUP LTD EMERSON STEWART GROUP LTD C/- Argonaut Securities Pty Limited C/- Argonaut Securities Pty Limited PO Box 2553 Level 30, Allendale Square PERTH WA 6001 PERTH WA 6000

Applications must be received by no later than 5.00 pm WST on the Closing Date 6 June 2008.

BROKER SPONSORED APPLICANTS

The Company intends to become an Issuer Sponsored participant in the ASX CHESS System. This enables a holder to receive a statement of holding rather than a certificate. If you are already a Broker Sponsored participant in this system, you may complete this section or forward a signed Application Form to your sponsoring broker for completion prior to lodgement. Otherwise, leave this box blank and your Shares will automatically be Issuer Sponsored on allotment.

TAX FILE NUMBERS

The collection of tax file number (TFN) information is authorised and the tax laws and the Privacy Act strictly regulate its use and disclosure. Please note that it is not against the law not to provide your TFN or claim an exemption, however, if you do not provide your TFN or claim an exemption, you should be aware that tax will be taken out of any unfranked dividend distribution at the maximum tax rate.

If you are completing the application with one or more joint applicants, and you do not wish to disclose your TFN or claim an exemption, a separate form may be obtained from the Australian Taxation Office to be used by you to provide this information to the Company. Certain persons are exempt from providing a TFN. For further information, please contact your taxation adviser or any Taxation Office.

CORRECT FORM OF REGISTRABLE TITLE

Note that only legal entities are allowed to hold securities. Applications must be in the name(s) of a natural person(s), companies or other legal entities acceptable to EMERSON STEWART GROUP LTD. At least one full given name and the surname are required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the example of the correct forms of registrable names below:.

TYPE OF INVESTOR	CORRECT FORM OF REGISTRATION	INCORRECT FORM OF REGISTRATION
Individual Use given names in full, not initials	Mr John Alfred Smith	J A Smith
Company Use the company’s full title, not abbreviations	ABC Pty Ltd	ABC P/L or ABC Co
Joint holdings Use full and complete names	Mr Peter Robert Williams & Ms Louise Susan Williams	Peter Robert & Louise S Williams
Trusts Use trustee(s) personal name(s), Do not use the name of the trust	Mrs Susan Jane Smith	Sue Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Jane Mary Smith & Mr Frank William Smith	Estate of Late John Smith, or John Smith Deceased
Minor (a person under the age of 18) Use the name of a responsible adult with an appropriate designation	Mr John Alfred Smith	Master Peter Smith
Partnerships Use the partners’ personal names. Do not use the name of the partnership	Mr John Robert Smith & Mr Michael John Smith	John Smith and Son

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A P P L I C AT I O N F O R M

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ACN 122 958 178

Broker Stamp/Adviser Code Share Registrar use only

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PLEASE READ ALL INSTRUCTIONS ON THE REVERSE OF THIS FORM

A I/We apply for
Shares at $0.20 per Share in EMERSON STEWART GROUP LTD or such lesser number of Shares which may be allocated to me/us by the Directors.
B I/We lodge full application of monies of:

A$

C Full Name (please print using BLOCK LETTERS)

Joint Applicant #2 or

PAYMENT DETAILS

Please enter details of the cheque(s) that accompany this application I Cheque Details Drawer Bank Branch Amount of cheque | | | Drawer Bank Branch Amount of cheque | | |

Declaration and Statements:

By lodging this Application Form:

I/We declare that all details and statements made by me/us are complete and accurate;

I/We agree to be bound by the terms and conditions set out in the Prospectus and by the Constitution of the Company;

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This Application Form relates to the Offer of Fully Paid Shares in EMERSON STEWART GROUP LTD pursuant to the Prospectus dated 8 May 2008.

APPLICATION FORM

No notice of acceptance of the application will be provided by the Company prior to the allotment of Shares. Applicants agree to be bound upon acceptance by the Company of the application.

PAYMENT

LODGING OF APPLICATIONS

Applications must be received by no later than 5.00 pm WST on the Closing Date 6 June 2008.

BROKER SPONSORED APPLICANTS

TAX FILE NUMBERS

CORRECT FORM OF REGISTRABLE TITLE

TYPE OF INVESTOR	CORRECT FORM OF REGISTRATION	INCORRECT FORM OF REGISTRATION
Individual Use given names in full, not initials	Mr John Alfred Smith	J A Smith
Company Use the company’s full title, not abbreviations	ABC Pty Ltd	ABC P/L or ABC Co
Joint holdings Use full and complete names	Mr Peter Robert Williams & Ms Louise Susan Williams	Peter Robert & Louise S Williams
Trusts Use trustee(s) personal name(s), Do not use the name of the trust	Mrs Susan Jane Smith	Sue Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Jane Mary Smith & Mr Frank William Smith	Estate of Late John Smith, or John Smith Deceased
Minor (a person under the age of 18) Use the name of a responsible adult with an appropriate designation	Mr John Alfred Smith	Master Peter Smith
Partnerships Use the partners’ personal names. Do not use the name of the partnership	Mr John Robert Smith & Mr Michael John Smith	John Smith and Son

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w w w . e m e r s o n s t e w a r t . c o m
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HEAD OFFICE

OLD SWAN BREWERY 110/171 Mounts Bay Road Perth Western Australia 6000

CONTACT Phone: +61 8 9424 9555 Fax: +61 8 9485 1339

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w w w . e m e r s o n s t e w a r t . c o m
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AI assistant

VERIS LIMITED — Capital/Financing Update 2008

66021_rns_2008-05-19_ed2543ad-f977-43ca-bf21-cb1162a3be98.pdf

IMPORTANT INFORMATION

Emerson Stewart Group Ltd

IMPORTANT NOTICE

WEBSITE – ELECTRONIC PROSPECTUS

EXPOSURE PERIOD

CORPORATE DIRECTORY

Directors

non-executive independent chairman

Corporate Adviser

Broker to the Offer

non-executive director

Company Secretary

Registered Office

Website

Solicitors to the Company

Auditors

Investigating Accountant

Share Registry*

CONTENTS

1. CHAIRMAN AND CHIEF EXECUTIVE’S LETTER

Nellie Ward Emerson (1892-1956)

William James Stewart (1855-1924)

2. INVESTMENT OVERVIEW

2.1 Emerson Stewart

2.1.1 Service provider to the resources, infrastructure and energy sectors

• Resources: all commodities

2.1.2 Substantial growth opportunities

2.1.3 Experienced and effective leadership

2.1.4 Strong financial profile

2.2 Key risks

2.3 Summary financial information

2.4 Dividend policy

2.5 Purpose of the Offer

2.6 Use of proceeds

2.7 Ownership structure

2.8 Enquiries

3. DETAILS OF THE OFFER

3.1 The Offer

3.2 Applications

Argonaut Securities Pty Limited

“Emerson Stewart Group Ltd – Share Offer Account”

“Not Negotiable” .

3.3 Oversubscriptions

3.4 Allotment and allocation policy

3.5 Minimum subscription

3.6 ASX listing

3.7 Applicants outside Australia

3.8 Broker to the Offer

3.9 Underwriting

3.10 Commissions on Application Forms

3.11 CHESS

3.12 Risk factors

3.13 Privacy statement

3.14 Electronic Prospectus

3.15 Taxation

4. BUSINESS OVERVIEW

4.1 Emerson Stewart background

Group Structure

4.2 Emerson Stewart business model

4.2.1 Growth opportunities

4.2.2 Systems, plans and procedures

4.3 Resources business line

4.3.1 Mineral commodities industry overview

4.3.2 Emerson Stewart Resources

4.4 Infrastructure business line

4.4.1 Infrastructure industry overview

Western Australia’s Infrastructure Boom

4.4.2 Emerson Stewart Infrastructure

4.5 Energy business line

4.5.1 Energy industry overview

4.5.2 Emerson Stewart Energy

5. DIRECTORS, SENIOR MANAGEMENT AND CORPORATE GOVERNANCE

5.1 Directors

non-executive independent chairman

managing director/chief executive

Angelo Dabala MAICD

executive director/director energy

VERIS LIMITED Capital/Financing Update 2008