For personal use only Australian S tock Exchange Limited 4 th Floor - - PDF document

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27 March, 2008 Company Announcements Office For personal use only Australian S tock Exchange Limited 4 th Floor 20 Bridge S treet S YDNEY NS W 2000 PRESENTATION OF SPOTLESS GROUP LIMITED TAKEOVER OFFER FOR PROGRAMMED MAINTENANCE

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S potless Group Limited 77 004 376 514 350 Queen S treet Melbourne Vict oria 3000 Australia www.spotless.com.au T +61 3 9269 7600 F +61 3 9269 7712

27 March, 2008 Company Announcements Office Australian S tock Exchange Limited 4th Floor 20 Bridge S treet S YDNEY NS W 2000

PRESENTATION OF SPOTLESS GROUP LIMITED TAKEOVER OFFER FOR PROGRAMMED MAINTENANCE SERVICES LIMITED

Any enquiries should be directed to Mr. Rowan Wilkie on +61 3 9269 7303 or +61 418 577 956

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Spotless’ Offer to acquire Programmed Maintenance Services: Creating a leading Australasian services business

27 March 2008

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Agenda

Transaction highlights Highly attractive offer for Programmed shareholders Strategic rationale Overview of the Merged Group Funding arrangements Timetable Conclusion #1 #1 #2 #2 #3 #3 #4 #4 #5 #5 #6 #6 #7 #7

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Transaction highlights

#1 #1

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Transaction highlights

#1 #1

  • 1. Offer value based on Spotless Volume Weighted Average Price (VWAP) of $3.77 for the 10 trading days up to and including 26 March 2008
  • 2. Based on median of broker estimates for Programmed’s earnings for the 12 months to 31 March 2008 as sourced from IBES (26 March 2008); median NPAT of $31.1 million, median EBIT of $59.6 million
  • 3. Assuming all Programmed shareholders elect to receive their Offer consideration under the Majority Share Alternative and Spotless' VWAP of $3.77 for the 10 trading days up to and including 26 March 2008.
  • Spotless Offer to acquire all the shares in Programmed, which it does not already own with the Offer valued at

$6.111 per share (the Offer)

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All Share Alternative – 1.620 Spotless shares per Programmed share; or

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Majority Share Alternative – $1.50 in cash plus 1.223 Spotless shares per Programmed share; or

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Maximum Cash Alternative – $3.00 in cash plus 0.825 Spotless shares per Programmed share

  • Compelling offer to Programmed shareholders

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34.6% premium to Programmed’s closing price prior to announcement on 26 March 2008

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Implied March 2008E P/E multiple of 17.9x2 and EBIT multiple of 12.8x2

  • Opportunity for Programmed shareholders to participate in the potential upside of Merged Group
  • Will create a leading provider of facility services within Australia and New Zealand

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Improved long term growth profile

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Increased operational economies of scale

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Significant management and administrative efficiencies

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Strengthened capital base for further growth

  • Spotless to have a pro forma market capitalisation of approximately $1.25 billion post acquisition3,

strengthening its position in the S&P/ASX 200

  • Expected annual pre-tax synergies of approximately $18 million per annum in year 2
  • Spotless has a relevant interest in shares totalling 13.2% of Programmed’s issued capital that includes an

interest of 10.3% pursuant to pre-bid acceptance agreements entered into with some of Programmed’s largest shareholders, indicating their support for the Offer

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  • Programmed is a provider of property maintenance, asset management, workforce and marine services,

managing buildings in the private and public sector throughout Australia, New Zealand and the United Kingdom

  • Following the acquisition of Integrated Group Limited in May 2007, Programmed now provides workforce

services to clients in various industries through its recruitment, labour hire and managed workforce services

#1 #1 Overview of Programmed

Property Maintenance

  • Painting – Maintenance painting programs, specialised surface preparations and finishes,

shut down and difficult access projects, heavy duty protective coatings and graffiti removal

  • Corporate Imaging – Project management and multi site projects, building identification

and way-finding signage, re-image artwork and web based image management

  • Building Services – Building related trades services, building condition and compliance

audits, preventative maintenance programs, refurbishments and capital upgrades Asset Management

  • Industrial Services – Sewerage, drainage, automated high pressure cleaning and jetting,

inspections of underground assets, non-destructive digging and waste collection

  • Technical Maintenance – Contract engineering, maintenance and project management
  • Facilities and Infrastructure Management – Catering, cleaning, security, logistics,

grounds and waste management, building services and civil works Workforce

  • Temporary and Permanent Recruitment – Recruitment services from provision of a

single staff member to complete workforce and contract management in support services

  • Managed Labour – Manning, project management and logistic solutions
  • Marine Services – Managed labour, contract management, vessel management,

specialist marine services, harbour services and support services

Segment Revenue FY2007 Property Maintenance 36% Workforce 42% Marine 15% Industrial Services 4% Technical Maintenance 3% Segment EBIT FY2007 Workforce 19% Property Maintenance 59% Marine 13% Industrial Services 5% Technical Maintenance 4%

Key brands Segment Contribution

Source: Programmed company announcements, Programmed investor presentations (12 February 2007 and 28 November 2007)

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Highly attractive offer for Programmed shareholders

#2 #2

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#2 #2

Transaction Spotless Group Limited (Spotless) intends to make an off-market takeover bid for Programmed Maintenance Services Limited (Programmed) (the Offer) Offer consideration Programmed shareholders can choose to receive their Offer consideration from one of three alternatives 1) All Share Alternative – 1.620 Spotless shares per Programmed share; or 2) Majority Share Alternative – $1.50 in cash plus 1.223 Spotless shares per Programmed share; or 3) Maximum Cash Alternative – $3.00 in cash plus 0.825 Spotless shares per Programmed share Under each of these alternatives, the Offer is valued at $6.11, based on Spotless' VWAP of $3.77 for the 10 trading days up to and including 26 March 2008 Status Spotless has a total relevant interest totalling 13.2% of Programmed’s issued capital 1) 2.9% in direct beneficial ownership of Programmed shares 2) 10.3% pursuant to pre-bid acceptance agreements with some of Programmed’s largest shareholders Total Offer value 1) Equity value ~$556 million1 2) Enterprise value ~$760 million2 Key Offer conditions 1) By the end of the Offer Period, Spotless and its Associates together have a Relevant Interest in more than 90% of the Programmed shares on issue 2) Other conditions are detailed in the accompanying ASX announcement

Highlights of the Offer

  • 1. Assumes 90.0 million ordinary Programmed shares on issue, plus 1.0 million performance options and performance rights at a value of $6.11 per Programmed share
  • 2. Assumes net debt position of $204 million as at 30 September 2007 as reported in Programmed interim results

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Significant premium for Programmed shareholders

#2 #2

The Offer is valued at $6.111 per share and represents a 34.6% premium to Programmed’s closing price as at 26 March 2008

  • 1. Based on Spotless Volume Weighted Average Price (VWAP) of $3.77 for the 10 trading days up to and including 26 March 2008.

$ 6.11 $ 4.54 $ 4.47 $ 4.47

Value of Spotless' Offer¹ Programmed closing price on 26 March 2008 Programmed 10 day VWAP Programmed 1 month VWAP Premium 34.6% Value of Spotless' Offer $6.11 Premium 36.7% Premium 36.7%

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EV / EBIT 2008E

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Significant premium to Programmed’s trading multiples

#2 #2

P / E 2008E

  • The Offer implies an equity value of $556 million1 and an enterprise value of $760 million2 representing a

significant premium to Programmed shareholders

  • Implied March 2008 P/E multiple of 17.9x and March 2008 EV/EBIT multiple of 12.8x represent significant

premia to Programmed’s trading multiples prior to the Offer3

  • 1. Assumes 90.0 million ordinary Programmed shares on issue, plus 1.0 million performance options and performance rights at a value of $6.11 per Programmed share
  • 2. Assumes net debt position of $204 million as at 30 September 2007 as reported in Programmed interim results.
  • 3. Based on median of broker estimates for Programmed’s earnings for the 12 months to 31 March 2008 as sourced from IBES (26 March 2008); median NPAT of $31.1 million, median EBIT of $59.6 million

17.9 x 13.3 x

Spotless Offer Multiple Programmed trading multiple based on closing price of $4.54 (26 March 2008)

12.8 x 10.4 x

Spotless Offer Multiple Programmed trading multiple based on closing price of $4.54 (26 March 2008)

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Strategic rationale

#3 #3

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The acquisition of Programmed has strong strategic rationale

#3 #3

  • Strong strategic fit
  • Increased breadth and depth in coverage of client segments
  • Increased breadth and depth of services with ability to provide clients seamless

integrated multi-service offerings and focused single service offerings

  • Significantly increased scale in Australia and New Zealand creating a facility services

leader with improved ability to create value from UK beachhead

  • Strong business model fit
  • Combination of multi-service and single service solutions
  • More effective labour management
  • Lowering the cost and improving the quality of client service delivery
  • Unlocks the complementary value in both businesses
  • Logical extension to facility services portfolio
  • Account management through Managed Services – with a deeper pool of services to

draw from

  • Opportunity to enhance workforce management capabilities across the Merged Group

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Strong strategic fit

#3 #3

Market segment

The combination of Programmed and Spotless deepens segment coverage in existing segments and extends the business into new growth segments

Service line

The combination of Programmed and Spotless creates a broad yet deep set of complementary capabilities across service lines

Existing Spotless service lines Existing Spotless geographies Existing Spotless market segments New service lines, geographies and market segments acquired from Programmed

The Programmed acquisition advances Spotless' strategic agenda along geographic, service line and market segments

Geography

The combination of Programmed and Spotless will create a leading facility services company in Australia and New Zealand Merged Group better positioned for

  • ffshore growth in the UK

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Strong business model fit

#3 #3

Labour management

The Merged Group will be a significantly larger employer and be better positioned to unlock the value of Workforce by driving more effective labour management; improve the efficiency of sourcing, training, deploying and managing people (both employees and subcontractors)

Service delivery platform

Increased operational economies

  • f scale in services; lowering the

cost and improving the quality of client service delivery

Integrated and single services backed by an account management focus

The combination of Programmed and Spotless will create market leading integrated and single service offerings based on client and market needs

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#3 #3 Unlocks the complementary value in

both businesses

Leadership of group-wide account management provided through the Managed Services division. Managing and delivering multi-service solutions drawn from both the internal services portfolio and external providers All divisions provide focused single services to their unique market segments and clients The provision of workforce management for the wider Group through the Workforce division. More efficiently and effectively sourcing, training, deploying and managing the tens of thousands of people working across the Merged Group Retailer Services remains a focused global business providing garment hangers, label and ticketing solutions and closed loop garment hanger reuse programs to the global apparel industry

Logical extension of Spotless facility services portfolio Account management through Managed Services - with a deeper pool of services to draw from Opportunity to enhance Workforce management capabilities across the Merged Group

SHARED SERVICES

SPOTLESS GROUP CLIENTS

FACILITY SERVICES

FOOD SERVICES CLEANING SERVICES MANAGED SERVICES LAUNDRY SERVICES PROPERTY MAINTENANCE SERVICES WORKFORCE SERVICES RETAILER SERVICES ACCOUNT MANAGEMENT WORKFORCE MANAGEMENT

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Overview of the Merged Group

#4 #4

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  • Spotless' intentions are for Programmed to be integrated with Spotless under the following structure

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Retain Programmed’s Workforce and Property Maintenance businesses as separate divisions within Spotless

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Merge Programmed’s Marine (non-workforce), managed services, industrial services and building services within Spotless' Managed Services division

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Merge Programmed and Spotless Shared Services including (but not limited to) IT, finance, HR, procurement and marketing

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Maintain Programmed’s UK division as a separate business within Property Maintenance

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Overview of Merged Group

#4 #4

The combination of these highly complementary businesses will create a leading facility services business in Australasia

Pro forma Group Revenue 12 months to 31 Dec 20071 Pro forma Group EBIT 12 months to 31 Dec 20071

  • 1. Pro forma financials exclude synergies and assume financials for the year ended 31 December 2007 for Spotless and pro forma financials for the year ended 31 March 2007 for Programmed based on Scheme

Document relating to Programmed and Integrated Group merger (3 April 2007)

Spotless 61% Programmed 39% Spotless 76% Programmed 24%

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Overview of Merged Group

#4 #4

A powerful combination

SHARED SERVICES SPOTLESS GROUP CLIENTS FACILITY SERVICES

FOOD SERVICES CLEANING SERVICES MANAGED SERVICES LAUNDRY SERVICES PROPERTY MAINTENANCE SERVICES WORKFORCE SERVICES

RETAILER SERVICES

Programmed businesses retained as separate divisions Merged shared services Programmed businesses within existing Spotless divisions Existing Spotless divisions

INDUSTRIAL SERVICES TECHNICAL SERVICES MARINE (non-workforce) MARINE (workforce) UK

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Increased market capitalisation

  • The Merged Group will have pro forma market capitalisation of approximately $1.25 billion1 and will be
  • ne of the top 150 largest companies by market capitalisation
  • Greater liquidity and stronger balance sheet will increase access to capital to fund future growth
  • pportunities and participate in further industry consolidation

#4 #4

  • 1. Assuming all Programmed shareholders elect to receive their Offer consideration under the Majority Share Alternative and Spotless' VWAP of $3.77 for the 10 trading days up to and including 26 March 2008.
  • 2. Based on Programmed closing price of $4.54 on 26 March 2008
  • 3. Based on Spotless Volume Weighted Average Price (VWAP) of $3.77 for the 10 trading days up to and including 26 March 2008

$413m $819m $1,239m

Programmed standalone market capitalisation² Spotless standalone market capitalisation³ Merged Group market capitalisation¹

S&P/ASX 200 membership

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Significant annual synergies of approximately $18 million in year 2

#4 #4

Synergy area Comments

Corporate overhead costs Removal of duplicated functions and costs associated with the management of the Merged Group This includes downsizing corporate office space, minimising annual report production and annual general meeting costs, registry services and listing costs, auditor’s fees and insurance Shared services costs Consolidation of key areas in shared services such as HR, finance, procurement, IT, legal, marketing and strategy Operational Cost and margin enhancement Consolidation of duplicated operational activities (where appropriate) such as client support and business development In-sourcing a portion of services currently provided by third parties for both Programmed and Spotless such as painting and cleaning Account management Introducing a stronger suite of Merged Group services to a deeper pool of clients Procurement Consolidation of third party goods and services used by both Spotless and Programmed to ensure the Merged Group receives fair value for its enlarged procurement scale Workforce services Payments made to third parties for labour and agency recruiting services may be redirected internally to the Merged Group generating further cost efficiencies

Note: Spotless expects to achieve approximately 50% of the stated year 2 synergies in the first full year of ownership and estimates associated one-off costs to be approximately $18 million spread over the first two years of ownership

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Integration plans well developed

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#4 #4

Post acquisition Spotless will establish a dedicated integration team, headed by the

CEO of Spotless and managed by a steering committee

  • Strong integration focus to maximise value from the Merged Group
  • The first task for the dedicated integration team will be the implementation of a detailed

post-merger integration work plan to be completed within the first 100 days

This work plan will address 5 key areas:

  • Post-merger Operations: post-Merger integration review and management of

communications

  • Corporate: organisational structure of Programmed and all properties owned or leased by

Programmed

  • Shared Services: the policies, procedures and staffing of Programmed’s Shared Services
  • Operations: realising operational synergies: duplicated operational activities, in-sourcing,

account management and procurement

  • Acquired Programmed businesses: alignment with the Merged Group and assessment of

business development prospects

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Funding arrangements

#5 #5

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Funding overview

  • Fully committed and underwritten debt facilities in place in connection with the Offer, provided by Goldman

Sachs JBWere Pty Ltd and Goldman Sachs Credit Partners L.P. Spotless intends to refinance the debt facilities at an appropriate time

  • The acquisition is expected to ultimately be funded through a combination of drawing down on existing

Spotless debt facilities, new bank debt facilities and Spotless scrip issued to Programmed shareholders pursuant to the Offer

  • If desired, Spotless may also undertake an equity raising to provide flexibility in its capital management and

has entered into an equity volume underwriting agreement with Goldman Sachs JBWere Pty Ltd

  • As outlined above, Spotless has a number of options to refinance the debt facilities and will consider the
  • ptimal balance of these funding options at a later stage

#5 #5

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Timetable

#6 #6

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Indicative timetable

  • Announcement date

27 March 2008

  • Expected lodgement of Bidder’s Statement

2 April 2008

  • Expected despatch of Bidder’s Statement

17 April 2008

  • Latest date for lodgement of Target’s Statement1

2 May 2008

#6 #6

  • 1. Based on expected despatch of Bidder’s Statement on 17 April 2008

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Conclusions

#7 #7

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Conclusions

#7 #7

  • 1. Offer value based on Spotless Volume Weighted Average Price (VWAP) of $3.77 for the 10 trading days up to and including 26 March 2008
  • 2. Assuming all Programmed shareholders elect to receive their Offer consideration under the Majority Share Alternative and Spotless' VWAP of $3.77 for the 10 trading days up to and including 26 March 2008.
  • Spotless Offer to acquire all the shares in Programmed, which it does not already own with the Offer valued at

$6.111 per share (the Offer)

  • Compelling offer to Programmed shareholders
  • Opportunity for Programmed shareholders to participate in the potential upside of Merged Group
  • Will create a leading provider of facility services within Australia and New Zealand

−

Improved long term growth profile

−

Increased operational economies of scale

−

Significant management and administrative efficiencies

−

Strengthened capital base for further growth

  • Spotless to have a pro forma market capitalisation of approximately $1.25 billion post acquisition2,

strengthening its position in the S&P/ASX 200

  • Expected annual pre-tax synergies of approximately $18 million per annum in year 2
  • Spotless has a relevant interest in shares totalling 13.2% of Programmed’s issued capital that includes an

interest of 10.3% pursuant to pre-bid acceptance agreements entered into with some of Programmed’s largest shareholders, indicating their support for the Offer

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Key contacts

#7 #7

Rowan Wilkie

Spotless Group T: +61 3 9269 7303 M: +61 418 577 956

Tony Osmond

Goldman Sachs JBWere T: +61 3 9679 1399 M: +61 411 449 751

Tim Duncan

Hintons T: +61 3 9600 1979 M: +61 408 441 122

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Important notice

This presentation is for information purposes only, is in a summary form, and does not purport to be complete. This presentation does not constitute an offer or invitation to acquire or dispose of any securities or investment advice in any jurisdiction, including the US. Any offer, invitation, or inducement to acquire or dispose of any securities of Spotless Group Limited or Programmed Maintenance Services Limited will be made solely by means of the Bidder's Statement and associated documents, and any decision to buy keep or sell shares in Spotless Group Limited or Programmed Maintenance Services Limited should be made solely on the basis of the information contained in such documents. This presentation does not take into account the investment objectives, financial situation

  • r needs of any investor or potential investor. Such persons should consider seeking independent professional advice depending on

their specific investment objectives, financial situation, or particular needs.

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