fd prospectus number 6

Prospectus and Investment Statement

Finance Direct Limited

22 September 2009 - Prospectus No 6

Important Information

(The information in this section is required under the Securities Act 1978).

Investment decisions are very important. They often have long-term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself.

Choosing an investment

When deciding whether to invest, consider carefully the answers to the following questions that can be found on the pages noted below:

• Whatsortofinvestmentisthis? 57

• Whoisinvolvedinprovidingitforme? 57

• HowmuchdoIpay? 59

• Whatarethecharges? 60

• WhatreturnswillIget? 60

• Whataremyrisks? 61

• Cantheinvestmentbealtered? 65

• HowdoIcashinmyinvestment? 65

• WhodoIcontactwithenquiries aboutmyinvestment? 66

• IsthereanyonetowhomIcancomplain ifIhaveproblemswiththeinvestment? 66

• WhatotherinformationcanIobtain aboutthisinvestment? 67

Inadditiontotheinformationinthisdocument,importantinformation can be found in the current registered prospectus for the investment. You are entitled to a copy of that prospectus on request. *

Engaging an investment advisor

An investment adviser must give you a written statement that contains information about the adviser and his or her ability to give advice. You are strongly encouraged to read that document and consider the information in it when deciding whether or not to engage an adviser.

Tell the adviser what the purpose of your investment is. This is important because different investments are suitable fordifferentpurposes,andcarrydifferentlevelsofrisk.

The written statement should contain important information about the adviser, including:

• relevantexperienceandqualifications,andwhether dispute resolution facilities are available to you; and

• whattypesofinvestmentstheadvisergivesadviceabout;and

• whethertheadviceislimitedtoinvestmentsofferedby1or moreparticularfinancialinstitutions;and

• informationthatmayberelevanttotheadviser’scharacter, includingcertaincriminalconvictions,bankruptcy,anyadverse findingsbyacourtagainsttheadviserinaprofessional capacity,andwhethertheadviserhasbeenexpelledfrom,or prohibited from joining, a professional body; and

• anyrelationshipslikelytogiverisetoaconflictofinterest.

The adviser must also tell you about fees and remuneration before giving advice about an investment. The information about fees and remuneration must include:

• thenatureandlevelofthefeesyouwillbechargedfor receiving the advice; and

• whethertheadviserwillormayreceiveacommissionor otherbenefitfromadvisingyou.

An investment adviser commits an offence if he or she does not provide you with the information required.

* This is the wording required by Schedule 3D of the Securities Regulations 1983 which contemplates a separate investment statement and prospectus. For this Offer the two documents have been combined and accordingly the prospectus available on request is identical to this document.

Investment Statement & Prospectus No 6

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

If you have any questions about any part of this Prospectus, you should obtain the advice of your solicitor, accountant or other financial adviser.

Page

Chairman’s Letter 2

Introducing the Board of Directors 3

The Business of Finance Direct Limited 4

How to Invest 7

Financial Statements 10

Auditors’ Report 43

Trustee’s Statement 47

Statutory Information 48

Investment Statement - Answers to Important Questions 56

Reserve Bank of New Zealand Amendment Act 2008 68

Index of Statutory Information 69

Glossary 70

Directory 72

Contents

REGISTRATION

This Prospectus is dated

22 September 2009.

A copy of this Prospectus, duly

signed and having attached thereto

copies of the documents required by

section 41 of the Securities Act 1978,

including Auditor’s Report and material

contracts (if any) have been delivered

for registration to the Registrar of

Companies at Auckland, New Zealand.

RESTRICTION ON THE DISTRIBUTION

OF THE PROSPECTUS

This Prospectus is intended for use only

in connection with the Offer in New

Zealand. This Prospectus must not

be distributed or given to any person

outside New Zealand in circumstances

in which the distribution or use of this

Prospectus would be unlawful.

NO STOCK EXCHANGE LISTING

Listing of the Securities is not being

sought on a recognised stock exchange.

DEFINED TERMS

Capitalised terms used in this Prospectus

have a special meaning and are defined

in the Glossary of this Prospectus.

All legislation referred to herein may be

viewed online at www.legislation.govt.nz.


22 September 2009

Dear Investor

We are very pleased to invite you to participate in this sixth issue of Debenture Stock by Finance Direct Limited.

The Company has grown steadily since 1999 by offering competitively priced, flexible products, and by providing a speed of service not always met by other lending institutions. The Company attracts its customers through a network of introducers and TV, press, internet and radio advertising.

The Company has always adopted a conservative approach to lending, and any loans that do not meet the Company’s strict lending criteria are brokered to a more appropriate lender thus minimising the risk to the Company. Loans which are brokered to other financial institutions are on a non-recourse basis meaning that the Company has no residual credit risk liability to those financial institutions in the event of a default by the respective borrower. This successful formula has helped Finance Direct Limited broker and arrange over $100 million worth of loans since its inception.

On 12 November 2008, Finance Direct Limited received approval under the Crown Deed of Guarantee Scheme (CDGS). The current scheme will expire on 12 October 2010. On 25 August 2009, details of an extension to the scheme through to 31 December 2011 were released. The scheme was implemented at a time of considerable uncertainty and lack of confidence in the New Zealand finance sector. This has improved in the past six months. Different conditions apply to the extension and the Company is currently considering its options.

The Company places a very strong focus on liquidity, through the continuous monitoring of cash flows and matching the maturity profiles of financial assets and financial liabilities. The CDGS provided the Company with the opportunity to grow its secured Loans and Advances and Debenture Stock at a rapid rate. At the date of this Prospectus, the Company’s secured Loans and Advances have increased to just under $8 million and its Debenture Stock has increased to just over $6 million.

On 3 December 2008, NZF Group Limited increased its controlling stake in Finance Direct Limited from 51% to 70%. * NZF Group Limited is publicly listed on the NZX and has the extra capital, business expertise and substantial distribution network that will allow Finance Direct Limited to grow and achieve our goals. NZF Group Limited now provides management support services to our investors as well as providing company accounting and administration support. This enables us to tap into the resources, knowledge and technology of NZF Group Limited and allow us to focus on the lending and finance broking business.

The funds obtained from deposits will allow us to increase our portfolio and seek further growth opportunities as they arise. The Company takes its responsibilities to its investors very seriously and is committed to offering the public an opportunity to invest in a dynamic company offering excellent returns whilst minimising risk.

We are hopeful that you will find the returns offered on this investment to be extremely competitive.

I encourage you to read this Prospectus and Investment Statement to find out more about Finance Direct Limited and the details of our Debenture Stock Offer. If you require additional explanation of information about the Company or this Prospectus please

contact us.

Yours faithfully

Richard Waddel

Chairman

* NZF Group Limited does not guarantee the Securities being offered under this Offer Document.

Chairman’s Letter


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Introducing the Board of Directors

Finance Direct Limited has a Board of four Directors, comprising one Executive Director who co-founded the business of

Finance Direct Limited, and three Non-Executive Directors (including the Chairman of the Board) all of whom have extensive

experience in the finance sector, corporate governance and associated matters.

Richard Waddel BCom FCA AF Inst D

CHAIRMAN AND INDEPENDENT

DIRECTOR

Richard brings with him a

wealth of business experience

and knowledge to the

Company. His background

is in accountancy, business

advisory and consulting, and

he has held a large number

of directorships in private

and public companies and

Government organisations.

Richard was a partner for 34

years in Ernst & Young where

he held the position of Chief

Executive for a period of 11

years with responsibility for

the overall direction, strategic

planning and marketing of

services for the firm. His

current appointments include

Chairman of NZF Group

Limited, Pharmaceutical

Management Agency,

Kidicorp Group Limited,

Auckland Festival Trust and

Aotea Centre Board of

Management. Richard is a

Fellow of both the Institute of

Chartered Accountants and

the Institute of Directors.

NON-EXECUTIvE DIRECTOR

Peter is the Managing

Director and Chief

Investment Officer of Huljich

Wealth Management, one

of New Zealand’s leading

KiwiSaver providers. Peter

is also a Non-Executive

Director of NZF Group

Limited, which holds a 70%

stake in the Company, and

Sugar International Limited.

Peter has extensive and

specialist knowledge of

the financial markets with

over ten years experience

successfully investing in

New Zealand, Australia,

Europe and the Americas.

His understanding of and

familiarity of the financial

markets compliment the

strengths of the current

Board.

Peter Huljich BCom, Dip. NZX, SA Fin.

NON-EXECUTIvE DIRECTOR

John is the Managing

Director of NZF Group

Limited, which holds a 70%

stake in the Company. John

has over 18 years experience

in the New Zealand banking

and finance industry, initially

with the Bank of New

Zealand, Business Banking

in Auckland and then in

the marketing division in

Wellington. John then

moved to ASB Bank Limited

where he undertook credit

assessment then residential

and commercial lending roles.

He also has a high level

of experience in property

development. He is the

founding Managing Director

and was responsible for the

formation of NZF Money

Limited (formerly New

Zealand Finance Limited)

in 1997 (which company

was subsequently acquired

by NZF Group Limited in

2004) and its very successful

progress to date.

John Callaghan

MANAGING DIRECTOR

Wayne is the Managing

Director of Finance Direct

Limited and has over 18

years experience in the New

Zealand banking, finance

and insurance industries. As

a founding director Wayne

has been responsible for the

implementation of systems,

key appointments, lending

standards and the strategic

direction of Finance Direct

Limited since inception. His

background has included

senior management positions

for both privately held

and public companies with

responsibility for risk analysis,

strategic planning, sales

and marketing and general

management.

Wayne Croad DIP BUS FINANCE BBS


The Business of Finance Direct Limited (“The Charging Group”)

FINANCIAL LIFE CYCLE

FINANCE DIRECT EMBRACES A “LIFECYCLE” APPROACH TO LENDING.

ENCOMPASSING THE FULL RANGE OF PERSONAL LOANS PEOPLE SEEK

AS THEY MATURE AND SEEK POSSESSIONS INCLUDING vEHICLE, BOAT

& PROPERTY ENHANCEMENT LOANS.

Finance Direct Limited was established in September 1999. To

date, the Company has specialised in matching the requirements

of its clients with appropriate financiers. With over $100 million

in loan business brokered and arranged since inception, the

Company has maintained its own small loan book and brokered

the remainder of business to other lending institutions.

Finance Direct Limited has recognised the competitive

advantage it has by being in the position to broker business that

does not fall into its own self-imposed lending criteria.

On 31 May 2007, Finance Direct Limited and its wholly owned

subsidiary Finance Assist Limited amalgamated to become

Finance Direct Limited under Part XIII of the Companies

Act 1993. Prior to the amalgamation, Finance Assist Limited

had primarily been involved in making certain loans and

other financial accommodation available to company and

individual borrowers. With effect from 31 May 2007, the date

of amalgamation, there are no Charging Subsidiaries and the

Charging Group therefore consists of the Company only.

The Charging Group currently generates its business via

introducers, internet advertising and retail advertising in print,

radio and television; and lends only on the security of vehicles,

boats and property. In-depth risk analysis, credit checking and

security valuations are obtained on all loans. As a mainstream

lender, we position ourselves to attract clientele at the quality

end of New Zealand’s loan market with a strong emphasis on

speed of service and flexibility.

Funds received will be used to support the Charging Group’s

lending operations directly to clients of the Charging Group.

The Charging Group has adopted strict and conservative

lending guidelines and criteria with a view to minimising the

credit risk of the Charging Group on each loan which it

undertakes. In addition the Charging Group has sought to

minimise its credit risk exposure by spreading its loans over a

large number of smaller loans rather than focusing on a fewer

number of larger transactions. The Charging Group intends to

continue this approach in the future to diversify its exposure to

individual borrowers.

We are pleased to offer a range of attractive rates depending

on the term of the investment and believe the offer will not only

provide a steady rate of return to Investors but an introduction

to a well-managed business with good growth opportunities.


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Security for your InvestmentThe Debenture Stock is issued pursuant to the terms and

with the protections of the Trust Deed. Under the Trust Deed,

Covenant Trustee Company Limited (“the Trustee”) has been

appointed to act on behalf of all Debenture Stock holders.

Trust Deed SecurityUnder the Trust Deed, the Charging Group have given a first

ranking floating charge over all of their assets and undertakings

to secure repayment of the principal amounts invested in

Debenture Stock and all interest on the Debenture Stock.

Restrictions on the CompanyThe Trust Deed imposes a number of financial limitations,

restrictive covenants and general covenants on the Company

(referred to as the “Charging Group” or the “Borrowing

Group”), including:

(a) Each of the Company and the other Charging Group

Members covenant with the Trustee that none of them

will at any time after the date of the Trust Deed:

• WheretheTotalTangibleAssetsarelessthan$8,000,000,

permit the Total Liabilities to exceed 86% of the Total

Tangible Assets;

• WheretheTotalTangibleAssetsare$8,000,000ormore

but less than $15,000,000, permit the Total Liabilities to

exceed 88% of the Total Tangible Assets;

• WheretheTotalTangibleAssetsare$15,000,000or

more, permit the Total Liabilities to exceed 90% of the

Total Tangible Assets;

• BorroworraiseanymoneyonthesecurityofanyPrior

Security Interest when the aggregate of all principal

moneys then secured by existing Prior Security Interests

plus the moneys so proposed to be borrowed or raised

and secured would exceed 2% of Total Tangible Assets.

(b) A restriction on the Charging Group entering into any

Related Party Transactions except in the ordinary course

of business and where the terms thereof are evidenced

in writing and the consideration therefore is on the basis

of an arms length transaction as between two unrelated

parties contracting in an open market, provided however

that in any twelve month period the aggregate Value of

Related Party Transactions entered into or remaining

outstanding shall not exceed 2% of Total Tangible Assets

as at the end of that twelve month period;

(c) A restriction on the Charging Group carrying on

any business other than the provision of financial

accommodation and financial services or acquiring any

assets other than assets used in such business;

(d) A restriction on the Charging Group allowing the amount

owing to the Charging Group under financing receivables

by any one debtor or related group of debtors to exceed

10% of Total Tangible Assets.

Further details of these restrictions and covenants are

provided on pages 51 and 52 of this document.

Reporting RequirementsTo ensure that the Trustee is adequately informed, the Trust

Deed requires that the Company must provide the following

information to the Trustee:

• Annualauditedfinancialstatements,accompaniedbyan

auditor’s report;

• Half-yearlyauditedfinancialstatements,accompaniedby

an auditor’s report;

• Furtherfinancialstatementsandreportswhenthe

Trustee considers that special circumstances have arisen

which warrant such request;

• Copiesofallreports,noticesandothermaterialsentby

the Company to its shareholders or to the holders of

Securities;

• Quarterlydirectors’certificatesintheformprescribed

by the Trust Deed (and otherwise as required by the

Securities Regulations) and a liquidity report also in the

form prescribed by the Trust Deed;

• Monthlydirectors’statementsandreportsonasset

quality, reinvestment rates, breaches of financial covenants

(if any) and liquidity to comply with additional reporting

requirements required by the Securities Regulations;

• Reportingaspertherequirementssetoutbythe

Reserve Bank of New Zealand pursuant to the Reserve

Bank of New Zealand Amendment Act 2008 and its

regulations (as permitted by the Reserve Bank);

• Acopyofthemonthlymanagementaccountsofthe

Company; and

• Noticeofproceedingswhichmateriallyandadversely

affect the Company.


Summary Financial InformationThe following amounts have been taken from the audited financial statements of the Charging Group for the years ended

31 March 2005 to 31 March 2009.

31/03/2009 31/03/2008 31/03/2007 31/03/2007 31/03/2006 31/03/2005 Previous Previous Previous NZ IFRS NZ IFRS NZ IFRS NZ GAAP NZ GAAP NZ GAAP $’000 $’000 $’000 $’000 $’000 $’000

Total Gross Operating Income 1,724 2,253 2,507 2,516 2,595 1,770

Interest Paid 350 445 497 497 261 48

(Loss)/Profit Before Income Tax (28) 316 443 441 248 132

Income Tax Expense 2 104 149 155 116 36

(Loss)/Profit After Income Tax (30) 212 294 286 132 96

Dividend on Preference Shares - - - - - -

Cents Per Share - - - - - -

Dividend on Ordinary Shares 210 - - - - -

Cents Per Share 26.62 - - - - -

Retained (Loss)/Profit for the Year (240) 212 294 286 132 96

Total Assets 6,121 6,247 6,904 6,773 5,835 1,714

Total Tangible Assets 6,121 6,247 6,904 6,773 5,835 1,714

Total Liabilities 4,530 4,416 5,510 5,352 4,700 981

Total Equity 1,591 1,831 1,394 1,421 1,135 733

NOTES

The audited financial statements of the Charging Group were prepared for the first time under NZ IFRS for the year ended

31 March 2008. The NZ IFRS transition date for the Charging Group was 1 April 2006. A net decrease in Total Equity of

$35,000 was reflected in the financial statements as at that date following the transition to NZ IFRS. Accordingly, amounts stated

in the Summary Financial Information for the three years ended 31 March 2007 are those reported under previous NZ GAAP

(NZ accounting standards that applied prior to the adoption of NZ IFRS), with amounts stated for all subsequent periods being

those reported under NZ IFRS.

Acquisition of, and subsequent amalgamation with Finance Assist Limited

On 31 May 2007, Finance Direct Limited and its wholly owned subsidiary Finance Assist Limited amalgamated to become

Finance Direct Limited under Part XIII of the Companies Act 1993. Prior to the amalgamation, Finance Assist Limited had

primarily been involved in making certain loans and other financial accommodation available to company and individual

borrowers.


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How to Invest

Minimum InvestmentInvestors may select the amount the Investor wishes to invest

(“Application Moneys”). The minimum amount that may be

invested however is $1,000. There is no maximum amount

that may be invested.

Application and PaymentIf an Investor wishes to make an Investment, the Investor must:

• CompletetheApplicationFormthataccompaniesthis

Prospectus and Investment Statement.

• AttachachequefortheApplicationMoneysordirect

credit the Application Moneys into our bank account.

• SendtheApplicationFormtogetherwiththeInvestor’s

cheque for the Application Moneys made payable to

“Finance Direct Limited” and crossed “Not Transferable”

for the amount of the Application Moneys shown on

the Application Form to Finance Direct Limited, to any

Primary Market Participant or any agent appointed by

the Company to receive such Application Forms.

Do not forward cash. Payment will only be accepted in

New Zealand currency as follows:

• Personalchequedrawnonandpayableatany

New Zealand bank;

• BankchequeissuedbyandpayableatanyNewZealand

bank;

• BankdraftdrawnonandpayableatanyNewZealand

bank; or

• BydirectcreditinclearedfundsintotheCompany’sbank

account.

Term – Debenture StockThe Debenture Stock will be issued for fixed terms ranging

between 3 months and 5 years. The Investor must select the

appropriate fixed term on the Application Form.

The Company reserves the absolute discretion to repay

the Investment prior to the expiry of the fixed term of the

Investment. Please refer below to the section headed “Early

repayment of the Debenture Stock at the election of the

Company” for further information.

Interest Rate – Debenture StockThe Company will pay the Investor interest on the sum

invested at the fixed rate advertised by the Company for

Investments of that term on the date the application is

received by the Company.

Current interest rates for Debenture Stock are set out on the

rate sheet accompanying the Application Form. From time to

time market conditions alter and interest rates on Debenture

Stock are changed to suit those conditions. Any alteration in

interest rates will not apply to Investments received before

that alteration is made. Once accepted, Debenture Stock

will continue to earn the interest rate agreed on when the

Investment is made and is fully protected from any later

fluctuation.

If the Application Form is received after an interest rate has

been changed the Company will advise the Investor of such

a change and in the event that the Investor does not confirm

within 10 Business Days that the Investor accepts the new

interest rate, the Company will refund the deposit to the

Investor. No interest will be repaid on moneys refunded.


Payment of Interest Interest on the Investment may be compounded or paid to

the Investor by direct credit or cheque at the Investor’s option.

The Company pays interest quarterly during the term of the

Investment from the date of the deposit with the Company.

Once the Debenture Stock has been allotted to the Investor

for a fixed term, the interest rate at which that Debenture

Stock has been issued to the Investor will be fixed during the

term of the Investment and will not be varied.

The Investor can choose to receive payments of interest in any

one of three ways:

Compound – Rather than make a quarterly interest payment,

the Company will add interest to the Investment automatically

and send the Investor a notice of the Investor’s balance. The

Investor will then earn interest on the original Investment and

on the interest. If the Investor selects “compounding interest

option” on the Application Form and then later decides that

they would like to receive quarterly payments the Company

will change the manner in which payments of interest are

made in the future.

Quarterly Direct Credit – The Company may pay interest

direct to the Investor’s bank account each quarter and mail the

Investor an interest advice which shows details of the amount

banked. This method avoids any postal delay which may occur

if a cheque is mailed to the Investor.

Quarterly Cheque – The Company may pay the interest by

cheque each quarter. The cheque together with an interest

advice is posted to the Investor.

TaxationUnder current legislation, the Company is required to deduct

Resident Withholding Tax (“RWT”) from interest paid to, or

applied for, the benefit of New Zealand resident Investors

and Investors who hold secured deposits through a fixed

establishment in New Zealand. RWT will not be deducted

by the Company where Investors hold a valid Certificate of

Exemption that has been supplied to the Company.

Investors who supply the Company with their IRD Number

must elect a RWT rate currently being 19.5c, 33c or 39c for

every $1.00 of interest earned. RWT will be deducted at

the rate of 39c for every $1.00 of interest earned where an

Investor’s IRD Number is not supplied, as required by current

legislation.

Non-Resident Withholding Tax (“NRWT”) will be deducted by

the Company from interest paid to, or applied for, the benefit

of an Investor who is not a tax resident of New Zealand

unless the Investor holds secured deposits through a fixed

establishment in New Zealand. The rate of NRWT deduction

will be dependent upon the Investor’s country of residence.

The Company will make the deductions referred to above and

as required by applicable legislation unless it is satisfied by the

Investor that such deductions are not required by law.

The Company has obtained “Approved Issuer” status and has

registered the Debenture Stock as “Registered Securities” for

the purpose of the approved issuer levy provisions in Part VIII

of the Stamp and Cheques Duties Act 1971. The Company

may, upon request, subject to being legally entitled so to do,

and on any terms it requires, agree to deduct and pay an

approved issuer levy (currently 2%) on interest payments

made to non-residents in lieu of NRWT.

With the tax threshold changes that took effect from

1 October 2008 and the new tax rates effective from

1 April 2009, no changes have yet been made to the RWT tax

rates of 19.5% or 33%. Financial institutions have the option

of offering a reduced rate of 38% in place of 39% for the 2010

tax year. However, the Company does not currently offer this

reduction. Accordingly, an Investor will need to recover any

overpaid RWT by filing a tax return.

The Government has advised that further consequential

changes to the RWT rates on interest will not be fully

implemented until there has been further consultation with

banks and other financial institutions. That consultation is still

in progress at the date of this Prospectus.

New Investment ProductsThe Company reserves the right to offer new investment

products, including savings accounts, not specified in this

Prospectus, and to offer different interest payment methods

to Investors.

Repayment of the Investment

DEBENTURE STOCK

On maturity, Stockholders will be paid the face value of

their Investment together with any interest then due, upon

presentation of the relevant documentation to the Company.

About 14 days before the date that the Investment is due


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to mature the Investor will be sent a letter which sets out

the options available for reinvestment or repayment of the

Investment.

If the Investor has no immediate use for the Investment, the

Company will, at the Investor’s request accept the Investment

for a further period nominated by the Investor at whatever is

the current interest rate at that time.

The Investor may request that repayment is made. If so, the

Investor will need to return the Investment Certificate held

in respect of the Investment. Payments will be made to the

Investor by cheque or deposited into the Investor’s bank

account at the election of the Investor.

If at the maturity date the Company has not received any

instruction from the Investor regarding either the reinvestment

or repayment of the investment the Company may at its sole

discretion:

• Holdthatinvestment“atcall”,withsevendaysnotice,at

the Company’s “at call” rate until it receives the Investor’s

instructions;

• Reinvesttheinvestmentforthesameterm(andthesame

payment terms) as the original investment of Debenture

Stock. The investment will accrue interest at the interest

rate applicable to investments of the same term as the

investment as at the date of the reinvestment;

• Repaytheinvestmenttogetherwithallaccruedbut

unpaid interest by cheque to the Investor’s last known

address or by direct credit to the Investor’s last

nominated bank account.

EARLY REPAYMENT – DEBENTURE STOCK

The Investor has no right to require the Company to repay

the Investment to the Investor prior to the expiry of the fixed

term of the Investment. However, the Company reserves

the ability at its absolute discretion to permit the early

repayment of Debenture Stock before the Maturity Date for

the respective Investment in the event of death or financial

hardship. Requests for early repayment of Debenture Stock

must be made to the Company in writing. In the event that

the Company agrees to repay the Investment to the Investor

prior to the Maturity Date, the Company reserves the right

at its discretion to adjust the interest rate applicable to the

Investment for the term upon which those funds have been

held by the Company. The Company may also charge an

investment break fee set by the Company from time to time.

EARLY REPAYMENT OF THE DEBENTURE STOCK AT THE

ELECTION OF THE COMPANY



Investment, provided that the Company:

• ProvidestheInvestorwithnotlessthanonemonths

notice of the early repayment in writing to the Investor ;

and

• TheCompanymustrepayallprincipalandinterest

accrued to the date of the early repayment on the date

of the early repayment.

Investment CertificateFor Debenture Stock, the Company issues a Certificate

containing full information about the Investment. This

Certificate is the Investor’s record of the terms on which the

Investment has been accepted by the Company. When the

Investment matures the Investor must return the Certificate

to the Company together with the Investor’s instructions for

repayment or reinvestment.

Registers and TransfersA Register of the holders of Securities will be maintained by

the Company.

An Investor may transfer its interest in the Investment at

any time (not later than 30 days before Maturity Date) by

completion of a Transfer in such form as is customarily used to

transfer shares in New Zealand (“Transfer”). More than one

person can take ownership of the Investment. The Company

is not bound to recognise trusts. Consequently no reference

to trusts or trustees should be made in the Transfer. Joint

Investment owners will be treated as joint tenants (unless

some other form of ownership is indicated) so that on the

death of one of them ownership of the Investment will vest

automatically with the survivor(s). To be valid the Transfer

must be registered with the Company. There is currently no

fee payable in respect of the Transfer of the Investment to

another person, however, the Company reserves the right to

charge a fee in the future.

MarketIn the opinion of the Company there is no established market

for the sale or transfer of the Securities.


FINANCE DIRECT LIMITED

Historical Financial InformationHOME & RENOvATION

LOANS ARE POPULAR

WITH INDIvIDUAL

BORROWERS AND

CONTRIBUTE TO

THE OPERATIONS OF

FINANCE DIRECT.


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Info

rmat

ion


Income Statementfor the year ended 31 March 2009

The attached notes form part of and are to be read in conjunction with the Financial Statements

Note 2009 2008 $’000 $’000

Interest income 3 807 880

Interest expense 3 (350) (445)

Net interest income 3 457 435

Fee and commission income 4 917 1,368

Fee and commission expense 4 (139) (306)

Net fee and commission income 4 778 1,062

Other income 5 - 5

Total operating income 1,235 1,502

Net impairment losses 6 (175) 4

Operating expenses and staff costs 7 (1,088) (1,190)

(Loss)/profit before income tax (28) 316

Income tax expense 9 (2) (104)

(Loss)/profit for the year (30) 212



Statement of Changes in Equityfor the year ended 31 March 2009

Share Capital Retained Earnings Total Equity Note $’000 $’000 $’000

Balance as at 1 April 2007 855 539 1,394

Net profit for the year - 212 212

Redemption of preference shares 21 (275) - (275)

Issue of ordinary shares 21 500 - 500

Dividends 11 - - -

Balance as at 31 March 2008 1,080 751 1,831

Balance as at 1 April 2008 1,080 751 1,831

Net loss for the year - (30) (30)

Dividends 11 - (210) (210)

Balance as at 31 March 2009 1,080 511 1,591



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Balance Sheetas at 31 March 2009

For and on behalf of the Board of Directors:

John Alan Callaghan Wayne Darrin Croad

Director Director

30 June 2009 30 June 2009


2009 2008 Note $’000 $’000

ASSETS

Cash and cash equivalents 1,068 722

Loans and advances to customers 12 4,906 5,317

Trade and other receivables 13 8 8

Current tax assets - 43

Property, plant and equipment 14 36 50

Deferred tax asset 16 90 64

Other assets 17 13 43

Total assets 6,121 6,247

LIABILITIES

Trade and other payables 18 212 163

Loans and borrowings 19 4,157 4,111

Current tax liabilities 13 -

Other liabilities 20 148 142

Total liabilities 4,530 4,416

Net assets 1,591 1,831

EQUITY

Share capital 21 1,080 1,080

Retained earnings 511 750

Total equity 1,591 1,831



Statement of Cashflowsfor the year ended 31 March 2009

2009 2008 $’000 $’000

CASH FLOWS FROM OPERATING ACTIvITIES

Interest received 807 880

Interest paid (350) (445)

Fee and commission income received 923 1,385

Other income received - 5

Payments to suppliers and employees (1,133) (1,520)

Taxation received/(paid) 28 (118)

Net decrease in loans and advances to customers 236 578

Net Cash Flow from Operating Activities 511 765

CASH FLOWS USED IN INvESTING ACTIvITIES

Purchase of property, plant and equipment (4) (12)

Sale of property, plant and equipment 3 -

Net Cash Flow from Investing Activities (1) (12)

CASH FLOWS FROM FINANCING ACTIvITIES

Net increase/(decrease) in secured debenture stock 46 (1,019)

Issue of ordinary shares - 500

Redemption of preference shares - (275)

Payment of dividends (210) -

Net Cash Flows from Financing Activities (164) (794)

Net increase/(decrease) in cash held 346 (41)

Cash balance at start of the year 722 763

Cash balance at end of the year 1,068 722

Made up as follows:

Bank accounts 1,068 722



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Reconciliation of net (loss)/profit with cash flows from operating activitiesfor the year ended 31 March 2009

2009 2008 $’000 $’000

(Loss)/profit for the year (30) 212

ADD:

Depreciation of property, plant and equipment 15 25

Increase/(decrease) in collective and specific loan allowances 175 (4)

DEDUCT:

Net decrease in loans and advances to customers 236 578

Decrease in accounts receivable and other assets 30 43

Increase/(decrease) in accounts payable and other liabilities 55 (75)

Decrease/(increase) in current tax assets 56 (28)

(Increase)/decrease in deferred tax asset (26) 14

Net Cash Flow from Operating Activities 511 765




Notes to the Financial Statements for the year ended 31 March 2009

1. Significant Accounting Policies

(a) General InformationThe reporting entity is Finance Direct Limited (“the Company”). The comparative period includes the Company and its former wholly owned Charging Subsidiary, Finance Assist Limited, which was amalgamated with the Company on 31 May 2007 and subsequently struck off. The Company is profit oriented and incorporated and domiciled in New Zealand. The Company is a reporting entity for the purposes of the Financial Reporting Act 1993 and its financial statements comply with that Act. The Company is an Issuer as defined by the Securities Act 1978 and the Securities Regulations 1983.

(b) Statement of ComplianceThe financial statements for the Charging Group have been

prepared in accordance with Generally Accepted Accounting

Practice in New Zealand (“NZ GAAP”) and the requirements

of the Companies Act 1993 and the Financial Reporting

Act 1993. They comply with New Zealand equivalents to

International Financial Reporting Standards (“NZ IFRS”)

and other applicable financial standards, as appropriate for

profit-oriented entities. The financial statements comply with

International Financial Reporting Standards (“IFRS”) as issued

by the International Accounting Standards Board.

Standards and interpretations to published standards that

are not yet effective

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been issued which were not yet effective at balance sheet date, and which the Charging Group

has not early adopted. The Charging Group has assessed the relevance of all such new standards, interpretations and amendments, has determined that the following may be relevant to its operations, and has concluded as follows:

NZ IAS 1 – Presentation of Financial Statements

(Amendments effective 1 July 2009)

Revised NZ IAS 1 introduces as a new primary financial statement, the “Statement of Comprehensive Income”, which represents changes in equity during a period other than those changes resulting from owners in their capacity as owners. This new statement can be presented as a single Statement of Comprehensive Income (which will effectively combine the Income Statement and all non-owner changes in equity) or a separate Income Statement and Statement of Comprehensive Income. This new standard does not change the recognition, measurement or disclosure of transactions and events that are required by other NZ IFRS’s. The amendments to NZ IAS 1 may result in changes to the additional disclosures in the Charging Group’s financial statements.

NZ IFRS 8 – Operating Segments (effective 1 January 2009)

NZ IFRS 8 requires an entity to report financial and descriptive information about its reportable segments based on how the business is reported to senior management. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Additional entity wide disclosures are required including information about products and services or groups of products and services, analyses of revenues and information about transactions with major customers. The standard does not change the recognition, measurement or disclosure of specific transactions and events that are required by other NZ IFRS’s.

Standard Effective Date

NZ IFRS 1 First Time adoption of New Zealand Equivalents to International Financial Reporting Standards (Restructured) 1 July 2009

NZ IFRS 1/IAS 27 Amendments to Cost of Investment in Subsidiary, Jointly Controlled Entity or Associate 1 January 2009

NZ IFRS 2 Amendments to Share Based Payments: Vesting Conditions and Cancellations 1 January 2009

NZ IFRS 3 Business Combinations (Revised) 1 July 2009

NZ IFRS 4 Insurance Contracts (Amendments) 1 January 2009

NZ IAS 1/32 Amends to puttable financial instruments and obligations arising on liquidation 1 January 2009

NZ IAS 23 Borrowing Costs (Revised) 1 January 2009

NZ IAS 39 Amendments to Financial Instruments: Recognition and Measurement - Eligible hedged items 1 July 2009

NZ IAS 40 Investment Properties 1 January 2009

NZ IFRIC 13 Customer Loyalty Programmes 1 July 2009

NZ IFRIC 15 Agreements for the construction of Real Estate 1 January 2009

NZ IFRIC 16 Hedges of a Net Investment in a Foreign Operation 1 October 2008

NZ IFRIC 17 Distribution of Non-Cash Assets to Owners 1 July 2009

Standards and interpretations and amendments to published standards that are not yet effective and/or not relevant:


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‘Improvements to IFRS’ was published in May 2008 and

contains numerous amendments to IFRS which the

International Accounting Standards Board and the Financial

Reporting Standards Board of the New Zealand Institute of

Chartered Accountants consider non-urgent but necessary.

No changes in accounting policies are expected as a result of

these amendments.

(c) Basis of PreparationThe financial statements have been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets.

The Charging Group meets the definition of a Financial Institution under NZ IFRS 7 ‘Financial Instruments: Disclosures’ and is subject to the specific additional disclosure requirements applicable to Financial Institutions defined in Appendix E of NZ IFRS 7.

The Income Statement discloses the net interest income, net fee and commission income and other income in line with the Income Statement presentation used by other Financial Institutions.

The Balance Sheet presentation discloses assets and liabilities in order of their liquidity in line with the Balance Sheet presentation used by other Financial Institutions. Where it is not evident from the financial statement line item, disclosure of the current/non-current split has been made in the relevant note.

(d) Functional and Presentational CurrencyThese financial statements are presented in New Zealand

dollars ($), which is the functional currency of the Charging

Group. All financial information presented in New Zealand

dollars has been rounded to the nearest thousand dollars

($’000).

(e) Basis of ConsolidationSUBSIDIARIES

Subsidiaries are entities controlled, either directly or indirectly, by the Company. Control exists when the Company has the power to govern the financial and operating policies of an entity so as to obtain the benefits from its activities.

TRANSACTIONS ELIMINATED ON CONSOLIDATION

Intercompany transactions, balances and realised gains and

losses on transactions between Charging Group companies

are eliminated on consolidation. Unrealised losses on

transactions between Charging Group companies are also

eliminated unless the transaction provides evidence of an

impairment of the asset transferred.

(f) Segment ReportingThe Charging Group operates in one industry as a Financial

Institution. All operations are carried out within New Zealand.

(g) RevenueRECOGNITION OF INCOME

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Charging Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

INTEREST INCOME AND SIMILAR EXPENSE

For all financial instruments measured at amortised cost,

interest income and expense is recorded at the effective interest rate, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the financial asset or liability. The calculation takes into account all contractual terms of the financial instrument (for example, prepayment options) and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the effective interest rate, but not future credit losses. The adjusted carrying amount is calculated based on the original effective interest rate and the change in carrying amount is recorded as interest income or expense.

Once the recorded value of a financial asset or a group of

financial assets has been reduced due to an impairment loss,

interest income continues to be recognised using the original

effective interest rate applied to the new carrying amount.

The Charging Group recognises interest revenue and

establishment fees on an accruals basis when the services are

rendered using the effective interest rate method.

FEE AND COMMISSION INCOME

The Charging Group earns fee income from a range of

services it provides to customers. Fee income can be divided

into the following categories:




1. Significant Accounting Policies (cont’d)

(g) Revenue (cont’d)LENDING/ESTABLISHMENT FEES

Fees and direct costs relating to loan origination, financing

or restructuring and to loan commitments are deferred and

amortised to the Income Statement over the life of the loan

using the effective interest method. Lending fees not directly

related to the origination of a loan are recognised over the

period of service.

COMMISSIONS AND OTHER FEES

When commissions or fees relate to specific transactions or events, they are recognised in the Income Statement when the service is provided to the customer. When they are charged for services provided over a period, they are recognised in the Income Statement on an accruals basis as the service is provided.

PAYMENT PROTECTION INSURANCE

The Charging Group acts as an agent for payment protection insurance. Given the agency relationship, under NZ IFRS the income is presented on a net basis rather than on a gross basis. This means that only the commission income is recognised, not the full amount of the insurance premiums offset by the cost to the Charging Group. The Charging Group recognises the estimated liability on payment protection insurance refunds at balance date. The amount of the liability is estimated using historical refund data. This means that only the commission income is recognised, not the full amount of the insurance premiums offset by the cost to the Charging Group. The Charging Group recognises the estimated liability on payment protection insurance refunds at balance date. The amount of the liability is estimated using historical refund data.

(h) Financial InstrumentsFinancial instruments are classified in one of the following

categories at initial recognition: Financial Assets at fair value

through profit or loss, Available for Sale Financial Assets,

Loans and Receivables, Held to Maturity Investments, Financial

Liabilities at fair value through profit or loss and Other

Financial Liabilities. Furthermore, financial instruments are split

between derivative and non-derivative financial instruments.

Financial instruments are transacted on a commercial basis to

derive an interest yield/cost with terms and conditions having

due regard to the nature of the transaction and the risks

involved.

Some of these categories require measurement at fair value.

Where available, quoted market prices are used as a measure

of fair value. Bid prices are used to estimate fair values of

assets, whereas offer prices are applied to liabilities. Where

quoted market prices do not exist, fair values are estimated

using present value or other market accepted valuation

techniques, using methods and assumptions that are based on

market conditions and risks existing as at balance date.

Where the Charging Group has assets and liabilities with

offsetting market risk, it uses mid-market prices as a basis

for establishing fair values for the offsetting risk positions and

applies a bid/offer spread adjustment to the net open position

as appropriate.

If changes in these assumptions to a reasonably possible

alternative would result in a significantly different fair value this

has been disclosed with a range of possibilities.

FINANCIAL ASSETS AND LIABILITIES AT FAIR vALUE

THROUGH PROFIT OR LOSS

Assets and liabilities in this category are either held for trading

or are managed with other assets and liabilities and are

accounted for and evaluated on a fair value basis. Fair value

reporting of these assets and liabilities reflects the Charging

Group’s risk management process, which includes utilising

natural offsets where possible and managing overall risks of the

portfolio on a trading basis.

Upon initial recognition, attributable transaction costs are

included in the Income Statement when incurred. Assets and

liabilities in this category are subsequently measured at fair

value, with any changes recognised in the Income Statement.

AvAILABLE FOR SALE FINANCIAL ASSETS

Assets in this category are measured upon initial recognition

at fair value plus transaction costs directly attributable to

their acquisition. Subsequently such assets are measured at

fair value excluding transaction costs. Assets in this category

include:


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CASH AND CASH EQUIvALENTS

These comprise cash balances and call deposits.

LOANS AND RECEIvABLES

These assets are recorded upon initial recognition at fair value

plus transaction costs and are subsequently measured at

amortised cost using the effective interest rate method, less

impairment. This category of Financial Asset includes:

LOANS AND ADvANCES TO CUSTOMERS

These are recorded at amortised cost using the effective

interest rate method, less impairment.

TRADE AND OTHER RECEIvABLES

These include accounts receivable and other sundry debtors,

less impairment.

HELD TO MATURITY INvESTMENTS

Assets in this category are recorded upon initial recognition

at fair value plus transaction costs and are subsequently

measured at amortised cost using the effective interest rate,

less impairment.

OTHER FINANCIAL LIABILITIES

This category includes all financial liabilities other than those at

fair value through profit or loss. Liabilities in this category are

measured at amortised cost using the effective interest rate

and include:

LOANS AND BORROWINGS

All loans and borrowings are initially recognised at cost,

being the fair value of the consideration received net of issue

costs associated with the borrowing. After initial recognition,

interest-bearing loans and borrowings are subsequently

measured at amortised cost using the effective interest rate

method.

OTHER LIABILITIES

These are recorded at amortised cost. They represent

liabilities for goods and services provided to the Charging

Group prior to the end of the financial year that are unpaid

and arise when the Charging Group becomes obliged to make

future payments. These amounts are unsecured.

(i) Share CapitalORDINARY SHARES

Incremental costs directly attributable to the issue of ordinary

shares are recognised as a deduction from equity.

(j) Property, Plant and Equipment RECOGNITION AND MEASUREMENT

Items of property, plant and equipment are measured at cost

less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the

acquisition of the asset. In the event that settlement of all

or part of the purchase consideration is deferred, cost is

determined by discounting the amounts payable in the future

to their present value as at the date of acquisition.

Purchased software that is integral to the functionality of the

related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have

different useful lives, they are accounted for as separate items

(major components) of property, plant and equipment.

SUBSEQUENT COSTS

The cost of replacing part of an item of property, plant and

equipment is recognised in the carrying amount of the item

if it is probable that the future economic benefits embodied

within the part will flow to the Charging Group and its cost

can be measured reliably. The costs of the day-to-day servicing

of property, plant and equipment are recognised in the Income

Statement as incurred.

DEPRECIATION

Depreciation is provided on office furniture and equipment.

Depreciation is recognised in the Income Statement to write

off the cost of an item of property, plant and equipment, less

any residual value, over its expected useful life, at the following

rates:

Office Furniture and Equipment

11.4% - 60% Diminishing value

The useful lives and residual values are reviewed annually

and the depreciation recognised in the Income Statement

calculated on a straight line basis would not be materially

different from the depreciation recognised using the above

rates as allowed by the Income Tax Act 2004.





(k) Leased AssetsLeases in terms of which the Charging Group assumes

substantially all the risks and rewards of ownership are

classified as finance leases. Upon initial recognition the leased

asset is measured at an amount equal to the lower of its fair

value and the present value of the minimum lease payments.

Subsequent to initial recognition, the asset is accounted for in

accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are

apportioned between the finance expense and the reduction

of the outstanding liability. The finance expense is allocated to

each period during the lease term so as to produce a constant

periodic rate of interest on the remaining balance of the

liability.

Other leases are operating leases and are not recognised

on the Charging Group’s balance sheet. Operating lease

payments are recognised as an expense on a straight line basis

over the lease term, except where another systematic basis is

more representative of the time pattern in which economic

benefits from the leased assets are consumed.

(l) Asset QualityPAST DUE ASSETS

An asset is Past Due when a counterparty has failed to make

a payment when contractually due. A 90 Day Past Due Asset

is any asset which has not been operated by the counterparty

within its key terms for at least 90 days and which is not

a restructured asset, other individually impaired asset, or a

financial asset acquired through the enforcement of security.

IMPAIRED ASSETS

Impaired assets consist of restructured assets, assets acquired

through the enforcement of security and other impaired assets.

“Restructured asset” means any credit exposure for which:

a) the original terms have been changed to grant the

counterparty a concession that would not otherwise

have been available, due to the counterparty’s difficulties

in complying with the original terms; and

b) the revised terms of the facility are not comparable with

the terms of new facilities with comparable risks; and

c) the yield on the asset following restructuring is equal

to, or greater than, the Charging Group’s average cost

of funds, or that a loss is not otherwise expected to be

incurred.

Assets acquired through the enforcement of security are those

assets which are legally owned as a result of the enforcement

of security.

Other impaired assets refers to any credit exposure for which

an impairment loss is recognised in accordance with NZ IAS

39 – Financial Instruments: Recognition and Measurement.

(m) ImpairmentIMPAIRMENT OF LOANS AND ADvANCES

Losses for impaired loans and advances are recognised

immediately when there is objective evidence that impairment

of a loan or portfolio of loans has occurred. A loan is

considered impaired when management determines that it

is probable that all amounts owing in accordance with the

terms of the original contract will not be collected. When a

loan has been identified as impaired, the carrying amount of

the loan is decreased by recording specific allowances for the

loss to reduce the loan to its estimated recoverable amount,

which is the present value of expected future cash flows

including amounts recoverable from guarantees and collateral,

discounted at the original effective interest rate of the loan.

Impairment losses are calculated on individually significant

loans and loans assessed collectively. Losses expected from

future events no matter how likely, are not recognised.

INDIvIDUALLY SIGNIFICANT LOANS

At each reporting date, the Charging Group reviews

individually significant loans for evidence of impairment. All

relevant information, including the economic situation, solvency

of the customer/guarantor, enforceability of guarantees,

current security values and the time value of future cash flows

are taken into account in determining individual impairment

allowances.


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(m) Impairment (cont’d)COLLECTIvELY ASSESSED LOANS

At each reporting date, loans that have been individually assessed but no objective evidence of impairment existed and loans that are not considered individually significant are pooled in similar credit risk groups. These groups are then assessed for impairment based on historical loss experience of assets with similar risk characteristics. The historical loss experience is then adjusted for the impact of current observable data.

Management regularly reviews and adjusts the methodology and assumptions for impairment testing as improved analysis becomes available to minimise any differences between loss estimates and actual loss experience.

LOAN WRITE-OFFS

Loans are normally written off, either partially or in full, when

there is no realistic prospect of recovery of these amounts

and, for collateralised loans, when the proceeds from realising

the security has been received.

IMPAIRMENT OF TRADE AND OTHER RECEIvABLES

The recoverable amount of the Charging Group’s trade and other receivables carried at amortised cost is calculated on an undiscounted basis due to their short term nature. At each reporting date, the Charging Group reviews individually significant trade and other receivables for evidence of impairment. For trade and other receivables which are not significant on an individual basis, collective impairment is assessed on a portfolio basis based on numbers of days overdue, and taking into account the historical loss experience in portfolios with a similar amount of days overdue.

IMPAIRMENT OF NON-FINANCIAL ASSETS

The carrying amounts of the Charging Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the Income Statement.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(n) ProvisionsA provision is recognised if, as a result of a past event, the Charging Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at balance sheet date. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability.

The increase in the provision resulting from the passage of time is recognised in finance costs. If economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be reliably measured.

(o) Expense RecognitionAll expenses are recognised in the Income Statement on an

accruals basis.

(p) Employee BenefitsSHORT-TERM BENEFITS

Short-term employee benefit obligations are measured on an

undiscounted basis and are expensed as the related service is

provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Charging Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

DEFINED CONTRIBUTION PLANS

A defined contribution plan is a post-employment benefit plan

under which an entity pays fixed contributions into a separate

entity and will have no legal or constructive obligation to pay

further amounts. Obligations for contributions to defined

contribution plans are recognised as an employee expense in

the Income Statement when they are due.



(q) Income TaxIncome tax expense comprises current and deferred tax.

Income tax expense is recognised in the Income Statement

except to the extent that it relates to items recognised directly

in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income

for the year, using tax rates enacted or substantively enacted

at the reporting date, and any adjustment to tax payable in

respect of previous years.

Deferred tax is recognised using the balance sheet method,

providing for temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes

and the amounts used for taxation purposes. Deferred tax

is not recognised for the following temporary differences:

the initial recognition of goodwill, the initial recognition of

assets or liabilities in a transaction that is not a business

combination and that affects neither accounting nor taxable

profit, and differences relating to investments in subsidiaries

and jointly controlled entities to the extent that they probably

will not reverse in the foreseeable future. Deferred tax is

measured at the tax rates that are expected to be applied to

the temporary differences when they reverse, based on the

laws that have been enacted or substantively enacted by the

reporting date.

In principle deferred tax liabilities are recognised from taxable

temporary timing differences. Deferred tax assets are

recognised to the extent that it is probable that future taxable

profits will be available against which deductible temporary

differences and unused tax losses and tax credits can be

utilised. Deferred tax assets are reviewed at each reporting

date and are reduced to the extent that it is no longer

probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset when they relate

to income taxes levied by the same taxation authority and the

Company has a legally enforceable right to offset current tax

assets against current tax liabilities.

(r) Cash FlowsThe Statement of Cash Flows has been prepared using the

direct approach. The following are the definitions used in the

Statement of Cash Flows:

Cash and cash equivalents are short term, highly liquid

investments that are readily convertible to known amounts

of cash and which are subject to an insignificant risk of changes

in value.

Operating activities are the principal revenue-producing

activities of the Charging Group and other activities that are

not investing or financing activities.

Investing activities are the acquisition and disposal of long-term

assets and other investments not included in cash and cash

equivalents.

Financing activities are activities that result in changes in

the size and composition of the contributed equity and

borrowings of the Charging Group.




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2. Critical Estimates and Judgements used in Applying Accounting PoliciesThe Charging Group prepares its financial statements in

accordance with NZ IFRS, the application of which often

requires judgements to be made by management when

formulating the Charging Group’s financial position and results.

Under NZ IFRS, the Directors are required to adopt those

accounting policies most appropriate to the Charging Group’s

circumstances for the purpose of presenting fairly the Charging

Group’s financial position, financial performance and cash flows.

In determining and applying accounting policies, judgement is

often required in respect of items where the choice of specific

policy, accounting estimate or assumption to be followed could

materially affect the reported results or net asset position of the

Charging Group should it later be determined that a different

choice would be more appropriate.

Management considers the accounting estimates and

assumptions discussed below to be its critical accounting

estimates and, accordingly, provides an explanation of each

below.

The discussion below should also be read in conjunction

with the Charging Group’s disclosure of significant NZ IFRS

accounting policies, which is provided in Note 1 to the financial

statements, “Significant accounting policies”.

IMPAIRMENT LOSSES ON LOANS AND ADvANCES

An impairment allowance is established if there is objective

evidence that a loan is impaired. A loan is considered impaired

when management determines that it is probable that all

amounts due according to the original contractual terms will

not be collected. When a loan has been identified as impaired,

the carrying amount of the loan is decreased by recording

specific allowances for the loss to reduce the loan to its

estimated recoverable amount, which is the present value of

expected future cash flows including amounts recoverable

from guarantees and collateral, discounted at the original

effective interest rate of the loan.

There are two methods used in assessing loans for

impairment, including specific loan assessment and collective

loan assessment. At each reporting date the Charging

Group reviews individually significant loans for evidence of

impairment. All relevant information, including the economic

situation, solvency of the customer/guarantor, enforceability of

guarantees, current security values and the time value of future

cash flows are taken into account in determining individual

allowances.

At each reporting date loans that have been individually

assessed but no objective evidence of impairment existed and

loans that are not considered individually significant are pooled

in similar credit risk groups. These groups are then assessed

for impairment based on historical loss experience of assets

with similar risk characteristics. The historical loss experience is

then adjusted for the impact of current observable data.

Management regularly reviews and adjusts the methodology

and assumptions for impairment testing as improved analysis

becomes available to minimise any differences between loss

estimates and actual loss experience.

FAIR vALUE ESTIMATION

The carrying amounts of loans and advances net of

impairment allowances are assumed to approximate their

fair values. The fair value of financial liabilities is estimated by

discounting the future contractual cash flows at the current

market interest for similar financial instruments.

RECOGNITION OF DEFERRED TAX ASSETS

The recognition of deferred tax assets is based upon whether

it is more likely than not that sufficient and suitable taxable

profits will be available in the future, against which the reversal

of temporary differences can be deducted. Recognition,

therefore, involves judgement regarding the future financial

performance of the Company.

Management believes that sufficient and suitable taxable profits

will be made available by the Company in the future and has

accordingly accounted for a deferred tax asset of $90,000 as at

31 March 2009 (2008: $64,000).




3. Net Interest Income

2009 2008 $’000 $’000

INTEREST INCOME

Loans and advances 725 865

Impaired loans and advances 37 -

Interest from Available for Sale Financial Assets: Cash and short term investments 45 15

Total interest income 807 880

INTEREST EXPENSE

Secured debenture stock 350 429

Related party loans - 12

Other similar charges - 4

Total interest expense 350 445

Net interest income 457 435

4. Net Fee and Commission Income

2009 2008 $’000 $’000

FEE AND COMMISSION INCOME

Lending and credit related fee income 444 507

Brokerage income 216 678

Payment protection insurance commission 257 183

Total fee and commission income 917 1,368

FEE AND COMMISSION EXPENSE

Brokerage and documentation fees 139 306

Total fee and commission expense 139 306

Net fee and commission income 778 1,062

5. Other Income

2009 2008 $’000 $’000

Other sundry income - 5


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6. Net Impairment Losses

2009 2008 Note $’000 $’000

Movement in collective loan allowance 12 (10) (4)

Movement in specific loan allowance 12 185 -

175 (4)

7. Operating Expenses and Staff Costs

2009 2008 Note $’000 $’000

PROFIT BEFORE INCOME TAX INCLUDES THE FOLLOWING EXPENSES:

Directors’ fees 184 299

Auditors’ remuneration 8 65 42

Depreciation of property, plant and equipment 15 25

Leasing and rental costs 87 84

Personnel costs 179 180

Administrative expenses 558 560

1,088 1,190

KEY MANAGEMENT COMPENSATION INCLUDED IN THE ABOvE:

Short-term employee benefits 175 290

There were no post-employment benefits, other long-term benefits, termination benefits or share based payments made to key

management personnel during the year ended 31 March 2009 (2008: $nil).

8. Auditor’s Remuneration

2009 2008 $’000 $’000

AMOUNTS PAID TO THE AUDITOR FOR:

Audit related services 65 42

Other services - -

Total auditors’ remuneration 65 42




9. Income Tax Expense

Note 2009 2008 $’000 $’000

INCOME TAX

Current period 46 90

Adjustment for prior periods (18) -

28 90

DEFERRED TAX

Origination and reversal of temporary differences 16 (52) 8

Adjustment for prior periods 16 26 -

Decrease in effective tax rate to 30% 16 - 6

(26) 14

Income tax expense reported in Income Statement 2 104

NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE

TO PRIMA FACIE TAX PAYABLE:

(Loss)/profit before income tax expense (28) 316

Tax at the New Zealand tax rate of 30% (2008: 33%) (8) 104

Tax amounts which are not taxable or deductible in calculating taxable income:

Non-taxable income - (7)

Non-deductible expenses 2 1

Adjustment for prior periods 8 -

Deferred tax:

Decrease in effective tax rate to 30% - 6

2 104

10. Imputation Credit AccountThe movements in the Imputation Credit Account in New Zealand were as follows:

2009 2008 $’000 $’000

Opening balance 118 531

Imputation credits lost due to change in shareholdings - (531)

Income tax (received)/paid to IRD (28) 118

Imputation credits attached to dividends paid (31) -

Closing balance 59 118


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11. Dividends Declared and PaidThe following dividends were declared and paid during the year ended 31 March 2009:

2009 2008 $’000 $’000

Ordinary Shares

Interim dividend for the year ended 31 March 2009 210 -

An interim dividend of 26.62 cents per Ordinary Share was paid on 9 December 2008 (2008: nil).

12. Loans and Advances to Customers

2009 2008 $’000 $’000

Loans and advances to customers 5,137 5,373

Less: Impaired loan allowance (231) (56)

4,906 5,317

IMPAIRED LOAN ALLOWANCE

Collective loan allowance (46) (56)

Specific loan allowance (185) -

Total loan allowance (231) (56)

COLLECTIvE LOAN ALLOWANCE

Opening balance (56) (60)

Movement in collective loan allowance 10 4

Closing balance (46) (56)

SPECIFIC LOAN ALLOWANCE

Opening balance - -

Reversal of specifically impaired assets - -

Addition to specific loan allowance (185) -

Closing balance (185) -

13. Trade and Other Receivables

2009 2008 $’000 $’000

Accounts receivable 8 8




14. Property, Plant and Equipment

Office Furniture & Equipment $’000

COST OR DEEMED COST

Balance at 1 April 2007 123

Additions 12

Balance at 31 March 2008 135


Additions 4

Disposals (3)


DEPRECIATION AND IMPAIRMENT LOSSES


Depreciation charge for the year 25



Depreciation charge for the year 15

On disposals -


CARRYING AMOUNTS

At 31 March 2008 50

At 31 March 2009 36

15. Investment in SubsidiaryAt 31 March 2007, the Company held 100% of the issued share capital of Finance Assist Limited, a Finance Company registered

in New Zealand, which formed part of the Charging Group. On 31 May 2007, Finance Assist Limited was amalgamated with

Finance Direct Limited and subsequently struck off.


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16. Deferred Tax Asset

2009 2008 Note $’000 $’000

THE BALANCE COMPRISES TEMPORARY DIFFERENCES ATTRIBUTABLE TO:

Collective loan impairment allowance 14 17

Specific loan impairment allowance 56 -

Deferred fee income - 43

Deferred brokerage fees - (13)

Holiday pay accrual 3 4

Other timing differences 17 13

Net deferred tax asset 90 64

MOvEMENTS

Opening balance 64 78

(Charged)/credited to the Income Statement 9 26 (14)

Closing balance 90 64

The reduction in the corporate tax rate from 33% to 30% from 1 April 2008 has been taken into account in calculating the value

of deferred tax as at 31 March 2008 and 31 March 2009.

17. Other Assets

2009 2008 $’000 $’000

Deferred brokerage fees 8 43

Prepaid expenses 5 -

13 43

Current 10 26

Non-Current 3 17

13 43

18. Trade and Other Payables

2009 2008 $’000 $’000

Accounts payable 122 65

Accrued expenses 90 98

212 163




19. Loans and Borrowings

2009 2008 $’000 $’000

Secured debenture stock 4,157 4,111

The debenture stock issued by Finance Direct Limited is secured under a Debenture Stock Trust Deed between Finance Direct

Limited and Covenant Trustee Company Limited as Trustee. The Deed creates a floating charge in favour of the Trustee over all

of the assets and undertakings of the Finance Direct Limited Charging Group.

Finance Direct Limited has a guarantee under the New Zealand Deposit Guarantee Scheme (“Scheme”). The guarantee is for

a two year period from 12 October 2008 to 12 October 2010. Finance Direct Limited has entered into a Deed of Guarantee

with the Crown in respect of the Scheme. The Crown has guaranteed certain deposits under the Scheme. The Crown

guarantee is subject to compliance with a number of requirements including certain reporting obligations, meeting Trust Deed

covenants, complying with prudential directions and restrictions on entering into certain transactions.

Finance Direct Limited has complied with all requirements under the Scheme throughout the period. As a result, there are

no liabilities that rank in priority to qualifying deposits under the Scheme as at 31 March 2009 in the event that Finance Direct

Limited was liquidated. For non-qualifying deposits under the Scheme, liabilities totalling $23,976 (2008: $nil) would rank in

priority as at 31 March 2009 in the event that Finance Direct Limited was liquidated.

20. Other Liabilities

2009 2008 $’000 $’000

Deferred fee income:

Current 85 100

Non-Current 63 42

148 142

21. Share Capital

2009 2009 2008 2008 No. of Shares $’000 No. of Shares $’000

Issued and paid up capital:

Redeemable Preference Shares - - - -

Ordinary Shares 789,157 1,080 789,157 1,080

789,157 1,080 789,157 1,080


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No Ordinary Shares or Redeemable Preference Shares were issued by the Company during the year ended 31 March 2009. On 2 April 2007, 209,365 Ordinary Shares in the Company were issued for the consideration of $500,000, with the Redeemable Preference Shares subsequently being redeemed at par. All Ordinary Shares are issued and fully paid, have no par value and have an equal right to vote, to dividends and to any surplus on winding up. The Company does not have a total number of authorised shares. Without prejudice to any special rights conferred on the existing Shareholders the Board may issue Shares with, or without, preferred, deferred or other special rights or

restrictions, whether in regard to distributions, voting, return of capital or otherwise.

22. Financial Instruments

Significant accounting policiesDetails of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.

Accounting classifications and fair values The table below sets out the Charging Group’s classification of each class of financial assets and financial liabilities, and their fair values:

2009 2008

Carrying Amount Fair Value Carrying Amount Fair Value $’000 $’000 $’000 $’000

FINANCIAL ASSETS

Available for sale assets:

Cash and cash equivalents 1,068 1,068 722 722

Loans and receivables:

Loans and advances to customers 4,906 4,906 5,317 5,317

Trade and other receivables 8 8 8 8

4,914 4,914 5,325 5,325

Total Financial Assets 5,982 5,982 6,047 6,047

FINANCIAL LIABILITIES

Other amortised cost:

Loans and borrowings 4,157 4,157 4,111 4,111

Trade and other payables 212 212 163 163

4,369 4,369 4,274 4,274

Total Financial Liabilities 4,369 4,369 4,274 4,274

The Charging Group has not classified any assets as Held to Maturity Investments or Financial Assets and Liabilities at fair value

through profit and loss.




22. Financial Instruments (cont’d)

Basis for determining fair values

The following summarises the significant methods and assumptions used in estimating the fair values of financial assets and financial

liabilities reflected in the table above.

Loans and advances to customers

Each loan has particular circumstances, which determine its fair value. The carrying amounts of the loans net of impairment

allowances best represent their fair value.

Loans and borrowings

Fair value is calculated based on the present value of contractual principal and interest cash flows, discounted at the market rate of

interest at the reporting date.

Cash and cash equivalents, trade and other receivables and trade and other payables

Due to their relatively short term nature, the carrying amounts of these items are equivalent to their fair value.

Interest rates used for determining fair value

The following interest rates used to discount estimated cash flows, where applicable, are based on the yield curve as at reporting

date plus an appropriate constant credit spread:

2009 2008

Loans and advances to customers 12.50% - 19.95% 12.50% - 19.95%

Secured debenture stock 5.00% - 12.25% 9.95% - 12.00%

Financial risk management objectives

The Charging Group’s management provides services to the business, co-ordinates access to domestic and international financial

markets, monitors and manages the financial risks relating to the operations of the Charging Group through internal risk reports

which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, fair value

interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.

Foreign currency risk management

All of the Charging Group’s operations are carried out within New Zealand. As a result, the Charging Group is not exposed to

any direct foreign currency exchange risks.

Interest rate risk management

The Charging Group is exposed to interest rate risk on the amount of its loans and advances to customers and monies owed to

secured debenture stockholders.

Loans and advances to customers are provided at fixed interest rates over the terms of the respective loans, which typically range

for periods between two and five years. Should loans go into default, interest is charged at penalty rates set when the respective

loan agreements are entered into.


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22. Financial Instruments (cont’d)Interest rates on secured debenture stock are subject to market influences, but are fixed for the duration of the investment term

at the time the relevant investments are made by investors.

Interest rate sensitivity analysisThe sensitivity analyses have been determined based on the exposure to interest rates for both derivatives and non-derivative

instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability

outstanding at the balance sheet date was outstanding for the whole year. A 50 basis point (0.5%) increase or decrease is used

when reporting interest rate risk internally to key management personnel and represents management’s assessment of the

reasonably possible change in interest rates. If interest rates had been 50 basis points higher/lower and all other variables were

held constant, the Charging Group’s loss for the year would decrease/increase by $5,000 (2008: $4,000).

Market riskThe Charging Group has prepared liquidity forecasts which indicate there is sufficient liquidity to meet its commitments. The

forecasts are prepared on the assumption that loan repayments will continue to be received and a level of reinvestment, based

on recent reinvestment rates, will continue to occur.

Credit risk managementCredit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Charging

Group. Financial instruments which potentially subject the Charging Group to credit risk principally consist of cash and cash

equivalents, loans and advances to customers, and trade and other receivables.

The Charging Group’s cash balances and call deposits are placed with major trading banks with high credit-ratings assigned

by international credit-rating agencies. The Charging Group performs credit evaluations on all customers requiring loans and

advances. The Charging Group requires collateral or other security to support financial instruments with credit risk.

The Charging Group operates a lending policy with various levels of authority depending on the size and loan to value ratio

of the loan, ensuring compliance with all Trust Deed covenants. The Charging Group closely monitors the performance of its

borrowers, the payment of instalments under its loans, and has adopted a formal debt management process to be followed when

a loan falls into arrears.

Risk gradings categorise exposures according to the degree of risk of financial loss faced and focus management on the attendant

risks. Risk grades are used to determine where impairment allowances may be required. The current risk grading framework

consists of three grades reflecting varying degrees of risk of default and the availability of collateral or other credit risk mitigation.

They are as follows:

• Neitherpastdueorimpaired–compliancewithallterms,goodsecurityvalue,noadverseeventsaffectingtheborrower.

• Pastduebutnotimpaired–materialcompliancewithallterms,noconcernsoversecurityvalueorfutureeventsthatmay

affect the borrower.

• Impaired–non-compliancewithtermsorevidenceofimpairmentofsecurityheld,oradverseeventaffectingtheborrower.

The Charging Group implements guidelines on the acceptability of specific classes of collateral or credit risk mitigation. The

principal collateral types for loans and advances to customers are:

• Mortgagesoverproperties.

• GeneralSecurityAgreements.

• Chargesoverbusinessassetsandmotorvehicles.

• Personalguarantees.




22. Financial Instruments (cont’d)Maximum exposure to credit risk is represented by the carrying value of each financial asset in the Balance Sheet which is net of

any impairment allowance. Concentration of credit exposures set out in Note 23 do not take into account the fair value of any

collateral, in the event of counterparties failing to meet their contractual obligations.

Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity

risk management framework for the management of the Charging Group’s short, medium and long-term funding and liquidity

management requirements. The Charging Group manages liquidity risk by maintaining adequate cash reserves, by continuously

monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and financial liabilities.

The tables in Note 24 detail the Charging Group’s expected maturity for its financial assets and the remaining contractual

maturity for its financial liabilities. The tables have been drawn up based on the contractual maturities of the financial assets

except where the Charging Group anticipates that the cash flow will occur in a different period and the cash flows of financial

liabilities based on the earliest date on which the Charging Group can be required to pay.

On 12 November 2008, the Company became an Approved Institution under the New Zealand Deposit Guarantee Scheme. In

order to maintain approved status, the Company has to comply with The Treasury requirements of the Guarantee Scheme. If the

New Zealand Deposit Guarantee Scheme was withdrawn, this would impact on the Company’s liquidity.

Capital managementThe Charging Group considers share capital and retained earnings to be capital for management purposes. In implementing

current capital requirements the Debenture Stock Trust Deed entered into between the Charging Group and Covenant Trustee

Company Limited as Trustee, requires the Charging Group to maintain a prescribed ratio of total liabilities to total tangible assets.

The Trust Deed prescribed ratio is 86% for the Charging Group.

The Charging Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and

to sustain future development of the business. The impact of the level of capital on shareholders’ return is also recognised and

the Charging Group recognises the need to maintain a balance between the higher returns that might be possible with greater

gearing and the advantages and security afforded by a sound capital position. The Charging Group also monitors the level of

dividends to ordinary shareholders.

The Charging Group has complied with all Trustee imposed capital requirements throughout the years ended 31 March 2008

and 31 March 2009 and there have been no material changes in the Charging Group’s approach to capital management during

the period.


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23. Concentration of Credit Exposure

Loans and Advances to CustomersGeographical Concentration of Loans and Advances

2009 2009 2008 2008 % $’000 % $’000

Auckland and Northland 72.41 3,720 71.86 3,861

Bay of Plenty 3.35 172 2.25 121

Central North Island 13.57 697 12.92 694

South Island 3.78 194 5.49 295

Waikato 4.09 210 4.69 252

Wellington 2.80 144 2.79 150

100.00 5,137 100.00 5,373

Collateral held over Loans and Advances

At 31 March 2009, the Charging Group had 374 (2008: 388) open loans with an average balance of $13,738 (2008: $13,848),

which provides a relatively low credit risk. All loans are secured by registered security interests over motor vehicles, boats,

charges over business assets, General Security Agreements, personal guarantees and agreements to mortgage real estate

(secured by caveats over the relevant real estate) owned by borrowers; the majority of which are financed with customers who

are not self-employed.

Concentration of Loans and Advances to Individual Counterparties

Number of Counterparties

2009 2008

% OF SHAREHOLDER FUNDS

10 - 19.99% - -

20 - 29.99% 1 2

Total 1 2




23. Concentration of Credit Exposure (cont’d)

Loans and Advances to Customers (cont’d)Managed Funds, Securitisation, Custodial and Other Fiduciary Activities

The Charging Group has not had any involvement in funds management, securitisation and/or custodial activities.

Funding – Loans and BorrowingsProduct Concentration of Funding

2009 2009 2008 2008 % $’000 % $’000

Secured debenture stock 100.00 4,157 100.00 4,111

Geographical Concentration of Funding

2009 2009 2008 2008 % $’000 % $’000

Auckland and Northland 45.28 1,882 33.34 1,370

Bay of Plenty 1.80 75 2.09 86

Central North Island 10.99 457 2.04 84

Overseas 10.15 422 23.67 973

South Island 19.15 796 21.16 870

Waikato 3.63 151 3.28 135

Wellington 9.00 374 14.42 593

100.00 4,157 100.00 4,111


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24. Maturity Profile of Financial Assets and Financial Liabilities(a) Interest rate riskThe following tables summarise the Charging Group’s interest rate gap position on the basis of net discounted cash flows:

2009

Weighted Current Non-Current Total

average 0 - 6 7 - 12 1 - 2 2 - 5 5+ effective Months Months Years Years Years interest rate $’000 $’000 $’000 $’000 $’000 $’000 %

FINANCIAL ASSETS

Cash and cash equivalents 3.50 1,068 - - - - 1,068

Loans and advances to customers 16.59 1,159 478 994 2,228 47 4,906

Trade and other receivables - 8 - - - - 8

2,235 478 994 2,228 47 5,982


Trade and other payables - 212 - - - - 212

Secured debenture stock 9.71 1,382 808 1,773 194 - 4,157

1,594 808 1,773 194 - 4,369

2008

Weighted Current Non-Current Total

average 0 - 6 7 - 12 1 - 2 2 - 5 5+ effective Months Months Years Years Years interest rate $’000 $’000 $’000 $’000 $’000 $’000 %

FINANCIAL ASSETS

Cash and cash equivalents 8.25 722 - - - - 722

Loans and advances to customers 16.15 2,067 532 843 1,867 8 5,317

Trade and other receivables - 8 - - - - 8

2,797 532 843 1,867 8 6,047


Trade and other payables - 163 - - - - 163

Secured debenture stock 10.36 1,769 1,389 920 33 - 4,111

1,932 1,389 920 33 - 4,274


24. Maturity Profile of Financial Assets and Financial Liabilities (cont’d)

(b) Residual contractual maturities of financial assets and financial liabilities

The following tables show the gross undiscounted cash flows of the Charging Group’s financial assets and financial liabilities

on the basis of their earliest possible contractual maturity and their expected maturity. The Gross nominal inflow/(outflow)

disclosed in the following tables is the contractual, undiscounted cash flow of the financial asset or financial liability.

2009

Gross Nominal 0 – 6 7 – 12 1 – 2 2 – 5 5+ Inflow/ Carrying Months Months Years Years Years (Outflow) Amount $’000 $’000 $’000 $’000 $’000 $’000 $’000

FINANCIAL ASSETS

Cash and cash equivalents 1,068 - - - - 1,068 1,068

Loans and advances to customers 1,965 1,181 1,350 1,264 1 5,761 4,906

Trade and other receivables 8 - - - - 8 8

3,041 1,181 1,350 1,264 1 6,837 5,982


Trade and other payables (212) - - - - (212) (212)

Secured debenture stock (1,537) (916) (1,852) (198) - (4,503) (4,157)

(1,749) (916) (1,852) (198) - (4,715) (4,369)

Total 1,292 265 (502) 1,066 1 2,122 1,613



The expected maturity of financial assets and financial liabilities differs materially from the contractual maturity in respect of loans

and advances for the Charging Group as at 31 March 2009. The expected maturity of loans and advances and the adjusted

contractual cash flows are as follows:

2009

Gross Nominal 0 – 6 7 – 12 1 – 2 2 – 5 5+ Inflow/ Months Months Years Years Years (Outflow) $’000 $’000 $’000 $’000 $’000 $’000

Loans and advances to customers

(expected) 1,878 1,141 1,307 1,179 1 5,506

Adjusted Total 1,205 225 (545) 981 1 1,867


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25. Asset Quality

a) Summary of Lending 2009 2008 $’000 $’000

Neither past due nor impaired 4,379 4,882

Past due but not impaired 444 491

Impaired 314 -

Gross loans and advances 5,137 5,373

Less: Impaired loan allowance (231) (56)

Net loans and advances 4,906 5,317

The Charging Group closely monitors the performance of its borrowers and the payment of instalments under its loans. The Board has adopted a formal debt management process to be followed when a loan falls into arrears, which includes specified time driven debt collection procedures, although management may take such actions earlier as circumstances require. Special monitoring of assets occurs when there is a risk of the asset becoming impaired and active management is required to maintain the debt.

2008

Gross Nominal 0 – 6 7 – 12 1 – 2 2 – 5 5+ Inflow/ Carrying Months Months Years Years Years (Outflow) Amount $’000 $’000 $’000 $’000 $’000 $’000 $’000

FINANCIAL ASSETS

Cash and cash equivalents 722 - - - - 722 722

Loans and advances to customers 3,672 898 869 721 1 6,161 5,317

Trade and other receivables 8 - - - - 8 8

4,402 898 869 721 1 6,891 6,047


Trade and other payables (163) - - - - (163) (163)

Secured debenture stock (1,899) (1,444) (983) (33) - (4,359) (4,111)

(2,062) (1,444) (983) (33) - (4,522) (4,274)

Total 2,340 (546) (114) 688 1 2,369 1,773


25. Asset Quality (Cont’d)



b) Loans and Advances Past Due But Not Impaired

2009 2008 $’000 $’000

PAST DUE ASSETS NOT IMPAIRED

At 1 April 2008 491 554

Collected during the year (491) (554)

Additions to Past Due asset status 758 491

Reclassified as Impaired assets (314) -

At 31 March 2009 444 491

2009 2008

Total Instalment Balance Total Instalment Balance Arrears of Loan Arrears of Loan Principal Principal $’000 $’000 $’000 $’000 $’000 $’000

Analysis of Past Due Assets Not Impaired:

0 - 31 Days 236 9 227 390 14 376

32 - 60 Days 121 9 112 13 1 12

61 - 90 Days 82 11 71 - - -

90+ Days 5 3 2 88 75 13

Total Past Due Assets Not Impaired 444 32 412 491 90 401

Past Due Assets Not Impaired represent Loans and Advances to Customers where contractual interest or principal payments are past due but the Charging Group believes that impairment is not appropriate on the basis of the level of security/collateral available and/or the stage of collection of amounts owed to the Charging Group.


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c) Impaired AssetsAt 31 March 2009, there were no restructured assets, real estate assets or other assets acquired through the enforcement

of security (2008: $nil). The breakdown of the gross amount of other individually impaired loans and advances and individual

impairment allowances is as follows:

2009 2008 $’000 $’000

TOTAL GROSS IMPAIRED ASSETS

At 1 April 2008 - -

Net additions 314 -

Deletions - -

Amounts written off - -

At 31 March 2009 314 -

Individual Allowance for Impairment (185) -

Total Net Impaired Assets 129 -

26. Operating Lease CommitmentsAt 31 March 2009, the Company had non-cancellable operating lease commitments in respect of leasehold property, the total

future minimum payments of which were payable as follows:

2009 2008 $’000 $’000

Less than one year 31 64

Between one and five years - 31

31 95

There are no onerous terms concerning renewal of the above leases.




27. Capital CommitmentsThere were no capital commitments at 31 March 2009 (2008: $nil).

28. Contingent Assets And LiabilitiesThere were no contingent assets or liabilities at 31 March 2009 (2008: $nil).

29. Related Party TransactionsDuring the year ended 31 March 2009, the Company paid intra-group interest of $nil (2008: $12,000) to NZF Group Limited,

the Company’s ultimate parent undertaking, in respect of intra-group indebtedness.

During the year ended 31 March 2009, the Company paid cost sharing fees of $60,000 (2008: $nil) to NZF Money Limited, a

fellow subsidiary undertaking of NZF Group Limited, to cover the cost of shared services and central administration costs.

At 31 March 2009, there were no outstanding balances with related parties (2008: $nil). No amounts owed by related parties

were written off or forgiven during the year (2008: $nil).

30. Subsequent EventsThe Directors are not aware of any matters or circumstances since the end of the reporting period, not otherwise dealt with

within this report or financial statements, that have significantly or may significantly affect the operations of Finance Direct

Limited.


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Aud

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22 September 2009

Dear Sirs

Audit Opinion on the Financial Statements Included in the Prospectus

We have prepared this report for inclusion in the prospectus to be dated on or around 22 September 2009.

As auditor of Finance Direct Limited, and in accordance with the requirements of the Securities Act 1978, Clause 36 of the Second Schedule of the Securities Regulations 1983 and the Securities Act (Financial Institutions) Exemption Notice 2007, we report as follows:

Audited Financial Statements of Finance Direct Limited

We have audited the financial statements of Finance Direct Limited (“the company”) on pages 11 to 42. These financial statements are required by the Second Schedule of the Securities Regulations 1983 and the Securities Act (Financial Institutions) Exemption Notice 2007. The financial statements provide information about the financial position of the company as at 31 March 2009 and its financial performance and cash flows for the year ended on that date. This information is stated in accordance with the accounting policies set out on pages 16 to 22.

Directors’ Responsibilities

The Directors are responsible for the preparation and presentation of:

a the financial statements which give a true and fair view of the financial position of the company as at 31 March 2009, and its financial performance and cash flows for the year ended on that date as required by the Second Schedule of the Securities Regulations 1983 and the Securities Act (Financial Institutions) Exemption Notice 2007;

b the summary of financial statements of the company for the years ended 31 March 2009, 2008, 2007, 2006 and 2005 as required by clauses 7(2) and 7(3) of the Second Schedule of the Securities Regulations 1983; and


c the details and amounts in respect of the ranking of securities of the company as at 31 March 2009 as required by clause 12 of the Second Schedule of the Securities Regulations 1983.

Auditors’ Responsibilities

We are responsible for expressing an independent opinion on the financial statements presented by the Directors and reporting our opinion in accordance with clause 36(1) of the Second Schedule of the Securities Regulations 1983 and the Securities Act (Financial Institutions) Exemption Notice 2007.

We are also responsible for reporting, in accordance with clause 36(1)(g) of the Second Schedule of the Securities Regulations 1983 and the Securities Act (Financial Institutions) Exemption Notice 2007, on:

a the amounts included in the summary of financial statements for the years ended 31 March 2009, 2008, 2007, 2006 and 2005, and

b the details and amounts in respect of the ranking of securities as at 31 March 2009 prepared and presented by the Directors.

This report has been prepared for inclusion in the prospectus for the purpose of meeting the requirements under clause 36(1) of the Second Schedule of the Securities Regulations 1983 and the Securities Act (Financial Institutions) Exemption Notice 2007. We disclaim any assumption of responsibility for reliance on this audit report, or the amounts included in the financial statements, the summary of financial statements or the details and amount in respect of the ranking of securities for any other purpose other than that for which this report has been prepared. In addition, we take no responsibility for, nor do we report on, any aspect of the prospectus not mentioned in this report.

Basis of Opinion on the Financial Statements, the Summary of Financial Statements and the Ranking of Securities

An audit of the financial statements includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It also includes assessing:

a the significant estimates and judgements made by the Directors in the preparation of the financial statements; and

b whether the accounting policies used and described on pages 16 to 22 are appropriate to the circumstances of the company, consistently applied and adequately disclosed.

We have conducted our audit in accordance with New Zealand Auditing Standards. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to obtain reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of the information in the financial statements.


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We have also undertaken procedures to provide reasonable assurance that:

a the amounts set out in the summary of financial statements on page 6, pursuant to clauses 7(2) and 7(3) of the Second Schedule of the Securities Regulations 1983, have been correctly taken from the audited financial statements of the company for the years ended 31 March 2009, 2008, 2007, 2006 and 2005; and

b the details and amounts in respect of the ranking of securities on page 51 pursuant to clause 12 of the Second Schedule of the Securities Regulations 1983, have been correctly taken from the audited financial statements of the company as at 31 March 2009.

Unqualified Opinion on the Financial Statements, the Summary of Financial Statements and the Ranking of Securities

We have obtained all the information and explanations we have required.

In our opinion:

a Proper accounting records have been kept by the company as far as appears from our examination of those records;

b The financial statements, on pages 11 to 42 , as required by the Second Schedule of the Securities Regulations 1983 and the Securities Act (Financial Institutions) Exemption Notice 2007, and that are required to be audited, have been drawn up to:

i comply with the Securities Regulations 1983 and the Securities Act (Financial Institutions) Exemption Notice 2007;

ii comply with generally accepted accounting practice in New Zealand; and

iii give a true and fair view of the financial position of the company as at 31 March 2009, and its financial performance and cash flows for the year ended on that date;

c the amounts set out in the summary of financial statements for the company, on page 6 of this prospectus, as required by clauses 7(2) and 7(3) of the Second Schedule of the Securities Regulations 1983 have been correctly taken from the audited financial statements of the company for the years ended 31 March 2009, 2008, 2007, 2006 and 2005; and


d the details and amounts set out in respect of the ranking of securities, on page 51 of this prospectus, as required by clause 12 of the Second Schedule of the Securities Regulations 1983, as at 31 March 2009 have been correctly taken from the audited financial statements of the company from which they were extracted.

We completed our work on the audited financial statements of the company for the year ended 31 March 2009 on 30 June 2009 and our unqualified opinion on the financial statements is expressed as at that date.


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Statutory Information

The following information is required to be disclosed by the

Second Schedule of the Securities Regulations 1983.

Main Terms of Offer

ISSUER

Finance Direct Limited is the issuer of the Securities which

are offered pursuant to this Prospectus, and has its registered

office at Level 2, Finance Direct House, 88 Broadway,

Newmarket, Auckland.

DESCRIPTION OF SECURITIES

This Prospectus offers up to $15,000,000 of first ranking

Debenture Stock of Finance Direct Limited for subscription.

The securities being offered are secured first ranking

Debenture Stock, subject to the registration of prior charges

and preferential claims. Debenture Stock offered in this

Prospectus are debt securities for the purposes of the

Securities Act 1978. Details of the Trust Deed are set out

in the section entitled “Provisions of Trust Deed and other

restrictions on borrowing group” on pages 51 to 54.

The Debenture Stock shall be issued for fixed terms ranging

between 3 months and 5 years. Fixed interest rates are

applicable to Debenture Stock and will vary depending upon

the fixed term selected. Details of the current fixed interest

rates are available upon request from the Company.

The issue of the Debenture Stock will provide the Company

with funds to on-lend for loan advances and selected

financial transactions including personal loans, hire purchase

arrangements and loan advances to both companies and

individuals.

The obligations of the Company to Investors in respect of the

Debenture Stock are secured by a security interest in all of the

Charging Group’s Personal Property and a charge over the

Charging Group’s Other Property pursuant to a Debenture

Trust Deed granted by the Charging Group in favour of

Covenant Trustee Company Limited. The charge created by

the Trust Deed in respect of the Other Property is a floating

charge over the Other Property in respect of which a fixed

charge is not legally and fully effective and a fixed charge over

all Other Property. Further details of the Trust Deed are

provided on pages 51 to 54 of this Prospectus.

The Debenture Stock issued by the Company is first ranking

because there are no other charges registered over all of the

Company’s assets that rank ahead of the charge granted in

favour of the Trustee pursuant to the Trust Deed except for

permitted prior charges.

The Trust Deed permits the Company to create prior security

interests over any asset to secure any moneys to be borrowed,

raised or otherwise owing in purchasing or acquiring such asset

if at the time of such borrowing the aggregate of all moneys

secured by existing prior security interests together with

the money so proposed to be borrowed or raised or to be

otherwise owing and secured would not exceed 2% of its Total

Tangible Assets. As at 31 March 2009 the aggregate amount of

prior charges ranking ahead of the Debenture Stock currently

outstanding and Debenture Stock being offered was $7,245.

This prior charge comprises a security interest granted by the

Company in favour of Sharp Corporation over certain office

equipment leased by the Company.

Certain creditors will also be given preference over the

holders of Debenture Stock at law. These preferential

creditors and their claims include liquidator’s costs, taxes and

certain payments to employees.

The Debenture Stock ranks equally with all present and future

Debenture Stock issued by the Company. As at 31 March

2009, the total principal amount of Debenture Stock on issue

was $4,156,660.

The minimum amount that may be invested under this Offer

is $1,000.

Further details of the Offer are comprised in the section of

this Prospectus entitled “How to Invest”.

Details of Incorporation of IssuerThe Company was incorporated under the Companies Act

1993 on 23 September 1999. The Company’s registered

number is 981004. The public file relating to the Company’s

incorporation is kept by the Companies Office. Documents

on the public file may be viewed on the Companies Office

website, www.companies.govt.nz, or (in relation to documents

which are not able to be viewed via the internet) upon

request by submitting a search request form which may be

obtained from the Companies Office at:


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Guarantors There are no guaranteeing subsidiaries.

On 12 November 2008, Finance Direct Limited received

approval under the Crown Deed of Guarantee Scheme

(“Scheme”). The Crown has guaranteed certain deposits

under the Scheme for a two year period from 12 October

2008 to 12 October 2010. The Crown guarantee is subject to

compliance by the Company with a number of requirements

including certain reporting obligations, meeting Trust

Deed covenants, complying with prudential directions and

restrictions on entering into certain transactions. A failure to

comply with any of these obligations could result in the Crown

withdrawing its guarantee.

On 25 August 2009, the Crown released details of an

extension to the Scheme through to 31 December 2011.

Different conditions apply to the extension of the Scheme and

there is a risk that the Company may not be able to obtain

extension of its current guarantee beyond 12 October 2010.

The Deed of Guarantee, together with further information

about the Scheme, including the Crown’s most recent audited

statement of financial position is available free of charge on the

Treasury website at www.treasury.govt.nz.

Directorate and Advisers

THE BOARD OF DIRECTORS

The names, addresses and technical or professional

qualifications of the Directors of the Company are stated in

the Directory on page 72.

ADvISERS

The name of the Company’s auditors is stated in the Directory

on page 72.

Grant Thornton has given and has not withdrawn its consent

to be named in this Prospectus as auditor to the Company

and to the issue of this Prospectus with its Auditor’s Report

included in the form and context in which it is included. Grant

Thornton takes no responsibility for, nor has it authorised nor

caused the issue of, any part of this Prospectus except for the

Auditor’s Report.

TRUSTEE

The Trustee is Covenant Trustee Company Limited. The

Trustee’s address is Level 34, Vero Centre, 48 Shortland Street,

Auckland.

The Trustee does not guarantee the repayment of the

Debenture Stock or the payments of interest thereon.

Restrictions on Directors’ Powers The following modifications, exceptions or limitations on

the powers of the Directors of the Company are imposed

by the Companies Act 1993 (the “Act”) or the Company’s

constitution:

• TheDirectorsmaynotdelegatethepowersconferred

on them by the sections of the Act listed in the Second

Schedule of the Act;

• TheDirectorsmaynotauthoriseadividendinrespect

of some but not all shares in a class that is of a greater

value per share in respect of other shares of that class,

otherwise than in proportion to the amount paid on the

share;

• TheDirectorsmaynotauthorisetheentryofthe

Company into a “major transaction” unless the

transaction is approved by, or contingent on approval by,

a special resolution of shareholders of the Company. A

“major transaction” is essentially a transaction, the value

of which exceeds half the value of the Company’s assets

before the transaction.

Description of Activities of Borrowing GroupThe Company was incorporated on 23 September 1999. On

31 May 2007, Finance Direct Limited and its wholly owned

subsidiary Finance Assist Limited amalgamated to become

Finance Direct Limited under Part XIII of the Companies Act

1993. Prior to the amalgamation, Finance Assist Limited had

primarily been involved in making certain loans and other

financial accommodation available to company and individual

borrowers. Subsequent to the amalgamation the combined

business operations of both Finance Direct Limited and

Finance Assist Limited are now undertaken solely by Finance

Direct Limited. A discussion of the activities of Finance Direct

Limited is provided below.

Since the date of incorporation of the Company, the Company

has been establishing itself as a multi-disciplined finance

company. The Company has primarily been involved in

sourcing financial solutions for the Company’s clients, including

• Level18,ASBCentre,135AlbertStreet,Auckland;

• GroundLevel,33BowenStreet,Wellington;or

• 55WordsworthStreet,Sydenham,Christchurch.

Copies of the documents can also be obtained (on payment

of the relevant fee) by telephoning the Companies Office on

0508 266 726.


sourcing lenders to make certain financial accommodation

available to clients and in making certain loans and other

financial accommodation to company and individual

borrowers. The Company facilitates the loan advances and

receives remuneration from the client and/or the lender for

the provision of these services.

The Company currently generates its business via introducers,

internet advertising and retail advertising in print, radio and

television, and lends only on the security of vehicles, boats and

property. In-depth risk analysis, credit checking and security

valuations are obtained on all loans. As a mainstream lender,

the Company seeks to position itself to attract clientele at

the quality end of New Zealand’s loan market with a strong

emphasis on speed of service and flexibility.

Further information about the business activities of the

Company are provided in the section entitled “Investment

Statement – Answers to Important Questions” under the

heading “Who is involved in providing it for me?” on page 57.

Nature and use of principal fixed assets

The principal fixed assets of the Charging Group are general

office equipment assets which are charged pursuant to the

Trust Deed. These assets are used by the Company for its

day-to-day operational requirements.

Summary of Financial StatementsThe financial statements in summary form in respect of

the Charging Group as required by clause 7 of the Second

Schedule to the Securities Regulations 1983 is provided on

page 6.

Material ContractsDuring the two years prior to the date of registration of this

Prospectus, the following material contracts were entered into:

• On12November2008,theCompanyenteredintoa

Crown Deed of Guarantee between the Company and

the Crown under which the Crown guarantees certain

deposits for the Company for a two year period from

12 October 2008 to 12 October 2010.

• On27November2008,theCompanyenteredintoa

Supplemental Deed to the Crown Deed of Guarantee

between the Company and the Crown under which the

Crown guarantees certain deposits for the Company for

a two year period from 12 October 2008 to 12 October

2010.

These material contracts are in addition to those previously

registered.

Pending ProceedingsThere are no legal proceedings or arbitrations pending at the date of the registration of this Prospectus that may have a material effect on the Charging Group.

Issue Expenses

ISSUE EXPENSES

Issue expenses, including legal fees, accounting, audit, printing and marketing to be paid by the Company are estimated at $75,000. This amount is exclusive of any commission or brokerage referred to below that may be payable by the Company.

COMMISSION

An Investor is not liable to pay any commission to the Company in respect of the Offer. However, the Company may, in certain circumstances, agree to pay commission or brokerage to Primary Market Participants and to the Company’s agents calculated as a percentage of the amount invested. Brokerage will be paid by the Company in respect of applications accepted that bear the stamp of an approved broker of the Company at the following rates:

Investment Term Brokerage Rate

3 months 0.125%

6 months 0.250%

9 months 0.375%

12 months 0.500%

18 months 0.750%

2 years 1.00%

3 years 1.50%

4 years 2.00%

5 years 2.50%

Brokerage (at the rate prevailing at the time of renewal)

may also be paid by the Company on Investments which

are reinvested, provided that the renewal bears the relevant

broker’s or agent’s stamp.


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Ranking of SecuritiesThe aggregate amount (as at the date of the latest statement

of financial position contained in this Prospectus) of securities

that were secured by a charge over the assets of the

Charging Group that ranked in point of security ahead of the

Debenture Stock was $7,245. This prior charge comprises a

security interest granted by the Company in favour of Sharp

Corporation over certain office equipment leased by the

Company. There were no securities (as at the date of the latest

statement of financial position contained in this Prospectus)

that were secured by a mortgage or charge over the assets

of the Charging Group that ranked in point of security equally

with the Debenture Stock, other than the existing Debenture

Stock currently on issue. As at 31 March 2009, $4,156,660 of

Debenture Stock had been issued.

Preferential claims however rank ahead of the Securities.

These claims include:

• Theclaimsofpreferentialcreditorsgivenpreference

under legislation, including liquidator’s costs, taxes and

certain payments to employees;

• TheTrustee’s,oranyreceiverappointedbytheTrustee,

remuneration, costs, charges, expenses and liabilities.

The Debenture Stock of this issue will rank equally with all

Debenture Stock issued by the Company from time to time

as far as security over the assets and undertakings of the

Company is concerned.

The Charging Group is prohibited from giving any security

interests ranking ahead of, or equally with, the first ranking

security interests given to the Trustee for the benefit of holders

of Debenture Stock under the Trust Deed except for Prior

Security Interests over any asset to secure any moneys to be

borrowed, raised or otherwise owing in purchasing or acquiring

such asset if at the time of such borrowing the aggregate of all

moneys secured by existing Prior Security Interests together

with the money so proposed to be borrowed or raised or to

be otherwise owing and secured would not exceed 2% of the

Total Tangible Assets.

Provisions of Trust Deed and other Restrictions on Borrowing Group

TRUST DEED

The Trust Deed is dated 30 September 2004 and entered

into between the Charging Group and Covenant Trustee

Company Limited.

The Trust Deed provides that the Company may from time

to time borrow or raise money secured by Debenture Stock.

Pursuant to the Trust Deed the Trustee has agreed to act as

trustee for the benefit of the Stockholders on the terms and

conditions and with the powers and authorities contained in

the Trust Deed.

GRANTING OF SECURITY INTEREST

Pursuant to the Trust Deed the Charging Group has granted

to Covenant Trustee Company Limited a security interest in all

of the Charging Group’s Personal Property and a charge over

the Charging Group’s Other Property. The charge created by


charge over Other Property in respect of which a fixed charge

is not legally and fully effective and a fixed charge over all

Other Property.

RESTRICTIONS IN TRUST DEED

Financial limitations

Each of the Company and the other Charging Group

Members covenant with the Trustee that none of them will at

any time after the date of the Trust Deed:

(a) Where the Total Tangible Assets are less than $8,000,000,

permit the Total Liabilities to exceed 86% of the Total

Tangible Assets;

(b) Where the Total Tangible Assets are $8,000,000 or more

but less than $15,000,000, permit the Total Liabilities to

exceed 88% of the Total Tangible Assets;

(c) Where the Total Tangible Assets are $15,000,000 or

more, permit the Total Liabilities to exceed 90% of the

Total Tangible Assets;

(d) Borrow or raise any money on the security of any Prior

Security Interest when the aggregate of all principal

moneys then secured by existing Prior Security Interests

plus the moneys so proposed to be borrowed or raised

and secured would exceed 2% of Total Tangible Assets.


Restrictive Covenants

Each of the Company and the other Charging Group

Members covenant with the Trustee that none of them will,

without the prior written consent of the Trustee:

(a) Own any Real Property or shares or other equity

securities or units in any company, unit trust or other

person except:

(i) Real Property or shares which are held as security

for the provision of financial accommodation, or are

held as a result of enforcing any such security

pending realisation;

(ii) Premises leased and occupied by the Company or

any Charging Group Member for the purposes of its

business; or

(iii) Shares in any other Charging Group Member;

(b) Enter into any Related Party Transaction except in the

ordinary course of business and where the terms thereof

are evidenced in writing and the consideration therefore

is on the basis of an arm’s length transaction as between

two unrelated parties contracting in an open market,

provided however that in any twelve month period the

aggregate Value of Related Party Transactions entered

into or remaining outstanding shall not exceed 2% of

Total Tangible Assets as at the end of that twelve month

period;

(c) Carry on any business other than the provision of

financial accommodation and financial services or acquire

any assets other than assets used in such business;

(d) Allow the amount owing to the Charging Group under

financing receivables by any one debtor or related group

of debtors to exceed 10% of Total Tangible Assets;

(e) Sell or transfer as a going concern, whether by a single

transaction, or any series of transactions whether related

or not, the whole of its undertaking, or any part or parts

thereof comprising more than 25% of Total Tangible

Assets;

(f) Write up the value of any asset in its books of account

beyond the fair market value thereof as approved by the

Auditors at the time of such writing up;

(g) Enter into or make any proposal for a compromise

or amalgamation (other than any amalgamation with

another Charging Group Member, prior written notice of

which has been given to the Trustee); or

(h) Make any distribution other than:

(i) From a Charging Group Member to the Company;

(ii) By way of redemption of Redeemable Shares; or

(iii) By way of dividend out of profits,

and, in any event, no distributions of any kind are to be

made at any time after an Event of Default has occurred

and is continuing.

Covenant Trustee Company Limited does not guarantee the

repayment of the Debenture Stock or the payment of interest

thereon.

Duties of TrusteeThe Trust Deed provides that the Trustee has agreed to act

as trustee for the benefit of the Stockholders on the terms

and conditions and with the powers and authorities contained

in the Trust Deed. The Trustee holds the security interest

in all of the Company’s Personal Property and a charge

over the Company’s Other Property and must consider

regular financial reports furnished by the Company and the

Company’s auditors as set out in the Trust Deed so as to

enable the Trustee to review the Company’s compliance with

its obligations under the Trust Deed.

The Fifth Schedule of the Securities Regulations 1983 requires

that the Trustee shall exercise reasonable diligence to ascertain

whether or not any breach of the terms of the Trust Deed

or of the terms of the Offer of the Securities has occurred

and, except where it is satisfied that the breach will not

materially prejudice the security (if any) of the Securities or

the interests of the holders thereof, shall do all such things as

it is empowered to do to cause any breach of those terms to

be remedied. The Trustee shall exercise reasonable diligence

to ascertain whether or not the assets of the Charging Group

that are or may be available, whether by way of security or

otherwise, are sufficient or likely to be sufficient to discharge

the amounts of the Securities as they become due.


Securities or the payment of interest.


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Reporting RequirementsTo ensure that the Trustee is adequately informed, the Trust

Deed requires that the Company must provide the following

information to the Trustee:

• Annualauditedfinancialstatements,accompanied

by an auditor’s report;

• Half-yearlyauditedfinancialstatements,accompanied

by an auditor’s report;

• Furtherfinancialstatementsandreportswhenthe

Trustee considers that special circumstances have arisen

which warrant such request;

• Copiesofallreports,noticesandothermaterialsent

by the Company to its shareholders or to the holders

of Securities;

• Quarterlydirectors’certificatesintheformprescribed

by the Trust Deed (and otherwise as required by the

Securities Regulations) and a liquidity report also in the

form prescribed by the Trust Deed;

• Monthlydirectors’statementsandreportsonasset

quality, reinvestment rates, breaches of financial covenants

(if any) and liquidity to comply with additional reporting

requirements required by the Securities Regulations;

• Reportingaspertherequirementssetoutbythe

Reserve Bank of New Zealand pursuant to the Reserve

Bank of New Zealand Amendment Act 2008 and its

regulations (as permitted by the Reserve Bank);

• Acopyofthemonthlymanagementaccountsofthe

Company; and

• Noticeofproceedingswhichmateriallyandadversely

affect the Company.

Ranking of Debenture StockThe Debenture Stock being offered under this issue will rank

equally with all existing and further Debenture Stock which

may be issued from time to time pursuant to the provisions of

the Trust Deed.

Enforcement and Meetings

ENFORCEMENT

The Trust Deed provides for various events of default

which include:

• Non-paymentofanyDebentureStockorothermoneys

owing under the Trust Deed on the due date;

• BreachofanyoftheobligationsoftheCompanyorthe

Charging Subsidiaries under the Trust Deed which is not

remedied within 14 days after the Company or Charging

Subsidiary became aware of it;

• Insolvency,creditorenforcementaction,receivership,

dissolution, amalgamation, statutory management or

cessation of business of the Company or any Charging

Subsidiary;

• EnforcementofaPriorSecurityInterest;

• ChangeincontroloftheCompanywithouttheprior

consent of the Trustee.

If an event of default occurs the Trustee may, by notice in

writing to the Company, appoint a receiver and realise the

assets of the Company and Charging Subsidiaries to repay

the Debenture Stock.

MEETINGS OF THE STOCKHOLDERS

Meetings of Stockholders can be called by the Company, the

Trustee or by Stockholders holding not less than 10% of the

aggregate principal amount of the Stock. 14 days’ notice of

each meeting must be given to the Stockholders.

A quorum for passing an Extraordinary Resolution is

Stockholders present in person or by representative, holding

more than 50% of the aggregate principal amount of the Stock.

A quorum for the transaction of any business other than

passing any Extraordinary Resolution is Stockholders present

in person or by representative, holding at least 10% of the

aggregate principal amount of the Stock.

If a quorum is not present at any meeting and the meeting is

adjourned, the Stockholders present in person or by proxy at

the adjourned meeting will constitute a quorum.

The Stockholders have various powers exercisable by

Extraordinary Resolution, including the power to amend the

Trust Deed. An Extraordinary Resolution is a resolution

passed by 75% of the votes cast at the meeting. Each

Stockholder present in person or by proxy at a meeting has


one vote or, if a poll is demanded, one vote for every dollar

principal amount of Stock held. Extraordinary Resolutions

bind all Stockholders whether or not they are present at the

meeting or vote for or against the Extraordinary Resolution.

A person appointed by the Trustee will be Chairperson of

the meeting and any director, officer or solicitor of, or person

authorised by, the Company or the Trustee may attend any

meeting and has the right to speak at the meeting.

This summary is not an exhaustive summary of the Trust Deed. You are invited to inspect a copy of the Trust Deed at the registered office of the Company or the offices of the Trustee.

Other Terms of Offer and SecuritiesAll terms of the Offer, and all the terms of the Debenture

Stock being offered, are set out in this Prospectus, other

than those implied by law or set out in a document that

is registered with a public official and is available for public

inspection and is referred to in this Prospectus.

Financial StatementsThe audited financial statements for the Company for the

12 month period ended 31 March 2009 are set out on pages

11 to 42 of this document. The Auditors’ Report in respect of

those financial statements is set out on pages 43 to 46 of this

document. The financial statements include the information

required by clauses 16-32 of the Securities Regulations 1983

and the Securities Act (Financial Institutions) Exemption

Notice 2007.

Places of Inspection of DocumentsThe Constitution of the Company and the material contracts

referred to in this document are kept by the Companies

Office. Documents on the public file may be viewed on the

Companies Office website, www.companies.govt.nz, (or where

those documents are not able to be viewed via the internet)

upon request by submitting a search request form which may

be obtained from the Companies Office at:






0508 266 726.

Other Material MattersThe current average reinvestment rate (i.e. percentage of funds

reinvested at the end of term) for the Debenture Stock for

the quarter ended 31 July 2009 was 39.39%. Reinvestment

rates vary greatly from month to month and are affected by

a variety of market factors including media coverage on the

global credit crisis, public perception of the industry and overall

market confidence. As the rates are primarily driven by these

factors, they often do not provide an accurate indication of

the performance of the Company. Investors are encouraged

to read the financial statements, Chairman’s Letter and other

sections of this Prospectus to obtain a better understanding of

the Company’s performance.

There are no other material matters relating to the Offer of

Debenture Stock under this Prospectus, other than matters set

out elsewhere in the Prospectus, and contracts entered into in

the ordinary course of business of the Company.


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Richard Alan Waddel Wayne Darrin Croad

Directors’ Statement

The Directors, after due enquiry by them in relation to the

period between 31 March 2009 and the date of registration of

the Prospectus, are of the opinion that no circumstances have

arisen that materially adversely affect the trading or profitability

of the Charging Group, the value of their assets or the ability

of the Charging Group to pay their liabilities due within the

next twelve months.

The Prospectus has been duly signed by each Director of the

Company or by their agents authorised in writing.

DIRECTORS OF FINANCE DIRECT LIMITED

John Alan Callaghan Peter Karl Christopher Huljich

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Investment Statement - Answers to Important Questions

MOTOR vEHICLE

LOANS MAKE UP

A SIGNIFICANT

PERCENTAGE OF

FINANCE DIRECT

OPERATIONS.


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Investment Statement - Answers to Important Questions

What sort of investment is this?

DEBENTURE STOCK

This Investment Statement offers first ranking Debenture

Stock of Finance Direct Limited, subject to the registration

of prior charges. Debenture Stock offered in this Investment

Statement are debt securities for the purposes of the

Securities Act 1978.

The Debenture Stock shall be issued for fixed terms ranging

between 3 months and 5 years. Fixed interest rates are

applicable to Debenture Stock and will vary depending upon

the fixed term selected. Current interest rates for Debenture

Stock are set out on the rate sheet accompanying the

Application Form.

The issue of the Debenture Stock will provide the Company

with funds to on-lend for selected financial transactions

including operating leases, hire purchase arrangements and

loan advances to both companies and individuals.

The obligations of the Company to Investors in respect of the

Debenture Stock is secured by a first ranking security interest

in all of the Company’s Personal Property and a charge over

the Company’s Other Property pursuant to a Debenture

Trust Deed granted by the Company in favour of Covenant

Trustee Company Limited. The Debenture Stock issued by the

Company is first ranking because there are no other charges

registered over all of the Company’s assets that rank ahead of

the charge granted in favour of the Trustee pursuant to the

Trust Deed except for permitted prior charges.

The Trust Deed permits the Company to create prior security

interests over any asset to secure any moneys to be borrowed,

raised or otherwise owing in purchasing or acquiring such asset

if at the time of such borrowing the aggregate of all moneys

secured by existing prior security interests together with

the money so proposed to be borrowed or raised or to be

otherwise owing and secured would not exceed 2% of its Total

Tangible Assets. As at 31 March 2009, the aggregate amount

of prior charges ranking ahead of the Debenture Stock

currently outstanding and Debenture Stock being offered was

$7,245. This prior charge comprises a security interest granted

by the Company in favour of Sharp Corporation over certain

office equipment leased by the Company.

Certain creditors may also be given preference under the

legislation. These preferential creditors include liquidator’s

costs, taxes and certain payments to employees.

The Debenture Stock ranks equally with all present and future

Debenture Stock issued by the Company. As at 31 March 2009,

the total principal amount of Debenture Stock on issue was

$4,156,660.

The minimum amount that may be invested under this Offer

is $1,000.

NEW INvESTMENT PRODUCTS

Finance Direct Limited reserves the right to offer new

investment products, including savings accounts, not specified

in this Investment Statement, and to offer different interest

payment methods to Investors.

Who is involved in providing it for me?

ISSUER

Finance Direct Limited is the issuer of the Debenture Stock.

The Company’s registered office is Level 2, Finance Direct

House, 88 Broadway, Newmarket, Auckland.

TRUSTEE

The Trustee is Covenant Trustee Company Limited.

The Trustee’s address is Level 34, Vero Centre, 48 Shortland

Street, Auckland.

BUSINESS ACTIvITIES

The Company was incorporated on 23 September 1999. Since

the date of incorporation of the Company, the Company has

been establishing itself as a multi-disciplined finance company.

The Company has primarily been involved in sourcing financial

solutions for the Company’s clients, including sourcing lenders

to make certain financial accommodation available to clients

and in making certain loans and other financial accommodation

to company and individual borrowers. The Company facilitates

the loan advances and receives remuneration from the client

and/or the lender for the provision of these services.

The Company currently generates its business via introducers

and retail advertising in print, radio and television; and lends

only on the security of vehicles, boats and property. In-depth

risk analysis, credit checking and security valuations are obtained

on all loans. As a mainstream lender, the Company seeks to

position itself to attract clientele at the quality end of New

Zealand’s loan market with a strong emphasis on speed of

service and flexibility.


CHARGING GROUP’S BUSINESS ACTIvITIES

The Charging Group’s principal activity is the raising of money

from the public by the issue of Debenture Stock and the

advance of that money, together with the Charging Group’s

own funds, to the consumer and retail finance sector. The

Charging Group’s loans can generally be categorised as falling

within the following three categories:

• Toassistconsumerswiththefundingofassetpurchases

(i.e. the purchase of motor vehicles and boats);

• Toassistconsumerswiththerefinancingorconsolidation

of existing indebtedness;

• Securedbusinessandpersonalloans.

The Company commenced business as a broker and financier

in the consumer and retail finance sector in 1999. This lending

comprises the provision of business loans and personal loans

to individual consumers for general purposes or to specifically

assist consumers with the purchase of motor vehicles and

boats. These loans are predominantly secured with registered

security interests over motor vehicles, boats, and agreements

to mortgage real estate (secured by caveats registered over

the relevant real estate) owned by the borrower. This lending

is generally:

• ConcentratedinAucklandandNorthland;

• Representedbyloansmadefortermsof24months(on

average);

• Representedbyloansoflessthan$20,000.

The Company’s loan documentation allows for loans to be

varied during the course of loan facility agreements. This

includes the ability to extend the maturity dates of loans and

the rollover of loans into new agreements, where it is deemed

beneficial to do so. Loan rollovers are considered based on

their individual merits, bearing in mind the current economic

climate and the additional period of time required to achieve

recovery of the loan. All loan rollovers are assessed based on

current credit policy and require in-depth risk analysis, credit

checking, security valuations and third party guarantees (where

applicable) to be provided by borrowers.

The Charging Group does not lend to parties related to the

Charging Group.

BREAKDOWN OF BUSINESS ACTIvITIES

The exposure of the Charging Group to the aforementioned

lending sectors was as follows (as a percentage of the total

receivables owned by the Company as at 31 March 2009):

Consumer loan finance 86%

Business and personal loans 14%

COMPOSITION OF RECEIvABLES BY QUANTUM

At 31 March 2009, the Charging Group had 374 open loans

with an average balance of $13,738. The following table

illustrates the composition of the Charging Group’s loan

receivables by quantum as at 31 March 2009:

Size of loan: Number of loans:

$0 to $10,000 231

$10,001 to $20,000 73

$20,001 to $30,000 31

Greater than $30,001 39

Total 374

NATURE OF SECURITY FOR LOANS

The loans made by the Charging Group are secured by

the following types of security (as a percentage of the total

receivables owned by the Company as at 31 March 2009):

Nature of Security % of total receivables secured

Security interest over motorbike only 0.11%

Security interest over motor vehicle and boat 1.74%

Security interest over property only 12.81%

Security interest over motor vehicle only 30.63%

Security interest over property

and motor vehicle 54.71%

Total 100.00%


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GEOGRAPHICAL EXPOSURE

The majority of loans made by the Charging Group are

made to borrowers residing in Auckland and Northland.

The following table illustrates the geographic location of

the borrowers to whom the Charging Group lends (as a

percentage of the total receivables owned by the Charging

Group as at 31 March 2009):

Location of borrower % of total receivables secured

Auckland and Northland 72.41%

Bay of Plenty 3.35%

Central North Island 13.57%

South Island 3.78%

Waikato 4.09%

Wellington 2.80%

Total 100.00%

TRUST DEED

The Trust Deed is dated 30 September 2004 and entered into

between the Charging Group and Covenant Trustee Company

Limited.

The Trust Deed provides that the Company may from time

to time borrow or raise money secured by Debenture Stock.

Pursuant to the Trust Deed the Trustee has agreed to act as

trustee for the benefit of the Stockholders on the terms and

conditions and with the powers and authorities contained in

the Trust Deed.

GRANTING OF SECURITY INTEREST

Pursuant to the Trust Deed the Charging Group has granted

to Covenant Trustee Company Limited a security interest in all

of the Charging Group’s Personal Property and a charge over

the Charging Group’s Other Property. The charge created by


charge over Other Property in respect of which a fixed charge

is not legally and fully effective and a fixed charge over all

Other Property.

RESTRICTIONS ON BORROWINGS AND OTHER COvENANTS

Details of the financial limitations, restrictive covenants and

general covenants imposed upon the Charging Group by the

Trust Deed are stated on pages 51 and 52.

DUTIES OF TRUSTEE

Details of the duties of the Trustee are stated on page 52.


Securities or the payment of interest.

REPORTING REQUIREMENTS

Details of the reporting requirements of the Charging Group

to the Trustee are stated on page 53.

RANKING OF DEBENTURE STOCK

The Debenture Stock being offered under this issue will rank

equally with all existing and future Debenture Stock which may

be issued from time to time pursuant to the provisions of the

Trust Deed.

This summary is not an exhaustive summary of the Trust Deed.

You are invited to inspect a copy of the Trust Deed at the

registered office of the Company or the offices of the Trustee.

How much do I pay?

MINIMUM INvESTMENT

You may select the amount you wish to invest (“Application

Moneys”). The minimum amount that may be invested

however is $1,000.

APPLICATION AND PAYMENT

If you wish to make an Investment, you must:

• CompletetheApplicationFormthataccompaniesthis

Investment Statement.

• Attachachequefortheamountyouwishtoinvest.

• SendyourApplicationFormtogetherwithyourcheque

made payable to “Finance Direct Limited” and crossed

“Not Transferable” for the amount of the Application

Moneys shown on your Application Form to Finance

Direct Limited, P O Box 17422, Greenlane, Auckland, to

any Primary Market Participant or any agent appointed

by the Company to receive such Application Forms.

DO NOT forward cash. Payment will only be accepted

in New Zealand currency as follows:

• Personalchequedrawnonandpayableatany

New Zealand bank;

• BankchequeissuedbyandpayableatanyNewZealand

bank;

• BankdraftdrawnonandpayableatanyNewZealand

bank; or

• BydirectcreditinclearedfundsintotheCompany’s

bank account.


What are the charges?You are not required to pay any fees or charges during the term

of your Investment other than those statutorily imposed (if any)

and the money paid for the Debenture Stock applied for.

The Investor has no right to require the Company to repay

Debenture Stock to the Investor prior to the expiry of the fixed

term of the Debenture Stock (“Maturity Date”). However, the

Company reserves the ability at its absolute discretion to permit

the early repayment of Debenture Stock before the Maturity

Date for the respective Investment in the event of death or

financial hardship. Requests for early repayment of Debenture

Stock must be made to the Company in writing. In the event

that the Company agrees to repay the Debenture Stock to the

Investor prior to the Maturity Date, the Company reserves the

right at its discretion to adjust the interest rate applicable to the

Debenture Stock for the term upon which those funds have

been held by the Company. The Company may also charge an


CHARGES PAYABLE BY THE ISSUER

The Company is liable to pay fees to the Trustee and may

from time to time pay brokerage to certain financial advisers,

intermediaries and brokers. Further details on brokerage

are set out on page 50 of this Prospectus under the section

headed “Issue Expenses”.

None of the above fees are payable by an Investor and do not

impact upon the amount of returns payable by the Company

on your investment.

What returns will I get?

INTEREST – DEBENTURE STOCK

The returns to an Investor from their investment in Debenture

Stock will be interest on the Debenture Stock. The Company

will pay the Investor interest on the sum invested as

Debenture Stock at the fixed rate advertised by the Company

for Debenture Stock of that term on the date the Application

is received by the Company. Subject to an Investor’s

application being accepted, interest will begin accruing on the

day the application money is received in cleared funds by the

Company. The interest will accrue on a daily basis from that

date (on the basis of a 365 day year) and will be paid at the

intervals and the rates as set out in the Application Form on

which the Investment was made or as otherwise agreed with

the Company.

Current interest rates for Debenture Stock are set out on the

rate sheet accompanying the Application Form. From time to

time market conditions alter and interest rates on Debenture

Stock are changed to suit those conditions. The Company

may vary the interest rates offered at any time. Any alteration

in interest rates will not apply to Investments received before

that alteration is made. Once accepted, Debenture Stock

will continue to earn the interest rate agreed on when the

Investment is made and is fully protected from any later

fluctuation.

If the Application Form is received after an interest rate has

been changed, the Company will advise the Investor of such a

change. In the event that the Investor does not confirm within

10 Business Days that the Investor accepts the new interest

rate, the Company will refund the deposit to the Investor. No

interest will be paid on moneys refunded.

PAYMENT OF INTEREST

The key factors that will determine your returns are:

• Thetermoftheinvestment;

• Theinterestrateapplicabletothetermof

the investment;

• Theinterestpaymentoptionselected.

Interest on the Investment may be compounded or paid to

the Investor by direct credit or cheque at the Investor’s option.

The Company pays interest quarterly during the term of the

Investment from the date of the deposit with the Company.

Once the Debenture Stock has been allotted to the Investor

for a fixed term, the interest rate at which that Debenture

Stock has been issued to the Investor will be fixed during the

term of the Investment and will not be varied.

The amount of returns an Investor will receive is not

quantifiable as at the date of this Investment Statement due to

the options available to the Investor. Nor is it possible to state

the exact dates on which, or the frequency with which, the

returns on your Debenture Stock will be paid. The amount

can be calculated once these options have been selected, and

that amount is enforceable by an Investor.

Because these factors vary between prospective investors, the

Company cannot promise a quantifiable amount of returns in

this Investment Statement.

The Company may adjust the interest rate applicable to any Debenture Stock if the Stockholder seeks early repayment


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in the circumstances set out in the section “What are the Charges?” The new rate will be a rate the Company determines is applicable for the period during which the investment was held. The Company may also charge an investment break fee set by the Company from time to time.

The Investor can choose to receive payments of interest in any

one of three ways:

Compound – Rather than make a quarterly interest payment, the Company will add interest to the investment automatically and send the Investor a notice of the Investor’s balance. The Investor will then earn interest on the original investment and on interest. If the Investor selects “compounding interest option” on the Application Form and then later decides that the Investor would like to receive quarterly payments the Company will change the manner in which payments of interest are made in the future.

Quarterly Direct Credit – The Company may pay interest direct to the Investor’s bank account each quarter and mail the Investor an interest advice which shows details of the amount banked. This method avoids any postal delay which may occur if a cheque is mailed to the Investor.

Quarterly Cheque – The Company may pay the interest by

cheque each quarter. The cheque together with an interest

advice is posted to the Investor.

TAXATION

Under current legislation, the Company is required to deduct Resident Withholding Tax (“RWT”) from interest paid to, or applied for, the benefit of New Zealand resident Investors and Investors who hold secured deposits through a fixed establishment in New Zealand. RWT will not be deducted by the Company where Investors hold a valid Certificate of Exemption that has been supplied to the Company.

Investors who supply the Company with their IRD Number must elect a RWT rate currently being 19.5c, 33c or 39c for every $1.00 of interest earned. RWT will be deducted at the rate of 39c for every $1.00 of interest earned where an Investor’s IRD Number is not supplied, as required by current legislation.

Non-Resident Withholding Tax (“NRWT”) will be deducted by the Company from interest paid to, or applied for, the benefit of an Investor who is not a tax resident of New Zealand unless the Investor holds secured deposits through a fixed establishment in New Zealand. The rate of NRWT deduction will be dependent upon the Investor’s country of residence.

The Company will make the deductions referred to above and as required by applicable legislation unless it is satisfied by the Investor that such deductions are not required by law.

The Company has obtained “Approved Issuer” status and has registered the Debenture Stock as “Registered Securities” for the purpose of the approved issuer levy provisions in Part VIII of the Stamp and Cheques Duties Act 1971. The Company may, upon request, subject to being legally entitled so to do, and on any terms it requires, agree to deduct and pay an approved issuer levy (currently 2%) on interest payments made to non-residents in lieu of NRWT.

With the tax threshold changes that took effect from 1 October 2008 and the new tax rates effective from 1 April 2009, no changes have yet been made to the RWT tax rates of 19.5% or 33%. Financial institutions have the option of offering a reduced rate of 38% in place of 39% for the 2010 tax year. However, the Company does not currently offer this reduction. Accordingly, an Investor will need to recover any overpaid RWT by filing a tax return.

The Government has advised that further consequential changes to the RWT rates on interest will not be fully implemented until there has been further consultation with banks and other financial institutions. That consultation is still in progress at the date of this Prospectus.

The party legally liable to pay the interest and principal

comprising the Investment is Finance Direct Limited.

NEW INvESTMENT PRODUCTS

Finance Direct Limited reserves the right to offer new

investment products, including savings accounts, not specified

in this Investment Statement, and to offer different interest

payment methods to Investors.

What are my risks?The principal risk of your Investment not being recovered in

full by you, or of not receiving the returns stated in the section

entitled “What returns will I get?”, is if the Company becomes

insolvent. This could occur if:

• AsignificantnumberofloansmadebytheCompany

were not repaid and security taken for those loans

proved inadequate for any reason and the Company was

otherwise unable to recover those loans in full from the

borrowers; or

• ThevalueoftheCompany’sassetsfallandthoseassets

were realised for less than the acquisition cost of those

assets;

• TheCompany,becauseofthoseprincipalrisksor

otherwise, is unable to meet its debts as they fall due.


GENERAL RISKS

DEBTOR RISK

As with most finance companies, the most significant risk faced

by the Company is the risk that the Company is unable to

recover loans in full from those parties borrowing funds from

the Company.

In light of the fact that the Company:

• Predominantlylendsonthesecurityofmotorvehicles,

boats (which are by their nature depreciating assets) and

agreements to mortgage over real estate (which are in

effect unregistered mortgages often ranking behind first

registered mortgages and/or second mortgages, or other

caveatable interests); and

• Lendsatahigherloantovalueratiothanlargerfinancial

institutions, in respect of the amount that it will lend

against certain assets,

the Company has potentially greater credit risk in the event

that a borrower client defaults under a loan made by the

Company as the Company may not be able to realise sufficient

value from the sale of the assets pledged by the borrower as

security for the loan.

The Company has a number of procedures in place to seek

to reduce the risk of the Company being rendered unable

to recover all the moneys owing to it by a borrower or

borrowers under a loan, including:

• Arigorousloanapplicationandcreditapprovalprocess

that each prospective borrower must complete to the

satisfaction of the Company prior to a loan advance

being made to that prospective borrower;

• EnsuringthattheCompanytakessufficientsecurityto

properly protect its position;

• EnsuringthattheCompanyfollowsstringentpoliciesof

monitoring loan performance, including daily monitoring

of the contractual position of all of the Company’s

debtors with immediate daily personal follow up if

there is a breach of the terms of their loan facility

documentation, followed up with enforcement action if

the breach is not expeditiously remedied;

• Obtainingthirdpartyguaranteesoftheborrower’s

obligations to the Company where appropriate in the

circumstances;

• Ensuringthatloansecuritiesarewithinprudentloanto

valuation ratio percentages;

• EnsuringthatthecovenantsintheDebentureTrustDeed,

pursuant to which Debenture Stock is issued, are met.

In the vast majority of loans made by the Company, the

Company requires that borrowers obtain payment protection

insurance. Under these policies of insurance, the insurer will

generally pay the borrower’s payment instalments as they

fall due under a loan upon the occurrence of death, certain

accidents, sicknesses or redundancy/bankruptcy (if the

borrower is self-employed).

In certain circumstances, the Company will require a

borrower’s obligations to the Company to be guaranteed

by a third party. This will generally only be required where

the security for a loan is owned by a person other than the

borrower, in which case the owner of that property will be

required to guarantee the obligations of the borrower to the

Company. Also, in the case of borrowers under the age of 20,

the Company normally looks for a third party to guarantee the

obligations of that borrower to the Company depending upon

the assessed value of the security given for the respective loan.

CONTINUITY OF SUPPLY

The Company is in the business of lending funds that have

been deposited with it together with other moneys that it

has access to. Some of these secured debenture funds are

received via a number of financial intermediaries. The ability

of the Company to lend relies upon the support of these

intermediaries and the investing public. If for any reason the

continuing support of a number of advisers and financial

intermediaries, or the investing public ceases to occur or were

to significantly reduce, then the Company may not have the

funds available to on-lend to prospective borrowers. This

event may adversely impact upon the growth and financial

performance of the Company.

LIQUIDITY RISK

Liquidity risk is the risk that the Company will not have

sufficient funds to meet its ongoing obligations. A risk exists

that the Company could encounter difficulty in raising funds at

short notice to meet its lending and repayment commitments

due to the Company principally raising funds from the issue of

Debenture Stock. To mitigate this risk, the Company:

• Preparesdetailedfinancialforecastsandholdsregular

management meetings to discuss liquidity management

issues;

• Maintainssufficientliquidfundstomeetitscommitments

based on the forecast financial information;


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• Obtainsexternalexpertadviceasconsideredprudent

from time to time;

• Generallylendsfundsfortermswhichareactually

shorter than most of the terms of its debenture

borrowings.

INTEREST RATE RISK

Interest rate risk arises as a result of mismatches between the

Company’s interest bearing assets (i.e. loans) and its interest

bearing liabilities (i.e. Debenture Stock). Movements in interest

rates may impact upon the Company’s financial results by

affecting interest margins as a result of such mismatches.

The Directors have a number of risk mitigation procedures

in place to seek to reduce the impact of interest rate

movements, including:

• ThefactthattheCompanygenerallylendsfundsfor

terms shorter than most of the terms of its debenture

borrowings means the Company generally knows funding

costs for the duration of any lending at the time it enters

into loan agreements;

• Interestratesformostinvestmentsarefixedfortheterm

of the investment.

BOARD PERFORMANCE

There is a risk that the performance of the Board of Directors

does not meet required standards either individually or

collectively. There is significant responsibility on the Directors

of a finance company to comply with prudent financial and

corporate governance measures, and other legal requirements

and responsibilities. The Company’s Board is aware of these

responsibilities and requirements, and is continuing to develop

its code of governance.

REGULATORY RISK

There could be substantial changes in laws and governmental

policies affecting the Company’s business. One such change

being the Reserve Bank of New Zealand Amendment Act

2008, that directly affects both the regulation and minimal

capital requirements for deposit takers.

COMPETITION

The Company faces the risk of existing or new competitors or

new products eroding the Company’s market share or margins.

LOSS OF KEY PERSONNEL

The Company has spent considerable time and effort in

bringing together individuals into the Company who have the

skills, experience and ability to work together effectively to

achieve superior results. In the normal course of business, the

Company faces the risk of the loss of one or more of those

individuals for a variety of reasons.

MARKET RISK

Market risks include further loss of confidence in the economy

in general possibly leading to a continuation of the recession.

Failure by competitor finance companies could also lead to a

general lack of confidence by investors.

IT RISKS

The Company is dependent on its information technology

(IT) systems to maintain its efficiency and to monitor the

performance of its finance receivables and debenture stock

ledgers. The failure of its IT systems could have a short term,

yet material, adverse impact on the Company’s operations.

The Company is also exposed to the risks of new systems

or upgrades introduced as part of the ongoing improvement

failing to perform to expectations.

LITIGATION RISK

There is a possibility that future litigation could adversely affect

the Company’s financial position. The Company is not aware

of any adverse litigation threatened or pending that may have

an adverse effect on the financial position of the Company as

at the date of this Prospectus.

GUARANTEE RISK

The Crown has guaranteed certain deposits under the

Scheme until 12 October 2010. The Crown guarantee is

subject to compliance by the Company with a number of

requirements including certain reporting obligations, meeting

Trust Deed covenants, complying with prudential directions

and restrictions on entering into certain transactions. There is

a risk that failure to comply with any of these obligations could

result in the Crown withdrawing its guarantee.

On 25 August 2009, the Crown released details of an

extension to the Scheme through to 31 December 2011.

Different conditions apply to the extension of the Scheme and

there is a risk that the Company may not be able to obtain

extension of its current guarantee beyond 12 October 2010.


SPECIFIC RISKS

REAL ESTATE AND PROPERTY MARKET

As at 31 March 2009, approximately 68% of the Company’s loans were secured by the Company taking security by way of an agreement to mortgage over real estate owned by the borrower, which agreement is secured by a caveat registered against the certificate of title for the borrower’s property. Generally, the caveat registered to secure the agreement to mortgage will be registered subsequent to a first and/or a second mortgage. As a consequence:

• Intheeventthattheconditionsintherealestatemarket

deteriorated materially causing a depreciation in real

estate values, this may adversely impact on the value of

the security underlying certain of the Company’s loans

which it may realise in the event that it is required to

enforce its security;

• IntheeventtheCompanysoughttoenforceitssecurities

through the registration of a mortgage and the exercise

of the power of sale under that mortgage, then the

Company’s ability to realise the proceeds of sale of the

mortgaged property would be subject to the claims of

any prior ranking secured interest registered over the

mortgaged property in question, i.e. a first or second

mortgage or prior ranking caveat. Subject to the

extent of the borrower’s indebtedness at the time of

enforcement, there may not be sufficient residual funds

available to the Company to repay the indebtedness of

the borrower to the Company.

EXPOSURE TO A PARTICULAR COUNTERPARTY

There is a risk that the Company may become too heavily exposed to one particular borrower. The Company mitigates this risk by ensuring that it is not exposed to one entity for an amount equal to or greater than 10% of the Company’s Total Tangible Assets.

RELATED PARTY LENDING

The Company has a rigid policy of not making loan advances to related parties and accordingly does not consider transactions of this nature to be a risk to the Company.

UNSUCCESSFUL MARKETING

It is possible that the Company’s initiatives to market its financial services to prospective borrowers and its financial investments such as secured debenture stock will fail, or not produce the projected levels, which may have an adverse impact upon the financial position and performance of the Company.

CONSEQUENCES OF INSOLvENCY

You would not be liable to pay any money to any person as a

result of the insolvency of the Company. Your principal risk is

that you could suffer loss of some or all of the interest due to

you, or your original investment, if for any reason the Company

becomes insolvent and is unable to meet its debts as they

fall due. It is possible therefore that on termination of your

investment at any time you may receive less than the amount

of your original investment.

The Debenture Stock being offered under this issue will rank

pari passu (or equally) with all existing and further Debenture

Stock which may be issued pursuant to the Trust Deed. As at

31 March 2009, the aggregate principal amount of Debenture

Stock issued by the Company and which were outstanding

was $4,156,660. The claims on the assets of the Company that

will or may rank ahead of your claim if the Company is put

into liquidation are:

• Claimsbypreferentialcreditors.Preferentialcreditors

are determined by reference to the Companies Act 1993.

They include the fees and expenses incurred by any

liquidator, certain claims by the Company’s employees

for unpaid remuneration, PAYE tax deductions and any

Goods and Services Tax;

• Claimsbyholdersofpriorsecurityinterests.TheTrust

Deed permits the Company to create prior security

interests over any asset to secure any moneys to be

borrowed, raised or otherwise owing in purchasing or

acquiring such asset if at the time of such borrowing

the aggregate of all moneys secured by existing prior

security interests together with the money so proposed

to be borrowed or raised or to be otherwise owing and

secured would not exceed 2% of its Total Tangible Assets.

As at 31 March 2009, the aggregate amount of prior

charges ranking ahead of the Debenture Stock currently

outstanding and Debenture Stock being offered was

$7,245. This prior charge comprises a security interest

granted by the Company in favour of Sharp Corporation

over certain office equipment leased by the Company;

• TheTrustee’s,oranyreceiverappointedbytheTrustee,

remuneration, costs, charges, expenses and liabilities.

The obligations of the Company to Investors in respect of

the Debenture Stock is secured by a security interest in all

of the Company’s Personal Property and a charge over the

Company’s Other Property pursuant to a Debenture Trust


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Deed granted by the Company in favour of Covenant Trustee

Company Limited (“the Trustee”). The charge created by


charge over the Other Property in respect of which a fixed

charge is not legally and fully effective and a fixed charge over

all Other Property.


Debenture Stock or the payment of interest thereon.

Can the investment be altered?

EARLY REPAYMENT

The Investor has no right to require the Company to repay the Debenture Stock to the Investor prior to the expiry of the fixed term of the investment (“Maturity Date”). However, the Company reserves the ability at its absolute discretion to permit the early repayment of Debenture Stock before the Maturity Date for the respective Debenture Stock in the event of death or financial hardship. Requests for early repayment of Debenture Stock must be made to the Company in writing. In the event that the Company agrees to repay the Debenture Stock to the Investor prior to the Maturity Date, the Company reserves the right, at its discretion, to adjust the interest rate applicable to the Debenture Stock for the term upon which those funds have been held by the Company. The Company may also charge an investment break fee set by the Company from time to time.



The Company reserves the absolute discretion to repay the Investment prior to the expiry of the fixed term of the Investment, provided that the Company:



and




TRUST DEED

The Trust Deed which governs the Debenture Stock does provide for the alteration of its terms in certain circumstances (which may include an alteration to the specific terms of the Debenture Stock) with the agreement of the Trustee. The Trustee may only agree to make the proposed alteration if the proposed alteration is:

• IntheopinionoftheTrustee,madetocorrectamanifest

error or is of a formal or technical nature or is necessary

in order to comply with any law or is convenient for

the purposes of obtaining or maintaining a quotation of

the Debenture Stock on any securities exchange and is

not prejudicial to the general interests of the holders of

Debenture Stock; or

• ApprovedbyanExtraordinaryResolutionoftheholders

of Debenture Stock (being a resolution passed by not

less than 75% of the votes given being in favour of the

resolution); or

• IntheopinionoftheTrustee,clearlynotornotlikelyto

become prejudicial to the general interests of the holders

of Debenture Stock.

How do I cash in my investment?

REPAYMENT OF THE INvESTMENT

On Maturity Date, Stockholders will be paid the face value of their Investment together with any interest then due, upon presentation of the relevant documentation to the Company. About 14 days before the date the Investment is due to mature, the Investor will be sent a letter which sets out the options available for reinvestment or repayment of the Investment.

If the Investor has no immediate use for the Investment, the Company will at the Investor’s request accept the Investment for a further period nominated by the Investor at whatever the current interest rate is at that time.

The Investor may request that repayment is made. If so the Investor will need to return the Investment Certificate held in respect of the Debenture Stock. Payments will be made to the Investor by cheque or deposited into the Investor’s bank account at the election of the Investor.

If at the maturity date the Company has not received any instruction from you regarding either the reinvestment or repayment of your investment the Company may at its sole discretion:

• Holdthatinvestment“atcall”,withsevendaysnotice,

at the Company’s “at call” rate until it receives your

instructions;

• Reinvesttheinvestmentforthesameterm(andthesame

payment terms) as the original investment of Debenture

Stock. The investment will accrue interest at the interest

rate applicable to investments of the same term as the

investment as at the date of the reinvestment;


• Repayyourinvestmenttogetherwithallaccruedbut

unpaid interest by cheque to your last known address or

by direct credit to your last nominated bank account.

EARLY REPAYMENT

Debenture Stock is issued for fixed terms and for fixed

interest rates during that term. This provides the Company

with certainty in respect of the planning of its business

operations. Accordingly, the Investor has no right to require

the Company to repay the Debenture Stock to the Investor

prior to the expiry of the fixed term of the Debenture Stock.

However, the Company reserves the ability at its absolute

discretion to permit the early repayment of Debenture Stock

before the Maturity Date for the respective Debenture

Stock in the event of death or financial hardship. Requests

for early repayment of Debenture Stock must be made to

the Company in writing. In the event that the Company

agrees to repay the Debenture Stock to the Investor prior

to the Maturity Date, the Company reserves the right, at

its discretion, to adjust the interest rate applicable to the

Debenture Stock for the term upon which those funds have

been held by the Company. The Company may also charge an






Investment, provided that the Company:



and




RIGHT TO SELL

You may transfer your interest in your Investment at any time

(not later than 30 days before Maturity Date) by completion

of a Transfer in such form as is customarily used to transfer

shares in New Zealand (“Transfer”). More than one person

can take ownership of the Investment. The Company is

not bound to recognise trusts. Consequently no reference

to trusts or trustees should be made in the Transfer. Joint

Investment owners will be treated as joint tenants (unless

some other form of ownership is indicated) so that on the

death of one of them, ownership of the Investment will vest

automatically with the survivor(s). To be valid, the Transfer

must be registered with the Company. There is currently no

fee payable in respect of the Transfer of the Investment to

another person; however, the Company reserves the right to

charge a fee in the future.

MARKET

In the opinion of the Company there is no established market

for the sale or transfer of the Securities.

Who do I contact with enquiries about my investment?Enquiries about your Investment can be addressed to the

Company at:

Managing Director


Freephone 0800 399 666

Telephone +64 9 529 5399

Facsimile +64 9 529 5509

Freefax 0800 104 200

Email [email protected]

P O Box 17422, Greenlane, Auckland

Is there anyone to whom I can complain if I have problems with the investment?The Company operates an internal complaints procedure to

investigate thoroughly any complaint.

If for any reason you are unhappy with any aspect of your

Investment, you may wish to contact the Managing Director of

the Company; the contact details for which are as follows:

Managing Director



Telephone +64 9 529 5399

Facsimile +64 9 529 5509

Freefax 0800 104 200




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You may also contact the Trustee;

the contact details for which are as follows:

Stewart Lockhart

Corporate Business Manager

Covenant Trustee Company Limited


Telephone +64 9 302 0638

Facsimile +64 9 302 1037


Level 34, Vero Centre

48 Shortland Street, Auckland

P O Box 4243, Shortland Street Auckland, 1140

Complaints cannot be made to an Ombudsman.

What other information can I obtain about this investment?Other information about the Debenture Stock or the

Company is contained or referred to in the Prospectus and in

the financial statements of the Company.

A copy of the Prospectus and of the most recent financial

statements of the Company can be obtained free of charge at

the registered office of the Company at the address stated in

the Directory.

The Prospectus, the Company’s financial statements, the

Trust Deed, any material contracts required to be registered

under the Securities Regulations 1983, and the Company’s

constitution are filed at the Companies Office of the

Ministry of Economic Development and are available for

public inspection (upon payment of the prescribed fee) by

downloading a copy from the Companies Office website,

www.companies.govt.nz, (or where those documents are not

able to be viewed via the internet) upon request and payment

of the current fee by submitting a search request form which

may be obtained from the Companies Office at:






0508 266 726.

On-request informationA copy of the Trust Deed, Prospectus, most recent financial

statements of the Company required to be registered

under the Financial Reporting Act 1993, together with all

documents that are required to be registered with those

financial statements, Annual Report and the latest Investment

Statement, are available for inspection free of charge at the

registered office of the Company. You can also request at

any time, a copy of the Trust Deed on payment of a fee not

exceeding 50 cents per page. Simply call the Company during

normal business hours.


With the passing of the Reserve Bank of New Zealand

Amendment Act 2008, there have been additional regulatory

requirements placed on non bank deposit takers with

various effective dates. There are also additional powers and

obligations for trustees of non bank deposit takers.

Finance Direct Limited is a “deposit taker” as defined under

Section 157C and is, therefore, subject to the requirements of

the Act. A brief summary of the requirements follow:

• Section157I– Deposit taker must have a current credit

rating from an approved rating agency (comes into force

on 1 March 2010).

• UndertheDepositTakers(CreditRatingsMinimum

Threshold) Exemption Notice 2009 (commencement

date 7 August 2009) an exemption is available from

this section if the consolidated liabilities of the

borrowing group of the deposit taker are less than

$20 million. The exemption notice outlines certain

conditions that a deposit taker must comply with in

order to benefit from this class exemption.

Applications for exemption are considered by

Reserve Bank staff. Finance Direct Limited currently

qualifies for this exemption but as at the date of this

Prospectus has not yet made a formal application for

it to the Reserve Bank.

• Section157L– Deposit taker must have at least 2

independent directors on its board (comes into force on

a date yet to be determined).

• FinanceDirectLimitedcurrentlyhas1independent

director as a member of its board.

• Section157M– Deposit taker must have and comply

with a risk management programme (comes into force

on 1 September 2009).

• FinanceDirectLimiteddoeshaveariskmanagement

programme in place which has been provided to and

approved by the Trustee as required by Section

157N and Section 157M(2) of the Act.

• Sections157Pand157S – Regulations may impose

requirements that trust deed sets out a minimum capital

amount and a capital ratio that a deposit taker is required

to maintain (these regulations are not yet in force, but are

currently expected to take effect in late 2010).

• FinanceDirectLimitediscurrentlysubjectto

minimum capital requirements set out in the Trust

Deed. Further information is set out under

“Restrictions on the Company” on page 5.

• Section157V – Regulations may impose requirements

that trust deed includes maximum limit on exposures to

related parties (these regulations are not yet in force, but

are currently expected to take effect in late 2010).

• FinanceDirectLimitedcurrentlyhasarestrictionon

related party lending as set out in “Restrictions on

the Company” on page 5.

• Section157Z– Regulations may impose requirements

that liquidity obligations be included in trust deeds (the

date on which these regulations will take effect is yet to

be determined).

• HowFinanceDirectLimitedcurrentlymanagesits

liquidity is set out under the heading “Liquidity Risk”

in the “General Risks” section on page 62.

• Section157ZD– The Reserve Bank may require

trustee to attest as to deposit taker’s compliance with

requirements.

• Section157ZE– Trustee must report to the Reserve

Bank non-compliance or likely non-compliance by the

deposit taker.

• Section157ZI–157ZJ– Powers of the Reserve Bank to

obtain reports and other information from the deposit

taker.

Deposit takers and trustees which breach their obligations

under the Act may be subject to prosecution, and if convicted,

fines up to a maximum amount of $2,000,000.

The summaries above are not a full representation of the

legal effect of the Reserve Bank of New Zealand Amendment

Act 2008, nor a full description of its terms. At the date of

this Prospectus, Finance Direct Limited is using all reasonable

endeavours to comply with its obligations under the new

legislation as these obligations take effect.

Reserve Bank of New Zealand Amendment Act 2008


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For the purposes of regulation 5(6) of the Securities Regulations 1983, the matters

required to be stated or contained in this Offer Document by virtue of the Second

Schedule to the Securities Regulations 1983, and the page reference within this Offer

Document in which each matter appears are:

MATTER SECOND SCHEDULE PAGE(S)

Main terms of Offer Clause 1 48

Name and address of offeror Clause 2 N/A

Details of incorporation of issuer Clause 3 48

Guarantors Clause 4 49

Directorate and advisors Clause 5 49

Restrictions on directors’ powers Clause 5A 49

Description of activities of borrowing group Clause 6 49

Summary of financial statements Clause 7 6 and 50

Acquisition of business or subsidiary Clause 8 N/A

Material contracts Clause 9 50

Pending proceedings Clause 10 50

Issue expenses Clause 11 50

Ranking of securities Clause 12 51

Provisions of trust deed and other

restrictions on the borrowing group Clause 13 51

Trustee’s Statement Clause 13(3) 47

Other terms of offer and securities Clause 14 54

Financial statements Clauses 15-32 11-42

Places of inspection of documents Clause 33 54

Other material matters Clause 34 54

Directors’ statement Clause 35 55

Auditors’ report Clause 36 43-46

Index of Statutory Information


Glossary

“Act” means the Reserve Bank of New Zealand

Amendment Act 2008.

“Application Form” means the Application Form

accompanying the Investment Statement upon

which applications to invest are required to be

made.

“Business Day” means a day on which the

Company is normally open for business.

“Certificate” means the Debenture Stock

certificate to be issued to an Investor whose

application to invest has been accepted by the

Company.

“Charging Group”, “Borrowing Group” and

“Group” means the Company and its Charging

Subsidiaries (if any) as the context requires.

“Charging Group Member” means each member

of the Charging Group.

“Charging Subsidiaries” has the same meaning

afforded that term in the Trust Deed.

“the Company”, “Finance Direct”, “we”, “us”, “our”

means Finance Direct Limited.

“Crown” means her Majesty the Queen in right of

New Zealand.

“Debenture Stock” means all debenture stock

or other secured indebtedness by whatever name

called, constituted and issued by the Company

pursuant to the Trust Deed from time to time

pursuant to this Prospectus.

“Directors” and “Board” means the board of

directors for the time being of the Company.

“Investor” means a Stockholder.

“Investment” means the subscription for

Debenture Stock in accordance with the terms of

this Prospectus.

“Investment Statement” means the Investment

Statement relating to the issue of Securities which

is comprised within this Offer Document on pages

56 to 69.

“Maturity Date” means the date agreed upon by

the Company and the Investor, upon which date

the Investor’s Investment is due to be repaid to the

Investor.

“NZ GAAP” means generally accepted accounting

practice as defined in section 3 of the Financial

Reporting Act 1993.

“NZ IFRS” means the New Zealand International

Financial Reporting Standards approved by the

Accounting Standards Review Board and forming

part of NZ GAAP.

“Offer” means the offer to subscribe for

Debenture Stock.

“Other Property” means, in relation to any

company, all of its Real Property and all other

present and after-acquired property that is not

Personal Property.

“Personal Property” means, in relation to any

company, all of its present and after-acquired

personal property.

“Prior Security Interest” means any security

interest on the Secured Property, or any part

thereof, ranking in priority to the security interests

in favour of the Trustee created by or pursuant to

the Trust Deed or as the case requires the principal

moneys secured by such security interests.

“Prospectus” means the registered prospectus

relating to the Company and the issue of

Debenture Stock comprised within this document.

“Real Property” means, in relation to any company,

all of its present and after-acquired freehold and

leasehold land, all estates and interests in land and

all buildings, structures and fixtures (including trade

fixtures) for the time being on that land.

“Related Party” means any person, other than a

Charging Group Member, who is:

(a) a company, trust or other person of which

more than 10% of the issued shares, units or

other interests are beneficially owned by the

Company or another Related Party;

(b) a person who has a relevant interest (as

defined in Section 5 of the Securities

Markets Act 1988) in any shares in the

Company, a Subsidiary or any other Charging

Group Member;

(c) a Director or a director of any Subsidiary or

other Charging Group Member;

(d) a Family Member of any person defined in

paragraph (b) or (c) above;

(e) a related company (as defined in section

2(3) of the Companies Act) of any Related

Party;

(f) any trust of which any director or

shareholder of the Company, any Subsidiary

or any other Charging Group Member or

any Family Member of any such director

or shareholder is a trustee, settlor or

beneficiary.

“Related Party Transaction” means any transaction

of any nature between the Company or any other

Charging Group Member and a Related Party

including, but not limited to:

(a) the provision of financial accommodation by

the Company or any other Charging Group

Member to a Related Party;

(b) the investment by the Company or any

other Charging Group Member in the capital

or equity of a Related Party;

(c) the transfer of assets between the Company

or any other Charging Group Member and a

Related Party;

(d) the provision of services by or to the

Company or any other Charging Group

Member to or by a Related Party; and

(e) the giving of a guarantee, indemnity or other

commitment by the Company or any other

Charging Group Member to, at the request

of, or for the benefit of, a Related Party,

but does not include:

(a) the provision of financial accommodation

by a Related Party to a Charging Group

Member on arm’s length commercial terms,

or any payment by a Charging Group

Member to that Related Party of principal,

interest or other moneys in respect of that

financial accommodation in accordance with

those terms;

(b) transactions with a Related Party in relation

to investments of a Charging Group

Member which are, or are to be, held by that

Related Party as nominee or trustee for that

Charging Group Member; or

(c) payment of reasonable salary and other

remuneration benefits to a Related Party

who is employed by a Charging Group

Member;


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(d) payment of reasonable remuneration

and expenses to a Director for his or her

services as a Director of a Charging Group

Member; or

(e) payment of rental at arm’s length market

rates by the Company to a Related Party in

relation to office accommodation occupied

by the Company.

“Secured Property” means, in relation to any

company, all of its Personal Property and Other

Property, wherever situated.

“Securities” means Debenture Stock.

“Securities Regulations” means the Securities

Regulations 1983 and includes any amendments.

“Stockholders” means the several persons

from time to time entered in the Register of

Stockholders as the holders of Debenture Stock

and includes their personal representatives.

“Tangible Assets” means all assets except deferred

tax assets and assets which according to NZ GAAP

are considered to be intangible assets.

“Total Contingent Liabilities” means, at any time,

the aggregate amount of all Contingent Liabilities

of the Charging Group at that date other than any

Contingent Liability:

(a) that is secured to the Charging Group by a

first ranking security interest over an asset in

all respects acceptable to the Trustee; or

(b) in respect of which the Charging Group has

the benefit of a guarantee or indemnity from

a bank, other financial institution or other

person, in any case having a credit rating or

credit worthiness acceptable to the Trustee.

“Total Liabilities” means, at any time, the

aggregate of:

(a) the amounts of all Liabilities of the Charging

Group as would be disclosed in a statement

of financial position if a statement of financial

position was then prepared;

(b) Total Contingent Liabilities; and

(c) the amount payable on redemption of

redeemable shares,

but does not include the principal amount of

subordinated debt or convertible notes.

“Total Tangible Assets” means, at any time, the

aggregate of:

(a) 80% of the market value, as determined

by the latest market valuation, of any

Real Property and shares or other equity

securities or units in any company, unit trust

or other person; and

(b) the book values of all other Tangible

Assets of the Charging Group as would be

disclosed in a statement of financial position

if a statement of financial position was then

prepared,

adjusted by excluding:

(c) the book values of any Tangible Assets

situated outside New Zealand in respect

of which the Trustee is not satisfied that

there is a valid and effective security interest

in favour of the Trustee enforceable in

accordance with the laws of the place where

the relevant assets are situated; and

(d) 15% of the principal amount of all

development loans outstanding at that time.

“Trust Deed” means the Debenture Trust Deed

entered into between the Company and the

Trustee dated 30 September 2004.

“Trustee” means Covenant Trustee Company

Limited.

“You/your” means the Investor.


Directors

Richard Waddel BCom FCA AF Inst D

CHAIRMAN AND INDEPENDENT DIRECTOR

301 Kingsridge Apartments

424 Remuera Road

Remuera

Auckland

Wayne Croad Dip Bus Finance

MANAGING DIRECTOR

7 Tranquility Rise

Mellons Bay

Auckland

John Callaghan BBS

NON-EXECUTIVE DIRECTOR

23 Milton Road

Mt Eden

Auckland

Peter Huljich BCom, Dip. NZX, SA Fin.

NON-EXECUTIVE DIRECTOR

8 Karori Crescent

Orakei

Auckland

Directory


COMPANY NUMBER

981004

DATE OF INCORPORATION

23 September 1999

REGISTERED OFFICE

Level 2, Finance Direct House

88 Broadway

Newmarket

Auckland


Telephone +64 9 529 5399

Facsimile +64 9 529 5509

Freefax 0800 104 200



THE SECURITIES HOLDERS REGISTER

The register of holders of securities is

kept at


Level 2, Finance Direct House

88 Broadway

Newmarket

Auckland

TRUSTEE

Covenant Trustee Company Limited

Level 34

Vero Centre

48 Shortland Street

Auckland

AUDITORS

Grant Thornton

152 Fanshawe Street

Auckland

BANKERS

ANZ Bank Limited

154 Kitchener Road

Milford

North Shore City

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Application Form for Secured Debenture Stock

Investor Details

InveStor Mr/Mrs/Miss Firstnamesinfull SurnameMs/Dr/Trustee

JoInt InveStor Mr/Mrs/Miss Firstnamesinfull SurnameMs/Dr/Trustee

CorPorAte nAMe, trUSt nAMe

ResidentialAddress

CityorTown PostCode

DaytimePhoneNo EmailAddress

MailingAddress(ifdifferentfromabove)

Investment Information

Interest payment options

PleASe InDICAte how yoUr IntereSt IS to be PAID

(tICk one box)

Compounding Interest (Quarterly)

Quarterly Cheque

Quarterly direct credit to bank account

Bank Branch

Please note If we do not have your IRD number on file, we

are required to deduct Resident Withholding Tax (‘RWT’) at 39%.

tAx DetAIlS

IRD No.

IRD No.

IRD No.

Please deduct rwt rate at 19.5% 33.0% 39.0% Exempt AIL

the InveStMent MAnAGer

FInAnCe DIreCt lIMIteD

P.o. box 17422, GreenlAne,

AUCklAnD

Investor Date Banked Maturity Date Brokerage Start Date Interest Option Source

brokerS StAMP

Brokers No.

Please Note: 1. Make cheques payable to FINANCE DIRECT LIMITED and cross ‘not negotiable’. 2. Joint applications to be signed by all applicants. 3. If signed by attorney, please attach power of attorney. If signed under power of attorney the attorney hereby declares that they have not had notice of the death of the donor or of the revocation of the power of attorney. 4. All applications including reinvestments will be acknowledged by a letter of confirmation. 5. Further copies of the current registered Prospectus and Investment Statement may be obtained from FINANCE DIRECT LIMITED at the above address.

I/We have received a copy of the Offer Document and I/we irrevocably apply for Debenture Stock as set out in this Application Form (including any lesser amount of Debenture Stock that may be allotted to me/us) upon the terms and conditions comprised within the Offer Document and the Debenture Trust Deed

I/we enclose the sum of $ being payment in full on application

Signature Dated

Signature Dated

4years % $

3years % $

2years % $

18months % $

12months % $

6months % $

3months % $

If you need a specific date, specify your requirements, (not to exceed 5 years)

Specified period % $

If reinvesting tick box and complete reinvestment date

Please tick box if you require additional Application Forms

Number(s)

how DID yoU FInD oUt AboUt thIS InveStMent?

Press Advertising Financial Advisor Personal Referral Existing Investor Other

Having read the current Finance Direct Limited Prospectus and Investment Statement

(“Offer Document”), I/we irrevocably apply for Debenture Stock as set out below,

and upon the terms and conditions comprised within the Offer Document and the

Debenture Trust Deed dated 30 September 2004.

Signatures

terM IntereSt rAte AMoUnt

Office Use Only

fd prospectus number 6

Documents

important information

prospectus available

investment decisions

prospectusthis prospectus

separate investment

financial adviser

important document

current registered prospectus