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The Rialto, Level 30 525 Collins Street Melbourne VIC 3000

Correspondence to: GPO Box 4736 Melbourne VIC 3001 T (03) 8320 2222 F (03) 8320 2200 E [email protected] W www.grantthornton.com.au

To the Recipient as Addressed 11 December 2013 Dear Sir/Madam

THINK APPLIANCES PTY LTD (RECEIVERS AND

MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

ACN 095 751 447 (“the Company”)

We refer to previous correspondence regarding the above Company and the First Meeting of Creditors held on 29 November 2013 and advise that the Second Meeting of Creditors will be held on 19 December 2013 pursuant to Section 439A(1) of the Corporations Act 2001 (“the Act”). We enclose for your attention:

• Notice of Meeting pursuant to Section 439A(3)(a) of the Act.

• Proof of Debt Form for the purposes of voting.

• Proxy form.

• Administrators’s Report to Creditors pursuant to Section 439A(4) of the Act.

• Remuneration Report. Please note that persons are not entitled to vote as a creditor at the meeting unless they have lodged with the Chairman of the meeting particulars of the debt they claim to be due to them from the Company. Corporate creditors are required to appoint a natural person to vote on their behalf at the meeting of creditors. Proof of debt and Proxy Forms should be lodged with this office prior to the meeting. These forms may be lodged via facsimile on (03) 8320 2200, however, in accordance with Corporations Regulation 5.6.36A, the original signed copy of the Proxy Form must be lodged with our office within 72 hours of lodging the faxed copy.

2

Should you have any queries in relation to the above, please contact Matthew Whitchurch of our office on (03) 8663 6134 or [email protected]. Yours faithfully

Matthew James Byrnes Joint and Several Administrator Enc.

© 2013 Grant Thornton | Think Appliances Pty Ltd - Section 439A second report to creditors | 11 December 2013

Think Appliances Pty Ltd (Receivers & Managers

Appointed) (Administrators Appointed)

ACN 095 751 447("the Company")Administrators' Section 439A Report

11 December 2013

© 2013 Grant Thornton | Think Appliances Pty Ltd - Section 439A second report to creditors | 11 December 2013 2

Contents

Section Page

1. Executive summary 4

2. Introduction 7

3. Background 12

4. Historical financial information and RATA 15

5. Investigations 20

6. Estimated Outcome and Administrator's recommendation 32

7. Remuneration 35

8. Meeting 37

Appendices

A. DIRRI

B. Notice of second meeting of creditors

C. Proof of Debt form

D. Proxy form

E. IPA creditor information sheet

F. Administrators' Remuneration Report


Glossary

Administrators Matthew James Byrnes and Gayle Dickerson

ASIC Australian Securities and Investments Commission

ATO Australian Taxation Office

Deed Deed of Company Arrangement under Part 5.3A of the Act

Company Think Appliances Pty Ltd (Receivers and Managers

Appointed)(Administrators Appointed)

DIRRI Declaration of Independence, Relevant Relationships and

Indemnities

Director(s) Enzo Balestrazzi and Gianluca Bianchi

ERV Estimated realisable value

FEG Fair Entitlements Guarantee Scheme

FY11/12/13 Financial Years ended 31 March 2011/2012/2013

GE GE Commercial Corporation (Australia) Pty Ltd

GST Goods and Services Tax

HSBC HSBC Bank Plc

PAYG Pay As You Go

PPSR Personal Property Securities Register

Receivers &

Managers

David Winterbottom and Craig Shepard of Korda Mentha

ROT Retention of Title

Section 439A

Report

A report on the company's business, property, affairs and

financial circumstances required to be given to creditors

pursuant to Subsection 439A(4) of the Act

Statutory priorities The priority for the payment of unsecured creditor claims set

down in Subsection 553, 560 and 561 of the Act

The Act Corporations Act 2001

YTD Five months to 31 August 2013


Section 1 Executive summary

01. Executive summary

02. Introduction

03. Background

04. Historical financial information and RATA

05. Investigations

06. Estimated Outcome and Administrator's recommendation

07. Remuneration

08. Meeting


Executive summary

Introduction

Refer to Section 2

� Matthew Byrnes and Gayle Dickerson were appointed Joint and Several Administrators of the Company on 19 November 2013 pursuant to section 436(C) of the Act.

� David Winterbottom and Craig Shepard of Korda Mentha were appointed Receivers and Managers of the Company on 18 October 2013.

� Attached as Appendix A is a copy of our DIRRI, an assessment of the risks in relation to our independence prior to accepting the appointment. Our assessment identified no real or potential risk to our independence and we confirm there has not been any changes to the DIRRI.

� The second meeting of creditors has been called for Thursday, 19 December 2013 at 11.00am and will be held at Grant Thornton, The Rialto, level 30, 525 Collins Street, Melbourne, Victoria.

� The notice in regards to this meeting is enclosed at Appendix B. A Proof of Debt and Proxy Forms are enclosed at Appendices C andD and are to be returned to our office by 12:00pm on Thursday 18 December 2013

BackgroundRefer to Section 3

� The Company's principal business was the wholesaling and distribution of white goods, primarily kitchen appliances.

� The principal place of business was located at 416-424 Barry Road, Coolaroo, Victoria with display rooms and distribution centres also located in New South Wales, Victoria, Queensland and Western Australia.

Historical Financial

Information

Refer to Section 4

� The Company traded profitably in FY11, FY12 and FY13. However, a small loss of c. $69,000 was recorded in the YTD period with the gross margin and sales declining. This decline corresponds to stock shortages and delays as a result of their key supplier's own weak financial position with the Company also implementing higher cost strategies in an effort to maintain customer relations during the stock shortage period.

� The balance sheet position did not deteriorate materially during the period of our comparative review with there being a net liability position of c. $70,000 as at 31 August 2013. This position would have deteriorated significantly on 8 October 2013 when a receivable from Baumatic Limited of $1.6 million became non-recoverable as a result of Baumatic Limited enetering administration in the UK.

Reasons for FailureRefer to Section 4

� The Directors have stated "the most immediate cause of failure of the Company was the loss of financial support from Baumatic Limited and the placement of Baumatic Limited into Administration in the UK".

� Our preliminary investigations and review of the historical financial accounts appear to support the Directors' claim. With Baumatic Limited being both the ultimate parent company and key supplier:

� Disruptions and delays in the receipt of stock from Baumatic Limited placed stress on the ability of the Company to meet customer demand, maintain existing customer relations and trade profitably; and

� Loan facilities were reliant on a guarantee facilitated by Baumatic Limited through their lender, HSBC. Without this ongoing financial support, the ability to drawn down on the existing facility or source new finance was severely impacted.

Executive summary


Summary (cont'd)

Estimated Outcome and

RATA

Refer to Sections 6 and 4

� We have prepared an estimated outcome statement based on which we note a return to unsecured creditors does not appear likely.

� Payment in full to GE as secured creditor appears likely noting they may be able to call on a guarantee from HSBC.

� In the event the guarantee is called on, HSBC is likely to have a secured claim in the administration (legal confirmation yet to be obtained) in which we expect only a partial return to be likely.

Investigations

Refer to Section 5

� For general information about offences under the Act, please refer to the enclosed IPA creditor information sheet, at Appendix E and Section 5 of this report.

Insolvent trading

− Our initial review of the Company's books and records received to date indicate that the Company was insolvent as at 8 October 2013 and potentially before that date.

Offences

− From our initial investigations it appears the Company may have traded whilst insolvent for a limited period, although we note that the Directors were taking appropriate insolvency advice from 4 October 2013.

Voidable transactions

− Further investigations are required with respect to $127,841 of payments which may potentially be preferential in nature.

− A number of payments to potential non-suppliers also requires further investigations to determine their commerciality.

− We have identified a number of payments to two related parties totalling $96,000, notwithstanding the transactions with BaumaticLimited, the Company's main supplier and parent company.

− Further investigations must be undertaken prior to a successful action being undertaken in relation to the above findings.

Administrators

recommendation

Refer to Section 6

� Section 439A(4)(b) of the Act requires the Administrators of the Company to prepare a statement setting out their opinion on the future of the Company.

� In this report we have recommended to creditors that the Company be wound up for the following reasons:

− A DOCA has not been proposed nor is likely to be proposed for consideration by creditors; and

− The Company is insolvent and the creditors must be dealt with in a formal manner provided via the Liquidation process.

Remuneration

Refer to Section 7

� The Administrators remuneration is to be approved by creditors at the forthcoming meeting of creditors.

� A Remuneration Report is enclosed at Appendix F, providing details of work performed to date, estimated future remuneration up to the second meeting of creditors and estimated remuneration of the Liquidators, depending on the creditors' decision of the outcome of the Company at the second meeting.

Executive summary


Section 2 Introduction


02. Introduction

03. Background


05. Investigations


07. Remuneration

08. Meeting


Appointment and Meetings

Appointment of Administrators

� Matthew Byrnes and Gayle Dickerson were appointed Joint and Several

Administrators of Think Appliances Pty Ltd pursuant to Section 436(C) of the

Act on 19 November 2013 by GE Commercial Corporation (Australia) Pty Ltd, a

creditor with security over the whole or substantially the whole of the Company’s property.

� The appointment of the Administrators follows the earlier appointment of David

Winterbottom and Craig Shepard of Korda Mentha as Receivers and Managers of

the Company on 18 October 2013. The Receivers and Managers assumed control

of the Company on their appointment and affected a sale of the business and assets with settlement taking place on 29 October 2013.

� The purpose of the appointment of the Administrators is to allow for

independent insolvency practitioners to investigate the affairs of the Company

and to provide creditors with information and recommendations to assist

creditors to decide upon the Company's future.

Events leading up to the Administrators' appointment

� As stated in the Declaration of Independence, Relevant Relationships and

Indemnities, prior to our appointment as Joint and Several Administrators, Grant Thornton Australia Limited was requested by Grant Thornton UK LLP to:

− Review the current financial position of the Company; and

− Ascertain the impact on the Company of an insolvency of the ultimate parent

company and key supplier, Baumatic Limited.

� Baumatic Limited, a UK registered company, subsequently entered administration on 8 October 2013 with Grant Thornton UK LLP appointed as

administrators.

Introduction

� The administration of Baumatic Limited caused disruptions to the supply of

stock, restricting the ability of the Company to continue to trade. The

appointment also impacted the Company's funding arrangements which were reliant on a guarantee underwritten by Baumatic Limited.

� GE appointed Craig Shepard and David Winterbottom of Korda Mentha as

Receivers and Managers of the Company on 18 October 2013. We were

subsequently appointed as Administrators by GE on 19 November 2013.

First meeting of Creditors

� The first meeting of the Company's creditors was held on 29 November 2013 at

at The Institute of Chartered Accountants Australia, Level 3, 600 Bourke Street,

Melbourne, VIC 3000.

� At this meeting, the Joint and Several Administrators' appointment was

confirmed by the creditors in attendance and it was resolved to not to form a

Committee of Creditors.

Second Meeting of Creditors

� Section 439A of the Act requires us to convene a second meeting of creditors to

consider the future of the Company, which is to be held within the statutory

timeframe provided by the Act.

� The second meeting of creditors has been called for Thursday, 19 December

2013 at 11.00am and will be held at Grant Thornton, The Rialto, Level 30, 525

Collins Street, Melbourne Victoria 3000.

� A formal notice of this meeting is attached to this report.


Report to creditors

Second Report to Creditors

� The purpose of this report is to provide creditors with sufficient information for

them to make an informed decision about the future of the Company, including:

− Background information about the Company;

− The results of our investigations;

− The estimated returns to creditors; and

− The options available to creditors and our opinion on each of these options.

� In the time available to us we have undertaken preliminary investigations into the

Company's business, property, affairs and financial circumstances. Our

investigations have been limited due to the short time period granted pursuant to the Act which requires us to issue a report to creditors prior to the Second

Meeting of Creditors. The information contained in this report is based on the

limited information available at the date of this report, however, should further

information become available that may assist in our investigations, we will

provide a further update to creditors at the Second Meeting of Creditors.

� However, in our opinion the above matters have not prevented us from being

able to provide sufficient, meaningful information in this report or from being

able to form an opinion on what is in the creditors' best interests.

� At the meeting of creditors to be held on 19 December 2013, creditors will be

asked to make a decision by passing a resolution in respect of options available to them. The options presented by the Act with respect to the Company which are

to be voted on by creditors at the meeting are that:

− the Administration be terminated; or

− the Company be wound up (Liquidation); or

− the Company execute a Deed of Company Arrangement.

� In this report we have recommended to creditors that the Company be

wound up and detailed why this option is, in our opinion, in creditors' best

interests.

� The Administrators have relied on information provided from numerous sources

to prepare the report, including:

− A review of the Company's books and records provided to date;

− Discussions with the Directors of the Company;

− Discussions with former employees of the Company;

− Discussions with the Receivers and Managers of the Company; and

− Information available from public sources, such as, Australian Securities and

Investments Commission (ASIC) and the Personal Property Securities Register (PPSR).

� Whilst we have no reason to doubt the accuracy of any information, we have not

performed an audit and we reserve the right to alter our conclusions should the

underlying data prove to be inaccurate or change materially from the date of this

report.

� In the event that the Company proceeds to liquidation, this report will form the

basis of our further investigations. Provided that funding is available, the

investigations will be more extensive than those undertaken to date, particularly

due to the time constraints of the voluntary administration process.

� It is the Administrators' view that this report provides sufficient information to creditors to allow them to make an informed decision as to the Company's future

and allows the Administrators to make a reasoned and fair recommendation

based upon their opinions and the options available to creditors.

Introduction


Compliance, Independence and Communications

Compliance with best practice

� We confirm that this report complies with the statements of best practice issued

by the Insolvency Practitioners' Association (IPA), with regard to content of the

Administrators' report and the Code of Professional Practice with regard to

remuneration.

Independence

� As disclosed in our First Notice to Creditors dated 21 November 2013, the

Administrators undertook a proper assessment of the risks in relation to their

independence prior to accepting the appointment. Our assessment identified no

real or potential risk to our independence. A copy of the DIRRI is enclosed at

Appendix A for your information.

� We confirm that there have not been any changes to the DIRRI as stated in the

initial Notice to Creditors.

Disclaimer

� In reviewing this report, creditors should note the following:

− This report is based on information from the books, records and other

information provided. Whilst the Administrators have reviewed the information, there has been no independent verification of the information.

− In considering the options available to creditors and formulating their

recommendations, the Administrators have necessarily made forecasts of asset

realisations and total creditors. These forecasts and estimates may change.

Whilst the forecasts and estimates are the result of the Administrators' best assessments in the circumstances, creditors should note that the outcome for

creditors may differ from the information provided in this report.

− This report is not for general circulation, publication, reproduction or any use

other than to assist creditors in evaluating their position as creditors and must

not be disclosed without the prior approval of the Administrators.

− The Administrators do not assume or accept any responsibility for any liability

or loss sustained by any creditor or any other party as a result of the

circulation, publication, reproduction or any use beyond that permitted above.

− The statements and opinions given in this report are given in good faith and

in the belief that such statements are not false or misleading. Except where otherwise stated, we reserve the right to alter any conclusions reached on the

basis of any changed or additional information which may be provided to us

between the date of this report and the date of the second meeting.

− Neither the Administrators, nor any member or employee thereof are

responsible in any way whatsoever to any person in respect of any errors in this report arising from incorrect information; and

− Creditors must seek their own independent legal advice as to their rights and

the options available to them at the second meeting of creditors.

Introduction


Actions undertaken

Introduction

Actions undertaken by the administrators

� Tasks undertaken by the Administrators include:

− Corresponding with the Receivers and Managers regarding company

information, the sale of the business and their actions to date.

− Dealing with creditor matters, including:

− Advising creditors of our appointment;

− Preparing meeting notices, proxies and advertisement;

− Holding the first meeting of creditors;

− Preparing the 439A report including undertaking preliminary investigations

into the Company’s affairs;

− Receipting and filing Proofs of Debt; and

− Receiving and following up creditor enquiries via telephone, email and fax.

− Conducting investigations, including reviewing books and records of the

Company, reviewing the Company’s trading history, conducting and

summarising statutory searches and reviewing specific transactions, from which our findings are summarised in Section 5 of this report.

− Preparing, reviewing and executing the documents of appointment and filing

with ASIC as necessary.

− Issuing Report as to Affairs and Directors Questionnaire to all Directors upon

appointment and following up.

Receivership Overview

� Craig Shepard and David Winterbottom of Korda Mentha were appointed

Receivers and Managers of the Company on 18 October 2013.

� Upon their appointment, the Receivers and Managers conducted an expedited

sale process in an attempt to preserve value in the business noting that:

− The third party logistics provider had ceased delivering goods and were

enforcing a lien over stock in their possession;

− Major customers were becoming frustrated with delays and were at risk of

finding alternate suppliers;

− Debtor collections were slowing as a result of concerns over warranty obligations not being able to be met; and

− The exclusive distribution agreement for the Baumatic brand could be

terminated as a result of the appointment.

� Four offers were received for the sale of the business with the ultimate purchaser

providing an unconditional offer and settling on 29 October 2013. The purchaser has guaranteed the warranty obligations of the Company and assumed the

employee entitlements of transferring employees.

� With the sale proceeds not sufficient to discharge GE's debt, the Receivers and

Managers are continuing to realise the only remaining asset, the debtor book. As

at 5 December 2013, collections totalled $2.2 million with the balance of the ledger being $2.4 million.

� It noted that in addition to relying on debtor receipts, GE may call upon a

guarantee of up to $3.5 million provided by HSBC. Should this occur then legal

advice may be sought to confirm the priority of HSBC's claim.

� Once GE's secured debt is repaid and the Receivers and Managers retire, collection of any residual debtors will transfer to the Administrators.


Section 3 Background


02. Introduction

03. Background


05. Investigations


07. Remuneration

08. Meeting


Shareholders Shareholder class Number issued % held

Baumatic Pty Ltd Ordinary 5,355 51%

Udo Dankesreither Ordinary 245 2%

Phillip Ross Pty Ltd Ordinary 4,802 46%

Joe Zoccali Ordinary 98 1%

Total 10,500 100%

Directors Date appointed Date ceased

Enzo Balestrazzi 13 May 2011 Current

Gianluca Bianchi 5 July 2007 Current

Principal Activity, Officeholders and Shareholders

Principal activity and history of the Company

� The Company was incorporated on 31 January 2001 with its principal business

activity being the wholesaling and distribution of white goods, primarily kitchen

appliances. The company had supply contracts with several key retailers including

The Good Guys and Masters, and also provided service and technical support.

� The majority of the Company's sales related to products sold under the Baumatic

brand, for which the Company held an exclusive distribution agreement. All

products were purchased from Baumatic Limited who liaised directly with the

manufacturers.

Trading Premises

� The Company's head office and principal place of business was in leased premises located at 416-424 Barry Road, Coolaroo, Victoria.

� Display rooms and distribution centres were also located in New South Wales,

Victoria, Queensland and Western Australia.

� The registered office is recorded as Level 18, 530 Collins Street, Melbourne,

Victoria.

Officeholders and Shareholders

� The Company officeholders are detailed below, as identified from a historical

company search obtained from the ASIC database.

Background

� At this point, we have not identified any other person who may be considered or

deemed to be a shadow director of the Company.

� According to the ASIC database, there has been one change to the officeholders in the 12 months prior to the appointment date. On 20 December 2012, Rosario

Minichilli resigned as Director of the Company.

� The Company's shareholders are detailed below, as identified from a historical

company search obtained from the ASIC database. At the date of our

appointment the issued share holdings comprised of 10,500 ordinary shares fully paid at the total amount of $500,100.

� There have ben no recorded changes to shareholdings in the 12 months prior to

the appointment date. However, we are advised that Baumatic Pty Ltd had agreed

to purchase the 49% of shares they do not currently hold, with Baumatic Limited guaranteeing the consideration of c. $1.6 million. This transfer has not been

registered with ASIC and the $1.7 million consideration remains as a receivable in

the accounts of the Company.


Chargee Collateral Class/Type Charge # Date

GE Commercial Corporation

(Australia)Pty Ltd

All present and after acquired property 19687464 23 November 2007

As above All present and after acquired property

(intangible property)

19234527 30 January 2012

As above Intangible property - blocked accounts 19234547 30 January 2012

As above All present and after acquired property 24016452 10 October 2013


(intangible property)

24016376 10 October 2013


(financial property)

24016539 10 October 2013

As above All present and after acquired property 24016580 10 October 2013

HSBC Bank Plc and 13 related parties All present and after acquired property 16101135 23 August 2011

Summit Auto Lease Australia P/L Motor Vehicle 18589950 14 February 2012

Summit Auto Lease Australia P/L Motor Vehicle 18592442 23 July 2012

Fleet Partners P/L Motor Vehicle 14863063 21 February 2012

Meyer Cookware P/L Cookware, kitchen ware & related products 22578519 11 June 2013

Kookaburra Containers P/L Goods supplied 24264513 31 October 2013

Toyota Material Handling Australia P/L Motor Vehicle 22899891 5 July 2013

Background

Related entities

� An extract from of the wider Baumatic Group structure is set out below:

Secured creditors and related entities

Secured creditors

� The charges listed below are registered under the Personal Property Securities

Register (PPSR).

� GE and HSBC are the only entities to hold charges over 'All present and after

acquired property'. Other security interests are either for leased assets which were

disclaimed by the Receivers and Managers, or relate to retention of title claims.

� We have been advised the amount outstanding to GE at our appointment was c.

$4.8 million and has since reduced due to asset realisations. We understand that

GE may call on a guarantee of up to $3.5 million provided by HSBC, in which

case HSBC may receive the benefit of future debtor realisations under its security.

� We have not yet reviewed any charge documentation to confirm the validity but will do so in due course and prior to making any distributions.

� The Company's ultimate parent company, Baumatic Limited, has submitted a

proof of debt in the sum of $3,144,258. The amount owed to Baumatic Limited

per the Company's books and records is $4,526,061. The debt occurred by reason of Baumatic Limited being the main supplier to the Company.

� Our initial investigations indicate that the claim from Baumatic Limited appears

to be reasonable, however formal adjudication of the claim will be made after

completion of our investigations and in the event of a distribution to unsecured

creditors.

� In addition, Baumatic Italia Srl (a subsidiary of Baumatic Limited) is listed as a

creditor in the Company's records for $ 6,115.

Baumatic

Limited (UK)

Baumatic Italia

SRL (ITL)

Baumatic Pty

Ltd

Phillip Ross Pty Ltd

Udo Dankesreither

Joe Zoccali

Think Appliances

Pty Ltd

95%100%

51%49%


Section 4 Historical financial information and RATA


02. Introduction

03. Background


05. Investigations


07. Remuneration

08. Meeting


Profit and Loss Statement

Year Ending Year Ending Year Ending Year to Date

31-Mar-11 31-Mar-12 31-Mar-13 31-Aug-13

($'000) ($'000) ($'000) ($'000)

Gross Sales 37,861 37,899 35,316 14,544

Rebates (6,592) (6,148) (6,253) (2,756)

Net Sales 31,269 31,751 29,063 11,788

Cost of Goods Sold (17,095) (18,382) (16,381) (7,052)

Gross Profit 14,175 13,369 12,683 4,735

Other Income 16 155 110 24

Commission Agents (528) (519) (512) (177)

Freight Storage and Handling (1,880) (2,165) (2,448) (953)

Rent (419) (249) (241) (105)

Salaries and Related (4,852) (4,501) (4,379) (1,616)

Warranty Expense (1,923) (1,910) (1,911) (698)

Other Expenses (2,771) (2,635) (2,086) (838)

Total Expenses (12,373) (11,978) (11,577) (4,387)

EBITDA 1,818 1,545 1,216 372

Interest (679) (633) (537) (207)

Depreciation (926) (725) (617) (234)

Net Profit before tax 214 187 62 (69)

Tax (160) (146) - n/a

Earnings After Tax 54 40 62 n/a

Key Metrics

Gross Margin 45.3% 42.1% 43.6% 40.2%

Sales Movement (1.4)% 0.1% (6.8)% (7.8)%

EBITDA % 4.8% 4.1% 3.4% 2.6%

NPBT 0.6% 0.5% 0.2% (0.5)%

Wages as % of sales 12.8% 11.9% 12.4% 11.1%

Warranties as % of sales 5.1% 5.0% 5.4% 4.8%

Historical financials – Profit and Loss

Historical financial information and RATA

Financial statements

� The Company maintained monthly management accounts utilising the SAP B1

system. The Company reported on a 31 March year end and prepared detailed

analysis of the results including sales, margin and warranty cost analysis.

� As we have not yet received copies of the financial accounts prepared by an external accountant, the summary opposite has been prepared based on the

management accounts.

� The last available management accounts we have are for the month ending 31

August 2013.

Profit and Loss Overview

� Small profits have been recorded for the past three years with the first five

months of the current period resulting in a loss.

� A decline in sales of $2.6 million was recorded in FY13 with this decline

continuing in the YTD period with sales down $1.2 million compared to the

same period in the prior year. More recently the decline in sales been attributed to

stock shortages and delays flowing from the weak financial position of their

supplier, Baumatic Limited.

� Associated with the stock shortages, YTD gross margin declined as a result of the

Company attempting to preserve goodwill by providing customers with alternate

higher cost products when those originally ordered could not be supplied in time.

� The stock shortages and extended lead times also resulted in the Company using

air freight to meet customer demand, again at a higher cost than their usual business model.

� The Company appeared pro-active in monitoring and attempting to reduce costs.

For example, wages as a percentage of sales remained relatively consistent

through the comparative period and cost saving initiatives, such as third party

storage arrangements, were implemented and regularly being reviewed.

� Due to the supplier also being the parent company, not all warranty rebates from

the manufacturers were passed on to the Company which could potentially

overstate the warranty expenses recorded.

Sources: Monthly Management AccountsNotes: YTD August 13 sales movement calculated in comparison to same period for prior year


Balance Sheet

31-Mar-11 31-Mar-12 31-Mar-13 31-Aug-13

($'000) ($'000) ($'000) ($'000)

Current Assets

Bank & Cash 291 95 97 69

Trade Debtors 4,867 4,882 5,264 4,980

Stock 4,382 4,617 4,899 3,505

Stock in Transit 1,265 1,294 1,193 1,057

Provisions (116) (134) (132) (113)

Other 1,162 440 517 664

Total Current Assets 11,852 11,195 11,838 10,161

Non-current Assets

Fixed Assets 1,072 828 780 745

Other Non Current Assets 1,690 1,739 1,737 1,751

Total Non Current Assets 2,762 2,567 2,517 2,496

Total Assets 14,614 13,762 14,355 12,658

Current Liabilities

Financing - GE Loan Facility 8,341 7,776 7,864 6,748

Trade Creditors 4,071 2,975 4,387 4,248

Other Creditors & Accruals 487 1,473 782 468

Total Current Liabilities 12,899 12,224 13,034 11,464

Non-Current Liabilities

Employee Entitlements 377 400 334 323

Provisions 1,441 1,200 988 940

Total Non Current Liabilities 1,818 1,601 1,322 1,263

Total Liabilities 14,717 13,824 14,356 12,727

Net Assets (103) (62) (1) (70)

Current Ratio 0.92 0.92 0.91 0.89

Quick Ratio 0.40 0.43 0.39 0.43

Historical financials – Balance Sheet


Sources: Monthly Management Accounts

Balance Sheet Overview

� As noted on the prior page, we have relied on the management accounts when

reviewing the historical financial position of the Company and in preparing the

summary opposite.

� A review of the historical balance sheet does not reveal a significant deterioration in the net asset position of the Company. Although the Company had a net

liability position at year end for at least the past three years, on a review of the

monthly balance sheets the Company has fluctuated between net asset and

liability positions. This has ranged between a $870,000 net asset position and a

$91,000 net liability position for the past two years.

� Stock levels dropped by $1.4 million between March 2013 and August 2013

which materially impacted on the Company's ability to trade and meet customer

demand. Further impacting this was the fact that much of the stock on hand was

not currently in demand by customers, or comprised of spare parts and seconds.

� Included in non-current assets is a $1.6 million receivable from Baumatic Limited. This is advised to relate to a transfer of shares with the transfer not having been

registered with ASIC despite the receivable being recorded throughout the

comparative period. With Baumatic Limited entering administration, it is unlikely

this will be recoverable.

� Over 60% of the fixed asset value relates to cabinetry that the Company has provided to retailers to showcase their goods. The cabinetry is located at various

third party locations and would have a minimal realisable value.

� As a result of the comments above, we believe the realisable value of the assets

would be significantly lower than their book value at the date of appointment.

� The reduction in the liability to GE by $1.1 million in the YTD period is as a result of the facility's draw down limit being calculated based on stock and debtor

levels, both of which reduced in the period.

� The trade creditor liability has not deteriorated significantly over the comparative

period. As at 31 August 2013, 44% of creditors were aged current and 24% aged

30 days.


RATA summary at 19 November 2013

Description

Note Book value

$

Assets not specifically charged -

Assets subject to specific charges

Book debts 1 4,275,482

Total assets subject to specific charges 4,275,482

Less: Amount payable in advance of secured creditor

Amount owing to secured creditors 2 (4,803,104)

Amount owing to priority creditors 3 -

Surplus / (Deficit) in assets before the claims of unsecured creditors (527,622)

Amount owing to unsecured creditors (4,273,436)

Contigent liabilities 2 -

Surplus / (Deficit) before Realisation and Administration costs (4,801,058)

Directors' Report as to Affairs (RATA)


Note 1 – book debts

� With the Receivers and Managers having sold the business prior to our

appointment, the only remaining realisable asset on appointment was the debtors

book.

� The Receivers and Managers have collected c.$2.2 million of debts since their appointment. Any balances remaining after the secured creditor has been paid

out will be available to the Joint and Several Administrators to collect. The actual

amount available will depend on when the Receivers & Managers retire and any

further realisations that they achieve.

Note 2 – secured creditor and contingent liabilities

� GE's debt on our appointment was advised to be $4.8 million. GE has the

benefit of a $3.5 million guarantee from HSBC in respect of any shortfall against its lending and the guarantee can be called upon at any time.

� Should this happen, any future realisations from the debtor book will revert to

HSBC under its security.

Note 3 – employee claims

� We understand that the majority of the Company's employees transferred with

the sale of the business and any employee entitlements also transferred.

� Where redundancies were necessary, these claims are advised to have been paid by the Company, resulting in there being no known priority employee creditors.

Directors report as to affairs (RATA)

� Pursuant to Section 438B(2) of the Act, the Directors of the Company are

required to complete a statement about the Company's business property, affairs

and financial circumstances, also known as the RATA. The RATA is a snapshot

in time as at the date of our appointment of the assets and liabilities of the Company, disclosing book values and the estimated realisable value (ERV) for

assets.

� On 22 November 2013 a written request was issued to the Directors to complete

the RATA for the Company. The Directors have requested an extension of time

to prepare this information until 12 December 2013, which coincides with the extension granted by the Receivers and Managers to receive their RATA from the

Directors.

� Should the Directors provide their RATA, a copy will be made available for

inspection at the second meeting of creditors. Alternatively, should they fail to

provide the RATA, we will report them to ASIC.

� In the absence of receiving a RATA, we have based the above table and our

comments in this section on the amounts obtained from the management

accounts and information provided by the Receivers and Managers.


Reasons for Failure

Directors' explanation

� The Directors have stated "the most immediate cause of the failure of the

Company was the loss of financial support from Baumatic Ltd and the placement

of Baumatic Ltd into Administration in the UK".

Administrators' opinion

� Our investigations into the affairs of the Company confirm that the Company's

difficulties were brought about by reasons identified by the Directors.

� With Baumatic Limited being the Companies key supplier, disruptions and delays

in the receipt of stock in the lead up to Baumatic Limited's administration placed

stress on the ability of the Company to meet customer demand and maintain

existing customer relations. The swift failure of the Company after the

administration of Baumatic Limited demonstrated its reliance on the parent company.

� Further, the Company's loan facilities were reliant on a guarantee facilitated by

Baumatic Limited through their lender, HSBC. Without the ongoing support of

Baumatic Limited, the Company’s ability to draw down on their banking facility

or to secure new bank facilities was severely impaired.



Section 5 Investigations


02. Introduction

03. Background


05. Investigations


07. Remuneration

08. Meeting


Insolvent trading review

Introduction

� In order to determine whether the Directors engaged in insolvent trading, we

must first ascertain the timeframe of the Company's insolvency.

� Common law has determined that certain factors, if present, constitute

reasonable grounds for suspecting insolvency.

� These factors make up the two common tests of insolvency. The two common

tests of insolvency are the “Balance Sheet Test” and the “Cash Flow Test”.

− The “Balance Sheet Test” analyses the financial performance of the Company

and generally a deficiency in assets is viewed as failure of this test.

− The second common test of insolvency, the “Cash Flow Test”, is more subjective and requires more pragmatic evidence such as significantly overdue

creditors and the inability to obtain further funding.

We reiterate that recoveries of this nature are only available if the Company is

placed into liquidation.

Procedures

� The following procedures were undertaken as part of the insolvent trading

review:

Our preliminary investigations indicate that the Company is likely to have

been trading whilst insolvent from 8 October 2013 and possible before.

Investigations

Insolvent Trading Investigation Procedures

1. Balance Sheet Test of insolvency

1. Review of maintenance of books and records in accordance with Section 286 of the Act

2. Testing the integrity and completeness of transaction data provided

3. Analysis of the financial position of the Company and Balance sheet test of insolvency

4. Analysis of liquidity ratios

5. Analysis of financial performance of the Company

2. Cash Flow Test of insolvency

1. Analysis of the cash flow test of insolvency

2. Relationship with financiers, shareholders or other funders

3. Review of the Company's history of remittance of Commonwealth and State taxes

4. Identification of any post-dated or dishonoured cheques

5. Review of creditor ageing and other overdue payables

6. Review of any demands for repayment or legal action pending

� In the following pages we discuss our investigations in respect of indicators of

insolvency.


(150)

(100)

(50)

0

50

100

150

200

250

Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13

$'000

Net Equity

Indicators of insolvency

Ref Indicator Commentary

1.1 Maintenance of proper books and records

� We are satisfied that the books and records of the Company which are available have been adequate for us to conduct our investigations and the Company appears to have maintained appropriate books and records in accordance with the Act.

� We have been able to review bank statements for the preceding six months and have been provided with the Company's management accounts and general ledger accounts to assist in our investigations.

1.2 Financial position Balance Sheet Test of Insolvency:

� We have assessed the following liquidity ratios for the Company during the 12 months to 31 August 2013. The results of these ratios assist in the determination of the timeframe of the Company's balance sheet insolvency.

Current Ratio

− Through the period, the Company’s current ratio declined marginally from 0.94 to 0.89. Stock holdings decreased considerably during this period, although this reduction was countered with a similar decrease in the GE debt and other creditor liabilities.

− A current ratio of less than one indicates that the company had liquidity issues, specifically an inability to fund short term obligations with liquid assets.

Quick Ratio (Acid Test)

− The Company's Quick Ratio averaged 0.40 over the 12 months to 31 August 2013. The ratio fluctuated between a low of 0.36 in October 2012 to a high of 0.45 in May 2013 and August 2013. There was a general improvement in the ratio towards the end of the period.

− The closing quick ratio at 31 August 2013 indicates that the Company held $0.45 of quick assets (i.e. cash plus trade debtors) for every $1 of current liabilities. This suggests that the Company did not hold sufficient liquid assets to pay current liabilities should they be required to be paid immediately. This ratio impacted by the GE debt being classified as a current liability.

Balance sheet review

� The Company had a broadly neutral net asset/liability position in the period of review, with closing net liabilities of c.$70,000 at August 2013.

� After adjusting for a non-current receivable of $1.6 million due from Baumatic Limited, the Company would have been balance sheet insolvent from at least 8 October 2013, being the date Baumatic Limited went into administration and it became clear this amount would not be received.


Investigations

0.000.100.200.300.400.500.600.700.800.901.00

Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13

Current Ratio

Quick/Acid Ratio


(8,000)

(6,000)

(4,000)

(2,000)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13

$'000

Inventory

Debtors

Other Creditors/accruals

Trade creditors

Net working capital (inclaccruals)



1.3 Financial position

(cont.)

Working Capital Ratio review

− The Company's net working capital position declined slightly in the months prior to our appointment, as shown in the graph below, however remained positive.

− The reduction in working capital was primarily due to a decline in the Company's stock levels, which was as a result of the Company's supplier being unable to provide stock due to its own procurement issues.

Conclusion on the review of the financial position of the Company

On the basis of our review of the Company's financial position, we consider the Company to be balance sheet insolvent from the date Baumatic Limited entered administration (8 October 2013) and possibly earlier. This had the following effects:

• The $1.6 million non-current receivable owed by Baumatic Limited effectively became non-recoverable, resulting in net liabilities of c.$1.7 million (based on the balance sheet position at 31 August 2013);

• The Company was unable to source any further inventory as Baumatic Limited was its main supplier. It is unlikely that a suitable alternative supplier could be sourced in the short term resulting in the Company not being able to trade profitably. Furthermore, the insolvency of Baumatic Limited meant that the Company's distribution agreement was at risk of termination and, without continued supply of goods, customers were increasingly at risk of defecting to new suppliers.

• The Company's bank facilities are understood to have become payable on demand.


Investigations


0

50

100

150

200

250

300

350

400

450

3/09/2012

3/10/2012

3/11/2012

3/12/2012

3/01/2013

3/02/2013

3/03/2013

3/04/2013

3/05/2013

3/06/2013

3/07/2013

3/08/2013

3/09/2013

3/10/2013

3/11/2013

3/12/2013

$'000 Bank balance Actual

Forecast

Profit and loss account summary

$'000 FY11 FY12 FY13 YTD

Net sales 31,269 31,751 29,063 11,788

Gross profit 14,175 13,369 12,683 4,735

Net profit/(loss) 54 40 62 (69)

Insolvent Trading Review (cont'd)



1.4 Financial Performance Cash Flow Test of Insolvency

� A cashflow review indicated the Company had a positive cash position from September 2012 to September 2013 with the average closing daily cash balance in the period being $74,000.

� We do not believe the cashflow test provides an accurate indication of the Company’s position due to its banking arrangements. The Company held minimal cash with all funds being applied towards the GE facility and draw downs being made as and when required for payments. As the facility limit varied based on a complicated calculation which took into consideration the quality of debtors and certain classes of stock, we have not been able to calculate and assess the available headroom in the short period since our appointment.

Conclusion on the review of cash flow test

The Company was marginally profitable in the years prior to insolvency and only made a loss in the YTD period. With the support of Baumatic Limited, the Company was able to pay for its supplies as and when funds permitted, rather than by the invoice due dates. When Baumatic Limited entered administration on 8 October 2013, the Company lost this privilege and arguably became cashflow insolvent from that date, or potentially earlier.

Investigations

Profit and loss

� Per the Company's management accounts, the Company generated net profits in the three financial years prior to insolvency. However, the Company did experience reducing sales and declines in its gross profit and EBITDA margins

� The Company made a $69,000 loss in the five months to 31 August 2013 and experienced a 8% reduction in sales compared to prior year in the same period.




1.5 Post-dated and dishonoured cheques

� From a review of the Bank statements we did not identify any bounced cheques, with the majority of the Company's payments being via EFT.

1.6 Creditor ageing � Total creditors remained relatively consistent over the period of our review, however, total creditor liabilities increased by 10% (c.$442,000) between 31 August 2013 and the date of the Receivers and Managers appointment.

� At this stage we only have books and records available to enable us to undertake a review of the ageing profile of creditors for limited periods. As at 31 August 2013, 33% of creditor liabilities were aged 60 days or greater. 99% of the debts aged 60 days or greater were due to related parties, primarily Baumatic Limited. We are advised there was an informal agreement in place with Baumatic Limited which resulted in the Company paying lump sums when they had sufficient funds, rather than paying individual invoices on terms. At one stage, the Company is advised to have been paying Baumatic Limited in advance under this informal arrangement.

� There is a marked shift in the ageing profile between 31 August 2013 and 14 October 2013, from 33% to 59% of liabilities aged 60 days or greater.

� This is consistent with indications that the Company was experiencing difficulties making creditor payments as and when they fell due, up to and around the time Baumatic Limited entered administration

1.7 Ability to generate additional capital / further funding

� GE suspended advances to the Company under their facility around the time Baumatic Limited entered administration on 8 October 2013.

� GE has the benefit of a $3.5 million guarantee from the bankers of Baumatic Limited (HSBC Bank Plc), which was unlikely to be replicated for a new funder.

� Given that the Company's main supplier was in an insolvency process and its future uncertain, it is unlikely that the Company could have refinanced and obtained similar or increased facilities to GE's.

� It is doubtful that the Company could have attracted sufficient investment in the short term once Baumatic Limited entered administration (unless the business and assets were sold quickly and supply to the Company was resumed)

Conclusions on the timeframe for insolvency

From our initial investigations, it appears that the Company was insolvent from 8 October 2013 (or potentially earlier), being the date in which the Company's ultimate parent company and main supplier, Baumatic Limited, also entered administration. A date of insolvency will be determined after the Liquidator's investigations are completed.


Investigations


Voidable transactions

Voidable Transactions

� In circumstances where a Liquidator is appointed he or she may be able to

recover certain payments or dispositions of property that appear to the

Liquidator to be voidable transactions pursuant to Part 5.7B of the Act.

� Voidable transactions include the following:

− Unfair preference payments;

− Uncommercial transactions;

− Unfair loans; and

− Unreasonable director related transactions.

� The above transactions and preliminary findings are discussed in detail in the following pages.

� The assessment of voidable transactions is relevant to creditors in choosing

between the three options available at the second meeting of creditors, as they

are only recoverable in a liquidation scenario.

� Should we be appointed as Liquidators of the Company, we will conduct a further detailed assessment of payments in order to assess whether there are any

likely recoveries.

� Pursuing such payments may incur substantial costs by us as Liquidators and our

legal advisors and there are a number of defences available to creditors in

defending a preferential or uncommercial transaction action brought against them by a liquidator.

� An unsuccessful action can result in a negative return as the Liquidator would be

required to settle both the Company’s and the defendant’s legal fees. Accordingly,

a Liquidator is required to fully investigate the circumstances surrounding the

payment before commencing legal action. I wish to stress that by no means should you assume that each of the payments referred to are recoverable.

Recoveries of this nature are only available if the Company is placed into

liquidation

Investigations



Investigations

Voidable Transaction Description


2.1 Unfair

Preference:

section 588FA

What is an Unfair Preference

To be recoverable, the following circumstances must have existed at the time the unfair preference transaction was entered into:

� The Company is insolvent or becomes insolvent at the time of entering into the transaction;

� The transaction was entered into in the six (6) months prior to the appointment of the Voluntary Administrators of the Company, being 19

May 2013 onwards ("the relation back date")';

� The transaction results in the creditor receiving from the Company more than the creditor would otherwise have received in respect to the debt in a winding up of the Company;

� A reasonable person in the creditor's circumstances would have been aware the Company was insolvent; and

� The creditor must not have an offset for goods or services provided after the payment which remain unpaid, for an amount greater than the

payment.

Ordinarily, this would be investigated further in liquidation and any payments to creditors in the six months prior to the appointment of the

Voluntary Administrator will be identified and considered. Certain transactions which may be pursued by a liquidator (depending on the

findings regarding insolvency) and potentially recoverable under these provisions will be based on indicators including, but not limited to:

� Threats to suspend or stop future supply;

� Being paid outside of their documented or agreed trading terms;

� Receiving large rounded payments upon the suspension of the supply of goods;

� Being advised that the Company is experiencing cash flow problems and being requested to hold off on presentation of cheques;

� Warnings that future supply would be dependant on Cash on Delivery (“COD”) or payment prior to delivery i.e. altered trading terms;

and/or

� Requests that outstanding invoices be paid or at least part paid before further future supply would be entertained.




2.1 Unfair

Preference:

section 588FA

(Cont.)

Procedures undertaken

� The following procedures were carried out in determining whether an unfair preference occurred:

� Analysis of ageing of all creditors as at the appointment date and an analysis of all creditor balances as at 31 August 2013, being the

last available aged creditors listing prior to the assumed date of insolvency of 8 October 2013.

� Review of bank statements throughout the relation back date period identifying any large, round sum or regular payments.

� As it must be proven that the Company was insolvent at the time of entering the transaction and due to the limited time available, we have focused our review on the six months prior to the Administrators' appointment. Should the Company enter liquidation, further

investigations will be conducted.

Findings

18 payments totalling $32,945 were made between 8 October 2013 and 18 October 2013 when the accounts were frozen by the Receivers and

Managers. The largest individual payment was for $10,450 for leased assets which the payee held security over.

From our preliminary review of the aged creditors listings, we have identified six supplier balances that reduced by a total of $94,896 between 31 August 2013 and 14 October 2013. Further information is being sought in relation to these payments which may constitute unfair

preferences, however, we note most suppliers were paid during this period.

Further investigation will be undertaken in respect of recoveries of voidable transactions in the liquidation.


Investigations



Investigations



2.2 Uncommercial

Transactions:

section 588FB

What is an Uncommercial Transaction

These are transactions that a reasonable person would not have entered into having regard to the benefit (if any) and detriment to the Company of entering into the transaction and the benefit to other parties of entering into the transaction.


The following procedures were carried out in determining whether any Uncommercial Transactions occurred:

� Identification of recurring payment amounts throughout the relation back date.

� Identification of payment transactions not allocated to a supplier code.

� Consideration of whether the substance of the identified transactions are on commercial terms.

Findings

Our preliminary investigations have identified a number of payments to potential non-suppliers. We have requested further information for these payments and will undertake further investigations in the liquidation.

2.3 Unfair Loans:

section 588FD

What is an Unfair Loan

Section 588FD(1) of the Act states a loan to a company is unfair "if and only if the interest of the loan was extortionate when the loan was made or has since become extortionate."

Regard is made to the risk of the lender, the value of security (if any), the terms of the loan, amount and any other relevant matters.



Investigations



2.3 Unfair Loans:

section 588FD

(Cont.)


The following procedures were carried out in determining whether any unfair loans occurred:

� Review of the terms of financing arrangements to the Company.

� Review of the Company's historical loan repayment and drawings throughout the relation back-date period.

� Consideration of whether the interest rates on the identified financing arrangements are on commercial terms.

Findings

Further investigations will be undertaken during the liquidation process, however, our preliminary investigations have not identified any unfair loans that would be recoverable.

2.4 Unreasonable

Director Related

Transactions: section 588FDA

What is a Director Related Transaction

For a transaction to be voidable under these provisions a director or an associate of a director must have benefited from the transaction in circumstances where a reasonable person would not have entered into the transaction given the nature of the resulting benefits and detriments

to the respective parties.

Payments, the issue of securities, conveyances or other dispositions of property by the company in favour of a director, a relative or de facto

spouse of a director may constitute an unreasonable director related transaction in accordance with section 588FD.


The following procedures were carried out in determining whether any unreasonable director related transactions occurred:

� Identification of related and associated parties to the Company.

� Identification of all significant payments to Directors and others throughout the relation back period.

� Identification of all significant payments to related entities throughout the relation back period.



Investigations



2.4 Unreasonable

Director Related

Transactions: section 588FDA

(Cont.)

Findings

Our investigations have identified the following in relation to director related transactions:

• Directors loan contributions of $708,687 are included with equity within the balance sheet. There has been no movement in this account for

over three years.

• One of the Directors, Enzo Balestrazzi, is also a director of the key supplier, Baumatic Limited. Due to the Company's trading relationship

with this entity and the large number of transactions, further time and investigations are required to determine whether there have been any uncommercial transactions, however note that it will not be commercial to pursue any identified actions against Baumatic Limited due to

their insolvency.

• We also note that Baumatic Limited charged a margin on all stock supplied but do not consider this to be uncommercial in general with the

goods being sold by the Company at competitive prices in the market. There is limited information available in the Company records

detailing the actual margins charged.

• We have identified a number of payments to two related parties totalling $96,000 (excluding Baumatic Limited) for which we are seeking

further information.

Further investigations will be undertaken into these transactions during the liquidation.


Section 6 Estimated Outcome and Administrator's recommendation


02. Introduction

03. Background


05. Investigations


07. Remuneration

08. Meeting


Estimated outcome statement at 11 December 2013

Description

Note High case

$

Low case

$

Asset realisations

Book debts 1 1,815,000 605,000

Total estimated realisations 1,815,000 605,000

Costs of realisation

Administrators' fees (63,741) (63,741)

Administrators' disbursements (1,000) (2,000)

Liquidators' fees (100,000) (100,000)

Liquidators' disbursements (1,000) (2,000)

Total administrators'/liquidators' fees (165,741) (167,741)

Legal fees (10,000) (25,000)

Estimated funds available for distribution 1,639,259 412,259

Secured creditors

Secured creditor - GE/HSBC 2 (3,408,302) (3,408,302)

Estimated funds available to unsecured creditors (1,769,043) (2,996,043)

Unsecured creditors

Unsecured creditor claims (4,273,436) (4,273,436)

Estimated return to unsecured creditors (cents on the dollar) - -

Estimated return for classes of creditors

Creditor Estimated Return

Secured Creditors

GE Payment in full likely

HSBC Unknown, but partial return is likely

Priority Creditors

Employee entitlements and superannuation N/A - no known liabilities existing as at the date of appointment

Unsecured Creditors

Ordinary Unsecured Creditors No return likely

Estimated Outcome

Estimated Outcome and Administrator's recommendation

Overview

� We do not expect a return to be available for unsecured creditors. However, it is

likely that secured creditors will receive a return.

� As detailed previously, due to the Receivers and Managers selling the business

prior to our appointment (and applying those proceeds to GE's debt), the only asset remaining as at the date of our appointment was the debtor book. The

Receivers and Managers are currently in the process of collecting the debtors

which will be applied in payment of GE's secured debt.

� Once the Receivers and Managers retire, the Administrators will be responsible

for collecting any remaining debtors. This first will require GE and the costs of the Receivership to be paid from debtor collections.

� Alternatively, GE may elect to call on a guarantee from HSBC meaning that

further surpluses may be payable to HSBC (subject to legal confirmation of their

priority). As HSBC's claim is contingent at present, their claim cannot be

quantified but is likely to represent an equivalent amount to the call under the guarantee.

� As all employee entitlements were transferred to the purchaser in the sale of the

business, or paid out by the Receivers where redundancies were made, there are

no known priority claims in the administration. In the event any employee claims

arise and the Company enters Liquidation, a claim may made under the Government's Fair Entitlement Guarantee scheme should there be insufficient

realisations to meet the claim.

� As the Administrators have not received a DOCA proposal, we are unable to

provide a comparison between a liquidation and any potential DOCA scenario.

Notes: 1. Debtors books as at 5 December 2013 was $2.42 million. Collection rates of 75% and 25% have been assumed. These are estimates only without any reference to the quality of the debtors book remaining. Accordingly, actual realisations may change significantly. 2. As at 6 December GE's debt was $3.42 million, prior to professional costs of the Receivership. If GE calls on a guarantee of up to $3.5 million from HSBC, HSBC may, subject to legal confirmation, be substituted as the secured creditor.


Administrators' recommendation

Estimated Outcome and Administrator's recommendation

Administrators' recommendation

� In accordance with Section 439A(4)(b) of the Act, we are obliged to make a

recommendation to creditors as to which of the options available to them is in

their best interests. The following options are available for creditors to vote on at

the meeting convened pursuant to Section 439A of the Act:

1. The Administration terminates

� Creditors may resolve to terminate the Voluntary Administration. Should this

occur the Company would be handed back to the Director.

We do not consider this option to be viable as the Company is insolvent and

creditors claims need to be dealt with under a formal administration.

2. The Company executes a Deed Of Company Arrangement

� The provisions of Part 5.3A of the Act allow the Company and its creditors to

negotiate a proposal to deal with the Company’s affairs and in such

circumstances execute a Deed of Company Arrangement ("DOCA").

� A DOCA is a flexible arrangement which is available to Companies in Voluntary

Administration and is usually proposed by the Director;

� A DOCA can allow a Company to continue to operate in a restructured form

after administration.

� In order for a DOCA to be considered and put forward to creditors it must

provide creditors with a greater return than that of liquidation.

There has been no DOCA proposed, therefore this option is not available to

creditors to vote upon at the second meeting.

3. The Company be wound up (Liquidation)

� Creditors may resolve to wind up the Company which would result in the

Company being placed into liquidation. If creditors do not nominate a different

person to be Liquidator, Matthew Byrnes and Gayle Dickerson will be taken as

having been nominated as Joint and Several Liquidators of the Company.

� A more detailed review of the Company’s financial affairs would be conducted

and as a consequence a report on its affairs and the conduct of its officers would

be prepared and the findings conveyed to ASIC.

� The assets of the Company would continue to be realised. The likelihood of

success for claims in relation to voidable transactions and insolvent trading would be made as well as a determination to proceed with such claims.

� Upon collection of all funds, monies would be distributed in accordance with the

provisions of Section 556 of the Act.

Having regard to the above, we believe the only viable option available to

creditors is for the Company to be wound up.

Recommendation:

In accordance with Section 439A(4)(b), the Administrators recommend

that creditors place the Company into Liquidation.


Section 7 Remuneration


02. Introduction

03. Background


05. Investigations


07. Remuneration

08. Meeting


Remuneration

Remuneration

Remuneration

� Enclosed at Appendix F is the Administrators' Remuneration Report, which

provides details of:

− Voluntary Administrators' remuneration to be approved

− Liquidators' future remuneration to be approved

� Creditors should note that all works has, and will be, performed by the

appropriate level of staff in order to optimise any potential realisations which

may be available to unsecured creditors.

Voluntary Administrators' remuneration

� The remuneration has been split between actual fees incurred for the period 19

November 2013 to 10 December 2013 and the estimated future fees to be incurred for the period 11 December 2013 to 19 December 2013, being the date

the of the second meeting.

Liquidators' future remuneration

� It will be necessary for the creditors to approve the drawing of remuneration for

the Liquidators, should creditors vote that the Company be placed into

liquidation.

� At the forthcoming meeting of creditors on 19 December 2013, the creditors will

be requested to approve our remuneration as provided in the tables opposite.

Voluntary Administrators' remuneration (exc of GST and disbursements)

DescriptionAmount

($)

Joint and Several Administrators remuneration for the period 19 November 2013 to 10 December 2013

43,741

Joint and Several Administrators' estimated future remuneration for the period 11 December 2013 to19 December 2013, being the date of the second meeting

20,000

Liquidators' future remuneration (exc of GST and disbursements)

DescriptionAmount

($)

Joint and Several Liquidators' remuneration for the period 19 December 2013 to the conclusion of the Liquidation

100,000


Section 8 Meeting


02. Introduction

03. Background


05. Investigations


07. Remuneration

08. Meeting


Second meeting of creditors

Meeting

Lodging of proofs of debt

� Should you not have already lodged a proof of debt, you are required to complete

the proof of debt as attached.

Contact details

� Should you have any queries in relation to any matter raised in this report then please do not hesitate to Matthew Whitchurch on (03) 8320 2222.

Yours faithfully

Matthew James Byrnes

Joint and Several Administrator

Second meeting of creditors

� The second meetings of creditors is to be held at Grant Thornton Australia

Limited, located at The Rialto, Level 30, 525 Collins Street, Melbourne, Victoria at 11:00 am on Thursday, 19 December 2013. Please arrive 15 minutes before

hand to allow sufficient time for registration.

� The meeting will be open to creditors for questions and general discussion. Should you wish to have us address any issue in detail please advise us prior to

the meeting date. This will allow sufficient time to prepare a detailed response to

your question.

Lodging of proxies

� Proxies lodged for the previous meeting are not valid for this meeting and

therefore, new proxies need to be lodged to enable voting at the second meeting.

� Please ensure that the proxies are signed under seal, where appropriate (if you are a company) and if the proxy is executed by a power of attorney, that a copy of

the power of attorney is enclosed with the proxy form. Proxies for the meeting

can be lodged in the following ways:

− Post: to arrive no later than 4:00 pm on the business day prior to the meeting,

being Wednesday, 18 December 2013;

− Facsimile: to (03) 8320 2200 no later than 4:00 pm on the business day prior to the meeting, being Wednesday, 18 December 2013;

− In Person: by person with a person attending the meeting; or

− Email: by email to [email protected] no later than 4:00 pm on

the business day prior to the meeting, being Wednesday, 18 December 2013

� If proxies are lodged by facsimile or email, the law requires that the original proxy must be lodged with the Voluntary Administrators within 72 hours of lodging the

faxed or emailed copy.


Appendices

A. DIRRI


C. Proof of Debt form

D. Proxy form




A. DIRRI

Appendices



Appendices

FORM 529

Corporations Act 2001

Subregulation 5.6.12 (2)

NOTICE OF SECOND MEETING OF

CREDITORS OF COMPANY UNDER ADMINISTRATION

Think Appliances Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) ACN: 095 751 447 (“the Company”)

Notice is given that a second meeting of the creditors of the Company will be held at Grant Thornton Australia Limited, The Rialto, Level 30, 525 Collins Street, Melbourne, Victoria 3000 at 11:00 AM on 19 December 2013.

AGENDA 1. To consider the Administrators’ report in relation to the Company’s affairs and any other matters raised

relating to the Company’s future and then to resolve either that: (a) the Company execute a Deed of Company Arrangement; or (b) the administration should end; or (c) the Company be wound up; or (d) the meeting be adjourned. 2. To consider and if thought fit approve the Administrators’ remuneration. 3. (a) To determine the remuneration of the Deed Administrator, if one is appointed; or

(b) To determine the remuneration of the Liquidators, if one is appointed. 4. If the Company is wound up, to consider:

(a) the appointment of a Committee of Inspection; (b) authorising the destruction of the Company’s books and records; and (c) authorising the Liquidators to compromise the debts of the Company.

5. To discuss any other relevant business which may arise. Dated 11 December 2013. MATTHEW JAMES BYRNES JOINT AND SEVERAL ADMINISTRATOR

Note:

Under the Corporations Regulations, a creditor is not entitled to vote at a meeting unless:

• his/her claim has been admitted, wholly or in part, by the administrator; or

• he/she has lodged with the administrator particulars of the debt or claim (regulation 5.6.23). Furthermore proxies must be made available to the administrator.

A secured creditor may vote for the whole of his debt without deduction for his/her security (reg 5.6.24(4)).

The Rialto, Level 30, 525 Collins Street, Melbourne VIC 3000 Telephone: (03) 8320 2222 Facsimile: (03) 8320 2200


C. Proof of debt form

Appendices

*Do not complete if this proof is made by the creditor personally.

ACN 095 751 447

FORM 535 Subregulation 5.6.49(2)

Corporations Act (2001)

FORMAL PROOF OF DEBT OR CLAIM

(GENERAL FORM)

To the Administrators of Think Appliances Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed)

1. This is to state that the company was on 19 November 2013 (date of court order in winding up by the

Court, or date of resolution to wind up, if a voluntary winding up), and still is, justly and truly indebted to:

_________________________________________________________ (full name and address of the creditor and, if applicable, the creditor's partners. If prepared by

an employee or agent of the creditor, also insert a description of the occupation of the creditor)

for $_______________and______cents.

Date Consideration (state how the Debt arose)

Amount $ c

Remarks (include details of voucher substantiating payment

2. To my knowledge or belief the creditor has not, nor has any person by the creditor's order, had or received any satisfaction or security for the sum or any part of it except for the following: (insert

particulars of all securities held. If the securities are on the property of the company, assess the value

of those securities. If any bills or other negotiable securities are held, show them in a schedule in the

following form).

Date Drawer Acceptor Amount $c Due Date

*3. I am employed by the creditor and authorised in writing by the creditor to make this statement. I know that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, remains unpaid and unsatisfied.

*3. I am the creditor's agent authorised in writing to make this statement in writing. I know that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, remains unpaid and unsatisfied.

........................................... Dated Signature Occupation: Address


D. Proxy form

Appendices

�

��

FORM 532 Corporations Act 2001

Regulation 5.6.29

Think Appliances Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) ACN: 095 751 447 (the Company)

APPOINTMENT OF PROXY

I/We (1) _____________________________________________________________________________ of

_________________________________________________________________________________________________

a creditor/member of Think Appliances Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) appoint

(2)_____________________________________________ or in his/her absence

(3) _____________________________________________as my/our general/special proxy to vote at the meeting of creditors to be held on 19 December 2013 at 11:00 AM or at any adjournment of that meeting.

Type For Against Abstain

1 A To vote specifically in the following manner: Ordinary That the Company execute a Deed of Company Arrangement OR □ □ □ That the Voluntary Administration should end OR □ □ □ That the Company be would up □ □ □ B The remuneration of the Administrators and any of the Administrators’

partners or employees in performance of services performed from 19 November 2013 to 10 December 2013 to be fixed at $43,741 (excluding GST) plus any out of pocket expenses incurred.

Ordinary □ □ □

C The remuneration of the Administrators and any of the Administrators’

partners or employees in performance of services performed from 11 December 2013 to 19 December 2013 to be fixed at $20,000 (excluding GST) plus any out of pocket expenses incurred.


D The remuneration of the Joint and Several Liquidators and any of the

Liquidators’ partners or employees in performance of services performed from 19 December 2013 to completion of the liquidation to be fixed at $100,000 (excluding GST) plus any out of pocket expenses incurred. Approval is given for such amounts approved to be drawn on a monthly basis.


E That a committee of inspection not be appointed OR Ordinary □ □ □

That a committee of inspection be formed comprising of members nominated at the meeting.

□ □ □

F That the Liquidators be authorised to destroy the Company’s books

and records six months after the date of its deregistration in accordance with Section 542(3) and (4) of the Corporations Act.


G That the Liquidators be authorised under Section 477(2A) of the

Corporations Act to compromise a debt owed to the Company of any amount.


Continued overleaf

DATED this ___________ day of ________________________ 20

(4) Signature ___________________________________

CERTIFICATE OF WITNESS - only complete if the person given the proxy is blind or incapable of writing.

I, ____________________________________________ of _______________________________________________

certify that the above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument.

DATED this ___________ day of ________________________ 20

Signature of witness ___________________________________

Description ___________________________________

Place of residence ___________________________________

___________________________________

Notes:

(1) If a firm strike out "I" and set out the full name of the firm.

(2) Insert the name of the person appointed.

(3) If a special proxy, “add the words ‘to vote for’ or the words ‘to vote against’ and specify the particular resolution”.

(4) If the creditor is a sole trader , sign in accordance with the following example: “A.B., proprietor”.

If the creditor is a partnership, sign in accordance with the following example: “A.B., a partner of the said firm.”

If the creditor is a company, then the form of proxy must be under its Common Seal or under the hand of some officer duly authorised in that capacity, and the fact that the officer is so authorised must be stated in accordance with the following example: “for the company, A.B.” (duly authorised under the Seal of the Company).

Proxy forms should have been completed and returned by no later than 12:00 PM on 18 December 2013 to be eligible to vote at the meeting.

RETURN TO: Think Appliances Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) of care of Grant Thornton Australia Limited Address: GPO Box 4736, Melbourne VIC 3001, Australia Phone: (03) 8320 2222 Fax: (03) 8320 2200



Appendices

Important note: The information sheets contain a summary of basic information on the topic. It is not

Insolvency information for directors, employees, creditors and shareholders ASIC has 11 insolvency information sheets to assist you if you’re affected by a company’s insolvency

and have little or no knowledge of what’s involved.

These plain language information sheets give directors, employees, creditors and shareholders a basic

understanding of the three most common company insolvency procedures—liquidation, voluntary

administration and receivership. There is an information sheet on the independence of external

administrators and one that explains the process for approving the fees of external administrators. A

glossary of commonly used insolvency terms is also provided.

The Insolvency Practitioners Association (IPA), the leading professional organisation in Australia for

insolvency practitioners, endorses these publications and encourages its members to make their

availability known to affected people.

List of information sheets

INFO 41 Insolvency: a glossary of terms

INFO 74 Voluntary administration: a guide for creditors

INFO 75 Voluntary administration: a guide for employees

INFO 45 Liquidation: a guide for creditors

INFO 46 Liquidation: a guide for employees

INFO 54 Receivership: a guide for creditors

INFO 55 Receivership: a guide for employees

INFO 43 Insolvency: a guide for shareholders

INFO 42 Insolvency: a guide for directors

INFO 84 Independence of external administrators: a guide for creditors

INFO 85 Approving fees: a guide for creditors

Getting copies of the information sheets

To get copies of the information sheets, visit ASIC’s website at

www.asic.gov.au/insolvencyinfosheets. The information sheets are also available from the IPA

website at www.ipaa.com.au. The IPA website also contains the IPA’s Code of Professional Practice

for Insolvency Professionals, which applies to IPA members.

a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. These documents may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional adviser to take into account your particular circumstances and to tell you how the law applies to you.

© Australian Securities & Investments Commission, December 2008 Page 1 of 1

Insolvency Practitioners Association of Australia ABN 28 002 472 362

33 Erskine Street, GPO Box 3921, Sydney NSW 2001 P+61 2 9290 5700 F +61 2 9290 2820 www.ipaa.com.au

Creditor Information Sheet

Offences, Recoverable transactions and

Insolvent Trading

Offences

A summary of offences that may be identified by the administrator:

180 Failure by officer to exercise a reasonable degree of care and diligence in the exercise of his powers and

the discharge of his duties.

181 Failure to act in good faith.

182 Making improper use of position as an officer or employee, to gain, directly or indirectly, an advantage.

183 Making improper use of information acquired by virtue of his position.

184 Reckless or intentional dishonesty in failing to exercise duties in good faith for proper purpose. Use of

position or information dishonestly to gain advantage or cause detriment.

206A Contravening an order against taking part in management of a corporation.

206A, B Taking part in management of corporation while being an insolvent under an administration.

206A, B Acting as a director or promoter or taking part in the management of a company within five years after

conviction or imprisonment for various offences.

209(3) Dishonest failure to observe requirements on making loans to directors or related companies.

254T Paying dividends except out of profits.

286 Failure to keep proper accounting records.

312 Obstruction of auditor.

314-7 Failure to comply with requirements for financial statement preparation.

437C Performing or exercising a function or power as officer while a company is under administration.

437D(5) Unauthorised dealing with company's property during administration.

438B(4) Failure by directors to assist administrator, deliver records and provide information.

438C(5) Failure to deliver up books and records to administrator.

590 Failure to disclose property, concealed or removed property, concealed a debt due to the company,

altered books of the company, fraudulently obtained credit on behalf of the company, material omission

from Report as to Affairs or false representation to creditors.


Preferences

A preference is a transaction such as a payment between the company and one or more of its creditors, in

which the creditor receiving the payment is preferred over the general body of creditors. The relevant time

period is six months before the commencement of the liquidation. The company must have been insolvent at

the time of the transaction, or become insolvent as a result of the transaction.

Where a creditor receives a preferred payment, the payment is voidable as against a liquidator and is liable to

be paid back to the liquidator subject to the creditor being able to successfully maintain any of the defences

available to the creditor under either the Corporations Act.

Uncommercial Transaction

An uncommercial transaction is one that it may be expected that a reasonable person in the company's

circumstances would not have entered into having regard to:

the benefit or detriment to the company;

the respective benefits to other parties; and,

any other relevant matter.

To be voidable, an uncommercial transaction must have occurred during the two years before the liquidation.

However, if a related entity is a party to the transaction, the time period is four years and if the intention of

the transaction is to defeat creditors, the time period is ten years.

Insolvency Practitioners Association of Australia Creditor Information Sheet s439A report (2)Page 2

The company must have been insolvent at the time of the transaction, or become insolvent as a result of the

transaction.

Unfair Loan

A loan is unfair if and only if the interest was extortionate when the loan was made or has since become

extortionate. There is no time limit on unfair loans – they only have to have been entered into any time on or

before the day when the winding up began.

Arrangements to avoid employee entitlements

If an employee suffers loss because a person (including a director) enters into an arrangement or transaction

to avoid the payment of employee entitlements, the liquidator or the employee may seek to recover

compensation from that person. It will only be necessary to satisfy the court that there was a breach on the

balance of probabilities. There is no time limit on when the transaction occurred.

Unreasonable payments to directors

Liquidators have the power to reclaim "unreasonable payments" made to directors by companies prior to

liquidation. The provision relates to transactions made to, on behalf of, or for the benefit of, a director or

close associate of a director. To fall within the scope of the section, the transaction must have been

unreasonable, and have been entered into during the 4 years leading up to a company's liquidation,

regardless of its solvency at the time the transaction occurred.

Voidable charges

Certain charges are voidable by a liquidator:

Floating charge created with six months of the liquidation unless it secures a subsequent advance;

Unregistered charges; and

Charges in favour of related parties who attempt to enforce the charge within 6 months of its creation.

Insolvent Trading

In the following circumstances, directors may be personally liable for insolvent trading by the company:

a person is a director at the time a company incurs a debt;

the company is insolvent at the time of incurring the debt or becomes insolvent because of incurring the

debt;

at the time the debt was incurred, there were reasonable grounds to suspect that the company was

insolvent;

the director was aware such grounds for suspicion existed; and

a reasonable person in a like position would have been so aware.

The law provides that the liquidator, and in certain circumstances the creditor who suffered the loss, may

recover from the director, an amount equal to the loss or damage suffered. Similar provisions exist to pursue

holding companies for debts incurred by their subsidiaries.

A defence is available under the law where the director can establish:

there were reasonable grounds to expect that the company was solvent and they actually did so

expect;

they did not take part in management for illness or some other good reason; or,

they took all reasonable steps to prevent the company incurring the debt.

The proceeds of any recovery for insolvent trading by a liquidator are available for distribution to the

unsecured creditors before the secured creditors.

Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some

provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about

the law or the exceptions and qualifications that are relevant to your circumstances.



Appendices

Think Appliances Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) Remuneration Request Approval Report Page 1 of 18

Part 1: Declaration We, Matthew James Byrnes and Gayle Dickerson, of Grant Thornton Australia Limited have undertaken a proper assessment of this remuneration claim for our appointment as Joint and Several Administrators of Think Appliances Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed), in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the Administration.

Part 2: Executive Summary To date, no remuneration has been approved and paid in this administration. This remuneration report details approval sought for the following fees:

Period Amount

(ex GST)

Current remuneration approval sought:

Voluntary Administration Resolution 1: The remuneration of the Administrators and any of the Administrators’ partners or employees in performance of services performed from 19 November 2013 to 10 December 2013 to be fixed at $43,741 (excluding GST) plus any out of pocket expenses incurred.

$43,741

Resolution 2: The remuneration of the Administrators and any of the Administrators’ partners or employees in performance of services performed from 11 December 2013 to 19 December 2013 to be fixed at $20,000 (excluding GST) plus any out of pocket expenses incurred.

$20,000

Total – Voluntary Administration* $63,741


Liquidation Resolution 3: The remuneration of the Joint and Several Liquidators and any of the Liquidators’ partners or employees in performance of services performed from 19 December 2013 to completion of the liquidation to be fixed at $100,000 (excluding GST) plus any out of pocket expenses incurred. Approval is given for such amounts approved to be drawn on a monthly basis.*

$100,000

* Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the administration. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors.

We note that our current estimate of costs for the Voluntary Liquidation is $16,259 lower than the estimate of costs provided in the Initial Advice to Creditors dated 21 November 2013, which estimated a cost to completion of the administration of $80,000(excluding GST).


Part 3: Description of work completed/to be completed

Resolution 1

“The remuneration of the Administrators and any of the Administrators’ partners or employees in performance of services performed from 19 November 2013 to 10 December 2013 to be fixed at $43,741 (excluding GST) plus any out of pocket expenses incurred.”

Company Think Appliances Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed)

Practitioner(s) Matthew James Byrnes and Gayle Dickerson Firm Grant Thornton Australia Limited

Administration Type Voluntary Administration

Period From 19 November 2013 To 10 December 2013

Task Area General Description Includes

Assets (1.2 hours) ($476)

Leasing Reviewing leasing documents

Tasks associated with disclaiming leases including liaising with Receivers and Managers regarding same

Creditors (59.4 hours) ($25,310)

Creditor Enquiries Receive and follow up creditor enquiries via telephone

Maintaining creditor enquiry register

Review and prepare correspondence to creditors and their representatives via facsimile, email and post

Creditor reports Preparing 439A report, investigation, meeting and general reports to creditors

Dealing with proofs of debt

Receipting and filing Proofs of Debt

Corresponding with OSR and ATO



Meeting of Creditors Preparation meeting notices, proxies and advertisements

Forward notice of meeting to all known creditors

Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting

Holding first meeting of creditors

Preparation and lodgement minutes of meetings with ASIC

Responding to stakeholder queries and questions immediately following meeting

Employees (0.5 hours) ($291)

Employees enquiry

Receive and follow up employee related enquiries via telephone

Investigation (19.5 hours) ($8,438)

Conducting investigations

Collection of company books and records

Requesting Report as to Affairs

Reviewing company’s books and records

Review and preparation of company nature and history

Conducting and summarising statutory searches

Preparation of comparative financial statements

Preparation of deficiency statement

Review of specific transactions

Liaising with prior employees regarding certain transactions

Preparation of investigation file

Administration (18.9 hours) ($8,719)

Correspondence Liaising with Receivers and Managers

Document maintenance/file review/checklist

Filing of documents

File reviews

Updating checklists



Insurance Identification of potential issues requiring attention of insurance specialists

Correspondence with Blue Insolvency regarding initial insurance requirements

Reviewing insurance policies

Correspondence with previous brokers

Bank account administration

Preparing correspondence closing accounts

Requesting bank statements

Planning/Review Discussions regarding status of administration

Statutory (1.3 hours) ($507)

Documents of appointment

Preparation

Review

Execution

Filing with ASIC

Report as to Affairs Letter of deponents

Directors Questionnaire

Completion deadlines and extensions

ASIC Forms Preparing and lodging ASIC forms including 505

ATO & other statutory reporting

Notification of appointment


Resolution 2

“The remuneration of the Administrators and any of the Administrators’ partners or employees in performance of services performed from 11 December 2013 to 19 December 2013 to be fixed at $20,000 (excluding GST) plus any out of pocket expenses incurred.”



Administration Type Voluntary Administration

Period From 11 December 2013 2013 To 19 December 2013


Creditors (18 hours) ($7,200)





Receipting and filing Proofs of Debt when not related to a dividend

Corresponding with OSR and ATO regarding Proofs of Debt when not related to a dividend

Meeting of Creditors Preparation meeting notices, proxies and advertisements


Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting.


Investigation (20 hours) ($8,000)

Conducting investigations


Requesting Report as to Affairs


Review of specific transactions

Liaising with prior employees regarding certain transactions

Preparation of investigation file Administration (10 hours) ($4,000)


First month administration review

Filing of documents

File reviews

Updating checklists

Correspondence Liaising with Receivers and Managers regarding the potential hand over of the debtors book and supporting records


Preparing correspondence opening and closing accounts


Bank account reconciliations

Correspondence with bank regarding specific transfers


Books and records/ storage

Dealing with records in storage

Sending job files to storage


Statutory (2 hours) ($800)

Report as to Affairs Directors Questionnaire

Completion deadlines and extensions


Preparing BAS’

I have applied an average charge-out rate of $400/hr in estimating the future costs as persons of various experience will be undertaking the future tasks.


Resolution 3

“The remuneration of the Joint and Several Liquidators and any of the Liquidators’ partners or employees in performance of services performed from 19 December 2013 to completion of the liquidation to be fixed at $100,000 (excluding GST) plus any out of pocket expenses incurred. Approval is given for such amounts approved to be drawn on a monthly basis.”



Administration Type Creditors Voluntary Liquidation

Period From 19 December 2013 To the completion of the liquidation


Assets (140 hours) ($56,000)

Debtors Reviewing and assessing debtors ledgers

Collating information on the debtors ledger such as invoices and other supporting documentation

Handing over and liaising with the Receivers and Managers

Reviewing correspondence between the Receivers and Managers and debtors

Correspondence with secured creditor

Correspondence with debtors

Send follow up letters and demands to debtors regarding outstanding balance owing

Liaising with debt collectors and solicitors if required

Reconciliation, banking and update of amounts owing

Creditors (30 hours) ($12,000)




Correspondence with committee of creditors members (if appointed)




Receipting and filing Proofs of Debt when not related to a dividend

Corresponding with OSR and ATO regarding Proofs of Debt when not related to a dividend

Meeting of Creditors Preparation AGM meeting notices, proxies and advertisements


Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting.

Preparation and lodgement minutes of meetings with ASIC

Responding to stakeholder queries and questions immediately following meeting

Investigation (35 hours) ($14,000)

Conducting investigation


Correspondence with ASIC to receive assistance in obtaining


Preparation of deficiency statement

Review of specific transactions and liaising with directors regarding certain transactions

Liaising with directors regarding certain transactions

Preparation of investigation file

Lodgement of investigation with the ASIC

Preparation and lodgement of supplementary report if required

Examinations Preparing brief to solicitor

Liaising with solicitor(s) regarding examinations

Attendance at examination

Reviewing examination transcripts

Liaising with solicitor(s) regarding outcome of examinations and further actions available

Litigation / Recoveries Internal meetings to discuss status of litigation

Preparing brief to solicitors



Liaising with solicitors regarding recovery actions

Attending to negotiations

Attending to settlement matters

ASIC reporting Preparing statutory investigation reports

Liaising with ASIC

Dividend (20 hours) ($8,000)

Processing proofs of debt

Adjudicating on priority of secured creditor claim

Distributions to secured creditor

Correspondence with secured creditor

Preparation of correspondence to potential creditors inviting lodgement of Proofs of Debt

Receipt of Proofs of Debt

Maintain Proofs of Debt register

Administration (15 hours) ($6,000)

Correspondence Liaising with the Receivers and Managers


First month, then 6 monthly administration review

Filing of documents

File reviews

Updating checklists


Preparing correspondence


Bank account reconciliations

Correspondence with bank regarding specific transfers

Finalisation Notifying ATO of finalisation

Cancelling ABN / GST / PAYG registration

Completing checklists



Finalising WIP


Books and records/ storage

Dealing with records in storage

Sending job files to storage

Statutory (10 hours) ($4,000)

Documents of appointment

Preparation

Review

Execution

Filing with ASIC

ASIC Form 524 and other forms

Preparing and lodging ASIC forms including 505, 524, etc

Correspondence with ASIC regarding statutory forms


Notification of appointment

Preparing BAS’

Completing PAYG Payment Summaries/group certificates

I have applied an average charge-out rate of $400.00/hr in estimating the future costs as persons of various experience will be undertaking the future tasks.


Part 4: Calculation of Remuneration

Please find below a calculation of remuneration by staff and task area for the period 19 November 2013 to 10 December 2013.

Hrs $ Hrs $ Hrs $ Hrs Hrs $ Hrs $

650 1.4 1.4 $910.00

630 10.1 3.6 $2,268.00 5.1 $3,213.00 0.4 1 $630.00

470 25.2 3.0 $1,410.00 0.1 $47.00 14.5 $6,815.00 7.6 $3,572.00

390 61.8 10.3 $4,017.00 1.1 $429.00 38.2 $14,898.00 0.1 10.8 $4,212.00 1.3 $507.00

240 1.7 1.6 $384.00 0.1 $24.00

190 0.6 0.6 $114.00

100.8 18.9 $8,719.00 1.2 $476.00 59.4 $25,310.00 0.5 19.5 $8,438.00 1.3 $507.00

Assets Creditors

IPAA Tasks

$252.00

Employees Investigations Statutory

Employee Position $

Admin

Supervisor / Assistant Manager $24,102.00 $39.00

Gayle Dickerson Partner $910.00

Matthew Byrnes Partner $6,363.00

Leanne Donaldson Administrator $114.00

Danielle Franjic Senior Manager $11,844.00

Matthew Whitchurch

$43,741.00 $291.00

Total Cost

excl. GST ($)

$/Hr

(excl. GST) Total Hours

Mei Lin Lee Graduate $408.00


Part 4A: Schedule of remuneration methods and hourly rates

There are four (4) basic methods that can be used to calculate the remuneration charged by an insolvency Practitioner. They are:

Time based / hourly rates: This is the most common method. The total fee charged is based on the hourly rate charged for each person who carried out the work multiplied by the number of hours spent by each person on each of the tasks performed. Fixed fee: The total fee charged is normally quoted at the commencement of the administration and is the total cost for the administration. Sometimes a Practitioner will finalise an administration for a fixed fee. Percentage: The total fee charged is based on a percentage of a particular variable, such as the gross proceeds of assets realisations. Contingency: The practitioner’s fee is structured to be contingent on a particular outcome being achieved.

Given the nature of this administration we propose that our remuneration be calculated on the time based / hourly rates method. This is because:

• Fixed Fee is not applicable as we are uncertain of the work required to complete this appointment. As such, time based remuneration is more relevant if the appointment is either simpler or more complex than originally expected

• Percentage remuneration is not reasonable as if one substantial asset is easily realised, it will not be fair for creditors if we take a large portion of the asset. Rather, our remuneration should be based on the amount and type of work we complete

• Alternatively, if our staff perform substantial work for minimal realisations, we consider it fair to be paid out of available assets, and

• Contingency remuneration is not applicable as the object of the liquidation, being the orderly winding-up of the company’s affairs, is a certain outcome.

Please find attached a schedule of remuneration method, the method chosen for this remuneration claim and an explanation of the hourly rates.


Part 5: Statement of Remuneration Claim

Resolution 1 The remuneration of the Administrators and any of the Administrators’ partners or employees in performance of services performed from 19 November 2013 to 10 December 2013 to be fixed at $43,741 (excluding GST) plus any out of pocket expenses incurred. Resolution 2 The remuneration of the Administrators and any of the Administrators’ partners or employees in performance of services performed from 11 December 2013 to 19 December 2013 to be fixed at $20,000 (excluding GST) plus any out of pocket expenses incurred. Resolution 3 The remuneration of the Joint and Several Liquidators and any of the Liquidators’ partners or employees in performance of services performed from 19 December 2013 to completion of the liquidation to be fixed at $100,000 (excluding GST) plus any out of pocket expenses incurred. Approval is given for such amounts approved to be drawn on a monthly basis.

Part 6: Remuneration Recoverable from External Sources Remuneration payments received in relation to the Fair Entitlements Guarantee Act 2012 or predecessor scheme are considered a separate arrangement involving a limited or partial funding agreement. We are yet to contact FEG with respect to performing a distribution on their behalf as we are yet to receive confirmation as to whether the Company will be placed into liquidation, or that there are any known priority employee claims. Should the Administrators assist FEG in the distribution of employee entitlements this will be detailed in future creditor correspondence.


As disclosed in the DIRRI, the Joint and Several Administrators have been provided with an indemnity from GE Commercial Corporation (Australia) Pty Ltd of up to $40,000, to the extent that they are unable to realise $40,000 from the assets of the Company. If required, the indemnity will be used to discharge the Joint and Several Administrators’ remuneration, costs, charges and expenses in relation to the Company. Part 7: Disbursements Disbursements are divided into three types: A, B1, B2.

A disbursements are all externally provided professional services. These are recovered at cost. An example of an A disbursement is legal fees.

B1 disbursements are externally provided non-professional costs such as travel, accommodation and search fees. B1 disbursements are recovered at cost.

B2 disbursements are internally provided non-professional costs such as photocopying, printing and postage. B2 disbursements, if charged to the Administration, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups

I have undertaken a proper assessment of disbursements claimed for the Company in accordance with the law and applicable professional standards. I am satisfied that the disbursements claimed are necessary and proper.

Part 8: Report on Progress of the Administration

The progress of the administration has been discussed in body of the Section 439A report, to which this remuneration report has been attached. Part 9: Summary of Receipts and Payments There have been no receipts or payments to the Joint & Several Administrators’ bank account to date.


Part 10: Queries Arrangements can be made to inspect the time and costs records which give greater detail of the work performed by contacting Matthew Whitchurch of this office on 03 8663 6134.

Part 11: Information Sheet

The ASIC Creditors Information Sheet (INFO 85) that outlines further information regarding the remuneration approval and payment process can be obtained from the following web address: www.asic.gov.au/insolvencyinfosheets

Think Appliances Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) Remuneration Request Approval Report

Grant Thornton Australia Limited

Statement of Remuneration Policy (1 July 2013)

Grant Thornton Australia Limited confirms that in all matters undertaken by us we seek to charge an appropriate level of fees and expenses. They should be appropriate for us having regard to the complexity and demands of each assignment and appropriate for our clients having regard to their objectives in seeking our assistance.

A schedule detailing our rates to apply for the period commencing 1 July 2013 is set out hereunder.

(Note that GST is a tax on services which is borne by the end consumer. It is not remuneration and

will always be separately stated on invoices).

Classification Charge

Rate Guide to Level of Insolvency Experience

PARTNER

$630 Registered Liquidator. Partner bringing specialist skills to Administrations and Insolvency matters. Controlling all matters relating to the assignment.

ASSOCIATE DIRECTOR $540

Qualified accountant (CA/CPA). 8+ years experience. Well developed technical and commercial skills. Planning and control of all Administration and Insolvency tasks. Controlling substantial matters relating to the assignment and reporting to the appointee.

SENIOR MANAGER $470 Typically CA/CPA Qualified. 6-8 years experience. Well developed technical and commercial skills. Planning and control of Administration and Insolvency tasks with the assistance of the appointee.

MANAGER $450 Typically CA/CPA Qualified. 6-8 years experience. Well developed technical and commercial skills. Planning and control of Administration and Insolvency tasks with the assistance of the appointee.

ASSISTANT MANAGER

$390 Typically CA/CPA Qualified. 4+ years experience. Co-ordinates planning and control of small to medium Administrations and Insolvency tasks. Conducts certain aspects of larger administrations.

SENIOR $370 Typically undertaking CA/CPA Qualification or recently Qualified. 3-5 years experience. Required to conduct the fieldwork on Administrations and Insolvency tasks.

INTERMEDIATE ACCOUNTANT

$290

Typically undertaking CA/CPA Qualification. Up to 3 years experience. Required to conduct the fieldwork on smaller Administrations and Insolvency tasks and assist with fieldwork on medium to large Administrations and Insolvency tasks.

GRADUATE $240 Typically first 6 months experience. Required to assist with the day to day fieldwork on Administrations and Insolvency tasks under the supervision of intermediate and senior staff.

ADMINISTRATOR $210 Conducts all aspects relating to administering the accounts function.

PA/SECRETARY $170 Carries out all secretarial functions relating to an administration.

UNDERGRADUATE $200 Typically in final year of tertiary studies and undergoing vacation employment or part time work.

JUNIOR $140 Carries out all junior roles relating to an administration