First Annual Report to Creditors

CORPORATE RECOVERY First Annual Report to Creditors Allco Finance Group Limited and 49 subsidiaries listed in Appendix A (All in Liquidation) (All Receivers & Managers Appointed) 20 August 2010

Contents 1 Glossary... 2 2 Introduction... 3 2.1 Purpose of Report... 3 2.2 Key activities undertaken... 3 2.3 Indemnities provided... 3 3 Status of investigations... 4 3.1 Entitlement to Excluded Assets... 4 3.2 Validity of the Security... 4 3.3 Investigation of offences... 4 3.4 Other investigations... 4 3.5 Future steps... 4 4 Remuneration... 5 4.1 Liquidators Remuneration Cross Guarantee Group... 5 4.2 Liquidators Remuneration Other entities... 5 5 Remaining activities in the liquidation... 6 Appendix A list of companies in liquidation... 7 Appendix B Receipts and payments... 8 Allco Finance Group - First Report to Creditors - 20 August 2010 Page 1

1 Glossary ACN Australian Company Number AFGL Allco Finance Group Limited Allco IB Allco IB Holdings Limited ASIC The Australian Securities and Investments Commission Creditors creditors of any member of the Group Cross Guarantee Group 17 Allco entities that are party to the DOCG DOCA Deed of Company Arrangement DOCG Deed of Cross Guarantee s439a Report 439A Report to Creditors dated 6 March 2009 Security The security held by the Banking Syndicate over the assets of the Companies the Act The Corporations Act 2001 the Banking Syndicate 12 banks with security over the assets of the Companies the Committee Committee of Inspection the Group / the Companies The 17 Allco entities that are in liquidation and party to the DOCG the Liquidators Anthony Gregory McGrath and Joseph David Hayes the Receivers Steven Sherman and Peter Gothard the Trust The AEP Holding Trust Allco Finance Group - First Report to Creditors - 20 August 2010 Page 2

2 Introduction 2.1 Purpose of Report This is the First Annual Report ( Report ) to the creditors of Allco Finance Group Limited ( AFGL ) and 49 of its subsidiaries that are in liquidation ( Creditors ) ( the Group or the Companies ) prepared by Anthony Gregory McGrath and Joseph David Hayes, liquidators of the Companies. Members of the Group are listed in Appendix A to this Report. Pursuant to s508(1)(b)(ii) of the Corporations Act ( the Act ) the Liquidators have made a determination to prepare a Report rather than convene a meeting of creditors. This Report has been prepared in accordance with s508(3) of the Act and outlines the key activities that have been undertaken over the period 26 May 2009 to 25 May 2010 and has been lodged with ASIC pursuant to s508(4) of the Act. 2.2 Key activities undertaken The key activities that have been undertaken by the Liquidators can be summarised into the following broad categories: + finalisation of the Deeds of Company Arrangement ( DOCAs ) for Allco Asset Finance Limited and Allco Management Limited; + attending to the retirement and replacement of trustee roles held by various members of the Group; + ongoing investigations; + dealing with regulatory matters, including liaison with ASIC; and + general creditor correspondence and engagement management. The focus of our activity during the past 12 months has been on investigations into the entitlement to certain Excluded Assets and the validity of the security held by the Banking Syndicate. The nature of these enquiries and a brief outline of the work that we have undertaken are detailed further at section 3 below. 2.3 Indemnities provided Indemnities have been provided to the Liquidators for professional fees incurred in relation to the following work streams: + finalisation of the DOCAs; and + retirement and replacement of trustees. The quantum of funding received is outlined in the Receipts and Payments statement included as Appendix B. In addition, as noted at 3.3 below, ASIC has recently agreed to fund the Liquidators to undertake certain investigations into the affairs of the Group. As this work has not yet been completed, no funding has been received as yet. Page 3

3 Status of investigations The status of our investigations is as follows. 3.1 Entitlement to Excluded Assets As outlined in our report prepared pursuant to s439a of the Act ( s439a Report ) we indicated that there were a number of assets that were Excluded under the terms of the security obtained by the Banking Syndicate. Following further investigation, the asset of most interest to Creditors is the interest in the AEP Holding Trust that is owned by Allco IB Holdings Limited ( Allco IB ). As Creditors may recall, the assets of the AEP Holding Trust comprise cash and shares in Oceania Capital Partners Limited ( Oceania ), a company listed on the Australian Securities Exchange. The current value of this asset is approximately $25 million. We have conducted substantial investigations into this issue and remain of the opinion that the Excluded Assets properly vest with the Liquidators. That said, we note that the Syndicate are of the view that the proceeds of the Excluded Assets are ultimately captured under the security held by the Syndicate ( the Security ). We note, however, that even if the proceeds of the Excluded Assets were found to be excluded from the Security, the Syndicate would be entitled to prove as an unsecured creditor to extent of the deficiency under the Security. This would substantially reduce the return potentially available to unsecured creditors. Our investigations into the Excluded Assets are continuing. 3.2 Validity of the Security As outlined in our s439a Report, a key avenue of investigation is the validity of the Security. As previously outlined, the Security is susceptible to challenge on a number of grounds most notably that it was enforced within six months of being granted. As Creditors will appreciate, issues regarding the validity of security are complex and require careful examination. Our investigations into the above matters are continuing. 3.3 Investigation of offences In our prior reports and over the course of the Administration/Liquidation we identified a number of potential offences under the Corporations Act. As the Liquidators are without funds we have been unable to investigate these matters. Following discussions with ASIC, in September 2009 we submitted an application to the Assetless Administration fund requesting funding in order that we further progress these inquiries. ASIC has recently agreed to provide funding to the Liquidators so that we may undertake an investigation into certain aspects of the Group s failure. 3.4 Other investigations In our s439a Report we outlined a number of transactions that may warrant further investigation, including: + the acquisition of Rubicon in December 2007; and + the loan to APT in December 2007. Creditors may be aware that Steve Sherman and Peter Gothard of Ferrier Hodgson, the Receivers and Managers ( Receivers ) of the Group undertook public examinations of various former executives and directors of the Group in March 2010. In the event that the Receivers pursue legal actions against former officers of the Group, it is likely that these will cross-over with claims that would otherwise be available to the Liquidators. We continue to monitor this situation. 3.5 Future steps We continue to progress our investigations in relation to the Excluded Assets and the Banking Syndicate s security. Until these issues are finally determined there remains uncertainty as to whether there will be any return to unsecured creditors from these avenues of enquiry. Page 4

4 Remuneration 4.1 Liquidators Remuneration Cross Guarantee Group Details of the Liquidators remuneration for these companies are summarised as follows: Liquidators' remuneration (26 May 2009 to 30 July 2010) to be considered by the Committee of Inspection Company The above has been provided for the information of creditors only. Pursuant to s499(3)(a) of the Act, the Liquidators remuneration for the Cross Guarantee Group will be put before the Committee of Inspection when a committee meeting is convened. 4.2 Liquidators Remuneration Other entities Fees incurred Allco Finance Group Limited 367,308.35 Allco Finance (Australia) Limited 6,459.15 Allco Nominees Limited 6,459.15 Allco Equipment Finance Limited 6,459.15 Allco Property Finance Limited 6,459.15 Allco Leasing Limited 6,459.15 ACME Funds Management Pty Limited 6,459.15 ACME Leasing Pty Limited 6,459.15 ACME Securitisation Pty Limited 6,459.15 RIL Finance Pty Limited 6,459.15 RIL Leasing Pty Limited 6,459.15 Allco International (Holdings) Limited 6,459.15 Allco Singapore Holdings Limited 6,459.15 Allco Securitisation Limited 6,459.15 Allco Funds Management Limited 6,459.15 Allco IB Holdings Limited 6,459.15 Allco International (Luxembourg) Holdings Limited 6,459.15 Total 470,654.70 Given that the members of the Cross Guarantee Group are the key asset-owning entities within the Group, the bulk of the activity in the Liquidation, being the investigation and analysis of the Security held by the Banking Syndicate and the analysis of the Excluded Assets, has been undertaken in relation to the members of the Cross Guarantee Group. Accordingly only minimal professional fees, relating primarily to statutory tasks, have been incurred in respect of the 32 entities that are not members of the Cross Guarantee Group. For this reason, we have not sought to obtain approval of our remuneration in respect of these entities at this stage. Page 5

5 Remaining activities in the liquidation s508(3) of the Act requires that a Liquidator provide: + a description of the acts and dealings that remain to be carried out; and + an estimate of when the winding up is likely to be completed. From the perspective of the Liquidators, the work that is outstanding is centred on the ongoing investigations and the possible litigation that may result from these investigations. As Creditors would appreciate, it is difficult to estimate the timeframes within which these issues may be finalised. In relation to the concurrent Receivership of the Group, we note that the Receivers continue to realise the assets of the Group and have advised that the remaining assets will continue to be realised as and when market conditions provide an appropriate opportunity to do so. The Receivers expect that the assets of the Group, excluding litigation claims, will not be fully realised prior to December 2010. In light of the prospective litigation, the liquidation could be expected to continue for a number of years. Should you have any queries in relation to the above, please contact Ms Summer Nguyen of our office on (02) 9338 2607. Dated 20 August 2010 A G McGrath Liquidator J D Hayes Liquidator Page 6

Appendix A list of companies in liquidation Allco Group - Liquidation companies Company Name ACN Allco Finance Group Limited 077 721 129 Allco Finance (Australia) Limited 003 315 446 Allco Funds Management Limited 102 785 384 Allco IB Holdings Limited 054 631 926 Allco International (Holdings) Limited 051 139 961 ACME Funds Management Pty Limited 095 162 879 ACME Leasing Pty Limited 095 162 771 ACME Securitisation Pty Limited 086 665 116 ACME Warehousing Pty Limited 095 162 824 Capital Markets Finance Limited 008 648 459 Record Leasing Pty Limited 095 162 762 RIL Finance Pty Limited 095 162 833 RIL Leasing Pty Limited 095 162 806 Allco OBU Pty Ltd 122 372 598 AFG Pty Ltd 051 982 560 Allco Cross Hudson Investments Pty Ltd 128 948 952 Allco Infrastructure Pty Ltd 122 181 186 Allco Securitisation Ltd 102 785 375 Allco International (Luxembourg) Holdings Ltd 123 111 213 Allco Wind Energy Management Pty Ltd 120 355 053 Allco Wholesale Investment Management Ltd 120 410 826 Allco Property (Europe) Holdings Pty Ltd 127 428 371 Allco Singapore Holdings Ltd 122 318 012 Mobius Investments Pty Ltd 099 618 354 Mobius Financial Services Pty Limited 099 088 365 ACME Finance Pty Limited 095 162 815 RIL Funds Management Pty Limited 086 665 161 Allco IP Pty Ltd 122 624 211 Allco Equipment Finance Ltd 008 652 159 Allco Property Finance Ltd 003 315 455 Allco Leasing Ltd 003 380 925 Allco Nominees Ltd 008 546 585 AFML Nominees Pty Ltd 114 916 648 AEPL Nominees Pty Ltd 111 698 474 Allco (CAS) SPV 3 Pty Ltd 113 126 828 Allco Equity Partners Management Pty Ltd 111 817 184 Allco Aircraft Holdings Pty Ltd 130 841 397 MPH Portfolio Holdings Pty Ltd 101 980 965 CRSDM Pty Ltd 124 694 953 Warringah Rd Management A Pty Ltd 120 447 510 Warringah Rd Management B Pty Ltd 120 447 609 Warringah Rd Management C Pty Ltd 120 447 663 Warringah Rd Management D Pty Ltd 120 447 805 Warringah Rd Management E Pty Ltd 120 447 958 Warringah Rd Management F Pty Ltd 120 447 994 Warringah Rd Management Pty Ltd 120 448 035 Allco (CAS) SPV 4 Pty Ltd 113 342 644 Mobius Origination Services Pty Limited 116 885 299 Allco Nominee (TFHB) Pty Limited 098 934 377 Allco Managed Investments Ltd 101 402 635 Page 7

Appendix B Receipts and payments Allco Finance Group Limited (In Liquidation) (Receivers and Managers Appointed) Receipts and payments for the period from 26 May 2009 to 25 May 2010 Amount ($) Receipts Funding from Allco trusts 144,429 Funding from Receivers and Managers 783,543 GST refunds 30,653 Total receipts 958,625 Payments Advertising costs (3,640) Bank charges (51) Consultants fees (8,162) GST payments (14,080) Legal costs (528,415) Mailing costs (15,266) Meeting costs (room hire) (3,153) Sundry expenses (383) Administrators' expenses (2,551) Administrators' and Deed Administrators' remuneration (454,404) Total payments (1,030,105) Net receipts (payments) for the period (71,480) Opening cash at bank as at 26 May 2009 85,911 Closing cash at bank as at 25 May 2010 14,431 Page 8