HUMM GROUP LIMITED — Capital/Financing Update 2006

Dec 5, 2006

Joint Lead Managers

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The Offer contained in this Prospectus is an invitation by FlexiGroup Limited ("Comparty") to apply for
Shares and Options in the Company.

Lodgehont and Listing This Prospectus is dated 21 November 2006 and a copy was lodged with ASIC on that date

The Company will apply to ASX for admission to the official fist of ASX and quotation of its Shares on ASX within seven days after the date of this Prospectus. The Options will not be quoted on the ASX.
Neither ASIC nor ASX take any responsibility for the content of this Prospectus or for the merits of the investment to which this Prospectus relates.

Exploy Date No Shares or Options will
be offered on the basis of this Prospectus later than 13 months after the date of this Prospectus.

Note to Applicants The information in this Prospectus is not financial product advice and does not take into account your investment objectives, financial situation or particular needs

It is important that you read. this Prospectus carefully and in its entirety before deciding whether to isvest in the Comparvi, în particular, vou should consider the risk factors that could affect the nerformance of BeviGroup ...................................... these risks in light of your personal circumstances (including financial and taxation issues) and seek professional guidance from your accountant, stockbroker or other crofessional adviser before deciding whether to invest Some of the risk factors that should be considered by prospective investors are set out in Section 8. You should also consider the assumptions underlying the Forecast Financial Information and the risk factors that could affect FlexiGroup's business financial condition and results of operations.

No Ottering Where Offering Would So Hegal This Prospectus does not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer

or invitation. No action has been taken to register or qualify the Shares, the Options or the Offer, or to otherwise permit a general nublic offering of Shares, the Options in any jurisdiction outside Australia.

The distribution of this Prospectus outside Australia may be restricted by law and persons who come into possession of this Prospectus outside Australia should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws For details of selling restrictions that apply to the Shares in certain jurisdictions outside of Australia, please see Section 3.21 for further information

Viening - United States The Shares have not been, and the Shares will not be. registered under the US
Securities Act of 1933, as amended ("US Securities Act") and the Shares may not be offered or sold in the United States, or to, or for the account or benefit of, US persons (as defined in Rule 902 under the US Securities Act) other than in retiance snon ope or more exemptions provided for under the US Securities Act. The Shares may only be resold or transferred if redistered under the US Securities Act or pursuant to an exemption from such registration under the
US Securities Act and in compliance with state securities laws. The Company is under no oblication and has no intention In register the Shares in the United States.

References to "Company" The Company is a new entity to be listed on ASX. The Company has entered into legally binding arrangements to acquire an angeneems to acquire
Flexirent Holdings Pty Ltd
{"Flexirent Holdings"), which .
is, as at the date of this Prospectus, the holding
company of the Existing Group. For ease of reference in this Prospectus, except where the context otherwise indicates or requires, references to
"FlexiGroup" and "Group" are to the Compasy and its wholly-owned subsidiaries after Flexirent Holdings has been
acquired by the Company.

Financial Information Presentetion As the Company was formed on 14 November 2006, there is no actual historical financial information for the Company.

The Directors have prepared pro-forma Historical Financial .
Information to present potential investors in the Company with information to hein them. understand what the fristorical financial performance would have been had the Company operated the RexiGroup
businesses from 1 July 2004.

The pro-forma Historical Financial Information included is this Prospectus for FY2005 and FY2006 has been prepared and presented in accordance with the recognition and measurement principles prescribed in the Australian equivalents to the International Financial Reporting Standards
("AIFRS") and other mandatory professional reporting requirements in Australia

in accordance with customary practice for offerings in .
Australia, this Prospectus includes Forecast Éiriancial
Information for FY2007 based on the best estimate assumptions of the Directors The basis of preparation and presentation of the Forecast .
Fisancial Information, to the extent relevant, is consistent with the basis of preparation
and presentation for the Historical Financial Information for FY2006 and FY2006.

The Bistorical Financial Information and the Forecast Financial Information in this Prospectus are unaudited.

The Historical Financial Information and the Forecast Financial Information in this Prospectos should be read. in conjunction with, and they are qualified by reference to, the information contained. in Section 7.

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No person is authorised to give any information or to make any representation in connection with the Offer described in this Prospectus which is not
contained in this Prospectus. .
You should rely only on isformation in this Prospectus. None of ElexiGroup, any person. named in this Prospectus or any other person warrants or guarantees the future performance of FlexiGroup, or any return on any investment made porsuant to this Prospectus.

This Prospectus contains forward tooking statements which are identified by words such as "may", "could"
"believes", "estimates",

"expects" "intends" and other similar words that involve risks and uncertainties. In addition, consistent with customary market practice in offerings. in Australia, financial forecests have been prepared and included in this Prospectus. in Section 7

The Company has no intention to update or revise forward. looking statements, or to
publish prospective financial information in the future, regardless of whether new information, future events. or any other factors affect the information contained in this Prospectus, except where required by law.

These forward looking statements are subject to various risk factors^' Some of these risk factors are set out in Section 8. These and other factors could cause actual results to differ materially from those expressed or anticipated is any forward looking statement made by, or on behalf of, the Company or FlexiGroup.

FlexiGroup disclaims all liability, whether in negligence or otherwise to persons who trade Shares before receiving their holding statement.

Symmeters Resins The Corporations Act prohibits the Company from processing Applications in the sevenday period after the date of lodgement of this Prospectus ("Exposure Period"). The Exposure Period may be extended by ASIC by up to a further seven days. The purpose of the Exposure Period is to enable the Prospectus to be examined by market participants prior to the raising of funds. This Prospectus will be made generally available in Acetralia in Australian residents during the Exposure Period at www.flexirent.com.

Analications received disting the Exposure Period will not be processed until after the expiry of the Exposure Period. No prime exposure venturints on any Applications received during the Exposure Period.

Obtaining a Copy of

This Prospectus A paper copy of the Prospectus is available free of charge to any person in Australia, including
persons who have received a copy of this Prospectus in its electronic form, by calling the FlexiGroup Share Offer

Information Lizz on ...................................... Offer Period.

Éfectronic Prospectur This Prospectus is also available to Australian resident investors in electronic form at FlexiGroup's website, www.flexirent.com nobele, m militarom.com.
The Offer constituted by this Prospectus in electronic form is available only to Australian residents accessing the website Temamus absoluting the Assis access the electronic version of this Prospectus should ensure that they download and
read the entire Prospectus.

Applications may only be made on the appropriate Application.
Form attached to or accompanying this Prospectus or in its paper copy form, which must be downloaded in its entirety from www.flexirent. com. By making an Application, you declare that you were given per debate mor you were grideness to the Prospectus,
together with an Application Form. The Corporations Act prohibits any person from passing the Application Form on to another person unless it
is attached to, or accompanied by, a hard copy of this Prospectus or the complete and
unaltered electronic version of this Prospectus.

Defined Terms and Chiefne and how in the

Certain terms and abbreviations used in this Prospectus are defined in Section 11. Unless otherwise stated or implied. references to times in this Prospectus are to Australian Eastern Daylight Time ("AEDT").

All financial amounts contained in this Prospectus are expressed in Australian dollars unless otherwise stated. Where a New Zealand dollar amount has been converted to Addition delays, the A\$ : NZ\$
exchange rate of \$1 : \$1.35 in
the EY2007 Forecast Financial Information has been assumed unless otherwise stated.

Any discrepancies between totals and surps and components in tables contained in this Prospectus are due to rounding.

Photographs and Diagrams Photographs and diagrams in this Prospectus do not depict assets or equipment owned or used by FlexiGroup unless. otherwise indicated. Diagrams used in the Prospectus are illustrative only and may not be drawn to scale. Unless otherwise stated, all data

contained in charts, graphs and
tables is based on information available as at the date of this Prospectus

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Privany

By completing an Application Form, you are providing personal information to the personal implement to the
Company through the Share
Registry, which is contracted by the Company to manage Applications. The Company and the Share Registry, on its behalf, collect, hold and use that personal information to process your Application, service your needs as a Shareholder and/or Optionholder, provide facilities and services that you request and carry out appropriate administration.

Once you become a holder of Shares and/or Options, the Corporations Act requires information about you. thorntoten about you
(including your name, address
and details of the Shares and/or Options you hold) to be included in FlexiGroup's public register. The information must contisue to be included in FlexiGroup's public register if you cease to hold the Shares and/er Options. If you do
Inot provide the information requested, your Application Form may not be able to be processed.

The Company and the Share Registry may disclose your personal information for purposes related to your investment to their agents and service providers on the basis that they deal with such information in accordance with the Compasy's privacy policy.

You can request access to your
personal information held by or on behalf of the Company or obtain further information about FlexiGroup's privacy. practices by contacting the
Share Registry or the Company. FlexiGroup aims to ensure that the personal information it retains about you is accurate complete and up-to-date. To assist us with this, please contact the Company or the Share Registry if any of the
Share Registry if any of the
details you have provided change. In accordance with the requirements of the Coroorations Act. information on the Shareholder register will be accessible by members of the public.

FlexiGroup Limited Prospectus

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Chairman's Letter 4 Key Offer Information 6 Highlights of the Offer 8

• Investment Overview 19
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  Film Answers to Key Questions 25
• 急。 Details of the Offer 29
• $\mathbb{Z}_p^{\boxplus}$ Industry Overview 39
• $\mathbb{S}^3_2$ Profile of FlexiGroup 45
• Board, Management and Corporate Governance 59 檾
• $\gamma$ Financial Information 67
• 8 Risk Factors 87
• Investigating Accountant's Report 93 $\mathbb{S}^3$
• 101 Additional Information 101
• $\begin{array}{c} \frac{d\mathbf{x}}{2} \ \frac{d\mathbf{x}}{2} \end{array}$ Glossary and Industry Terminology 139 Application Forms Corporate Directory

A robust business model, with a positive outlook, FlexiGroup's track record of growth reflects a leading position within a growing market and an ability to cross-sell additional products to its customer base.

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Chairman's Letter

Dany Investor

On behalf of the Directors, it is my pleasure to invite you to become a shareholder in FlexiGroup Limited.

FlexiGroup is a leading provider of retail point-of-sale lease and rental finance for the IT equipment, electrical appliance and other retail markets in Australia and New Zealand. FlexiGroup's success has been underpinned by its sales and marketing-driven business model which trains and motivates retailers and their salespeople to sell FlexiGroup's products.

FlexiGroup has a strong track record of earnings growth underpinned by growth in the value of deals. Between FY1998 and FY2006, the total value of deals settled grew at a compound annual growth rate of 23%. Our retail partners' distribution network of 11,000 third-party salespeople representing almost 4,400 retailers has been critical to our success. Importantly, this network includes a successful longstanding contractual relationship with Harvey Norman, Australia's largest homeware and electrical goods retailer. More recently, FlexiGroup entered into a contractual relationship with Noel Leeming, a major New Zealand retailer.

The Board is committed to a growth strategy which focuses on increasing sales penetration within the business' current distribution network and broadening its asset categories, retail partners and geographies. FlexiGroup has recently extended its products to personal loans and finance leases for a broader range of individual and small business capital items. FlexiGroup anticipates that the strong growth in demand for IT equipment and electrical appliances and continued product innovation in those asset categories will underpin future demand for FlexiGroup products. With its experienced management team and strong marketing abilities, the Board believes that FlexiGroup is well positioned to take advantage of these opportunities.

The Offer Price is \$2.00 per Share. A purpose of the Offer is to provide funding to enable the Company to acquire the shares in Flexirent Holdings Pty Limited and fund other payments in connection with that acquisition. The net proceeds of the Offer will be payable to the Existing Shareholders and certain Directors (or associated trusts) and executives of FlexiGroup. FlexiGroup's management will have a significant interest in the Company following the Offer, which we believe will incentivise them to build on FlexiGroup's strong track record and capitalise on its growth opportualties.

This Prospectus provides detailed information about the Offer. It also sets out FlexiGroup's recent financial position and its prospects for the future. We recommend that you read this entire document carefully before making an investment decision.

The Directors believe that FlexiGroup represents a compelling investment opportunity. We encourage you to consider the Offer and look forward to welcoming you as a shareholder of FlexiGroup.

Yours sincerely

Margaret Jackson, AC Chairman FlexiGroup Limited

"FlexiGroup is a leading provider lease and rental finance for the IT equipment, electrical appliance markets in Australia and New Zealand"

6

Key Offer Information

Prospectus Date	21 November 2006
Broker Firm Offer, Reserved Offer, Employee Gift Offer opens.	29 November 2006
Institutional Offer opens	5 December 2006
Institutional Offer closes	5 December 2006
Broker Firm Offer closes	7 December 2006
Settlement date - Broker Firm Offer and Institutional Offer	8 December 2006
Issue of Shares to successful Applicants – Broker Firm Offer and Institutional Offer	11 December 2006
Deferred settlement trading on ASX expected to commence - Broker Firm Offer and Institutional Offer	12 December 2006
Reserved Offer and Employee Gift Offer closes	15 December 2006
Issue of Shares to successful Applicants - Reserved Offer and Employee Gift Offer	22 December 2006
Normal trading on ASX expected to commence - Reserved Offer	29 December 2006

Note:

This timetable is indicative only. The Company, in consultation with the Joint Lead Managers, reserves the right to vary the dates and times of the Offer, including to close the Offer (or any component of the Offer) early, or withdraw the Offer (or any component of the Offer), to extend any Closing Date or to accept late Applications, either generally or in particular cases, without notifying any recipient of this Prospectus or any Applicants, Investors are encouraged to submit their Applications as soon as possible as the Offer may close at any time without notice.

Offer Price Total number of Shares available under the Offer!

Cash Proceeds

Total number of Shares on issue following the Offer²³

Market Capitalisation at the Offer Price

Total Net Income FY20064

Total Net Income FY2007F6

NPAT FY2006⁴

NPAT EY2007FS

Earnings per Share FY2007F⁵

Price to earnings ratio FY2007F⁵

Dividends per Share FY2007F (fully franked)⁵

Dividend vield FY2007F (based on the Offer Price)⁵

\$2.00 132,261,048 \$264.5 million 217,500,000 \$435.0 million \$85.4 million $$101.0$ million \$22.7 million $$275$ million 12.6 cents 152 x 5.5 cents 5.0%

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Notes

• 128,616,048 Shares are available, in aggregate, under the Broker Firm Offer and the Institutional Offer. 3,500,000 Shares are available under the Reserved Offer. In addition, up to 146,000 Shares may be issued under the Employee Gift Offer. In addition, 86,238,962 Shares will be issued to Existing Shareholders, Directors and/or their associates and certain members of senior management of Flexirent Holdings under the Offer, as set out in Section 10.4.
• 1. This comprises 132,261,048 Shares available under the Broker Firm Offer, the Institutional Offer, the Reserved Offer and the Employee Gät Offer together with 85,238,952 Shares to be issued at the date of the Prospectus, to Existing Shareholders, Directors and/or their associates and certain members of senior management of Elexirent Floldings under the Offer, as set out in Section 10.4.
• 1. Up to 13,050,000 Options may be issued under the Option Offer. If all these Options are issued and are subsequently exercised in accordance with their terms and the £3P, the total nomber of Shares will be 230,550,000. Note these Options do not vest before 30 September 2010.
• Based on the Bistorical Financial Information which, as set out in Section 7.2.2, has been derived from the audited statutory financial statements for Flexirent Holdings and adjusted for certain non-recurring items, as detailed in Section 7.13.
• 1. Based on the Forecast Financial Information which, as set out in Section 7.2.3, reflects a number of estimates and assumptions that are subject to business, economic and competitive uncertainties and contingencies, many of which are beyond the control of FlexiGroup and the Directors, and are not reliably predictable. In addition, the Forecast Financial information assumes the implementation of certain future business decisions and strategies, which are subject to change, and assumes the success of those strategies. The Forecast Financial Information presented in this Prospectus may vary from actual financial results, and these variations may be material. Details of the Forecast Financial Information, the Directors' best estimate assumptions on which it has been based, management discussion and analysis of it and a reconciliation to the statutory forecast income statement are set out in Section 7, while associated risk factors are set out in Section 8

FlexiGroup is a leading provider in the growing lease and rental retail finance market

Approximately 300,000 customer profiles

65,000 new customers and 26,000 repeat purchases by existing customers in FY2006

Leading Market Position

FlexiGroup has established priority access relationships with leading Australian and New Zealand retail stores

FlexiGroup has access to a network of 4,400 retailers and 11,000 third-party salespeople across Australia and New Zealand

Entrenched Relationships with Retail Partners

FlexiGroup has a track record of strong and profitable growth which is forecast to continue in EY2007

In excess of 75% of the FY2007 forecast interest income from receivables¹ is expected to be earned from the existing lease receivable and loan portfolio

Attractive growth outlook

Product and asset category diversification

New and expanded distribution channels

Geographic reach - potential for further offshore expansion

Notes:

• Under the Company's accounting policy, interest incomefrom receivables is earned over the term of the contract. See Section 7.15.4 for further details.
• 1. Compound annual growth rate.

Profitable Growth

13

• Notes:
  3. Cross-sell contracts include Add-on and Ioans in Australia only.
• 1. Australia only.

FlexiGroup has developed a highly successful sales and marketing driven business model

Retailers and salespeople are motivated to originate business on behalf of FlexiGroup

FlexiGroup focuses on cross-sell and end-of-term trade-up opportunities to existing customers

Approximately 27% of total deal value in FY2006 were from existing customers

Approximately 196,000 active customers in FY2006

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Dependence on key retail partner

50% of deals by value were originated by one retail partner in $FY2006$

Reliance on distribution relationships

FlexiGroup is dependent on its retail partners and their salespeople to sell its products

Compliance with and changes to regulation and legislation

Non-compliance and requlatory change may adversely affect FlexiGroup

Access to funding

FlexiGroup's business is dependent on debt funding to finance new lease, rental and other products

Impact of reducing retail prices of IT equipment and electrical appliances

This trend may reduce average deal size, and may also reduce customer propensity to lease rather than buy

Credit losses

Changes in the credit environment and/or interest rates can affect customer ability and willingness to meet payment obligations

.
Note

See Section 1.5 and Section 8 for a description of the key risk factors that could affect the future financial performance of FlexiGroup. Prospective applicants should read the entire-Prospectus before applying for Shares under the Offer.

Investment Overview

13 Smakrada Chaarvigan

FlexiGroup is a leading provider of retail point-of-sale lease and rental finance in Australia and New Zealand, focusing on:

• IT equipment, including desktop and laptop computers, computer peripherals and software; and
• Electrical appliances, including audio visual equipment, whitegoods and browngoods.

More recently, FlexiGroup has begun to offer personal and business loans and other financial services products, directly to active customers.

FlexiGroup was founded in 1988 as a vendor finance company partnering with office equipment companies such as Mitsui, Ricoh and Toshiba. In 1995, FlexiGroup entered into its first distribution agreement with Harvey Norman, focusing on retail point-of-sale financing in its IT division. A long term contract remains in place with Harvey Norman, giving it priority access rights to provide rental and leasing solutions for IT equipment and electrical appliances.

Through its retailers' distribution petwork. FlexiGroug's products are now available through approximately 11,000 third-party salespeople, representing approximately 4,400 retailers in Australia and New Zealand. FlexiGroup also recently entered into a five year priority access rights agreement with Noel Leeming, a major New Zealand retailer. FlexiGroup's other major retail partners include Apple Centres, Notebooks R Us and A&R Computer Services.

FlexiGroup's operating performance has been characterised by strong growth as it has expanded with new retail partners, products, asset categories and geographies. FlexiGroup is forecasting Total Net Income of \$101.0 million and NPAT of \$27.5 million for FY2007.

FlexiGroup's management team is supported by a workforce of approximately 260 full-time employees.

1.2 Kev hwestnent Nafdishts

1.2.1 Leading Market Position

FlexiGroup has a leading market position within the retail point-of-safe lease and rental finance market in Australia and New Zealand. FlexiGroup's products are available through approximately 4.400 retailers, including Harvey Norman, one of Australia's largest IT equipment and electrical appliance retailers, and Noel Leeming a major New Zealand retailer. FlexiGroup's products are also available through direct promotion to its customers. FlexiGroup has a customer base of approximately 300,000 profiles, including approximately 196,000 active customers.

1.2.2 Entrenched Relationships with Retail Partners

Distribution of FlexiGroup's products is principally through its retail partners, which include some of Australia and New Zealand's leading IT equipment and electrical appliance retailers. Through these relationships, retailers benefit from increased purchasing power of customers, repeat sales directed by FlexiGroup and improved margins. In addition, FlexiGroup provides sales training and helps motivate retail salespeople. At present, FlexiGroup's retail partners include Harvey Norman, Noel Leeming, Apple Centres, Notebooks R Us, A&R Computer Services and a number of other chain and independent retailers.

1.2.3 Track Record of Strong, Profitable Growth

FlexiGroup has a track record of strong, profitable growth. Between FY2004 and FY2006, FlexiGroup's number of deals settled has grown at a compound annual growth rate of 15.4%. More recently, Total Net Income grew 17.6% from FY2005 to FY2006 and NPAT grew 84.6% during the same period. The ratio of NPAT to Total Net income was 26.6% for FY2006.

As interest income from receivables is earned over the term of the contract', in excess of 75% of the FY2007 forecast interest income is expected to be earned from the existing portfolio.

Note:

Under the Company's accounting policy, interest income from receivables is earned over the term of the contract. See Section 7.15.4 for further details.

1.2.4 Innovative Business Model

FlexiGroup has a sales and marketing-driven business model. Customer origination occurs with retailers and their salespeople who are encouraged to introduce customers to FlexiGroup products at the point-of-sale.

In addition, FlexiGroup seeks to generate revenue throughout the relationship with its active customers by offering cross-sell and add-on opportunities with additional products such as loans and Protect/Protect Platinum'. For FY2006. FlexiGroup generated approximately 65,000 new customers and 26,000 repeat perchases by active customers. Approximately 70% of FlexiGroup's customers^{2, 3} currently purchase Protect/Protect Platinum.

Figure 1 shows the growth achieved in the number of applications for additional products and services purchased by active customers ("Add-on") over the last three years to 30 June 2006.

FIGURE 1: CROSS-SELL - NUMBER OF CONTRACTS3.4

Source: FlexiGroup

At the end of a contract, customers have the option of trading-up their equipment with new leases ("Trade-up"). During the period from FY2004 to FY2006 inclusive, approximately 34,000 FlexiGroup customers traded-up, which represented a compound annual growth rate of 25.0% (see Figure 2).

FIGURE 2: END-OF-TERM - NUMBER OF TRADE-UP DEALS®

Source: FlexiGroup

Notes:

• Ť. Protect is a product which covers the customer in the case of theft, loss or damage to the leased asset whilst Protect Platinum offers additional debt waiver features.
• Excluding loan products where Protect/Protect Platinum is not applicable. Ò,
• 1. Australia only.
• 1. Cross-sell contracts include Add-on and loans.

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1.2.5 High Cash Flow Generation

The current funding structure provides upfront cash flows for FlexiGroup, which on a portfolio basis are usually in excess of the underlying assets being financed. As a result, after payment of the retailer's invoice, FlexiGroup generates strong cash flow at inception of the contract whilst the majority of the ongoing rental stream is passed directly to the Funder. Additionally, any cash received from customers after the end of the contract is retained by FlexiGroup.

1.2.6 Attractive Growth Outlook

The Board is forecasting continued strong growth in the FlexiGroup business.

FlexiGroup's track record of strong growth is expected to continue. The key elements of FlexiGroup's growth strategy are:

• To leverage and transport the FlexiGroup business model and product range into:
• Existing and new asset categories, such as in the electrical appliance market;
• Existing and new retail partners, such as the new relationship with Noel Leeming in New Zealand;
• Existing and new geographic markets such as New Zealand; and

To extend its cross-sell competencies by leveraging the active customer base with:

• Add-ons underpinned by an in-depth understanding of its customers' profiles and a broadening of its product range (see Section 5.3.3);
• A business and personal loans product. FlexiGroup has recruited an experienced management team $\bar{a}$ to grow the number of loan product deals; and

To leverage the existing operational platform and systems infrastructure to realise productivity and efficiency improvements.

1.2.7 Strong Management and Board Performance Record

FlexiGroup is led by a management team that has delivered strong growth in profit and the number of deals settled.

John DeLano, Managing Director, has overseen the evolution of the FlexiGroup business model and assembled a talented management team with a broad and complementary range of skills and commercial experience. FlexiGroup has strengthened the management team with the inclusion of a number of experienced managers to focus on implementing the next stage of its growth strategy.

Chairman Margaret Jackson currently leads RexiGroup's Board, which also includes R John Skippen, recently retired Chief Financial Officer of Harvey Norman Group. The experienced Board will continue to guide FlexiGroup for future growth.

1.3 Summary Financiel Information

Set out below is an extract of FlexiGroup's pro-forma consolidated historical income statement for EY2005 and FY2006, pro-forma consolidated forecast income statement for FY2007 and other operating data for the same period. See Section 7 for further details.

TABLE 1: SUMMARY PRO-FORMA CONSOLIDATED INCOME STATEMENT OF FLEXIGROUP

		PRO-FORBIA PEO-FORNA 多彩料形の意味 网络军队的法国
AS MELION	. FY2005	. FV2006	FY2007	FY2006-2007F
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Interest income from receivables 3 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	76.5.	89.5
Net margin
i otal pet income. ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	'2 6
Net Profit After Tax ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,			47
Basic earnings per Share (cents)
Other Operating Data
Average Receiva bles Outstanding
Source: Flexifizaun

See Section 7.13 for a reconciliation of the pro-forma consolidated income statements shown in Table 1 to audited historical income statements for FY2005 and FY2006, and statutory forecast consolidated income statement for FY2007.

1.4 Dividend Polloy

Subject to the Directors' forecasts being achieved and other relevant factors, the Directors intend to declare a fully franked final dividend of 5.5 cents per Share for FY2007 equivalent to a fully franked annualised vield of 5% based on the Offer Price and target a dividend payout ratio of 70% for EY2008. There can be no assurance that any dividends will be paid or as to the level to which those dividends will be franked as actual events might differ from the assumptions used in assessing the ability of FlexiGroup to pay these dividends. FlexiGroup's ability to pay fully franked dividends may be impacted by overall portfolio growth and growth of individual products which have different taxation consequences.

1.5 Key Nisks

There are a number of risks associated with an investment in FlexiGroup. Please read Section 8 for further information on the key risks set out below and details of other significant risks associated with an investment in FlexiGroup.

• Dependence on key retail partner Harvey Norman is the most important retail partner to FlexiGroup, and was responsible for approximately 50% of deals by value originated by FlexiGroup in FY2006.
• Reliance on distribution relationships FlexiGroup is dependent on its retail partners and their salespeople to sell its products.
• Compliance with and changes to regulation and legislation FlexiGroup operates in an industry which is subject to a range of laws and regulations and a complex, changing regulatory environment.
• Access to funding FlexiGroup's business is dependent on debt funding to finance new lease and rental products and other products (such as personal loans).
• Impact of reducing retail prices of IT equipment and electrical appliances In recent years, prices of IT equipment and electrical appliances have fallen. This trend is expected to continue and may reduce average deal size, and may also reduce costomer propensity to lease rather than boy.
• Credit losses Changes in the credit environment and/or interest rates can affect a customer's ability and willingness to meet their payment obligations during their contract term.

Notes:

1. Net of amortisation of initial direct sales costs.

This takes into account an amount of \$0.7 million in FY2007 relating to a share-based payment expense which results from an arrangement with Existing Shareholders. As this arrangement was established between Existing Shareholders prior to the Offer, no new Shares in the Company will be issued in relation to this arrangement upon vesting. As a result, new shareholders of the Company will not be economically diluted, i.e. they will not have their right to future dividends diluted, if the vesting conditions were to be satisfied. See Section 7.3 for further details.

1.6 Description of the Offer

The Closing Date of the Broker Firm Offer is 7 December 2006. The Closing Date of the Institutional Offer is 5 December 2007. The fater Closing Date of 15 December 2006 applies to the Reserved Offer and Employee Gift Offer only.

The Closing Date of the Option Offer for the Offer of Options to certain members of senior management is 15 December 2006.

Full details of the Offer are set out in Section 3.

You should read this Prospectus in its entirety before deciding to complete and lodge an Application Form.

Potential investors are encouraged to submit their Application Forms as early as possible as the Offer or any part of the Offer may be closed before the indicated Closing Date without prior notice.

1.7 Uses of Proceeds

The gross proceeds of the Offer will be \$435.0 million and will be ased to fand the following:

• Fees and expenses of \$8.1 million relating directly to the Offer; and
• Consideration payable of \$426.9 million to the Existing Shareholders for the acquisition of their shares $\overline{a}$ in Flexirent Holdings.

See Section 3.2 and Section 3.3 for further details.

MARINA EN TO THE WAY.
MOTTAMARINA

TOPIC	SHBANARY	YB FERING I VI FERING D paformation
Who is FlexiGroup?	FlexiGroup is a leading provider of retail point-of-sale lease and rental finance for the IT equipment, electrical appliance and other retail markets in Australia and New Zealand.
What is being offered?	The Company is offering to issue Shares and Options.	Section 3
What is the Offer Structure?	The Offer comprises an Offer of 132,261,048 Shares:	Section 3.6, Section 10.4 and
	- A Broker Firm Offer, open to Retail Investors who have received a firm allocation from their Broker, with the con- - A Reserved Offer, open to certain retail partners of FlexiGroup. and Eligible Employees; -An Employee Gift Offer, allowing Eligible Employees to apply for the nearest number of whole Shares to the value of \$1,000 . (rounded down) at the Offer Price at no cost to the employee; and An Institutional Offer open to certain Australian and international : (non-US) Institutional Investors.	Section 10.5
	Shares will also be issued to Existing Shareholders, certain Directors, Dhawan Trust and certain members of senior management.
	The Offer also comprises an Offer of Options to certain members. of senior management under the Option Offer.
	No Shares or Options are being offered to the general public.
What is the Offer Price?	\$2.00 per Share	Section 3.
What is the Market Capitalisation at the Offer Price?	\$435 million	Section 3
Waat are the number of Shares on Issue?	217,500,000	Section 3
What is the Offer Sizer	132,261,048 Shares are being offered under the Offer. Based on the Offer Price for the offer of 132,261,048 Shares, the total cash proceeds from the Offer will be \$264.5 million.	Section 3
Where is the Offer	The Broker Firm Offer is open to Applicants in Australia. Selection	Section 3
being conducted?	the company of the company of the The Reserved Offer is open to certain retail partners of FlexiGroup in Australia and New Zealand and Eligible Employees of FlexiGroup resident in Australia and New Zealand. New York المنابعة المستخدمة المستخدمة المستخدمة التي تستخدم المستخدمة المستخدمة the commitment and computer
	The Employee Gift Offer is open to Eligible Employees of FlexiGroup resident in Australia and New Zealand: Alles and March 1999 ka ta kasa 1998 kuwa na 1995 alikuwa wakati wa kuwa wakati wa kuwa wakati wa kuwa wakati wa kuwa wakati wa kuw Wakati wa kuwa wakati wa kuwa wakati wa kuwa wakati wa kuwa wakati wa kuwa wakati wa kuwa wakati wa kuwa wakat the Same Line of the
	The Institutional Offer is open to Institutional Investors in Australia [1] and certain other jurisdictions (excluding the US).
is the Offer underwritten?	The offer of Shares under the Broker Firm Offer and the Institutional and Section 3 and S Offer is fully underwritten by the Joint Lead Managers.	Section 10
	The offer of Shares under the Reserved Offer is underwritten by the state in the Eighth SRJ and the Joint Lead Managers. .

Topic	suwmary	whiere to find more enformation
What is the minimum Investment size of the Offering?	Seat of the Seat and Seat of excellent report of an The minimum Application for Broker Firm Applicants is the 2,000 Shares. [100] فالمتحيي فتلاحظ San Kelaya The minimum Application for Reserved Offer Applicants is. 500 Shares The Joint Lead Managers, in consultation with the Company and the Existing Shareholders, reserve the right to reject any Application or to allocate a lesser number of Shares than that applied for.	Section 3
How can Lapply?	By submitting a valid Application Form contained within or a accompanying this Prospectus (including, for Australian residents 3 only, the electronic version of the Prospectus) that is appropriate for the Application you are making, in accordance with the instructions. relating to it. I	Section 3
VV NOT SYC TIE significant risks in investing in the Shares?	Key risks of investing in FlexiGroup are: - Dependence on key retail partner; --Reliance on distribution relationships; - Compliance with and changes to regulation and legislation; $-$ Access to funding; $\frac{1}{2}$ and $\frac{1}{2}$ and $\frac{1}{2}$ - Impact of reducing retail prices of IT equipment and electrical appliances; and - Credit losses. and the state state	Section 8.3
What is the forecast yield on the Shares?	The Directors intend to declare a fully franked final dividend of 5.5 cents per share for FY2007 equivalent to a fully franked annualised yield of 5% based on the Offer Price. والربيدة للمناسبة The Directors can give no assurance as to the extent or timing of dividends, nor the level of franking of dividends. Also have the first for	Section 7.12
When will dividends on the Shares be paid?	Dividends, to the extent they are paid, are expected to be payable, in arrears, for half yearly periods ending 31 December and 30 June, commencing with the period ending 30 June 2007. Anticipated dividends are expected to be paid in April and October.	Section 7.12
Will there be a dividend plan in connection with the Offer?	Νo.	Not applicable -
is there any commission payable to financial advisers?	Under the Underwriting Agreement, FlexiGroup will pay the Joint. Lead Managers an underwriting fee of 2.25% of the gross proceeds raised under the Offer and an incentive fee up to 0.75% of the gross proceeds of the Offer, paid at the sole discretion of FlexiGroup.	Section 10.7.1
	The Joint Lead Managers may pay a fee to brokers out of their own fees.	Section 10.7.1

TOPIC	SUMMARY	where to find more INFORMATION
What are the taxation implications of mvesting in the Shares?	a tha cann an Colorado (for the the algorithm and the action of the colorado for the theath of the color color The state and colorado for the action for a state of a material and the color that the same of the following f The taxation consequences of any investment in Shares or Options Section 10 will depend upon an investor's particular circumstances. Applicants should obtain their own tax advice prior to investing. an di Barat, Kabupatén Bangaré Kabupatèn Palau Kabupatèn Jawa Ser
Where can I find more information?	an na karawanan masa By speaking to your accountant, stockbroker or other setting a No professional adviser. And the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of t
	For Australian residents only, by calling the FlexiGroup Share Offer Information Line on 1800 881 432
	For Australian residents only, by visiting the FlexiGroup Share Offer product website at www.flexirent.com. en jaar van die Kaap II van die Kaap. Geboorte van die Groot van die Groot van die Groot van die Groot van die Groot van die Groot van die Groot van Geboorte van die Groot van die Groot van die Groot van die Groot van die
Who are the advisers to the Offer?	Section 10.11 e da Chaile () Media () Media () the Offer, production is always a result of re estados (Martin Permitianos de Permitianos de P
	Mallesons Stephen Jaques is the Australian legal adviser in connection with the Offer.
	PricewaterhouseCoopers Securities Ltd has prepared the Securities Investigating Accountant's Report on Historical and Forecast Financial Information. a a gu gu dhean ann an ceann an chuid an chuid an chuid an chuid an chuid an chuid an chuid an chuid an chuid Tagairtean an chuid ann an chuid an chuid an chuid an chuid an chuid an chuid an chuid an chuid an chuid an ch i salah s
	For further contact details, refer to the Corporate Directory. [1999] Corporate Directory The State 1947 пÚ. $\sim$ $\sim$ $\sim$ , $\sim$ , $\sim$ 76 N.Y ÷. say. $\rho \sim \rho^{-1/3}$ $\sim$ , $\sim$ $\sim$ $\sim$ $\sim$ Ч. $\alpha = 0.1$ $\epsilon$ ( $\gamma\gamma_{\rm{max}}$ ) and $\gamma\gamma_{\rm{max}}$ $\gamma_{\alpha_1}$ $\sim$ . ALCOHOL: a capital Techni ma tala State in Serge ing Kilography Contract in sa b i i Santana. Kabupaten Santana Santana Santana di Santana di Santana. Â. n e f $\label{eq:1} \frac{\partial \phi_{\alpha\beta}(\mathbf{x})}{\partial \phi_{\alpha\beta}(\mathbf{x})},$ المعارف والمرارة Paul the country of residents. $\alpha$ , $\alpha$ , $\alpha$ Singa ya $\frac{1}{2} \sum_{i=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=$ $\sim$ No. 6 n, P g aan leis ta est eg tit $\sim 10^{-10}$ ge ty H. $\gamma_{\rm{max}}$ . and the same of the control of the control of the control of the control of the control of the control of the Second of the control of the control of the control of the control of the control of the control of the control $\gamma_{\alpha} \gamma_{\alpha} + \gamma_{\alpha} + \gamma_{\alpha} \gamma_{\alpha} \gamma_{\alpha}$ . $\mathbb{R}{\geq 0}$ $\tau{\rm{max}} \approx 0.222$ of Sales المتحدثين $\mathcal{C}{\mathbf{a}}$ en beskrig i en gjennig en eg en bli is esserent SALE Robert Committee ing pa $\mathcal{V}{\mathcal{A}}(s) \leq \mathcal{V}{\mathcal{A}}(s) \leq \mathcal{V}{\mathcal{A}}(s) \leq \mathcal{V}{\mathcal{A}}(s) \leq \mathcal{V}{\mathcal{A}}(s) \leq s$ $\begin{aligned} \mathcal{S}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}}}}}}}}}}}}\mathcal{F}}{\mathcal{G}{\mathcal{G}{\mathcal{G}{\mathcal{G}}}}}}}} \end{aligned}$ magaala Sidoo $\gamma{\rm{eq}}$ $\gamma_{\rm{eq}}$ $\gamma_{\rm{eq}}$ $\left\langle \cdot,\cdot\right\rangle {G{\mathcal{L}{\mathcal{L}}}}$ the Motor Straight and the second complete section of $\sigma$ , $\sigma{\rm{max}}$ $\label{eq:1} \left\langle \left\langle \psi_{\alpha} \right\rangle \right\rangle_{\alpha} = \left\langle \left\langle \psi_{\alpha} \right\rangle \right\rangle_{\alpha} = \left\langle \psi_{\alpha} \right\rangle_{\alpha}$ $\tau$ (eq. ( )). $\mathcal{A}(\mathcal{D}1)$ is defined as $\mathcal{O}(\mathcal{O}{\mathcal{M}}(\mathcal{H}))$ and the Marine and the theory de la filma de la companya de la companya de la companya de la companya de la companya de la companya de la co La filma de la companya de la companya de la companya de la companya de la companya de la companya de la compa $\mathcal{P}^{\text{c}}{\text{c}}(\mathcal{A})$ NG. The Common and the state and the state and the state of the state of the state of the state of the $\zeta \geq 0$ a de la participa de la participa de la participa de la participa de la participa de la participa de la partic La participa de la participa de la participa de la participa de la participa de la participa de la participa d $\sum{i=1}^n \gamma_{i+1}$ , and then are considered to the constraint of the constant the contract of the contract $\label{eq:1} \mathcal{F}^{(n)}(x) = \mathcal{F}^{(n)}(x) = \mathcal{F}^{(n)}(x) = \mathcal{F}^{(n)}(x) = \mathcal{F}^{(n)}(x)$ $\alpha$ . istori $\alpha_{\rm{H}}$ , $\alpha_{\rm{H}}$ $\mathcal{A}\mathcal{A}$ , $\mathcal{A}\mathcal{A}$ $\mathcal{A}\mathbf{a}$ . $\mathcal{A}\mathbf{a}$ $\sim$ $\sim$ $\lambda_{\rm{B}}$ , $\lambda_{\rm{B}}$ $\mathcal{A}\mathcal{A}$ . As $\mathcal{A}\mathbf{a}=\mathbf{0}$ A11 A.C. $\mathcal{H}_{\mathbf{r},\mathbf{r}}$ $\sim$ ALCOHOL: THE a mar	Territori del in albuman ina ng ng Person $\gamma_{\rm c} \rightarrow$ 为了 计保存 N. . a juga kecama $\epsilon$ , $\epsilon_{\rm max}$ , $\epsilon$ Art Tale 日本・九つか $\sim 10^6$ ha a $\sim$ $\sim$ $\alpha \rightarrow \alpha$ ing. the magnesium Marka Collagh Colla ALC: YES $\sim$ Carlo Marc na an $\mathbb{R}^n \times \mathbb{R}{\geq 1}$ $\zeta_1$ and $\zeta_2$ $\sim$ $\sim$ Programme in the $\label{eq:1} \zeta{\alpha} \rightarrow e^{-\gamma \alpha} \frac{\zeta_{\alpha}}{\zeta_{\alpha}} \gamma_{\alpha} \gamma_{\alpha} \gamma_{\alpha} + \zeta_{\alpha} \gamma_{\alpha} \gamma_{\alpha}$ and the fact escretched ad $\mathcal{S}(\mathcal{S}n)$ Posta. i, su ta ma $\label{eq:1} \begin{array}{l} \gamma{\alpha_1\cdots\alpha_{n-1}} \,, \qquad \qquad \ \gamma_{\alpha_1\cdots\alpha_{n-1}} \,, \qquad \qquad \ \end{array}$ Tu, $\label{eq:1} \frac{\sum_{i=1}^n \sum_{j=1}^n \alpha_{ij}}{\sum_{i=1}^n \alpha_{ij}}$ $\sim$ Contract Second St $\sim$ n Daoine a e espe

3.1 Datable of the Offer

This Prospectus invites investors to apply for a total of 132,261,048 Shares, being offered for issue by the Company, to raise cash proceeds of approximately \$264.5 million. All Shares are being offered at the Offer Price of \$2.00 per Share (except for Shares under the Employee Gift Offer which are issued at no cost to the Employee Offer Applicants).

The Broker Firm Offer and the Institutional Offer have been fully underwritten by the Joint Lead Managers, Goldman Sachs JBWere and UBS (see Section 3.6 and Section 10.7.1).

At the completion of the Offer the Company will have 217,500,000 Shares on issue. The Shares issued under the Broker Firm Offer, the Reserved Offer, the institutional Offer and the Employee Gift Offer will represent approximately 60.8% of the Company's issued capital. The remaining 39.2% will be held by the Existing Shareholders, Directors. Dhawan Trust and certain members of segior management of Flexirent Holdings including as a result of the arrangements relating to the Company's acquisition of Flexirent Holdings as summarised in Section 10.4.

The Company is also offering 13,050,000 Options to certain members of senior management under the Option Offer.

3.2 Pursose of the Offer

A purpose of the Offer is to provide funding to enable the Company to acquire the shares in Flexirent Holdings. The Offer will also:

• Provide Existing Shareholders with a mechanism to realise part of their existing investment in Flexirent Holdings;
• Provide FlexiGroup with access to capital markets;
• Continue to raise the public profile of FlexiGroup, its brands, products and business; and
• Provide an opportunity for certain members of senior management of Flexirent Holdings, Eligible Employees and Reserved Offer Applicants to participate in the ownership of the Company.

3.3 Use of Proceeds

The funds raised under the Offer are intended to be used as follows:

Total use		Total source
Fees and expenses of the Offer	81	Reinvestment of Proceeds 2	70 S
Existing Shareholders
of shares in Flexirent Holdings from the
Consideration payable for the acquisition.	426.9	Cash proceeds under the Offer 3	264.5
登海形勢	S MILLION	综合経験の日	G MM.LION

Part of the cash proceeds payable to the Existing Shareholders will be used by them to make the payment to Harvey Norman described in Section 10.7.2, and also for the cancellation of options and long term incentive entitlements (see Section 10.4.2 and Section 10.4.3 for further details) and underwriting fees to the Joint Lead Managers.

The Company's costs of the Offer are estimated to be \$8.1 million, the majority of which are deductible for income tax purposes over a period of five years.

Following the completion of the Offer, the Directors believe that the Company will have sufficient working capital from its operations and existing funding sources to fund its stated business objectives.

128,761,048 Shares are available, in aggregate, under the Broker Firm Offer, the Employee Gift Offer and Institutional Offer, 3,500,000 Shares have been set aside for the Reserved Offer. In total, this will raise cash proceeds of \$264.5 million.

Notes:

^1. Assumes the Reserved Offer is fully subscribed. See Section 3.8, Section 10.4.1 and Section 10.7.1 for further details.

^{2. 85,238,952} Shares will be issued to Existing Shareholders, Directors and/or their associates and certain members of senior management of Flexirent Holdings under the Offer, as set out in Section 10.4.

Details of the Offer The Theorem

3.4 Ownership Stracture

The ownership structure of FlexiGroup, immediately prior to and at completion of the Offer, is summarised below:

	ORE COVERTS		at completion of the opers
	% ownership of shares	SHARES IN	-% ownership of shares
	BW FLEXBERENY HOLDBNGS	flexignoup limited	- Plexigroup Livitet
Eighth SR3 (Andrew Abercrombie) 3	79 34% .	64,651,875-65,228,250	29.73-29.99%
Viewłove (David Berkman) .	19 RA%	0.514.899	13%
DeLano Trust (John DeLano)	-33%	' 880 810	32%
Other Directors 4		2 841.	-31%
Management		4.350.319	በበ%
New Shareholders 3		131,684,673-132,261,048	60.55-60.81%
Tota ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,		217,500,000	0.00%

All Shares will rank equally in all respects. Further details on the ownership structure are set out in Section 10.4.

3.6 Ceatow

The Existing Shareholders and Paul McMahon have entered into escrow deeds with the Company under which they will be restricted from selling their Shares until two Business Days after the date on which the Company announces to ASX its results for FY2007.

Furthermore, it is the intention of Andrew Abercrombie and his interests that following the release of their Shares. from these escrow arrangements, they will sell no more than 33% of their shareholding (based on the number of Shares held at the completion of the Offer) per annum, commencing in FY2008, unless the Board approves otherwise.

Dhawan Trust has entered into escrow deeds with the Company restricting it from selling 379,515 Shares until two Business Days after the date on which the Company announces to ASX its results for FY2007 and from selling a further 353,049 Shares until two Business Days after the date on which the Company announces to ASX its results for FY2010.

Margaret Jackson and R John Skippen and/or their associates have entered into escrow deeds with the Company restricting them from selling their Shares antil two Business Days after the date on which the Company announces to ASX its results for FY2010.

Participants in the long term incentive plans of the Existing Group have entered into escrow deeds with the Company restricting them from selling 50% of their escrowed Shares antil 12 months after their issue and from selling the remaining 50% of their escrowed Shares until 24 months after their issue⁶.

Shares subject to escrow will represent approximately 38.5% of the Shares upon completion of the Offer. See Section 10.7.4 for further details of the escrow arrangements.

Notes:

• Chawan Trust is a bolder of an equity participation entitlement in Flexirent Holdings. This is further detailed in Section 10.4.2.
• Chawan Trust and certain senior executives and sales executives hold performance options or are participants in long term incentive plans relating to Flexirent Holdings and/or Flexirent Capital. This is further detailed in Section 10.4.
• $\mathbb{R}^+$ Shares held in FlexiGroup and percentage ownership vary due to the extent of allocations to Reserved Offer Applicants under, and the sub-underwriting arrangements between Eighth SRJ and the Underwritters in relation to, the Reserved Offer. See Section 3.8, Section 10.4.1 and Section 10.7.1 for further details.
• Other Directors refers to Margaret Jackson, R John Skippen and Rajeev Dhawan and/or their associates. See Section 10.6.1 for for their details.
• Certain senior executives and sales executives are participants in long-term incentive plans relating to Flexirent Holdings and/or Flexirent Capital. This is further detailed in Section 10.4.

$21$

3.6 Stracture of the Offac

The Offer comprises:

• A Broker Firm Offer open to Retail Investors who have received a firm allocation from their Broker;
• A Reserved Offer, open to certain retail partners of FlexiGroup and Eligible Employees;
• An Employee Gift Offer, allowing Eligible Employees to apply for the nearest number of whole Shares to the value of \$1,000 (rounded down) at the Offer Price at no cost to the employee; and
• An Institutional Offer open to certain Australian and international (non-US) Institutional Investors.

Shares will also be issued under the Offer to Existing Shareholders, certain Directors, Dhawan Trust and certain members of senior management of Flexirent Holdings in connection with the arrangements for the purchase of the Existing Group.

The Offer also comprises an offer of Options under the Option Offer.

There is no general public offer of Shares or Options under this Prospectus.

128,761,048 Shares are available, in aggregate, under the Broker Firm Offer, the Employee Gift Offer and the Institutional Offer, 3,500,000 Shares have been set aside for the Reserved Offer. In addition, 85,238,952 Shares will be issued under the Offer to Existing Shareholders, certain Directors and/or their associates, Dhawan Trust and certain members of senior management of Flexirent Holdings in connection with the acquisition of Flexirent Holdings (see Section 10.4).

The Offer of Shares under the Broker Firm Offer and Institutional Offer is fully underwritten by the Joint Lead Managers. Eighth SRJ has agreed to subscribe for Shares forming part of the Reserved Offer which are not taken up by retail partners of FlexiGroup and Eligible Employees under the Reserved Offer in accordance with the underwriting arrangements set out in Section 3.8 and Section 10.7.1. See Section 3.8 for further details.

3.7 Broker Firm Offer

The Broker Firm Offer is only open to Retail Investors who are resident in Australia and who have received a firm allocation from their Broker. Where an Applicant has been offered a firm allocation by a Broker, they will be treated as a Broker Firm Applicant in respect of that allocation.

If you participate in the Broker Firm Offer, your Broker will be responsible for easuring that your Application Form and Application Monies are submitted before the date the Broker Firm Offer closes, being at 5,00pm AEDT on 7 December 2006. The Company and the Joint Lead Managers reserve the right to vary the Closing Date of the Broker Firm Offer without notice. The Company and the Joint Lead Managers take no responsibility for any acts or emissions by your Broker in connection with your Application or Application Monies.

It is a matter for the Brokers how they allocate firm Shares amongst their retail clients. However, the Joint Lead Managers and the Company reserve the right to aggregate any Applications under the Broker Firm Offer which they believe may be multiple Applications from the same person.

3.8 Nacarvad Offer

The Reserved Offer is only open to Reserved Offer Applicants (certain retail partners of FlexiGroup and Eligible Employees) as determined by the Company, All valid Applications under the Reserved Offer must be received by 5.00pm AED? on 15 December 2006. The Company and the Joint Lead Managers reserve the right to vary the Closing Date of the Reserved Offer without notice. There is no quarantee any applicant will receive any or all of the amount of shares applied for.

Under the Reserved Offer, 3,500,000 Shares have been set aside for which Reserved Offer Applicants may apply at the Offer Price.

Applications under the Reserved Offer must be for a minimum of 500 Shares. Applications for more than 500 Shares must be in multiples of 25 Shares.

3.9 Employee Gift Offer

All Eligible Employees, being employees of the Existing Group on 17 November 2006 are eligible to participate in the Employee Gift Offer. The Employee Gift Offer is made ander the Employee Share Acquisition Plan (ESAP), (see Section 10.5.1).

Details of the Offer The Theory

Under the Employee Gift Offer each Eligible Employee who accepts the Offer will be issued the nearest number of whole Shares to the value of \$1,000 (rounded down) at the Offer Price, at no cost to the employee. The acquisition of Shares under the Employee Gift Offer by Australian Eligible Employees will be free of income tax in accordance with current Australian tax legislation where a tax election is made. The acquisition of Shares under the Employee Gift Offer by Eligible Employees in New Zealand will be subject to income tax; however, any income tax attributable to the acquisition of Shares under the Employee Gift Offer will be reimbursed by the Company.

See Section 10.10.2.6 and Section 10.10.3 for summaries of Australian and New Zealand tax implications relating to the Employee Gift Offer respectively.

A personalised Application Form will be sent together with this Prospectus to Eligible Employees detailing the terms of the Employee Gift Offer.

3.10 Option Offer and Retail Partner Ontion Plan

Certain members of senior management of the Existing Group will be invited to participate in the Option Offer. The Option Offer is made under the Long Term Incentive Plan ("LTIP"), see Section 10.5.2.

The Board has discretion over the terms and conditions of any grant of Options made under the Option Offer, including (but not limited to) the number of Options to be granted, the exercise price, exercise period, and any exercise or vesting condition. The maximum number of Options that may be issued under the LTIP may not exceed 10% of the issued share capital of the Company from time to time. However, this figure may be increased to a maximum of 12% if no offers are made under the Retail Partners Option Plan described in Section 10.5.6.

A personalised Application Form will be sent together with this Prospectus to eligible members of management detailing the terms of the Option Offer.

It is the intention of the Company to offer options under the Retail Partners Option Plan to certain retail partners. described in Section 10.5.6. The terms and conditions of the options to be offered under such an offer and the timing of such an offer have yet to be determined and will be limited to a maximum of 2% of the issued share capital of the Company.

The total number of Options on issue under the above Plans will not exceed 12% of the issued capital of the Company from time to time.

3.11 How to Amily for Shares

Section 3.11 describes how to apply for Shares under the Broker Firm Offer, Reserved Offer and Employee Gift Offer and Options under the Option Offer. Application procedures for Institutional Investors will be advised by the Joint Lead Managers.

You should read this Prospectus in its entirety before deciding to complete and lodge an Application Form.

3.11.1 Application Form

APPLICANTS	АРРЕКСАТЕЗЯ РОДА	LODGEMENT	ALLOCATION
Broker Firm Offer	Please contact your Broker	Lodge your Application Form and Application Monies with the Broker from which you received a firm allocation, in accordance with that Broker's directions	Your Broker allocation of Shares at the Offer Price
Reserved Offer	Personalised blue Application Form	Lodge your Application Form and Application Monies at the address set out on page 35. You must apply for a minimum of 500 Shares and in multiples of 25 Shares thereafter	Shares at the Offer Price, allocation of which is subject to the discretion of the Company in consultation with the Joint Lead Managers
Employee Gift Offer	Personalised grey Application Form	Lodge your Application Form at the address set out on page 35	The nearest number of whole Shares to the value of \$1,000 of Shares (rounded down) at the Offer Price, at no cost to the employee
Option Offer	Personalised Application Form	Lodge your Application Form at the address set out on your personalised Application Form	The aumber of Options set out on your personalised Application Form

If you have received a firm allocation of shares from your Broker, you should obtain a copy of this Prospectus from that Broker and apply for Shares as directed by your Broker. There is also an electronic Prospectus available from FlexiGroup's website www.flexirent.com.

If you have received a personalised Application Form inviting you to participate in the Reserved Offer you should lodge your Application Form at the address set out on page 35 by 15 December 2006.

t you received a personalised Application Form inviting you to participate in the Employee Gift Offer, you should lodge your Application Form at the address set out on page 35 by 15 December 2006.

If you have received a personalised Application Form inviting you to participate in the Option Offer, you should lodge your Application Form at the address set out on your personalised Application Form by 15 December 2006.

The Company reserves the right to reject any Application Form which is not correctly completed or which is submitted by a person whom they believe to be an ineligible Applicant, or to waive or correct any errors made by an Applicant is completing an Application Form.

3.11.2 Application Monies

Application Forms must be accompanied by cheque(s) or money order(s) in Australian currency, drawn on a bankauthorised to conduct banking business in Australia, and crossed "Not Negotiable".

For Applicants under the Broker Firm Offer, cheques must be made payable in accordance with the directions of the Broker from which you received a firm allocation.

For Applicants under the Reserved Offer, cheques must be made payable to "FlexiGroup Limited - Share Offer Account".

Applicants must not make payment by way of cash. No receipts will be issued. No interest will be paid on Application Monies.

Details of the Offer Community

Applicants should ensure that sufficient funds are held in the relevant account(s) to cover your cheque. If the amount of your cheque(s) for Application Monies (or the amount for which those cheque(s) clear in time for allocation) is insufficient to pay for the amount you have applied for in your Application Form, you may be taken to have applied for such lesser amount as your cleared Application Monies will pay for land to have specified that amount in your Application Form), or your Application may be rejected.

3.11.3 Lodgement

For Applicants under the Reserved Offer and Employee Gift Offer, return your Application Form and (where applicable) cheque(s) or money order(s) to one of the following addresses:

By mail to:	By hand delivery to:
Link Market Services Limited	Link Market Services Limited
FlexiGroup Share Offer	ElexiGroup Share Offer
Locked Bag A14	Leve! 12, 680 George Street
Sydney South NSW 1235	ESydney NSW 2000
Australia	Australia
	(do not use this address for mailing purposes)

Do not return Application Forms directly to the Company (unless otherwise stated).

Applicants under the Broker Firm Offer must lodge their Application Form and Application Monies in accordance with their Broker's directions.

All Application Forms and Application Monies under the Reserved Offer must be received by the Share Registry no later than 5.00pm (AEDT) on 15 December 2006.

All Application Forms under the Employee Gift Offer must be received by the Share Registry no later than 5.00pm (AEDT) on 15 December 2006.

All Application Forms under the Option Offer must be received by the Company no later than 5.00pm (AEDT). on 15 December 2006.

Applicants are encouraged to submit their Applications as soon as possible, as the Offer (or any part of the Offer) may be closed early without prior notice.

3.12 Nefunds and Dealings with Amilication Monles

Application Monies will be held in trust for Applicants in a bank account established solely for that purpose until the issue of the Shares.

An Application may be accepted in respect of the full amount, or any amount less than that specified in the Application Form, without further notice to the Applicant. Acceptance of an Application will give rise to a binding contract with acceptance to take place after the quotation of Shares on ASX.

Once the Shares have been issued, the Application Monies will be paid to the Company in accordance with this Prospectus.

Applicants will receive a refund of all or part of their Application Monies (as applicable) if:

• Their Application is rejected or accepted in part only;
• The Offer is withdrawn; or
• ASX does not admit the Company to the official list of ASX.

No interest will be paid on any refunded Application Monies or amounts. The Company will receive any interest earned on Application Monies.

3.13 Institutional Office

The Company is inviting certain Australian and international (non-US) institutional investors to apply for Shares under the institutional Offer. Application procedures for Institutional Investors will be advised by the Joint Lead Managers.

Any Shares issued under the Institutional Offer will be issued under this Prospectus.

3.14 Allocation Policy

The policy for the allocation of Shares to Applicants is a complex matter that will be determined having regard to achieving a balance of a number of factors, including but not limited to:

• Number of Shares applied for:
• Overall level of demand under the Broker Firm Offer and the Institutional Offer; $\ddot{ }$
• Desire to establish a wide spread of Institutional Investors and Retail Investors: and
• Desire for an active and orderly secondary market.

A pool of 3.5 million Shares has been set aside exclusively for the Reserved Offer.

The Company and the Joint Lead Managers reserve the right to scale back Applications under the Reserved Offer, if total Applications under the Reserved Offer exceed \$7 million. The Company, in consultation with the Joint Lead Manager, has absolute discretion regarding the allocation of Shares within the Reserved Offer.

The Joint Lead Managers, in consultation with the Company, have absolute discretion regarding the allocation of Shares between the Broker Firm Offer and the Institutional Offer, having regard to the allocation policy.

There is no assurance that Applicants under the Reserved Offer and Institutional Offer will be allocated any Shares under the Offer

It will be a matter for the Brokers as to how they allocate Shares among their retail clients in the Broker Firm Offer. It is the sole responsibility of the Brokers to ensure that their clients with a firm Share allocation receive their Shares.

Employee Gift Offer Applicants who apply for Shares correctly, are guaranteed an allocation of 500 Shares.

The Joint Lead Managers, in consultation with the Company, will determine the allocation of Shares among Applicants under the Institutional Offer. The Joint Lead Managers, in consultation with the Company, have absolute discretion regarding the basis of allocation of Shares under the Institutional Offer and there is no assurance that any Applicant under the Institutional Offer will be allocated all or any of the Shares for which they have applied.

The Company expects to announce the basis of allocation under the Institutional Offer and Broker Firm Offer on or about 12 December 2006. This information will be advertised in The Australian and Australian Financial Review and in other national and major metropolitan newspapers in Australia, on the same day.

3.16 Early Close or Withdrawal of the Offer

The Company and the Joint Lead Managers reserve the right to close the Offer (or any part of the Offer) early or withdraw the Offer (or any part of the Offer). If the Offer does not proceed, Application Monies will be refunded, without interest, to Applicants in accordance with the Corporations Act.

3.16 ASX Admission and Ountation

Within seven days after the Prospectus Date, the Company will apply for admission to the official list of ASX and quotation of the Shares on ASX. If the Company does not make such an application within seven days of the Prospectus Date, or if the Company has not been admitted to the official list of ASX within three months of the Prospectus Date (or any later date approved by ASIC), any issue of Shares as a consequence of the Offer will be void and all Application Monies will be refunded in full (without interest).

Details of the Offer Community

The fact that ASX may admit the Company to the official list of ASX and quote the Shares on ASX is not to be taken as an endorsement by ASX of the medts of the Shares or the Company.

If the Company is admitted to the official list of ASX, it is anticipated that the Company's ASX code will be FXL.

The Options will not be avoted on the ASX.

3.17 Tradims on ASK

It is expected that deferred settlement trading for Shares issued under the Broker Firm Offer and Institutional Offer will commence on 12 December 2006, with normal trading expected to commence on 15 December 2006.

It is expected that Shares issued under the Reserved Offer and Employee Gift Offer will commence trading on a pormal settlement basis on 29 December 2006.

It is expected that initial holding statements will be dispatched by standard post on:

• 14 December 2006 for the Broker Firm Offer and Institutional Offer; or
• 28 December 2006 for the Reserved Offer and Employee Gift Offer.

From 8.30am (AEDT) on 12 December 2006, it is expected that Applicants under the Broker Firm will be able to call the FlexiGroup Share Offer Information Line on 1800 881 432 (within Australia) or +61 2 8280 7927 (outside Australia), to find out the details of their allocation. Applicants under the Broker Firm Offer will also be able to confirm their allocation with their Broker.

From 8.30am (AEDT) on 23 December 2006, it is expected that Applicants under the Reserved Offer and Employee Gift Offer will be able to call the FlexiGroup Share Offer Information Line on 1800 881 432 (within Australia) or +61 2 8280 7927 (outside Australia), to find out the details of their allocation.

It is the responsibility of each Applicant to confirm their holding before trading in Shares. Applicants who sell Shares before they receive a holding statement do so at their own risk.

To the extent permitted by law, the Company, Share Registry and Joint Lead Managers disclaim all liability, whether in negagence or otherwise, to persons who sell Shares before receiving their initial holding statement, whether on the basis of a confirmation of allocation provided by any of them or by the FlexiGroup Share Offer Information Line or a Broker or otherwise.

3.18 Srokerace. Commission and Stamp Duty

No brokerage, commission or stamp duty is payable by Applicants for Shares. Investors who buy or sell Shares on or after listing may be subject to brokerage and other transaction costs. Under current legislation, there is no stamp duty payable in Australia on the sale or nurchase of Shares on ASX.

See Section 10.16 for details of the fees payable by the Company under the Offer.

3.19 CHESS and Nokling Statements

The Company will apply to participate in CHESS, and, in accordance with the Listing Rules and the ASTC Settlement Rules, will maintain an electronic issuer-sponsored sub-register and an electronic CHESS sub-register.

Following the allotment of Shares to successful Applicants. Shareholders will be sent an initial holding statement that sets out the number of Shares that have been allotted to them under the Offer.

This statement will also provide details of a Shareholder's HIN in the case of a holding on the CHESS sub-register, or SRN in the case of a holding on the issuer-sponsored sub-register. Shareholders will be required to quote their HIN or SRN, as appropriate, in all dealings with a Broker or the Share Registry.

Shareholders will receive subsequent statements only if there has been a change to their holding on the register and as otherwise required under the ASX Listing Rafes and the Corporations Act.

3.30 Taxation

The Australian taxation consequences of any investment in Shares will depend upon the investor's circumstances. It is the responsibility of each prospective investor to make their own enguiries concerning the taxation consequences of an investment in the Company. If you are in doubt as to the course you should follow, you should seek independent professional advice. See Section 10.10 for farther details.

3.21 Foreign Selling Restrictions

No action has been taken to register or qualify this Prospectus, the Shares or the Offer or otherwise permit a public offering of the Shares in any jurisdiction outside Australia. This Prospectus does not constitute an offer or an invitation in any jurisdiction where, or to any person to whom, such an offer or invitation would be unlawful.

The Shares have not been, and the Shares will not be, registered under the US Securities Act of 1933, as amended ("US Securities Act") and the Shares may not be offered or sold in the Upited States, or to, or for the account or benefit of, US persons (as defined in Rule 902 under the US Securities Act) other than in reliance upon one or more exemptions provided for under the US Securities Act. The Shares may only be resold or transferred if registered under the US Securities Act or pursuant to an exemption from such registration under the US Securities Act and in compliance with state securities laws. The Issuer is under no obligation and has no intention to register the Shares in the United States.

See Section 10.18 for additional information.

3.22 Cnaulries

If you are an Australian resident and require assistance to complete an Application Form or additional copies of this Prospectus, you should contact the FlexiGroup Share Offer Information Line on 1800 881 432. The FlexiGroup Share Offer Information Line will be open on Business Days from 8.30am (AEDT) to 5.30pm (AEDT) gntil 28 December 2006.

If you require advice as to whether the Offer is a suitable investment for you, you should seek independent professional advice

4.1 harmalundun

FlexiGroup markets and sells small basiness and consumer lease and finance products in retailers at the point-of-sale and directly to its customer base in Australia and New Zealand.

This Section outlines:

• The retail point-of-sale finance markets in Australia and New Zealand (see Section 4.2);
• The size and structure of the retail IT equipment and electrical appliance markets. IT equipment and electrical appliances form the enderlying assets for FlexiGroup's traditional lease and finance products (see Section 4.3 and Section 4.4);
• The personal lending market in Australia which is a key growth opportunity for FlexiGroup (see Section 4.5); and
• The regulation of FlexiGroup's industry (see Section 4.6).

4.2 Retail Point-of-Sale Finance Markets

Retail point-of-sale finance refers to credit facilities and other financing methods available to customers acquiring goods or services at the time of their initial purchase of these goods and services. The retail point-of-sale payment alternatives can be broadly segmented into four categories:

• Direct leasing/hire purchase options includes hire purchase, lease and other finance for a range of electrical appliances and IT equipment provided directly or through retailers. These include FlexiGroup, RentSmart, Technorent and CIT;
• Competing retail point-of-sale finance options includes credit cards and other point-of-sale financing such as interest-free loans, store cards and instalment loans. Operators in this field include GE Money and HSBC, as well as retailers including David Jones:
• Original equipment manufacturer finance includes finance provided by IBM Global Financing, HP Financial Services and Dell Financial Services/CIT, whose products are generally only available when purchasing equipment directly from the relevant manufacturers; and
• Other point-of-sale payment options includes cash, money orders and cheques.

4.3 Retail IT Equipment Market

The retail IT equipment market in Australia and New Zealand encompasses desktop personal compaters, laptops, software, storage media and computer peripherals.

Industry sales revenue in the retail IT equipment market in Australia was estimated at approximately \$3.6 billion for FY2005. Between FY2001 and FY2005, the market grew at a compound annual growth rate of 5.8% (see Figure 3), underpinned by increased domestic computer usage and the introduction of new technology.

FIGURE 3: AUSTRALIAN RETAIL IT EQUIPMENT MARKET SIZE BY TOTAL SALES REVENUE (\$ BILLION)⁾

Source: (BISWorld Industry Report June 2006 - Computer and Software Retailing in Australia

FlexiGroup expects a similar growth rate to that experienced in the past five years in the retail IT equipment market over the medium term, it is anticipated that retail prices on IT equipment will fall, but this is expected to be offset by an increase in the total number of products sold.

traustry Querview

The majority of retail IT equipment sales in Australia are desktop computers and laptops, which have continued to increase in popularity due to portability and greater affordability, increased broadband penetration and new digital products (including iPods and digital cameras) have encouraged many customers to upgrade their IT equipment (see Figure 4).

PIGURE 4: AUSTRALIAN RETAIL IT EQUIPMENT PRODUCT SPLIT

FIGURE 5: AUSTRALIAN RETAIL IT EQUIPMENT MARKET SHARE

Source: IBiSWorld Industry Report June 2006 -- Computer and Software Retailing in Australia Source: IBISWorld Industry Report January 2004 - Computer and Software Retailing in Australia

The retail IT equipment market in Australia is relatively concentrated, with the top four retailers commanding approximately 75% market share and Harvey Norman, the market leader, holding approximately 40% market share (see Figure 5).

The retail IT equipment market in New Zealand is significantly concentrated with three farge retailers, namely Noel Leeming (84 stores), Dick Smith (64 stores) and Harvey Norman (22 stores).

4.4 Retall Electrical Appliance Market

The retail electrical appliance market in Australia and New Zealand encompasses a broad range of audio, video and telephone goods and domestic appliances including whitegoods such as fridges, freezers, microwaves and dishwashers.

Industry sales revenue in the retail electrical appliance market in Australia was estimated at approximately \$10.4 billion for FY2005. Between FY2001 and FY2005, the market grew at a compound annual growth rate of 10.9%, underpinned by the growth of digital entertainment (including digital TVs, DVDs, photographic equipment and associated accessories) (see Figure 6). The retail electrical appliance market in Australia is currently more than twice the size of the retail IT equipment market.

Note

$\lambda$ ¹

Reflects market share prior to the sale of Myer Department Stores by Myer. Six Myer wholly-owned Megamart stores were acquired by Harvey Norman in November 2006. The effect of these transactions is not included in the above chart.

42

FIGURE 6: AUSTRALIAN RETAIL ELECTRICAL APPLIANCE MARKET SIZE BY TOTAL SALES REVENUE (\$ BILLION)

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egma 22 O M iliu Auto u 1999999999984 -------------- 300000000000000000000000000000000000000 ,,,,,,,,,,,,,,,,, impoqni 20020 * CONTRACT 300088008 111112011111111111111111111111111111111 . 1 88888888 ***** --------------------------------------- 2002 Mannelli SELE And a second contract service services and	ALCOHOL ,,,,,,,,,,,,,,,,, e de la provincia de la provincia de la provincia de la provincia de la provincia de la provincia de la provincia Del provincia de la provincia de la provincia de la provincia de la provincia de la provincia de la provinci ,,,,,,,,,,,,, 10000100020 CONTRACTOR . Mamilk . . emm 1. --------------------------------------- ,,,,,,,,,,,,,,, amma mgilililililililigilili Communist . 52000000000000 * ,,,,,,, SALESMAN Programma A MANAGERIA ,,,,,,,,,,, . ,,,,,,,,,,,,,,,,,,,,,,,,,, 88888888 Communic Egy Maria Colonia de Conte	,,,,,,,,, CONTRACTOR magaaggilib. vombodininin. THURSEEL . ***** . the state and a
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Source: (BISWorld Industry Report May 2006 - Domestic Appliance (excluding Computer and Software) Retailing in Australia

FlexiGroup expects to grow at least in line with the growth of the retail electrical appliance market. It is anticipated that retail prices on electrical appliances will fall, but this is expected to be offset by an increase in the total number of products sold.

The retail electrical appliance market in Australia is relatively concentrated, with the top four retailers currently commanding over 50% market share (see Figure 8). Retravision and Harvey Norman are the market leaders with approximately 19% and 15% market shares respectively based on IBISWorld figures.

FIGURE 7: AUSTRALIAN RETAIL ELECTRICAL APPLIANCE PRODUCT SPLIT

FIGURE B: ALISTRALIAN RETAIL ELECTRICAL MARKET SHARE

Source: (BISWorld Industry Report May 2006 - Domestic Appliance (excluding Computer and Software) Retailing in Australia

According to IBISWorld, competition is also driving industry consolidation, with the larger retailers gaining market share at the expense of smaller retailers and independents.

As with the retail IT equipment market in New Zealand, the leading electrical appliance retailers are Noel Leeming, Dick Smith and Harvey Norman.

4.5 Parasmal Lasma

Broadly defined, the personal loans market in Australia includes all loans used for purposes other than housing. However, personal loans can be used to finance the purchase of goods and services such as home renovations or other household goods. As at 30 June 2005, the total outstanding balance on non-housing or personal loans tincluding credit card balances) originated by banks and credit card providers in Australia was over \$110 billion. Between FY2001 and FY2005, this amount grew at a compound annual growth rate of 15.1%, whilst personal loans grew at a compound annual growth rate of 14.2% and the credit card market grew at a compound annual growth rate of 17.5% (see Figure 9).

inewse.Voiversiers

FIGURE 9: AUSTRALIAN PERSONAL LOANS' AND CREDIT CARD BALANCES OUTSTANDING (\$ BILLION)

Source: Reserve Bank of Australia, C01 Credit Card Statistics and D06 Bank Lending Classified by Sector

4.6 Industry Regulation

FlexiGroup's operations are subject to laws and regulations, in particular, consumer credit laws in both Australia and New Zealand

An overview of the main laws and regulations applicable to the markets in which FlexiGroup operates in Australia and New Zealand is set out below. Further detail on these laws and requiations is contained in Section 10.8 (for Australia) and Section 10.9 (for New Zealand).

4.6.1 Australia

In Australia, FlexiGroup's consumer credit products are subject to the requirements of the Uniform Consumer Credit Code ("UCCC"). The UCCC and related legislation contain regulrements relevant to licensing, disclosure, procedures (including enforcement) and systems relating to the provision of consumer credit.

FlexiGroup's activities in Australia are also subject to the consumer protection provisions of the Trade Practices Act 1974 (Cth) and the various State and Territory Fair Trading Acts. FlexiGroup is also subject to various provisions of the Australian Securities and Investments Commission Act 2001 (Cth), the Contracts Review Act 1980 (NSW), secret commissions legislation and the Financial Transaction Reports Act 1998 (Cth).

FlexiGroup is regaired to comply with the Privacy Act 1988 (Cth) concerning personal information (including credit information) collected, used, stored and disclosed in Australia. The Privacy Act 1988 (Cth) also gives individuals the right to access personal information and to request correction of it. FlexiGroup must also comply with the Spam Act 2003 (Cth) and relevant telecommunications legislation, concerning the recording of telephone conversations.

Note

Personal lending for non-housing purposes by Banks - this excludes non-authorised deposit taking institutions such as FlexiGroup. As at June vear end.

4.6.2 New Zealand

In New Zealand, FlexiGroup's credit products are subject to the requirements of the Credit Contracts and Consumer Finance Act 2003 ("CCCF"), which regulates disclosure, fees and charges and the enforcement of credit contracts. The majority of the requirements under the CCCF apply only in respect of consumer contracts.

FlexiGroup's activities in New Zealand are also subject to the Fair Trading Act 1986 (covering both consumer and business customers), the Consumer Guarantees Act 1993, the Personal Property Securities Act 1999, and the Credit (Repossession) Act 1997 (which sets out rules that apply when a creditor takes possession of consumer goods under a security agreement).

FlexiGroup is also required to comply with the New Zealand Privacy Act 1993, which contains provisions promoting and protecting individual privacy.

5.1 Sushiess Overview

FlexiGroup is a leading provider of retail point-of-sale lease and rental finance in Australia and New Zealand. FlexiGroup built its core business around providing a lease finance solution for IT equipment, including desktop and laptop computers, computer peripherals and software. Since 2004, FlexiGroup has also provided lease finance products within the retail electrical appliance market in Australia and New Zealand for goods such as plasma TVs. audiovisual equipment, whitegoods and browngoods. More recently, FlexiGroup has begun to offer additional financial products, including loans to its active customer base.

FlexiGroup was founded in 1988 as a vendor finance company parteering with office equipment companies such as Mitsui, Ricoh and Toshiba. In 1995, FlexiGroup entered into its first distribution relationship with Harvey Norman, focusing on point-of-sale financing in Harvey Norman's retail (T equipment division, In 2004, FlexiGroup introduced Ezyway to diversify its product offering and expand into the electrical appliance market.

FlexiGroup has a long-standing contractual relationship with Harvey Norman giving it priority access rights to provide rental and leasing solutions for IT equipment and electrical appliances sold in Harvey Norman stores (as summarised in Section 10.7.2). During the current financial year. FlexiGroup entered into a five year priority access rights contractual relationship with Noel Leeming, a major New Zealand retailer.

FlexiGroup has expanded its distribution network since 1995 to approximately 11,000 third-party salespeople representing almost 4,400 retailers. In addition to Harvey Norman and Noel Leeming, FlexiGroup has distribution arrangements with other retailers including Apple, Notebooks R Us and A&R Computers.

FlexiGroup's operating performance has been characterised by strong growth as it has entered into distribution arrangements with additional retailers, introduced new products and expanded into new geographic markets. The Company is forecasting Total Net Income of \$101.0 million and NPAT of \$27.5 million on a pro-forma basis. for FY2007.

FlexiGroup's management team is supported by a workforce of approximately 260 full-time employees.

5.2 PesiGrous's Product Range

FlexiGroup provides a range of lease and other finance products to small businesses and consumers across Australia and New Zealand. FlexiGroup retains ownership of the equipment which is the subject of all lease, rental and hire purchase' agreements entered into by FlexiGroup. The customer is responsible for keeping the equipment in good working order and assames the risk for any loss or damage to the equipment.

	IABLE 2: SUMMARY OF FLEXIGROUP'S PRODUCTS
product category	NAME OF PRODUCE	DESCRIPTION	TARGET CHSTOMERS	TERM (540037103)	DEAL SIZE
IT leasing.	Flexirent	Operating lease 1	Small business and consumer	$12 - 48$	\$500 to \$20,000
IT leasing.	FlexiOwn 2	Hire porchase	Small business and consumer in NZ	36–60	NZ\$500 to NZ\$20,000
Electrical leasing.	Ezvway	Operating lease with "Keep" or "Swap" feature 1,3	Mainly consumer	24–60	\$500 to \$20,000
Lending	Personal/HandyŁoan i	Unsecured loan	Small business and consumer (planned)	$12 - 60$	$$1,000$ to \$10,000
IT leasing.	Flexiline	Master lease drawdown facility	Small business	24–60	Over \$20,000
Other leasing	Minilease	Finance lease	Small business	36–60	\$1,500 to \$20,000
Equipment protection	Protect/ Protect Platinum	Replaces the customer's need to insure/ debt waiver product	Small business and consumer	Equal to term of lease	% of monthly payment

Source: FlexiGroup

FlexiGroup markets its financial products under maltiple brands through different retall partners.

Since 2004, FlexiGroup has actively sought to diversify its revenue sources via the introduction of new products such as Ezyway which is offered to finance the perchase of electrical appliances. Figure 10 highlights the evolution of FlexiGroup's business mix by category since FY2004 by percentage of the total annual value of deals. Total annual value of deals is the aggregate value of all deals settled by category in that year.

FIGURE 10: BUSINESS MIX BY CATEGORY (% OF TOTAL ANNUAL VALUE OF DEALS)*

Source: FlexiGroup

Notes:

• Treated as a direct finance lease for accounting purposes as substantially all the risks and benefits incidental to ownership of the $\gamma_{\perp}$ leased asset are transferred by the lessor to the lessee.
• $\overline{2}$ . Available to customers in New Zealand only.

3 This feature allows customers to keep their electrical equipment at the end of the lease contract by making one additional rental payment ("Keep"), or upgrade their electrical equipment any time during the last six months of their contract by entering into a new contract and acquiring a new asset of equal or greater value to their original equipment, and in return for which FlexiGroup will forgive the remaining rentals payable under the original contract ("Swap").

1. Electrical appliance category also includes Minilease product.

S.3 Susiness Model

FlexiGroup's strength is as a sales and marketing-driven business which encourages and supports its retail partners to introduce its products at the retail point-of-sale.

The business model has evolved as FlexiGroup has focused on introducing new financial products and by responding to the customers' intention to purchase new IT equipment/electrical appliances at the end of the term of their contract.

The business model has allowed FlexiGroup to attract approximately 65,000 new customers in FY2006 and 26,000 repeat purchases from customers in FY2006.

5.3.1 How FlexiGroup Generates Revenue

FlexiGroup generates revenue at multiple stages of the customer lifecycle as illustrated in Figure 11.

FIGURE 11: FLEXIGROUP'S THREE STAGE BUSINESS MODEL

Source: FlexiGroup

Figure 12 illustrates the transaction flow for a traditional leasing product (such as Flexirent) introduced to a customer by one of FlexiGroup's retail partners, it shows the transaction flow between the customer, the retailer, FlexiGroup and FlexiGroup's Funder at origination and throughout the term of the contract.

FIGURE 12: FLEXIGROUP'S TRANSACTION FLOW

Source: FlexiGroup

The FlexiGroup transaction flow illustrated by Figure 12 has the following main steps:

• Salesperson invites the customer at the retail point-of-sale to apply at the retail point-of-sale to use the selected IT equipment or electrical appliance which is purchased by FlexiGroup;
• Customer enters into a contract with FlexiGroup to use the IT equipment or electrical appliance purchased by FlexiGroup;
• FlexiGroup pays the retailer's invoice for, and acquires title to, the iT equipment or electrical appliance;
• Funder lends FlexiGroup an upfront amount (less the Loss Reserve Portion). The Loss Reserve Portion represents an amount set aside to cover potential future bad debts;
• Throughout the term of the contract, the customer makes monthly rental payments to FlexiGroup; and
• FlexiGroup passes the majority of those monthly rental payments through to the Funder to repay the loan from the Funder (see Section 5.7.1).

FlexiGroup's Funders generally lend to FlexiGroup on a present value methodology. This is where the present value of the future cash flow stream (payments of interest and principal) paid by the customer to FlexiGroup over the term of the contract is lent to FlexiGroup by the Funder at origination after deducting an amount for the Loss Reserve Portion. The Loss Reserve Portion is the amount set aside in relation to possible future bad debts. The present value funding methodology usually generates a cash flow for FlexiGroup that is in excess of the underlying cost of the asset that FlexiGroup must pay to the retail partner (as described in step 3 of Figure 12). See Section 5.7.1 for further details.

5.3.2 Customer Origination

FlexiGroup's products are offered to customers at the retail point-of-sale by the salespeople of its retail partners. FlexiGroup provides a range of services to both the retailer and the salesperson that are designed to provide the skills and motivation that enable them to perform at a high level.

With approximately 80 sales and support staff, FlexiGroup is able to provide both in-store sales and compliance training and training academies that not only cover the features and benefits of the FlexiGroup products but are designed to improve the general selling skills of the retailers' safespeople. This training is then supported by a comprehensive mystery shopping program that seeks to measure the effectiveness of the training and identify skill gaps for FlexiGroup to address.

FlexiGroup recognises the effort and success of its retail partners and salespeople through newsfetters, competitions, targets and various reward and performance incentive schemes at both a retailer and salesperson level.

Working in conjunction with its key retail partners, FlexiGroup functions as an outsourced marketing resource, by developing customer campaigns and advertising strategies. FlexiGroup provides the concept, artwork, and merchandise, and often contributes to the advertising costs.

For retail partners, FlexiGroup brings the benefits of:

• Increased sales by providing the customer with greater purchasing nower:
• Repeat customers responding to new offers by RexiGroup to finance the perchase of IT equipment and/or electrical appliances both during and at the end of the contract term;
• Improved skills and effectiveness of their safespeople through significant sales training and motivation provided by FlexiGroup:
• Rapid in-store approvals enabled by a fast, easy and convenient application process for FlexiGroup's products; and
• A rapid settlement process, improving eash flow for the retailer.

For customers, FlexiGroup brings the benefits of:

• Increased ability to acquire the goods they aspire to acquire due to the ability to spread payments for purchases over the term of the contract:
• Access to up-to-date technology and the ability to replace iT equipment and electrical appliances at the end-of-term:
• Operating lease-related tax effectiveness for those customers who use IT equipment or electrical appliances for work-related purposes; and
• Rapid in-store approvals enabled by a fast, easy and convenient application process for FlexiGroup's products

5.3.3 Cross-sell

By investing in understanding the needs of its customers, FlexiGroup has developed additional products and services that their customers require. These products include:

• Protect/Protect Platinum: Protect provides customers with a convenient and competitively priced alternative to equipment cover whilst Protect Platinum provides customers with additional debt waiver protection in circumstances where a customer's ability to repay is impacted. Both products are offered through FlexiGroup's call centre at the time a customer applies for a FlexiGroup product, with approximately 70%¹ of FlexiGroup's castomers selecting one of these options;
• Additional Assets ("Add-on"): FlexiGroup serveys its customer base to gain an enderstanding of what additional IT equipment and/or electrical appliances they may be interested in acquiring. FlexiGroup is then able to make targeted offers to these customers that enable them to acquire these additional assets; and
• Business and Personal Loans: FlexiGroup has begun to offer personal and business loans (e.g. HandyLoan) $\overline{a}$ directly to active customers.

Importantly, Add-on and loan products are offered to customers who have already demonstrated their credit quality to FlexiGroup. In addition, the cost associated with selling products to these customers is lower than the cost of selling products to new customers.

In FY2006, FlexiGroup generated approximately 13,000 Add-on and HandyLoan deals which equated to approximately 15% of annual deals settled and represented a significant improvement in the number of Add-on and HandyLoan deals settled over the previous two years.

Figure 13 shows the growth achieved in the number of deals settled for Add-ons and HandyLoans over the last three years to 30 June 2006.

FIGURE 13: CROSS-SELL - NUMBER OF CONTRACTS²

Source: FlexiGroup

• Notes
• Australia only and excludes customers taking out a loan product.
• Cross-sell contracts include add-on and loans in Australia only. $\overline{\mathcal{I}}$

5.3.4 End-of-term

FlexiGroup contacts customers towards the end of their contract term and offers a variety of options for the customer to choose from:

• Trade-up: enables a customer to update their IT equipment/electrical appliance and enter into a new contract; and
• Extend, Offer or Return: customers evaluate the usefulness of their equipment and elect to continue renting $\overline{a}$ ("Extend"), make an offer to purchase ("Offer"), or return it to FlexiGroup for disposal ("Return").

Approximately 25% of FlexiGroup's customers choose to update their IT equipment/electrical appliance by trading up. In FY2006, FlexiGroup generated approximately 13,000 trade-ups, a 56% increase over the last two years to 30 June 2006 (see Figure 14).

FIGURE 14: END-OF-TERM - NUMBER OF TRADE-UP DEALS SETTLED!

Source: FlexiGroup

The success of FlexiGroup's decision in 2004 to focus on developing new and existing products is reflected in Figure 15, which sets out the proportion of deals settled with new and active customers. The growth in the proportion of deals settled with active customers has been achieved through focusing on Cross-sell and Trade-ups.

FIGURE 15: CUSTOMER MIX BY TYPE (% OF TOTAL VALUE OF DEALS SETTLED)

® New Customers @ Existing Customers

Source: FlexiGroup

S.4 Distribution Champio

As at 30 June 2006, FlexiGroup had access to a distribution network of approximately 4,400 retailers encompassing approximately 11,000 sales people located in all states and territories of Australia and in New Zealand (see Figure 16).

FIGURE 16: FLEXIGROUP'S DISTRIBUTION CHANNELS

Source: FlexiGroup

FlexiGroup has offices in six cities in Australia and New Zealand that support its distribution network.

Table 3 provides a summary of FlexiGroup's key retall partner and distribution channels.

TABLE 3: KEY RETAIL PARTNER AND DISTRIBUTION CHANNELS

Betah partner/chansiel	DESCRIPTION
Harvey Norman	- FlexiGroup's largest retail partner by total annual value of deals settled - Reclades Harvey Norman, Domayne and Joyce Mayne brands - Large product range could create additional business opportunities for FlexiGroup See Section 10.7.2 for summary of agreement with Harvey Norman
Noel Leeming	A new relationship with the leading retailer in New Zealand which has 84 stores See Section 10.7.3 for summary of agreement with Noel Leeming
Key retailers	- Operating agreements (57 retail partners) and includes retailers such as Notebooks R Us and A&R Computer Services
Apple Centres	$\div$ Partnership with Apple Centres - Apple Centres on operating agreements
independent retailers	+ Large number of small and independent retailers
Direct Cross-sell to customer hase	- Supplementary and repeat business through Add-on and Trade-up deals with retail partners - Protect, Protect Platinum and loan products marketed directly to FlexiGroup's active customers

Source: FlexiGroup

$\lesssim \lesssim \epsilon_{\rm eq}$

Harvey Norman, as Australia's largest homeware and appliances retailer, is FlexiGroup's key retail partner, and originated approximately half of the value of deals settled in FY2006 (see Figure 17).

FIGURE 17: TOTAL VALUE OF DEALS BY SOURCE (FY2006)

a la

.
Istorija prista postaje prije E PlexiGroup's Existing Customers 29.3%. All and all all Other Retailers 20.1% si gir

Source: FlexiGroup

This excludes Flexiline. Source refers to originator of deal. For cross-sell and add-on products, deals are credited to "FlexiGroup's Existing customers".

S.S. Customans

FlexiGroup has developed a valuable customer database containing approximately 300,000 customer profiles and has approximately 196,000 active customers, up from approximately 140,000 in FY2004 (see Figure 18). This customer base provides significant potential for FlexiGroup to execute its cross-sell growth strategy (see Section 5.6).

FIGURE 18: NUMBER OF ACTIVE CUSTOMERS

Source: FlexiGroup

Customers are profiled by their payment history, credit score attributes and different key demographic characteristics isuch as age, home ownership, income and employment). This profile enables FlexiGroup to develop and market suitable products to its customer base.

S.O Growth Strategy

Since 2004, FlexiGroup's growth has been underpinned by diversification into existing and new asset categories. distribution channels and geographic markets. The key elements of FlexiGroup's growth strategy are outlined below:

Leveraging and transporting the FlexiGroup business model and product range into:

Existing and new asset categories.

• FlexiGroup introduced the Ezyway product in late 2004 to target the electrical appliance market in Australia and more recently New Zealand. Specifically, FlexiGroup is focused on continuing to increase growth of the Ezyway product in the electrical appliance market. This represents a significant opportunity for FlexiGroup and is a driver of the receivables portfolio growth forecast for FY2007; and
• The product features of Ezyway also provide an opportunity for FlexiGroup to expand across asset categories, such as golf clabs and other sporting and leisure equipment:

Existing and new distribution channels

• Recently, FlexiGroup entered into a contractual relationship with Noel Leeming, a leading New Zealand retailer, as a preferred point-of-sale finance provider. This highlights FlexiGroup's ability to leverage its business model into significant new distribution channels;
• FlexiGroup continues to develop new relationships with retailers as a result of the expansion of its product range: and
• Continuing to develop the capability of retail partners and their salespeople to offer FlexiGroup products with particular emphasis on training for those retailers and salespeople in the electrical appliance market;

• Existing and new geographic markets
• FlexiGroup expects growth in New Zealand due to its new arrangements with Noel Leeming and existing arrangements with Harvey Norman and a number of independent retail partners;
• As key retail partners broaden their geographic spread within Australia, FlexiGroup ensures it appropriately services these retail partners to benefit from this growth; and
• FlexiGroup plans to explore new geographic markets;

Extending its cross-sell competencies by leveraging the active customer base with:

• Adri-ans
• FlexiGroup's growth in Add-ons is underpinned by an in-depth understanding of its customers through its customer database and a broadening of the range of products available to cross-sell to active customers: and
• Business loans and personal loans
• FlexiGroup has recruited an experienced management team to grow the number of deals settled in relation to its (oan products, FlexiGroup's customer surveys have indicated that there is a high level of demand for such products; and

Leveraging FlexiGroup's existing operational platform and systems infrastructure to realise productivity and efficiency improvements; and

FlexiGroup will also assess acquisition opportunities as appropriate.

5.7 Funding and Nek Manacement

5.7.1 Fundina

FlexiGroup fands the acquisition of the assets leased by and loans advanced to FlexiGroup's castomers through stand-alone asset funding arrangements with three leading Australian financial institutions and one major global financial institution ("Funders"), each of which have net assets over \$4.4 billion.

The current funding arrangements generate upfront cash flows for FlexiGroup from the outset as Funders provide cash at origination usually in excess of the cost of the underlying assets financed and the required Loss Reserve Portion. FlexiGroup passes the majority of the rental stream received from the customer during the term of the contract through to the funder to repay the loan from the Funder, meaning little net cash is received and retained by FlexiGroup during the term of the contract. Any cash received from customers following the end-of-term for any product is retained by FlexiGroup.

Each funding arrangement with a Funder involves a special purpose vehicle (SPV) established by and wholly owned by FlexiGroup. FlexiGroup enters into the appropriate arrangements with the relevant Funder. Through the SPV structure, each funding arrangement is on a non-recourse basis to the assets of FlexiGroup and ring-fenced to the pool of customer receivables that secures that particular funding arrangement.

As at 30 June 2006, aggregate octstanding borrowings amounted to \$451 million. As at 30 June 2006, FlexiGroup also had \$690 million of facilities in place, with undrawn limits of \$239 million. This capacity is sufficient to cover anticipated growth in current core products through to 30 June 2007 (being the end of the forecast period).

5.7.2 Credit and Risk Management

FlexiGroup has developed a proprietary credit assessment scorecard based upon its own customer base in partnership with a leading provider of credit assessment scorecards. Credit assessment is undertaken through a combination of automated credit scoring and the application of Board and Funder approved credit policies. The Funders undertake periodic audits to ensure adherence to the agreed credit policies and procedures.

Total Australian arrears as at 30 June 2006 were 4.8% of the Australian receivables portfolio, down from 6.3% as at 30 June 2005 (see Figure 19). Arrears is defined as the total value of those receivables with repayments outstanding ibefore being written offi as a proportion of the receivables portfolio. The decrease was driven by the successful implementation of a new collections system and a review of collection processes and structure.

FIGURE 19: TOTAL AUSTRALIAN ARREARS AND BAD DEBTS WRITTEN OFF AS % OF PORTFOLIO

Source: FlexiGroup

FlexiGroup's general policy is to write-off or fully provide for any contract which has arrears of 90 days or more.

Between 30 June 2005 and 30 June 2006, the rate of annualised bad debt write-offs for Australia fell marginally to 3.0% (see Figure 19).

E.S Systems. Technology and Processes

FlexiGroup believes that its technology systems are critical to servicing the retail point-of-sale lease and rental finance market. FlexiGroup's systems enable it to make its application processes fast and easy for the customer, the retailer and the salesperson.

FlexiGroup has invested in proprietary besiness systems and customised third-party software to manage key aspects of its operations from origination through to servicing and funding. Between FY2004 and FY2006, FlexiGroup invested \$9.6 million in infrastructure, telephony and systems development.

Board, Management and
Corporate Governance

B & Directors

Margaret Jackson, AC Chairman. Non-executive Director BEC, MBA, Honorary Doctor of Laws, FCA, PAKTO Ane: 53

Andrew Abercrombie Founding Director BEC. U.S. MBA Ade: 60

R John Skippen Non-executive Oirector ACA. Age: 58

Margaret was appointed a director of the Company in November 2006. Margaret is Chairman of Qantas Airways Limited, a rofe she has held since. 2000, and is a current. director of Australia and New Zealand Banking Group Limited and Billabong International Limited.

Margaret is also Chairman of the Asia Pacific Business Coalition on HIV/AIDS, a member of the Foreign Affairs Council, a member of the Melbourne Liniversity Business School Association and an Executive Committee member of the Australia Japan Business Co-operation Committee.

Before beginning her career as a full-time company director in 1992, Margaret was a Partner of KPMG Peat Marwick's Management Consulting Division.

Andrew became a director of the original business in 1991 and was the Chairman of Flexirent Holdings prior to the appointment of Margaret Jackson, He was appointed a director of the Company in November 2006. Andrew is an experienced commercial and tax lawyer and was a founding partner in a legal firm operating in both Sydney and Melbourne. Following several years in property investment and tax consulting, he became involved in the FlexiGroup business in 1991, and until 2003, was Chief Executive Officer. Andrew corrently holds a majority shareholding in Flexirent Holdings through a corporate trustee (see Section 3.4).

John was appointed a director of the Company in November 2006. John was the former Finance Director and CFO of Harvey Norman for 12 years. John was involved in the establishment of the arrangement between Flexirent Holdings and Harvey Norman in 1995, and has continued to play. an active role in the joint arrangement ever since.

John is also currently a director of Rebel Sport Limited, Briscoe Group Limited (NZ), Pertama Holdings Limited (Singapore), all publicly listed companies. John has over 30 years. experience as a chartered accountant.

Rajeev Dhawan Non-executive Cirector 8Com. ACA, M8A Age: 40

Rajeev represented Colonial First State Private Equity managed funds ("CFSPE") on the board of Flexirent Holdings from February 2003 to December 2004. Upon CFSPE's exit from Flexirent Holdings in December 2004, Rajeev continued in an advisory capacity. to Flexirent Holdiags. Currently a partner of Equity Partners, Rajeev has 13 years venture capital and private equity experience and has been a director of a number of listed and unlisted portfolio companies. From 1993 to 2004, he worked at Hambro-Grantham Management/CFSPE, where he focused on mid-size expansion capital and buy-out transactions.

Prior to the private equity industry, Rajeev was a Manager in the Financial Consulting Practice of Arthur Andersen.

John DeLano Managing Director and CEO $BA$ Age: 46

John has been Chief Executive Officer of the FlexiGroup besiness since September 2003, and was appointed a director of the Company in November 2006. John started his career with Avis Inc. in the United States before progressing to the position of Managing Director of Avis Australia, which was a winner of the Australian Quality Award and Australian Customer Service Award, John was subsequently involved with Travel Services International, a NASDAQ listed company which successfully completed a roff-up of 23 leisere travel companies.

6.2 Mansgement Team

FlexiGroup is led by a highly experienced management team.

TABLE 4: EXECUTIVE MANAGEMENT

机蒸锅圈	position	坚迫意愿的 旧义经任职时制成会
John Del ann	Managing Director and CEO
Padi McMahon	Chief Financial Officer
Pearl Laughton	Chief Information Officer
Cara Lee	Head of Contact Centre
Frank Morberger	National Safes Manager
Neil Roberts	Head of Consumer Direct
Grace Silvio	Head of Human Resources
Ben Taylor	Chief Marketing Officer
Russell Webber	National Manager New Zealand

Paul McMahon nan

Pearl Laughton $10.357$

Cara Lee Head of Contact Centre

Pearl Laughton has 15 years of experience managing the development of large scale IT systems and delivering commercial-grade software. Prior to joining FlexiGroup in 2006, Pearl held senior IT management roles at Travel Services International and Amadeus in the US.

Cara Lee has 22 years of operations and planning experience both locally and overseas, in contact centre development and customer relationship management, sales and service management. Prior to joining FlexiGroup in 2004, she held senior management roles at Credit Union Services Corporation, RAMS Home Loans, Westpac, Citibank and American Express.

Frank Morberger National Sales Manager

Frank joined FlexiGroup in 1999 as Victorian State Manager, having afready gained 15 years sales and operations management experience in the leasing. industry. A 10 year career at Orix spanned roles such as National Operations Manager and CEO New Zealand. He then moved on to senior sales. management roles with ABN AMRO (Lease Plan) and prior to joining FlexiGroup, Esanda Fleet Partners (ANZ).

Neil Roberts Head of Consumer Direct

Neil Roberts has 16 years of financial services experience across the insurance and finance industries. He has managed and restructured businesses in both of these sectors. Prior to joining FlexiGroup he held the role of General Manager of GE Finance, New Zealand trading as Pacific Retail Finance. Neil joined FlexiGroup in August 2006 to head up Consumer Direct and develop the Personal Loan division.

Grace Silvio Head of Human Resources

Grace Silvio has 20 years of experience, covering employee relations. learning and development, payroll, remuneration. and reward and industrial relations in a broad range. of industries, including financial services, healthcare, IT, media and entertainment. Her most recent experience. includes with McCann Erickson Advertising and F2 (Fairfax Interactive). Grace joined FlexiGroup in 2004 as Head of Human Resources.

Chief Marketing Officer

Ben Taylor has 16 years marketing experience. Before joining FlexiGroup in 2004, Ben was involved in a range of management. roles, including product management in the fast moving consumer goods industry, with Kimberly Clark and GlaxoSmithKline, marketing management for Gateway and AOL, and Commercial Manager for AOL.

Russell Webber National Manager New Zealand

Russell has 10 years of experience in sales and operations roles in a variety of industries, including the technology sector and more recently with a major supplier of EFTPOS solutions, Russell joined FlexiGroup in 2001 to develop the commercial channel and in 2003 became involved in the retail point-of-safe finance. channel. In early 2004, Russell was promoted and currently heads the New Zealand operation.

6.3 Comorate Governance

6.3.1 Board and its Committees

The Board is responsible for the overall corporate governance of the Company including establishing and monitoring key performance goals. The Board has created a framework for managing the Company, including internal controls and a risk management process.

The Board Charter adopted by the Board sets out the responsibilities of the Board in greater detail.

The Board Charter envisages that the Board should comprise Directors with a broad range of skills, expertise and experience from a diverse range of backgrounds.

The Board Charter allows the Board to delegate powers. and responsibilities to committees established by the Board. The Board retains ultimate accountability to Shareholders in discharging its duties.

To assist in the execution of its responsibilities, the Board has established an Audit and Risk Committee, a Nomination Committee and a Remuneration Committee. These committees have written mandates and operating procedures.

6.3.2 Composition of the Board

The Directors in office as at the Prospectus Date are detailed in Section 6.1. After completion of the Offer, the Directors intend to conduct a search for a suitably qualified individual prepared to serve as an additional independent non-executive Director.

6.3.3 Audit and Risk Committee

The role of the Audit and Risk Committee is to advise on internal controls and appropriate ethical standards for the management of the Company. The committee also confirms the quality and reliability of the financial information prepared by the Company, working on behalf of the Board with the external auditor, and reviews aoa-audit services provided by the external auditor to confirm they are consistent with maintaining external audit independence.

The Audit and Risk Committee provides advice to the Board and reports on the status and management of the risks to the Company. The purpose of the committee's risk management process is to ensure that risks are identified, assessed and appropriately managed.

The Board has adopted a policy regarding the services that the Company may obtain from its external auditor. It is the policy of the Company that its:

• External auditing firm must be independent of the Company and the Directors and senior executives. To ensure this, the Group will require a formal confirmation of independence from its external auditor on an annual basis; and
• External additor may not provide services to the Company that are perceived to be materially in conflict with the role of the external auditor. Services which involve the external auditor acting in a managerial or decision-making capacity, or processing or originating transactions, are not appropriate. However, the external auditor may be permitted to provide additional services, which are not perceived to be materially in coaffict with the role of the external auditor if the Board or Audit and Risk Committee has approved those additional services or they fall within the terms of any approved policy. Such additional services may include financial audits, audits or reviews undertaken for regulatory. purposes, completion audits, tax compliance, adviceon accounting standards, and due diligence in certain. acquisition or sale transactions.

The committee must comprise at least three Directors, all of whom must be non-executive Directors and a majority of whom must be independent. The chairman of the committee must be an independent. non-executive Director.

The committee will meet as often as is required to undertake its role effectively. The chairman of the committee may invite members of management. and representatives of the external auditor or other external advisers to be present at meetings of the committee. The committee will regularly report to the Board about committee activities, issues and related recommendations.

The committee will comprise R John Skippen (chair), Margaret Jackson and Rajeev Dhawan.

6.3.4 Remuneration Committee

The role of the Remuneration Committee is to review and make recommendations to the Board on remuneration packages and policies related to the Directors and senior executives and to ensure that the remuneration policies and practices are consistent with the Company's strategic goals and human resource objectives.

The committee will meet as often as is required to perform its functions. Following each meeting, the committee will report to the Board on any matter that should be brought to the Board's attention and on any recommendation of the committee that requires Board approval.

The committee will comprise Rajeev Dhawan (chair), Margaret Jackson, R John Skippen and Andrew Abercrombie.

6.3.5 Nomination Committee

The role of the Nomination Committee is to review and make recommendations in relation to the composition and performance of the Board and its committees and ensure that adequate succession plans are in place lincluding for the recruitment and appointment of Directors and senior management). Independent advice will be sought where appropriate.

The committee will meet as often as is required to perform its functions. Following each meeting, the committee will report to the Board on any matter that should be brought to the Board's attention and onany recommendation of the committee that requires. Board approval.

The committee will comprise Andrew Abercrombie (chair), Margaret Jackson, R John Skippen and Rajeev Dhawan.

6.3.6 Continuous Disclosure

The Board aims to ensure that Shareholders are informed of all major developments affecting the Company's state of affairs, information will be communicated to Shareholders through ASX announcements, the Company's annual report, annual general meeting, half and full year results announcements and the Company's website, www.flexirent.com.

The Company Secretary will act as ASX liaison officer to easure timely and appropriate access to information for all investors.

6.3.7 Securities Trading Guidelines

The Company has adopted a Trading Policy which will apply to the Directors and employees of FlexiGroup.

The Trading Policy is intended to explain the type of conduct in relation to dealings in Shares that is prohibited under the Corporations Act, and establish procedures in relation to Directors, executives or employees dealing in Shares.

Financial Information

$67$

73 hatzenbertien

This Section contains a summary of the bistorical and forecast financial information for FlexiGroup. The financial information in this Section should be read in conjunction with Section 9, Investigating Accountant's Report, Section 8, Risk Factors, and other information contained within this Prospectus.

7.2 Metorical and Forecast Financial Information

7.2.1 Basis of Preparation and Presentation of Historical Financial Information The Historical Financial Information comprises:

• the pro-forma consolidated income statement of FlexiGroup for FY2005 and FY2006 (see Section 7.3);
• the pro-forma consolidated statement of cash flows of FlexiGroup for FY2005 and FY2006 (see Section 7.8); and
• $\ddot{ }$ the pro-forma consolidated balance sheet of FlexiGroup as at 30 June 2006 on the assumption that all transactions stated in Section 7.11 have occurred or will occur as a consequence of the Offer ("Pro-forma Transactions").

The Historical Financial Information has been prepared under the Australian equivalents to International Financial Reporting Standards ("AlFRS"), is presented in an abbreviated form and does not contain all of the disclosures and notes applicable to annual reports prepared in accordance with the Corporations Act.

7.2.2 Sources of Historical Financial Information

The Historical Financial Information has been extracted from the audited statutory financial statements of FlexiGroup prepared under AIFRS for the years ended 30 June 2005 and 30 June 2006 ("Audited Financial Information").

In preparing the Historical Financial Information, certain adjustments were made to the Audited Financial Information to eliminate certain non-recurring items ("Pro-forma Adjustments") in order to allow for better comparison with the Forecast Financial Information for FlexiGroup set out in Section 7.3. These Pro-forma Adjustments, together with reconciliations of the Historical Financial Information to the Audited Financial Information of FlexiGroup, are contained in Section 7.13.

The significant accounting policies of FlexiGroup are set out in Section 7.15.

7.2.3 Basis of Preparation and Presentation of Forecast Financial Information

The Forecast Financial Information comprises:

• the pro-forma consolidated forecast income statement of FlexiGroup for FY2007; and
• the pro-forma consolidated forecast statement of cash flows of FlexiGroup for FY2007.

The Forecast Financial Information has been prepared by the Directors with due care and attention, on the basis of the Directors' general and specific best estimate assumptions included in Section 7.5. The Directors consider these best estimate assumptions to be reasonable when viewed as a whole.

The Directors' best estimate assumptions are subject to business, economic and competitive uncertainties and coatingencies, many of which are beyond the coatrol of FlexiGroup and the Directors, and are not reliably predictable. The industry in which FlexiGroup operates is subject to many external influences, which can materially impact FlexiGroup's financial performance.

The Forecast Financial Information assumes the implementation of certain future business decisions and strategies, which are subject to change, and assumes the success of those business decisions and strategies. No assurance can be given that the business decisions and strategies will be effective or that the anticipated benefits from them will be realised in the period for which the Forecast Financial Information has been prepared or otherwise.

Events and circumstances often do not occur as anticipated and therefore actual results are likely to differ from the Forecast Financial Information. These differences may be material. As shown in the sensitivity analysis in Section 7.7. relatively small changes in key variables can have a significant impact on net profit after tax.

Accordingly, none of FlexiGroup, the Directors or any other person quarantees or provides any assurance as to the achievement of the Forecast Financial Information. The Forecast Financial Information should not be regarded as a representation or warranty that FlexiGroup will achieve, or is likely to achieve, any particular results. Actual events and outcomes may differ in quantum and timing from those assumed, with material consequential positive or negative impact on FlexiGroup's actual earnings or cash flows.

The Forecast Financial Information should be read in conjunction with the Directors' general best estimate assumptions set out in Section 7.5.2, the Directors' specific best estimate assumptions set out in Section 7.5.3, the sensitivity analysis set out in Section 7.7, the discussion of the risk factors set out in Section 8, and other information set out in this Prospectus.

The Forecast Financial Information has been presented in an abbreviated form insofar as it does not include all of the disclosures and notes required by AIFRS applicable to annual reports and notes in accordance with the Corporations Act.

Under AASB 3 - Business Combinations, when an existing group is acquired by a new shell company, the legal acquirer may not be treated as the acquirer for accounting purposes. In this case, acquisition of the Existing Shareholders' shares in Flexirent Holdings by the Company will be treated as a reverse acquisition since the substance of the transaction is that the existing group will continue to control the business post the transaction. Hence, Flexirent Holdings will be treated as the acquirer of the Company for accounting purposes and this transaction will not result in the creation of any fair value adjustments or goodwill apon consolidation.

The Historical Financial Information and Forecast Financial Information have been reviewed by PricewaterhouseCoopers Securities Ltd, whose Investigating Accountant's Report is included in Section 9.

7.3 Summary of Pro-forma Nistorical and Forecast Income Statement and Operating Data

Set out below is a summary of FlexiGroup's pro-forma consolidated historical income statement for FY2005 and EY2006, the pro-forma consolidated forecast income statement for FY2007 and other operating data for the period.

TABLE 5: SUMMARY PRO-FORMA CONSOLIDATED INCOME STATEMENT OF FLEXIGROUP

			やはいでひきるなん
	PRO-FORMA HISTORICAL!		FORECAST 2.5
AS MILLION	FV2005	FY2006	FY2067	FY2006-07F
vear end 30 june	森勝欣悠	双胚界粉	AUTRS	GROWTH RATE
interest income from receivables*	76.5	89.5	98.1	9.6%
Interest expense	(30.6)	(34.5)	(38.3)	11.0%
Net Margin	45.9	55.0	59.8	8.7%
Other net income	26.7	30.4	41.2	35.5%
Total Net Income	72.6	85.4	101.0	18.3%
Payroll and related expenses	(24.4)	(25.0)	(27.7)	10.8%
Share-based payment expenses
- from Company	(0.8)	(0.1)	(1.2)
- from Existing Shareholders 5			(0.7)
Bad debt expense	(12.5)	(11.6)	(15.4)	32.8%
Depreciation and amortisation expense	(5.0)	(3.5)	(2.9)	(17.1%)
Other expenses	(11.7)	(12.6)	(13.0)	3.2%
Total Expenses®	(54.4)	(52.8)	(60.9)	15.3%
Net Profit before Tax	18.2	32.6	40.1	23.0%
Tax expense	(5.9)	(9.9)	(12.6)	27.3%
Net Profit after Tax	12.3	22 7	27.5	21.1%
Operating Data
Average Receivables Outstanding?	342.2	381.5	424.5	11.3%
Australia as % of total Average Receivables Outstanding	92.1%	90.8%	88.2%
Basic earnings per Share (cents)			12.6

Notes:

1. The Historical Financial Information has been derived from the Audited Financial Information and adjusted as set out in Section 7.13.

2. An exchange rate of A\$1 : NZ\$1.15 in FY2007 has been assumed.

3. The actual statutory financial information that FlexiGroup will report in its audited financial statements for FY2007 ("Statutory Forecast") will differ from the Forecast Financial Information. As set out in Section 7.14, FlexiGroup's Statutory NPAT is forecast to be \$22.0 million.

4. Net of amortisation of initial direct sales costs.

5. As the option arrangement was established between Existing Shareholders prior to the Offer, no new Shares in the Company will be issued in relation to this arrangement upon vesting. As a result, new shareholders of the Company will not be economically diluted, i.e. they will not have their right to future dividends diluted, if the vesting conditions were to be satisfied. See Section 10.6.1 for further details.

6. Total expenses include allowance for a full year of estimated public company-related costs of \$1.3 million in FY2007.

7. Average Receivables Outstanding reflects the net receivables balance averaged on a monthly basis.

The table below outlines the number and average size of deals settled by FlexiGroup annually for FY2004 to FY2006 and forecast for FY2007.

TABLE 6: KEY STATISTICS FOR DEALS SETTLED.

.
			.er#
year end 30 june ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,			!ATE

,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

7.4 Management Diecussion and Analysis of Pro-fonna Historical Income Statement

7.4.1 Introduction

FlexiGroup generates revenue from the following sources:

• Net margin: and
• Other net income.

Fach of these is discussed in more detail below.

Net Margin

This reflects the net margin between the interest income earned on the receivables portfolio and the interest expense paid to Funders, Interest income from receivables is therefore driven by the number and value of deals settled and the composition of the portfolio in terms of both product type and maturity. Direct sales costs incurred in originating new leases are included as lease receivables and amortised over the lease term. The amortisation charge relating to the capitalisation of direct sales costs is deducted from interest income from receivables. Interest expense reflects the value of deals financed and repayment of borrowings.

Other Net Income

Other net income consists of:

• End-of-term income which occurs when a customer:
• Continues to rent the underlying asset beyond the contract maturity date; or
• $\overline{a}$ Elects to either return or purchase outright the asset before, at or after the contract's maturity date or return that asset and that asset is then sold.

End-of-term income is primarily dependent on the number of maturing contracts, the number of cestomers who continue to rent the asset past the contract materity date, the number of rental payments received post end-ofterm and the proceeds received when the asset is sold.

• Net Protect income generated from the sale of Protect (asset protection) and Protect Platinum (debt waiver) products at the time the customer enters into a contract (i.e. at the point-of-sale) less any costs associated with the product;
• Interest received on cash balances and the balance of the loss reserves;
• Loss recoveries: and
• Fee and other income

Expenses

Payroll and related expenses includes salaries and bonuses paid to employees, on-costs (superannuation, payroll tax, workers' compensation and fringe benefits tax) and other employment-related expenses (training and recruitment fees etc.).

Share-based payment expenses reflects the fair value of shares and options issued to employees as remuneration as at the grant date, amortised as an expense over the vesting period. This includes both option and share-based remuneration, as outlined in Section 10.4 and Section 10.5.

Bad debt expense includes bad debts written-off and any movement in the allowance for loan losses. Generally, accounts are written-off or fully provided for when they are 90 days or more overdue. The Company also has an allowance for loan losses which is based on the current delinguency position of the portfolio and historical roll-rates of arrears. Roll-rates reflect the historical experience of conversion of arrears into loan losses.

Depreciation and amortisation expense includes depreciation on predominantly general office furniture and equipment and the amortisation of software development costs. Office furniture and equipment is depreciated on a straight line basis at rates between 20% p.a. and 40% p.a. Capitalised software expenses are also depreciated on a straight line basis at 40% p.a.

Other expenses represent other operating expenses including marketing, IT, communications and other.

7.4.2 FY2006 Compared to FY2005

The number of deals grew by 12.5%, driven by the increased penetration of Ezyway in Australia and FlexiOwn in New Zealand following its initial launch in FY2005, adding to the consistent performance of Flexirent. In addition, HandyLoan was introduced in Australia in the fourth quarter of FY2006 following a successful pilot in the second quarter of FY2006.

Average deal sizes declined by 4.8% reflective of pricing trends for IT equipment and electrical appliances.

The impact of the above movements increased Average Net Receivables Outstanding by \$39.3 million from \$342.2 million in FY2005 to \$381.5 million in FY2006 (growth of 11.5%). This increase in receivables coupled with a 1.1 percentage point increase in Interest income from receivables as a percentage of Average Receivables Outstanding drove net margin to \$55.0 million (growth of 19.8%).

Other net income increased by \$3.7 million from \$26.7 million in FY2005 to \$30.4 million in FY2006 (growth of 13.9%). This result was driven principally by a \$2.8 million increase in net Protect income through increased sales of the Protect and Protect Platinum products.

Payroll and related expenses increased by 2.5% to \$25 million.

Share-based payment expense reduced from \$0.8 million in FY2005 to \$0.1 million in FY2006, reflecting the amortisation of share-based remuneration granted in FY2005.

Bad debt expense decreased by 7.2% compared to FY2005 due to a reduction in average levels of arrears stemming from improved credit procedures and collection performance.

Depreciation and amortisation of software decreased \$1.5 million (30%), principally due to the write-off of obsolete software in FY2005.

Other expenses increased by \$0.9 million from \$11.7 million in FY2005 to \$12.6 million in FY2006 (growth of 7.7%). which included increased marketing costs incurred in relation to the launch of Ezyway.

7.5 Forecast Financial Information

7.5.1 Directors' Best Estimate Assumptions

The Forecast Financial Information has been prepared on the basis of the Directors' best estimate assumptions, including those set out in Section 7.5.2 and Section 7.5.3, which should be read in conjunction with the sensitivity analysis set out in Section 7.7 and the risk factors set out in Section 8.

As set out in Section 7.2.3, the Directors' best estimate assumptions are subject to business, economic and competitive uncertainties and contingencies, many of which are beyond the control of FlexiGroup and the Directors, and are not reliably predictable. The industry in which FlexiGroup operates is subject to many external influences, which can materially impact FlexiGroup's financial performance.

The information in Section 7.5.2 and Section 7.5.3 is intended to assist potential investors in assessing the reasonableness and likelihood of the Forecast Financial Information being achieved, and is not intended to be a representation that those events that have been assumed will occur.

Potential investors should be aware that actual events and outcomes may differ in quantum and timing from those assumed, with material consequential positive or negative impact on FlexiGroup's actual earnings and cash flows. Accordingly, potential investors should be aware of the risks of placing undue reliance on the information in this Section.

7.5.2 General Best Estimate Assumptions

The material general assumptions made when preparing the Forecast Financial Information are as follows:

• The operating and financial performance of FlexiGroup is influenced by a variety of general economic and business conditions in both Australia and New Zealand, including the levels of inflation, interest rates and exchange rates, and government fiscal, monetary and regulatory policies. The Forecast Financial Information assumes that there will be no material changes in these conditions in either country:
• There is no material amendment to any material agreement relating to FlexiGroup's business;
• There are no material acquisitions or disposals during the Forecast Period;
• There is no material change to FlexiGroup's funding arrangements;
• There are no material changes to the statutory, legal or regulatory environment, including taxation, which would be detrimental to FlexiGroup or its key suppliers or distributors in any of the jurisdictions in which they operate;
• There is no loss of key management personnel;
• There are no material beneficial or adverse effects arising from the actions of competitors;
• There are no material changes in AIFRS, Statements of Accounting Concepts or other mandatory professional reporting requirements, being Urgent Issues Group Consensus Views and the Corporations Act, which would have a material effect on the Forecast Financial Information;
• There are no material changes in the terms of the share-based payment plans as outlined in Section 10.5;
• The forecast assumes the continuation of the current outsourced sales and marketing arrangements for the state of Queensland:
• The cash proceeds of the Offer will be approximately \$264.5 million. Combined with proceeds from reinvestment, the total gross proceeds under the Offer will be \$435 million. This amount, less approximately \$8.1 million to cover the expenses of the Offer is the purchase price and will be used to fund the purchase of the Existing Group from the Existing Shareholders (see Section 10.4).

7.5.3 Specific Best Estimate Assumptions

Forecasts for FY2007 - Income Statement

The following specific best estimate assumptions have been applied in preparing the pro-forma consolidated forecast income statement of FlexiGroup for FY2007.

Net Margin Assumptions

Net Margin is derived from:

• Interest income based on the forecast product mix within the receivables portfolio and the implicit interest rates associated with the individual products, net of amortisation of direct sales costs; and
• Interest expense based on the interest rates charged by Funders.

The forecast interest income from receivables is derived both from new deals settled and the run-off of the existing portfolio. Forecast values of new deals settled are derived from forecast numbers of deals and average deal size assumptions.

The forecast number of deals has been prepared on the basis of a product-by-product analysis taking into account historical trends and the expected penetration of new channels.

The average deal size assumptions are forecast on the basis of each product and the historical trends in prices of IT and electrical equipment. As these have been declining over time in relation to the traditional rental products, management has forecast a continued decline for these products over the forecast period. The overall average deal size is forecast to increase slightly in FY2007, resulting from the forecast increase in the number of deals for the HandyLoan product at an average loan size of \$6,000.

Overall, these assumptions result in a forecast increase in the total value of deals of around 20% compared to FY2006.

Initial direct sales costs have been forecast based on the total forecast value of deals settled and are consistent with the terms of FlexiGroup's current arrangements with its retail channel partners. These costs are capitalised and amortised consistent with how interest is earned over the lease term, in accordance with the Company's accounting policy as set out in Section 7.15.

The implicit interest rates associated with individeal product settlements are expected to remain consistent with historical implicit rates achieved on settlements of these individual products.

interest expense forecast is based on the current margin for each Funder above an interpolation of the three year swap rate. Interest expense also includes bank fees and charges as required under accounting standards. The impact of any increase in official interest rates during the forecast period is assumed to be offset by a corresponding increase in the interest rate charged to customers on FlexiGroup's products.

Other Net Income Assumptions

Net Protect income is based on the expected Protect and Protect Platinum income and expense as outlined further below.

Protect income has been forecast according to the take-up rates for each of the Flexirent and Ezyway products for both the Protect and Protect Platinum products. Take-up rates and loading percentage assumptions are forecast to remain in line with recent historical experience. Protect expenses are assumed to be in line with recent historical experience.

End-of-term income has been forecast on the basis of the expected monthly end-of-term income for each of the Flexirent and Ezyway products. End-of-term income has been assumed in the forecast based on the continued receipt of a number of months of end-of-term rentals and proceeds from sale of the leased asset, consistent with historical experience and individual product terms.

Expense Assumptions

Operating expenses forecast, including payroll and related expenses, have been derived based on a "bottom up" approach at a cost centre level, applying a minimum 3% salary increase p.a. from 1 January 2007.

Annual public company corporate costs of \$1.3 million have been assumed in the EY2007 forecast, split between payroll and related expenses (\$1.1 million) and other expenses (\$0.2 million).

The share-based payment expenses reflect the amortisation of a portion of the fair value of the Share-based payment Plans set out in Section 10.5, including the share-based incentive arrangements with the Managing Director and Chief Financial Officer, as set out in Section 10.6.1.

Forecast bad debts expense incurred has been determined based on the forecast receivables portfolio mix between consumer and commercial customers. The forecast level of bad debts expense has been derived from applying historical loss rates to both the existing portfolio and new deals as well as including any movement in the allowance for loan losses. The allowance for loan losses is calculated based on the historical roll-rates of arrears and the delinquency position of the portfolio.

Depreciation and amortisation expense has been based on the continued depreciation of existing assets and software along with forecast capital expenditure. No change in current depreciation rates has been assumed.

An exchange rate of A\$1 : NZ\$1.15 has been assumed.

Tax expense has been assumed at a rate of approximately 30%, after allowing for non-assessable items.

7.6 Manapement Discussion and Analysis of Pro-forma Forecast Income Statement

7.6.1 FY2007 Compared to FY2006

The number of deals is forecast to grow by 20.2%, driven by:

• Coatinued performance of Flexireat;
• Increasing Ezyway product penetration;
• The continued rollout of the HandyLoan product; and
• The continued growth in the number of deals in New Zealand through increased penetration with existing retall partners and the recently signed contract with Noel Leeming.

Interest income from receivables (net of amortisation of direct sales costs) is forecast to grow by \$8.6 million from \$89.5 million in FY2006 to \$98.1 million in FY2007 (growth of 9.6%). This increase is expected to be driven by an increase in Average Receivables Outstanding driven by growth in Ezyway, HandyLoan, New Zealand Rexirent and FlexiOwn products as discussed above.

The increase in the Average Receivables Outstanding is forecast to be partially offset by a 0.4 percentage point decrease in the interest income from receivables as a percentage of Average Receivables Outstanding due to the increased proportion of the lower margin Ezyway and HandyLoan products as a percentage of total portfolio outstandings.

As interest income from receivables is earned over the term of the contract, approximately 75% of the FY2007 forecast interest income is expected to be earned from the existing portfolio.

Amortisation of direct sales costs is forecast to increase by \$2.7 million reflecting the increased levels of Average Receivables Outstanding.

Interest expense as a percentage of Average Receivables Outstanding is forecast to remain consistent between FY2006 and FY2007 at around 9.02%. This is higher than the actual funding cost as bank charges are included in the interest expense figure and borrowings exceed receivables as a result of the Company's funding arrangements.

Other net income is forecast to increase by \$10.8 million from \$30.4 million in FY2006 to \$41.2 million in FY2007 (growth of 35.5%). This is primarily comprised of a \$4.1 million increase from net Protect income as a result of the increased take-up rate of the Protect Platinum product and an increase in end-of-term income of \$3.7 million as a result of a growing number of maturing contracts.

Payroli and related expenses is forecast to increase by 10.8% to \$27.7 million, which reflects the impact of the allowance for expected public company costs, the forecast salary increases and increased headcount in New Zealand.

Share-based payment expenses relating to arrangements with Existing Shareholders is forecast to be \$0.7 million, relating to a full year amortisation charge of the fair value of share-based incentive arrangements with certain senior executives including John DeLano, as set out in Section 10.6.1. As this arrangement was established between Existing Shareholders prior to the Offer, no new Shares in the company will be issued in relation to this arrangement upon vesting. As a result, new shareholders of the Company will not be economically diluted, i.e. they will not have their right to fature dividends diluted, if the vesting conditions were to be satisfied.

Bad debt expense is forecast to increase from 3.04% of Average Receivables Outstanding in FY2006 to 3.63% in FY2007. This expected increase is principally driven by the increase in the receivables portfolio and the forecast increase in sales of Ezyway and HandyLoan products, which have greater proportions of consumer customers.

The decline in depreciation and amortisation expense in FY2007 results from the lower carrying value of plant and equipment and software in FY2007.

Other expenses are forecast to increase by \$0.4 million from \$12.6 million in FY2006 to \$13.0 million for FY2007 (growth of 3.2%), primarily reflecting the full year allowance for public company costs.

Overall, Net Profit after Tax is forecast to increase by 21.1% from \$22.7 million in FY2006 to \$27.5 million in FY2007. Excluding non-cash share-based payments expenses, net profit after tax is forecast to increase by approximately 29% year-on-year in the same period.

7.7 Sensitivity Analysis

The Forecast Financial leformation is based on a number of economic and business assumptions about future events, as set out in Sections 7.5.2 and 7.5.3. The Forecast Financial Information is considered to be sensitive to movements. in a number of key assumptions, and a summary of the likely effect of movements in certain key assumptions on the forecast FY2007 net profit after tax is set out below.

Investors should note that changes in the key assumptions set out below are not meant to be indicative of the full range of variations that may occur. The sensitivity analysis has been provided to assist potential investors in their assessment of the future performance of FlexiGroup. It is possible that more than one variable may move concurrently, giving rise to cumulative or offsetting effects, and so care should be taken in interpreting this information. Typically, FlexiGroup would respond to any material adverse change in conditions by taking appropriate mitigating action to minimise, to the extent possible, any adverse effect on net profit after tax. The effect of any such mitigating action has been excluded from the following analysis. Potential investors should consider this analysis in conjunction with the risk factors set out in Section 8.

sensitivity on fy2007f net profit after tax ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
+/- 5% in the number of new deals ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
+/- 5% in average deal size
+/- 0.25% in interest rate on new borrowings
+/= 10% in end-of-term income.
+/- 1% in payroll and related expenses
+/- 1% in loss rate on new deals
+/- 0.25% in loss rate on existing portfolio

Note

1. Incremental to the assumed expense assumptions (see Section 7.5.3).

7.8 Summary of Pro-forms Historical and Porecast Statement of Cash Flows Set out below is a summary of FlexiGroup's pro-forma consolidated statement of cash flows for EY2005 and EY2006, along with the pro-forma consolidated forecast for FY2007.

TABLE 7: SUMMARY PRO-FORMA CONSOLIDATED STATEMENT OF CASH FLOWS OF FLEXIGROUP

			PRG-FORMA
AS MILLKIN	рво ғовала нетежнол FY2005		Forecast'' FY2007
year ended 30 june	AFFRS	FY 2006 森豚联合	西洋独立
Net Profit After Tax	12.3	22.7	27.5
Add Back: Non-cash Items
Share-based payment expenses	08	01	1.9
Bad debt expense?	12.5	11 6	15.4
Depreciation and amortisation expense	5.0	3.5	2.9
Tax expense	5.9	9.9	12.6
Other	(0.7)	2.1	4.6
Total Non-cash Items	23.5	27.2	37.4
Balance Sheet Movements
Net rentals received (net of interest and Protect income included in profit)	181.5	207.8	218.2
Payments to retailers for assets and loans advanced	(240.2)	(254.7)	(310.8)
Gross borrowing proceeds	332.2	336.7	380.9
Principal repayment to Funders	(256.8)	(311.6)	(302.7)
Tax paid		(0.6)	(12.9)
Net movement in loss reserves 2	(6.8)	(11.0)	(11.5)
Other	26	3.5	7.2
Pro-forma Operating Cash Flow before Capital Expenditure	48.3	19.0	33.3
Capital Expenditure	(9.3)	(2.6)	(2.9)
Pro-forma Operating Cash Flow after Capital Expenditure	39.0	16.4	30.4
Shareholder-related and share-based cash payment transactions	$(43.7)^3$		$(7.5)^{4}$
Pro-forma Adjustments 5	(2.3)	(2.7)
Net Movement in Cash (per Audited Financial Information for
FY2005 and FY2006)	(7.0)	13.7	22.9

Notes:

1. The pro-forma consolidated forecast statement of cash flows excludes the gross proceeds of the Offer and the use of these proceeds as set out in Section 3.3 as there is no net cash flow impact and these do not represent onerational cash flows

2. Bad debt expense is a non cash item due to the funding structure under which the Funders recover any bad debts incurred from a loss reserve established at the time of funding to cover such potential losses (Loss Reserve Portion). Hence, the net movement in loss reserve reflects the losses incurred by the Funders and withdrawn from the loss reserve, as well as new additions to the loss reserve arising on new fundings in the period. The bad debt expense reflects the expense per the pro-forma consolidated forecast income statement of FlexiGroup.

3. This represents payments relating to a transaction with previous shareholders of the Company.

4. This represents cash expected to be used to settle a portion of the Existing Group Purchase Arrangements (see Section 10.4).

5. This represents the cash impact of the pro-forma adjustments as set out in Section 7.13, excluding bad debt expenses and tax expense which are included in non-cash items.

FlexiGroup Limited Prospectus

There were a number of specific items which impacted cash flows in FY2005 and FY2006. These items have not been included as pro-forma adjustments in the pro-forma historical cash flows in Table 7, as they relate to either timing differences or operational matters that are not necessarily one-off or non-recurring. An explanation of these items follows the table.

YEAR ERICE: 30 SUNE
phies paid to loss reserve.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

(a) Dering FY2005, FlexiGroup sold down a tranche of leases it had originally funded on balance sheet dering FY2004. The amount of the sell down was \$21.4 million and effectively represents a timing difference.

(b) The loss reserves were reviewed during FY2006 and based on this review it was decided to increase the loss reserves by \$4.0 million.

(c) Leases settled in June 2005 and not funded until July 2005 generated a cash inflow of approximately \$5.0 million. These leases were effectively funded in FY2005 and represent a timing difference. Leases settled in June 2006 generated cash of approximately \$10.2 million when funded in FY2007. Forecast cash flows in FY2007 are calculated strictly off the assets that are settled in that year such that the pro-forma forecast cash flow for FY2007 is not impacted by such timing differences.

(d) Dering FY2006, FlexiGroup made voluntary principal repayments of \$8.8 million to a Funder.

le) The Forecast Financial Information assumes a different funding allocation for the Ezvway product compared to how that product was funded in FY2006. The new funding structure provides additional up-front cash and if it was applied to the FY2006 Ezyway volume, approximately \$1.0 million additional cash flow would have been received.

7.9 Management Discussion and Analysis of Liquidity and Capital Necources

7.9.1 General

As discussed in Section 5.7.1, current funding facilities have been structured to provide up-front cash flows (net of required Loss Reserve Portion) on average in excess of the cost of the underlying assets. As a result, FlexiGroup passes the rental stream directly through to the Funder and, as such, very little net cash is received during the term of the contract. At the end-of-term, any cash generated from end-of-term income is retained by FlexiGroup. FlexiGroup's funding arrangements are on a non-recourse basis to the assets of FlexiGroup and ring-fenced to the pool of customer receivables that secures the particular funding arrangement.

Hence, working capital and operating cash flows will be influenced primarily by:

• Product type (including term) of new settlements; and
• Funding structure utilised.

7.9.2 Working Capital

The key items included in the statement of cash flows are:

• Net rentals received represents rentals and loan repayments received from customers, net of interest and Protect income which is already included in net profit after tax;
• Payments to retailers for assets represents the purchase of leased assets and loans advanced to customers (HandvLoan):
• Gross borrowing proceeds represents monies received by FlexiGroup from Funders through the discounting of rentals and/or monies received against underlying assets; and
• Principal repayment to the Funders being the required contractual principal payment to be made; and
• Net movement in loss reserves which represents the losses incurred by the Funders and withdrawn from the loss reserve and new additions to the loss reserve arising on new fundings in the period.

7.9.3 Seasonality

Due to seasonal fluctuations in the underlying retall business, FlexiGroup is also subject to fluctuations with increases in applications particularly around June (fiscal year end) and December (Christmas).

7.9.4 Capital Expenditure

Capital expenditure of \$9.3 million in FY2005 comprised of \$3.2 million for relocation to new premises and \$6.1 million on systems infrastructure. Ongoing expenditure relates primarily to investments in systems infrastructure.

7.10 Parnossts for FY2007 – Stefannent of Cash flows

The following specific best estimate assumptions have been used in developing the pro-forma consolidated forecast statement of cash flows for FY2007.

7.10.1 Balance Sheet Movements Assumptions

The forecast balance sheet movements have been prepared based on the same product-by-product assumptions. used to determine settlement forecasts and portfolio run-off as discussed previously.

The forecast balance sheet movements assume that the current funding structures will remain in place over the forecast period. This assumption broadly means that each of FlexiGroup's products is funded by the current Funders on unchanged terms and that each product is funded in approximately the same proportion as that occurring in FY2006, except for the HandyLoan product where it is assumed that FlexiGroup receives a set percentage of the loan advanced to the customer. Funding rates forecast were discussed in Section 7.5.3.

7.10.2 Capital Expenditure Assumptions

Capital expenditure for FY2007 is forecast to be \$2.9 million, representing the purchase of fixed assets and systems development expenditure.

7.10.3 Tax Paid Assumption

FlexiGroup otilised all available tax losses during FY2005. The forecasts therefore assume that FlexiGroup will pay tax instalments in FY2007.

7.11 Pro-forma Balanca Sheet

TABLE B: PRO-FOBMA CONSOLIDATED BALANCE SHEET OF ELEXIGROUP

AS MILLION as at 30 june 2006	audhted historical AIFRS	рко-говма adjustments	note	pro-forma historical 8868
Current Assets
Cash at bank	36.9	(7.5)	(a)	29.4
Loans and receivables	205.3			205.3
Rental equipment	2.6			2.6
Total Current Assets	244.8	(7.5)		237.3
Non-current Assets
Loans and receivables	226.6			226.6
Plant and equipment	3.6			3.6
Deferred tax assets	3.9	2.4	$\langle b \rangle$	6.3
Intangible Assets
Goodwill	50.2			50.2
Major Contract		1.0	$\langle C \rangle$	1.0
Capitalised software expenses	4.1			4.1
Total Non-current Assets	288.4	3.4		291.8
Total Assets	533.2	(4.1)		529.1
Current Liabilities
Payables	17.2			17.2
Borrowings	196.0			196.0
Current tax liabilities	9.1			9.1
Provisions	0.5			0.5
Total Current Liabilities	222.8			222.8
Non-current Liabilities
Borrowings	230.7			230.7
Deferred tax liabilities	21.8			21.8
Provisions	0.3			0.3
Total Non-current Liabilities	252.8			252.8
Total Liabilities	475.6			475.6
Net Assets	57.6	(4.1)		53.5
Shareholders' Equity
Contributed equity	21.0	3.4	$(b)$ , $(c)$	24.4
Retained profits	36.2	(4.9)	$\langle d \rangle$	31.3
Share-based payments reserve	$0.8\,$	(2.6)	(a)	(1.8)
Other reserves	(0.4)			(0.4)
Total Shareholders' Equity	57.6	(4.1)		53.5

8888

the community of the community of the community of the community of the community of the community of the community

Note:

1. Under AASB 3 - Business Combinations, when an existing group is acquired by a new shell company, the legal acquirer may not be treated as the acquirer for accounting purposes, in this case, acquisition of the Existing Shareholders' shares in Flexirent Holdings by the Company will be treated as a reverse acquisition since the substance of the transaction is that the existing group will continue to control the business post the transaction. Hence, Flexirent Holdings will be treated as the acquirer of the Company for accounting purposes and this transaction will not result in the creation of any fair value adjustments or goodwill upon consolidation.

The following Pro-forma Transactions have been reflected in Table 8:

• la) The adjustment to share-based payments reserve reflects payments made from FlexiGroup's existing cash resources in relation to the settlement of a portion of the Existing Group Purchase Arrangements, as set out in Section 10.4, in addition to the payment as set out in (d). This also impacts cash at bank.
• (b) The Company's costs of the Offer are estimated to be \$8.1 million (see Section 10.16). The majority of these costs are deductible for income tax purposes over a period of five years. A deferred tax asset of \$2.4 million has been raised in respect of the future income tax benefit associated with these deductible costs and included in contributed equity;
• (c) The one-off payment to Harvey Norman as set out in Section 10.7.2 results in the recognition of an intangible asset of \$1.0 million which will be amortised over the four year period between FY2011 and FY2015, for which period the contract was recently extended and therefore future benefits derived; and
• (d) The adjustment to retained profits relates to a share-based payment to the Chairman and Directors as set out in Section 10.6.1.

7.12 Dividend Policy

Subject to the Directors' forecasts being achieved and other relevant factors, the Directors intend to declare a tully franked final dividend of 5.5 cents per Share for FY2007 equivalent to a fully franked annualised vield of 5% based on the Offer Price and target a dividend payout ratio of 70% for EY2008. There can be no assurance that any dividends will be paid or as to the level to which those dividends will be franked as actual events might differ from the assumptions used in assessing the ability of FlexiGroup to pay these dividends. FlexiGroup's ability to pay fully franked dividends may be impacted by overall portfolio growth and growth of individual products which have different taxation consequences.

7.13 Raconsilietion of the Nistorical Income Statements

TABLE 9: FY2005 RECONCILIATION OF THE INCOME STATEMENT OF FLEXIGROUP

	AUDITED			学校のよめ発展を表
AS MILLION	网络综合系统	FRO-FORMA
vear ended so june	FY2005 AIFRS	ADJUSTMENTS	note	FY2005 AFFRS
Interest income from receivables	76.5			76.5
Interest expense	(30.6)			(30.6)
Net Margin	45.9			45.9
Other net income	27.0	(0.3)	(a), (b), (c)	26.7
Total Net Income	72.9	(0.3)	in de de de de de de de de de de de de de	72.6
Payroll and related expenses	(25.2)	0.8	(d)	(24.4)
Share-based payment expenses
– from Company	(0.8)			(0.8)
- from Existing Shareholders
Bad debt expense	(8.0)	(4.5)	(e)	{12.5}
Depreciation and amortisation expense	(5.0)			(6.0)
Other expenses	(13.5)	1.8	$(d)$ , $(i)$ , $(g)$	(11.7)
Total Expenses	(52.5)	(1.9)		(54.4)
Net Profit before tax	20.4	(2.2)		18.2
Tax expense	(11.8)	5.9	{3), (1)	(5.9)
Net Profit after Tax	8.6	3.7		12.3

Please refer to notes following Table 10.

mmmm

TABLE 10: EY2006 RECONCILIATION OF THE INCOME STATEMENT OF FLEXIGROUP

	auoted			斜纹の下の状況な
as million vear end 30 june	HISTORICAL FY2000 AIFRS	РЕС-ГОКИА AD.RISTMENTS	mote	*膝窩下の発症こな! FY2006 ABB23
Interest income from receivables	89.5			89.5
Interest expense	(34.5)			(34.5)
Net Margin	55.0			55.0
Other net income	30.9	(U.5)
Total Net Income	85.9	(0.5)		85.4
Payroll and related expenses	(25.9)	09	(d)	(25.0)
Share-based payment expenses
- from Company	(0.1)			40. î.)
- from Existing Shareholders
Bad debt expense	(10.6)	(1.0)	(e)	1.6)
Depreciation and amortisation expense	(3.5)			(3.5)
Other expenses	(14.8)	2.2	(d), (g), (g)	12.6)
Total Expenses	(54.9)	2.1		(52.8)
Net Profit before Tax	31.0	1.6		32.6
Tax expense	(8.9)	(1 O)		(9.9)
Net Profit after Tax	22.1	0.6		22.7

Agjustments have been made to the historical FlexiGroup income statement per the Audited Financial Information to reflect a number of items as listed below:

• (a) The removal of one-off impacts associated with Protect expenses in order to reflect the ongoing position in relation to the management of these expenses (now been assumed internally);
• (b) Reversal of the release of a provision relating to an indirect tax accrual;
• (c) Add-back of the gain on liquidation of a subsidiary;
• (d) The removal of payments historically made to the Existing Shareholders, such as remuneration, on-costs and ancillary costs which do not relate to the ongoing operations of FlexiGroup;
• (e) Dering EY2005, the basis of calculation for the allowance for loan losses was changed to more accurately reflect the historical roll-rates of arrears and the delinguency position of the portfolio. This adjustment has been made to reflect the consistent adoption of this practice during FY2005 in order to be comparable with FY2006 and the FY2007 forecast. The adjustment in FY2006 reflects the add-back of a one-off release of an allowance for loan losses:
• (f) Add-back of one-off legal expenses relating to a share bay-back in FY2005;
• (g) Add-back of non-recerring commissions paid to Harvey Norman, as set out in Section 10.7.2;
• (h) Reversal of prior period tax under and over provisions;
• (i) Tax expense on normalisations calculated at 30% after allowing for non-assessable items; and
• (j) Add-back of costs relating to the corporate sale process.

7.14 Revonsilletion of the Pro-forms Forecast Income Statement

Kanada (Kanada) ya Kasasa Marejeo ya Kasasa Marejeo ya Kasasa Marejeo ya Kasasa Marejeo ya Kasasa Marejeo ya

a a mata a shekarar 1999 a tsara tsa a tsa a tsa a tsa a tsa a tsa a tsa a tsa a tsa a tsa a tsa a tsa a tsa a

TABLE 11: RECONCILIATION OF THE PRO-FORMA FORECAST INCOME STATEMENT OF FLEXIGROUP
	statutory FORECAST			PRO-FORMA FORECAST
as melion year emd 30 june	FV2007 AIFRS	FRO-FORMA ADJUSTMENTS	NETE	FY2007 AIFRS
Interest income from receivables	98.1			98.1
Interest expense	(38.3)			(38.3)
Net Margin	59.8			59.8
Other net income	41.5	(0.3)	(a)
Total Net Income	101.3	(0.3)		101.0
Payroll and related expenses	(27.2)	(0.5)	(b)	(27.7)
Share-based payment expenses
– from Compasy	(5.6)	4.4	$\langle$ c), $\langle$ d)	(1.2)
- from Existing Shareholders	(0.4)	(0.3)	(d)	(0.7)
Bad debt expense	(15.4)			(16.4)
Depreciation and amortisation expense	(2.9)			(2.9)
Other expenses	(15.2)	2.2	$(b)$ , $(e)$	(13.0)
Total Expenses	(66.7)	5.8		(60.9)
Net Profit before Tax	34.6	5.5		40.1
Tax expense	(12.6)			(12.6)
Net Profit after Tax	22.0			27.5

The actual statutory financial information that the Company will report in its audited financial statements for FY2007 Statutory Forecast will differ from the Forecast Financial Information due to:

• (a) Interest received in the first half of FY2007 on the cash used to settle a portion of the Existing Group Purchase Arrangements, as set out in Section 10.4;
• (b) Inclusion of public company costs for the second half of FY2007 only, whereas the full year cost has been included in the pro-forma forecast income statement;
• (c) Inclusion of one-off share-based payment expense to the Chairman and Directors as set out in Section 10.6.1;
• (d) Inclusion of share-based payment expenses for the new employee share plans (as set out in Section 10.5) for the second half of FY2007, whereas the full year cost has been included in the pro-forma forecast income statement; and
• (e) Inclusion of certain expenses for the first half of FY2007. The Existing Shareholders of Flexirent Holdings pursued a trade sale in conjunction with an initial public offer, as such, transaction costs in relation to the trade sale were incurred. Certain payments were also made to Existing Shareholders noted in Section 7.11, which will not be incurred post the transaction, and hence have not been included in the pro-forma forecast income statement.

:::::::::::::::::::::::::

7.18 Summer of Signifeant Accaunting Policies

The principal accounting policies adopted in the preparation of the financial information are set out below.

7.15.1 Revenue Recognition

Lease finance interest revenue on finance leases is recognised by applying discount rates implicit in the leases to lease balances receivable at the beginning of each payment period.

Secondary lease income, including inertia rentals received and rental income on extended rental assets, is recognised when it is due on an accrual basis. Proceeds from the sale of rental assets are recognised upon disposal of the relevant assets.

The Company operates an edgipment protection and debt waiver plan entitled Protect and Protect Platinum. Protect and Protect Platinum revenue is recognised in the month it is due on an accrual basis. A provision for outstanding expected claims is recognised in the balance sheet for the cost of Protect and Protect Platinum claims which have been incurred at year end, but have not yet been notified to the Company, or which have been notified to the Company but not yet paid.

7.15.2 Income Tax

The income tax expense on revenue for the period is the tax payable on the current period's taxable income based on the notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

It is intended that FlexiGroup Limited will be the head entity in the tax consolidated group.

Amounts payable or receivable under a tax-sharing agreement with the head entity are recognised in accordance with the terms and conditions of the agreement as tax-related amounts receivable or payable. Expenses and revenues arising under these agreements are recognised as income tax expense or revenue.

The head entity, FlexiGroup Limited, and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax coasolidated group coatinues to be a stand-alone taxpayer in its own right.

7.15.3 Lease Receivables

The Company's principal activity is the provision of point-of-sale lease and rental financing for IT equipment and electrical appliances. The Company has classified its leases as direct finance leases. Under a direct finance lease, substantially all the risks and benefits incidental to the ownership of the leased asset are transferred by the lessor to the lessee.

The Company recognises at the beginning of the lease term an asset at an amount equal to the aggregate of the present value (discounted at the interest rate implicit in the lease) of the minimum lease payments and a conservative estimate of the value of any unguaranteed residual value expected to accrue to the benefit of the Company at the end of the lease term.

7.15.4 Unearned Interest

Unearned interest on lease and other receivables is brought to account over the life of the lease or loan contract based on the interest rate implicit in the lease or loan.

7.15.5 Initial Direct Sales Costs

Initial direct costs incurred relating to direct financing of leases are included as part of lease receivables in the balance sheet and are amortised consistent with how interest is earned over the lease term.

7.15.6 Allowance for Losses

The collectability of receivables is assessed on an ongoing basis. A provision is made for expected losses based on historical roll rates of arrears and the current delingeency position of the portfolio.

7.15.7 Cash and Cash Equivalents

For statement of cash flow presentation purposes, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

7.15.8 Rental Equipment

Rental equipment is carried at the lower of cost and net realisable value and comprises returned rental equipment and items remaining on rental after the end of the contractual rental period.

7.15.9 Plant and Equipment

Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows:

oepheciation asset ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	-depreciation raye
Plant and equipment.	}=40% m
Motor vehicles	40%

The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written-down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the income statement.

7.15.10 Impairment of Assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell, and value in use.

7.15.11 Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Company prior to year end which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

7.15.12 Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

7.15.13 Employee Benefits

7.15.13.1 Wages and Salaries, Annual Leave and Sick Leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date, are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

7.15.13.2 Long Service Leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

7.15.13.3 Profit Sharing and Bonus Plans

The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

7.15.14 Business Combination

Under AASB 3 - Business Combinations, when an existing group is acquired by a new shell company, the legal acquirer may not be treated as the acquirer for accounting perposes. In this case, acquisition of the Existing Shareholders' shares in Flexirent Holdings by the Company will be treated as a reverse acquisition since the substance of the transaction is that the existing group will continue to control the business post the transaction. Hence. Flexirent Holdings will be treated as the acquirer of the Company for accounting purposes and this transaction will not result in the creation of any fair value adjustments or goodwill upon consolidation.

7.15.15 Share-based Payments

Share-based compensation benefits are provided to Directors and certain employees. Information relating to these schemes is set out in Sections 10.4 and 10.5.

7.15.15.1 Share-based Payments Granted before 7 November 2002 and/or Vested before 1 January 2005 No expense is recognised in respects of the instruments issued for nil consideration. Shares issued following the exercise of the instruments are recognised at that time and the proceeds received allocated to share capital. No proceeds are carrently expected to be received on exercise.

7.15.15.2 Share-based Payments Granted after 7 November 2002 and Vested after 1 January 2005

The fair value of such instruments is recognised as an expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the relevant party becomes unconditionally entitled to the instruments.

The fair value at grant date is independently determined using a pricing model that takes into account the exercise price, the term of the instrument, the impact of dilution, the estimated value of the Company at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the instrument.

The fair value of the instruments granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number and value of instruments that are expected to become exercisable. At each balance sheet date, the entity revises its estimate of the number of instruments that are expected to become exercisable. The share-based payment expense recognised each period takes into account the most recent estimate.

Upon the exercise of instruments, the balance of the share-based payments reserve relating to those instruments is transferred to share capital and the proceeds received (if any), net of any directly attributable transaction costs, are credited to share capital.

B. ! Intraduction

There are a number of factors, both specific to FlexiGroup and of a general nature relating to the business and economic climate, which may either individually or in combination affect the operating and financial performance of FlexiGroup, its prospects, its investment returns and the value of the Shares. These risks include, but are not limited to, the risks set out in this Section 8

in the event that a number of the risks set out below eventuate, there may be a materially adverse impact on any of FlexiGrosp's operating performance, cash flows and profits and consequently the financial performance of FlexiGroup, its prospects, its investment returns and the value of the Shares.

The risks have been separated into general risk factors. (described in Section 8.2) and specific risk factors (described in Section 8.3).

Prospective investors should note that this Section is not an exhaustive list of the risks associated with an investment in the Company and it should be considered in conjunction with other information disclosed in this Prospectus.

8.2 General Nick Factors

8.2.1 Share Market and Price Variations

There is no existing public market for the Shares, and an active public market might not develop or be sustained. after the completion of the Offer. Any failure of an active public market for the Shares to develop following the completion of the Offer could adversely affect your ability to sell your Shares and depress the market price. of your Shares. Even if an active public market does develop, the price at which Shares trade on ASX may vary from time to time and may not exceed the Offer Price.

The Offer Price may not be indicative of prices that will prevail in the open market following the Offer. Investors may not be able to sell their Shares at prices equal to or greater than the Offer Price.

The sale of large parcels of Shares (whether by Existing Shareholders or by any party that acquires Shares under the Offer or following completion of the Offer) may cause a fluctuation in the price at which the Shares trade on ASX from time to time.

8.2.2 Dependence on General Economic Conditions and External Market Factors

The operating and financial performance of FiexiGrosn. is influenced by a variety of general economic and basiness conditions, inclading the level of inflation, interest rates, exchange rates, government policy, consumer spending and employment rates. Adverse changes in such factors as the level of inflation, interest rates, exchange rates, government policy, consumer spending and employment rates are outside of FlexiGroup's control and that of the Directors and may result in a material adverse impact on FlexiGroup's business, financial condition, prospects and results of operation.

Changes to laws and regulations or accounting standards that apply to FlexiGroup from time to time. could also adversely impact on FlexiGroup's earnings. and financial performance.

8.3 September Mark Factors

8.3.1 Dependence on Relationship with Harvey Norman

FlexiGroup distributes its products through a number of retail partners. Of these retail partners, the most important one is Harvey Norman, which in FY2006 originated approximately 50% of the value of deals. settled by FlexiGroup. Harvey Norman and FlexiGroup have entered into a longstanding contractual relationship (as described in Section 10.7.2). However, if Harvey Norman were to terminate for breach by FlexiGroup or Harvey Norman were to default on the agreement, become insolvent or otherwise lose market share or cease to sell electrical appliances and IT equipment, this would have a material adverse impact on the financial performance and prospects of FlexiGroup.

In addition, the agreement described above is due to automatically expire in 2015 (unless terminated earlier as described in Section 10.7.2). There can be no guarantee that upon expiry of this agreement it will be renewed on similar terms or on terms which are no less favourable. than the existing arrangements. The expiry of the Harvey Norman contract, without renewal on similar terms, may have an adverse impact on the financial performance. and prospects of FlexiGroup.

8.3.2 Reliance on Distribution Relationships

FlexiGroup is dependent on its retail partners to offer its products at the retail point-of-sale. FlexiGroup's financial performance and prospects depend, in part, on its ability to retain and attract new distribution partners on acceptable terms. Each of FlexiGroup's retail partners has the ability to terminate its distribution agreement subject to notice periods varying from 14 days to 60 days. The term of the distribution agreements with each of its retail partners varies, and there is no gearantee that FlexiGroup will be able to negotiate new distribution agreements with any of its current retail partners on terms acceptable to FlexiGroup. Renewals of distribution. agreements on less favourable terms to FlexiGroup or terminations of a number of the current agreements significantly reducing the FlexiGroup distribution network may have an adverse impact on the financial performance and prospects of FlexiGroup.

8.3.3 Compliance with and Changes to Regulation and Legislation

The industry in which FlexiGroup operates is subject to a range of laws and regulations including taxation (see Sections 10.8 and 10.9), in particular, the provision. of consumer credit in Australia and New Zealand is requiated by the terms of the Uniform Consumer Credit Code and the Credit Contracts and Consumer Finance. Act 2003 respectively as well as various fair trading and consumer protection laws.

There is a risk that FlexiGroup may fail to comply in all material respects with all laws and regulations including taxation relating to the markets in which FlexiGroup operates. If FlexiGroup does not meet regulatory requirements, FlexiGroup may be exposed to fines, penalties and/or obligations to pay compensation and it may give rise to adverse publicity. Non-compliance with laws or regulations may have an adverse impact on the financial performance and prospects of FlexiGroup.

The regulatory regime is subject to change. Changes in laws, regulations and government policy may positively or negatively affect FlexiGroup and the attractiveness of an investment in FlexiGroup.

FlexiGroup cannot predict what legislative or regulatory changes may be made in the future or the impact of future legislative or regalatory change on its business. If, for example, there are changes to the regulatory environment which necessitate FlexiGroup ceasing to provide some of the end-of-term options on its consumer leasing products, or which make significant changes to disclosure requirements, such changes

could impact take-up of FlexiGroup's consumer. products with a consequent adverse impact on the financial performance and prospects of FlexiGroup. le addition, if the amount and complexity of new regulation increase, so too may the cost of compliance and the risk of non-compliance which may have an adverse impact on the financial performance and prospects of FlexiGroup.

The Australian Government is in the process of reforming Australia's anti-money laundering and counter-terrorism financing ("AML/CTF") regulatory regime. It is anticipated that FlexiGroup's products will fall within the new regime and, if so, PlexiGroup would be required to develop and implement a compliant AML/CTF program, including customer identification, ongoing customer due diligence and transaction. monitoring, employee due diligence and training, reporting and record keeping. This would be likely to involve significant compliance costs.

8.3.4 Access to Funding

STANDARD AND THE STANDARD STANDARD STANDARD STANDARD STANDARD STANDARD STANDARD STANDARD STANDARD STANDARD ST

FlexiGroup is dependent on debt funding to operate its business. If FlexiGroup is unable to secure sufficient funding for new products or asset categories or is unable to secure sufficient funding on favourable terms. due to high interest rates, restrictive covenants, failure to comply with the terms of its existing finance facilities or otherwise, it may limit FlexiGroup's ability to remain competitive or to have funds to purchase enderlying assets from retailers and thereby may have an adverse. impact on the financial performance and prospects of FlexiGroup.

FlexiGroup's current Funders have the ability to terminate the current fending arrangements by giving 90 days' notice. Termination does not affect any existing loans for products previously written under a particular facility but will result in FlexiGroup being unable to obtain new funds under that facility.

8.3.5 Impact of Reducing Retail Prices of IT Equipment and Electrical Appliances

In recent years, prices of IT equipment and electrical appliances have fallen. This trend is expected to continue, which could reduce the average value of each deal involving FlexiGroup's products. In addition, lower prices could reduce customers' propensity to lease or finance the perchase of IT equipment and electrical appliances which may have an adverse impact on the financial performance and prospects of FlexiGroup.

8.3.6 Credit Losses

FlexiGroup is exposed to its customers' ability and willingness to meet their nayment obligations during the term of their contracts. FlexiGroup's business model assumes a certain level of its customers will default on their payments. However, the level of defaults could be higher than that assumed by FlexiGroup or experienced by FlexiGroup historically. This may have an adverse impact on the financial performance and prospects. of FlexiGroup.

in addition, as FlexiGroup executes its growth strategy, it expects to attract a higher proportion of customers. acquiring personal loans and related products, with a different expected level of defacit on their payments. While FlexiGroup has experience with estimating and providing for the default levels associated with customers using its products to finance electrical appliances and IT equipment, it has less experience. estimating and providing for defacit levels associated with customers acquiring personal loans. There is a risk that default levels will rise beyond FlexiGroup's. expectations and this may have an adverse impact on the financial performance and prospects of FlexiGroup.

As a retail consumer finance business. FlexiGroup is exposed to the risk of customer fraud, in particular the provision of false information and stolen identification. Increased incidents of such fraud bevoad bistoric levels may have an adverse impact on the financial performance and prospects of FlexiGroup.

8.3.7 Interest Rate Fluctuations

Changes in the credit and interest rate environment can affect a customer's ability and willingness to acquire additional electrical appliances and/or IT equipment. which may lead to an overall reduction in the number of new deals settled by FlexiGroup.

FlexiGroup's borrowings are primarily on a fixed rate basis, as such, fluctuations in interest rates do not necessarily adversely affect interest rate margins on deals already written. However, to the extent that FlexiGroup is unable to pass on interest rate rises to customers in new deals written, this may have an adverse impact on the financial performance or prospects of FlexiGroup.

8.3.8 Impact of New Product Launches

FlexiGroup's financial performance and prospects are in part dependent on the successful launch and growth. of new products including business and personal. loans. If these new products and asset categories do not provide the growth as expected, this may have an adverse impact on the financial performance or prospects of FlexiGroup.

8.3.9 Quality of Advice

FlexiGroup provides training and support to safespeople of its retail nartners and motivates those salespeople to offer FlexiGroup products. It is possible that FlexiGroup could be exposed to reputational risk in connection with the basiness conduct of retail partners and their salespeople otherwise than in accordance with FlexiGroup's quidelines and the terms of the distribution agreements between retail partners and FlexiGroup. Also, FlexiGroup may incur expenses in dealing with complaints due to the misapprehension that customers are dealing directly with FlexiGroup or that FlexiGroup is responsible for actions of retail partners and their salespeople and this may have an adverse impact on the financial performance and prospects of FlexiGroup.

8.3.10 Dependence on Key Personnel

FlexiGroup's future seccess depends in part on the capacity of FlexiGroup to retain and motivate existing members of senior management as well as attract new executives, in particular, FlexiGroup's performance is dependent on the talents and efforts. of key senior executives. The loss of key executives could cause material disruption to FlexiGroup's. business and operations in the short to medium term. and may have an adverse impact on the financial performance or prospects of FlexiGroup, While FlexiGroup has historically enjoyed low turnover among its senior executives and the equity incentives of key personnel align their interests with FlexiGroup's future performance, neither of these factors provides a guarantee of their continued employment. with FlexiGroup.

8.3.11 Competition

FlexiGroup's industry is competitive. Actions by existing competitors or new entrants to the market could result in reductions in the number of deals FlexiGroup settles, reduced margins and/or loss of market share, any of which may have an adverse impact on the financial performance and prospects of FlexiGroup. Some of FlexiGroup's competitors are large financial institutions. who operate in the broader financial services indestry. They offer a wider range of products and services, and have access to greater financial and marketing resources. and customer databases than FlexiGroup. As a result of FlexiGroup's current market position, it is possible. that FlexiGroup may be disproportionately affected by the actions of its larger competitors or changes to the markets in which it operates caused by the actions. of those competitors.

8.3.12 Changes in Industry Conditions

Conditions in the point-of-sale finance industry, the IT ergänment and electrical appliance retail market and consumer confidence and behaviour could all affect FlexiGroup's financial performance and prospects.

Negative publicity regarding the retail point-of-sale finance industry could lead to a reduction in the volume of products sold by FlexiGroup and inhibit FlexiGroup's ability to grow and may have an adverse impact on the financial performance or prospects of FlexiGroup.

8.3.13 Operational Risks and Controls

Operational risk relates to the risk of loss resulting from inadequate or falled internal processes, people and systems, or from external events which affect FlexiGroup's business. FlexiGroup is exposed to operational risks including process error, fraud, system failure, and failure, of security and physical protection systems.

FlexiGroup is reliant in part on the efforts of salespeople employed by retail partners to offer its products. FlexiGroup has no direct supervisory control over salespeople employed by retail partners. There is a risk that failure by salespeople to comply with FlexiGroup's operational systems and processes will result in loss or damage to FlexiGroup.

A failure by a retail partner's salespeople to comply with FlexiGroup's risk management systems and processes. may have an adverse impact on the reputation and financial performance or prospects of FlexiGroup.

8.3.14 Taxation

Federal or State Governments may introduce further taxes, duties or other imposts which may have an adverse impact on FlexiGroup. In particular, changes in the tax regime could reduce the relative attractiveness of leasing rather than purchasing outright and this may adversely impact on the levels of business undertaken. by FlexiGroup and on the financial performance or prospects of FlexiGroup.

8.3.15 Information Technology

The financial services industry relies to a high degree on information technology. FlexiGroup faces the risk, in common with other industry participants, that information technology changes will be required which could result in a substantial increase in costs.

FlexiGroup's prospects will depend significantly on its ability to adapt to changing technologies by continually improving the performance features and reliability of its services. In addition, while FlexiGroup has implemented plans and procedures to ensure that data contained in various information systems, and technology and software products are retained and that these systems are maintained to meet the demands of the business, system failures may have an adverse impact on the financial performance or prospects of FlexiGroup.

FlexiGroup's ability to service its customers is dependent upon the ongoing performance of its information systems, software and telecommunications equipment. Interruptions, or delays in the provision, of these systems may have an adverse impact on the financial performance or prospects of FlexiGroup.

8.3.16 Brands and Reputation

FlexiGroup's business relies to a large extent on. relationships and a reputation for efficiency, good service and value for money to attract and retain customers and retail partners. Maintaining the FlexiGroup brand is important to attracting and expanding its customer base, solidifying its business relationships and reputation and implementing its business strategy. A tarnished brand and reputation may have an adverse impact on the financial performance or prospects of FlexiGroup, Promotion. and enhancement of the FlexiGroup brand will also depend, in part, on FlexiGroup's success in providing a high quality customer experience. There can be no assurance that FlexiGroup will be successful in achieving this goal, particularly as FlexiGroup has no direct supervisory control over salespeople employed. by retail partners.

8.3.17 Material Litigation

FlexiGroup is not cerrently involved in any material litigation as a defendant and is not aware of any facts. or circumstances that may give rise to any material litigation commenced against it. However, given the nature and scope of FlexiGroup's activities and the wide range of parties it deals with. FlexiGroup may be exposed to potential claims or litigation from third parties such as customers, regulators, employees and business associates, including retail partners. To the extent that these risks are not covered by FlexiGroup's insurance policies, litigation and the costs of responding to any threats of legal action or investigation may have an adverse impact on the financial performance or prospects of FlexiGroup.

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Investigating
Accountant's Report

93

PriceWATERHOUSE COPERS ®

The Directors FlexiGroup Limited Level 8, 201 Pacific Highway ST LEONARDS NSW 2065

PricewaterhouseCoopers Securities Ltd ACN 003 311 617 ABN 54 003 311 617 Holder of Australian Financial Services Licence No 244572

Darling Park Tower 2 201 Sussex Street GPO BOX 2658 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999

21 November 2006

Dear Sirs

Investigating Accountant's Report on Historical and Forecast Financial Information

We have prepared this report on the pro-forma historical and forecast financial information of FlexiGroup Limited and controlled entities ("FlexiGroup" or the "Company") for inclusion in a Prospectus dated on or about 21 November 2006 (the "Prospectus") relating to the issue of 217,500,000 ordinary shares in the Company in order to provide funding to enable the Company to acquire Flexirent Holdings Pty Limited and its subsidiaries.

Expressions defined in the Prospectus have the same meaning in this report.

The nature of this Report is such that it should be given by an entity which holds an Australian Financial Services Licence under the Corporations Act 2001. PricewaterhouseCoopers Securities Ltd is wholly owned by PricewaterhouseCoopers and holds the appropriate Australian Financial Services Licence

Scope

You have requested PricewaterhouseCoopers Securities Ltd to prepare an Investigating Accountant's Report (the "Report") covering the following information:

Historical financial information

• $(a)$ the pro-forma consolidated income statements of FlexiGroup for the years ended 30 June 2005 and 30 June 2006;
• $(b)$ the pro-forma consolidated statements of cash flows of FlexiGroup for the years ended 30 June 2005 and 30 June 2006; and
• $(c)$ the pro-forma consolidated balance sheet of FlexiGroup as at 30 June 2006 on the assumption that all transactions stated in Section 7.11 of the Prospectus have occurred or will occur as a consequence of the Offer (the "Pro-forma Transactions")

(collectively, the "Historical Financial Information").

Investuation Americanis Sceen

PRICEWATERHOUSE COPERS

FlexiGroup Limited 21 November 2006

Forecast financial information

• $(a)$ the pro-forma consolidated forecast income statement of FlexiGroup for the year ending 30 June 2007; and
• $(b)$ the pro-forma consolidated forecast statement of cash flows of FlexiGroup for the vear ending 30 June 2007;
• (the "Forecast Financial Information").

This Report has been prepared for inclusion in the Prospectus. We disclaim any assumption of responsibility for any reliance on this Report or on the Historical or Forecast Financial Information to which it relates for any purposes other than for which it was prepared.

Scope of review of Historical Financial Information

The Historical Financial Information set out in Sections 7.3, 7.8 and 7.11 of the Prospectus has been extracted from the audited financial statements of the Company prepared under AIFRS, which were audited by PricewaterhouseCoopers, which issued an unmodified audit opinion on the financial statements. The Historical Financial Information incorporates such adjustments as the Directors considered necessary to eliminate certain non-recurring items ("Pro-forma Adjustments") in order to allow for better comparison with the Forecast Financial Information. The Directors are responsible for the preparation of the Historical Financial Information, including determination of the Pro-forma Adjustments.

We have conducted our review of the Historical Financial Information in accordance with Australian Auditing Standard AUS 902 "Review of Financial Reports". We made such inquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including:

• an analytical review of the audited financial performance of FlexiGroup for the relevant historical period
• a review of work papers, accounting records and other documents
• a review of the Pro-forma Adiustments made to the historical income statement
• a review of the Pro-forma Transactions and other assumptions used to compile the proforma consolidated balance sheet
• a comparison of consistency in application of the recognition and measurement principles in Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the Company disclosed in Section 7.15 of the Prospectus, and
• enquiry of directors, management and others.

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These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Review statement on Historical Financial Information

Based on our review, which is not an audit, nothing has come to our attention which causes us to believe that:

• the pro-forma consolidated balance sheet has not been properly prepared on the basis of the Pro-forma Transactions
• the Pro-forma Transactions do not form a reasonable basis for the pro-forma consolidated balance sheet
• the Historical Financial Information, as set out in Sections 7.3, 7.8 and 7.11 of the Prospectus does not present fairly:
• the pro-forma consolidated income statements of FlexiGroup for each of the years $(a)$ ended 30 June 2005 and 30 June 2006:
• the pro-forma consolidated statements of cash flows of FlexiGroup for the years $(b)$ ended 30 June 2005 and 30 June 2006; and
• the historical and pro-forma consolidated balance sheet of FlexiGroup as at $(c)$ 30 June 2006.

in accordance with the recognition and measurement principles prescribed in Accounting Standards and other mandatory professional reporting requirements in Australia, and accounting policies adopted by the Company as disclosed in Section 7.15 of the Prospectus.

Scope of review of Forecast financial information

The Directors are responsible for the preparation and presentation of the Forecast Financial Information, including the best estimate assumptions, which include the Pro-forma Transactions, on which they are based.

Our review of the best estimate assumptions underlying the Forecast Financial Information was conducted in accordance with Australian Auditing Standard AUS 902 "Review of Financial Reports". Our procedures consisted primarily of enquiry and comparison and other such analytical review procedures we considered necessary so as to adequately evaluate whether the best estimate assumptions provide a reasonable basis for the Forecast Financial Information. These procedures included discussion with the Directors and management of the Company and consideration of ASIC Policy Statement 170 "Prospective financial information" and have been undertaken to form an opinion whether anything has come to our attention which causes us to

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believe that the best estimate assumptions do not provide a reasonable basis for the preparation of the Forecast Financial Information and whether, in all material respects, the Forecast Financial Information has been properly prepared on the basis of the assumptions and is presented fairly in accordance with the recognition and measurement principles prescribed in Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies of the Company disclosed in Section 7.15 of the Prospectus so as to present a view of the Company which is consistent with our understanding of the Company's past, current and future operations.

The Forecast Financial Information has been prepared by the Directors to provide investors with a quide to the Company's potential future financial performance based upon the achievement of certain economic, operating and trading assumptions about future events and actions that have not yet occurred and may not necessarily occur. There is a considerable degree of subjective judgement involved in the preparation of the Forecast Financial Information. Actual results may vary materially from the Forecast Financial Information and the variation may be materially positive or negative. Accordingly, investors should have regard to the investment risks set out in Section 8 of the Prospectus.

Our review of the Forecast Financial Information, that is based on best estimate assumptions, is substantially less in scope than an audit examination conducted in accordance with Australian Auditing and Assurance Standards. A review of this nature provides less assurance than an audit. We have not performed an audit and we do not express an audit opinion on the Forecast Financial Information included in the Prospectus.

Review statement on the Forecast Financial Information

Based on our review of the Forecast Financial Information, which is not an audit, and based on an investigation of the reasonableness of the best estimate assumptions giving rise to the Forecast Financial Information, nothing has come to our attention which causes us to believe that:

• the best estimate assumptions set out in Sections 7.5.2, 7.5.3 and 7.10 of the $(a)$ Prospectus do not provide a reasonable basis for the preparation of the Forecast Financial Information:
• the Forecast Financial Information has not been properly prepared on the basis of $(b)$ the best estimate assumptions and presented fairly in accordance with the recognition and measurement principles prescribed in Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the Company disclosed in Section 7.15 of the Prospectus: and
• the Forecast Financial Information is unreasonable. $(c)$

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The underlying assumptions are subject to significant uncertainties and contingencies often outside the control of the Company. If events do not occur as assumed, actual results achieved by the Company may vary significantly from the Forecast Financial Information. Accordingly, we do not confirm or guarantee the achievement of the Forecast Financial Information, as future events, by their very nature, are not capable of independent substantiation.

Subsequent events

Apart from the matters dealt with in this Report, and having regard to the scope of our Report, to the best of our knowledge and belief no material transactions or events outside of the ordinary business of the Company have come to our attention that would require comment on, or adjustment to, the information referred to in our Report or that would cause such information to be misleading or deceptive.

Independence or Disclosure of Interest

PricewaterhouseCoopers Securities Ltd does not have any interest in the outcome of this issue other than the preparation of this Report and participation in due diligence procedures for which normal professional fees will be received.

Financial Services Guide

We have included our Financial Services Guide following our Report. The Financial Services Guide is designed to assist retail clients in their use of any general financial product advice in our Report.

Yours faithfully

Troy Porter Authorised Representative PricewaterhouseCoopers Securities Ltd

Communication

Victor Clarke Authorised Representative PricewaterhouseCoopers Securities Ltd

Invostiganing Amerikanis' Bepant

PRICEWATERHOUSE COPERS

PRICEWATERHOUSECOOPERS SECURITIES LTD FINANCIAL SERVICES GUIDE

This Financial Services Guide is dated 21 November 2006

PricewaterhouseCoopers Securities Ltd ACN 003 311 617 ABN 54 003 311 617 Holder of Australian Financial Services Licence No 244572

Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999

About us $\ddagger$

PricewaterhouseCoopers Securities Ltd (ABN 54 003 311 617, Australian Financial Services Licence no 244572) ("PwC Securities") has been engaged by FlexiGroup Limited ("FlexiGroup") to provide a report in the form of an Independent Accountant's Report in relation to the historical and forecast financial information (the "Report") for inclusion in the prospectus dated 21 November 2006.

You have not engaged us directly but have been provided with a copy of the Report as a retail client because of your connection to the matters set out in the Report.

$\overline{2}$ This Financial Services Guide

This Financial Services Guide ("FSG") is designed to assist retail clients in their use of any general financial product advice contained in the Report. This FSG contains information about PwC Securities negatally the financial services we are licensed to provide, the remuneration we may receive in connection with the preparation of the Report, and how complaints against us will be dealt with.

3 Financial services we are licensed to provide Our Australian financial services licence allows us to provide a broad range of services, including providing financial product advice in relation to various financial products such as securities, interests in managed investment schemes, derivatives, superannuation products, foreign exchange contracts, insurance products, life products, managed investment schemes, povernment debentures, stocks or bonds, and deposit products

General financial product advice The Report contains only general financial product advice. It was prepared without taking into account your personal objectives, financial situation or needs.

You should consider your own objectives, financial situation and needs when assessing the suitability of the Report to your situation. You may wish to obtain personal financial product advice from the holder of an Australian Financial Services Licence to assist you in this assessment.

Fees, commissions and other benefits we may receive

PwC Securities charges fees to produce reports, including this Report. These fees are negotiated and agreed with the entity who engages PwC Securities to provide a report. Fees are charged on an hourly basis or as a fixed amount depending on the terms of the agreement with the person who engages us. In the preparation of this Report our fees are based on hourly rates and are disclosed in Section 10.11.

Directors or employees of PwC Securities, PricewaterhouseCoopers, or other associated entities. may receive partnership distributions, salary or wages from PricewaterhouseCoopers

£, Associations with issuers of financial products

PwC Securities and its authorised representatives employees and associates may from time to time have relationships with the issuers of financial products. For example, PricewaterhouseCoopers may be the auditor of, or provide financial services to, the issuer of a financial product and PwC Securities may provide financial services to the issuer of a financial product in the ordinary course of its business. We note that PricewaterhouseCoopers has ongoing audit and tax advisory relationships with FlexiGroup.

$\overline{7}$ Complaints

If you have a complaint, please raise it with us first, using the contact details listed below. We will endeavour to satisfactorily resolve your complaint in a timely manner. In addition, a copy of our internal complaints handling procedure is available upon request.

If we are not able to resolve your complaint to your satisfaction within 45 days of your written notification. you are entitled to have your matter referred to the Financial Industry Complaints Service ("FICS"), an external complaints resolution service. You will not be charged for using the FICS service.

Contact Details

PwC Securities can be contacted by sending a letter to the following address: Troy Porter PricewaterhouseCoopers Securities Ltd Darling Park Tower 2 201 Sussex Street SYDNEY NSW 2088

Additional Information

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10.1 kacomparation of FlexiGroup and Share Camited

The Company was registered in Victoria on 14 November 2006 and is a public company limited by shares.

The Company has only one class of shares, being fully paid ordinary shares. As at the date of this Prospectus, the Company has two Shares on issue. Following completion of the Offer the Company will have that number of Shares on issue as set out in Section 3.4.

10.2 Tax Status and Fisandal Year

The Company will be taxed in Australia as a public company. The financial year of the Company will end on 30 June annually.

10.3 Constitution of Mexitirems

Rights attaching to the Shares are set out in the Constitution and arise from a combination of the Constitution, statute, general law and while the Company is listed on ASX, the Listing Rules and the ASTC Settlement Rules.

A summary of the rights attaching to the Shares and certain provisions of the Constitution are set out below. This semmary is not intended to be exhaustive and is qualified by the full terms of the Constitution (a copy of which is available for inspection as described in Section 10.17).

General	The Shares will be the only shares currently on issue in the capital of the Company. All Shares are of the same class and rank equally in all respects.
Voting Rights	Subject to any special rights or restrictions attached to any class or classes of shares. in the Company, at a general meeting each Shareholder present in person or by proxy, representative or attorney has one vote on a show of hands and one vote for each fully paid Share held on a poll.
	Voting at any meeting of Shareholders is by a show of hands unless a poll is demanded and not withdrawn.
	The guorum required for a meeting of Shareholders is two members present in person. or by proxy, attorney or representative.
	A Shareholder is not entitled to vote at a general meeting in respect of Shares which are the subject of a current Restriction Agreement (within the meaning of the Listing Rules) for so (ong as any breach of that agreement exists.
	On a poll, partly paid Shares confer a fraction of a vote in proportion to the amount paid up on the Share.
General Meetings and Notices	Each Shareholder is entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive all notices, accounts and other documents. required to be sent to Shareholders under the Constitution, the Corporations Act or the Listing Rules.
	Under the Corporations Act, a notice must cerrently be provided to the Shareholders of a listed entity at least twenty eight days in advance of the meeting.

Dividends	Subject to the Corporations Act, the Constitution and the rights of holders of shares. issued with any special or preferential rights, the profits of the Company which the Directors may from time to time determine to distribute by way of dividend are divisible amongst the Shareholders in proportion to the Shares held by them respectively and will be paid in proportion to the amounts paid, or credited as paid, on the issue price of those Shares.
Variation of Class Rights	Subject to the Corporations Act, whenever the capital of the Company is divided into different classes of shares, the rights attached to any class of share may be altered with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class or with the written consent of the holders of at least three-ovarters of the shares of that class on issue.
Further Issues of shares and options	Subject to any restrictions on the allotment and issue of shares imposed by the Constitution, the Corporations Act, the Listing Rules or any special rights conferred on the holders of any shares, the allotment and issue of shares is under the control of the Directors, who may allot, issue and cancel shares, and grant options over unissued shares, in the Company on such terms and conditions as they see fit.
Transfer of Shares	Subject to the Constitution, Shares may be transferred by a proper transfer effected in accordance with the ASTC Settlement Rules, by a written instrument of transfer approved by the Directors which complies with the Constitution or by any other method of transfer that is required or permitted by the Corporations Act and the Listing Rules.
	The Company will not issue share certificates to Shareholders.
Holding Locks	The Directors:
	- May, if the Listing Rules permit the Company to do so; and Must, if the Listing Reles require the Company to do so (or if the transfer is in breach of the Listing Rules or any Restriction Agreement),
	request the ASTC to apply a holding lock to prevent a transfer of Shares through CHESS or decline to register any transfer of Shares.
Small Holdings	Subject to the Corporations Act, the Listing Rules and the ASTC Settlement Rules, the Company may sell the Shares of a Shareholder who holds less than a marketable parcel of Shares.
Share Buy-Backs	Subject to the Corporations Act and the Listing Rules, the Company may buy back shares on such terms and conditions as may from time to time be determined by the Directors.
Proportional Takeover of Provisions	The Constitution contains provisions which prohibit the registration of any transfer voting shares giving effect to an offer made under a proportional takeover bid (i.e. an offer for some but not all of the holders' shares in the Company) until the persons holding shares in a class for which the offer made under the takeover bid was made have passed an ordinary resolution approving the bid. The bidder and any associate of the bidder are excluded from voting on that resolution. To remain effective, these provisions must be renewed by the Company in a general meeting every three years from the later of their adoption or renewal.

104

Winding Up	Subject to the rights of holders of shares issued with any special or preferential rights, if the Company is wound up, the liquidator may with the sanction of a special resolution divide among the shareholders in kind the whole or any part of the property of the Company and for such purpose may set such value as he or she deems fair on any property and may determine how the division shall be carried out as between shareholders or different classes of shareholders.
Directors - Appointment and Removal	The Board of Directors is responsible for the overall corporate governance of the Company, including establishing its strategic direction, establishing goals for management and monitoring the achievement of these goals.
	The minimum number of Directors is three and the maximum number is ten. Shareholders may vary the number by resolution in general meeting.
	The Constitution provides that at each annual general meeting, any Director who has held office:
	- Without re-election for in excess of three years; - Past the third annual general meeting following that Director's last election or appointment; or - Persuant to an appointment by the Directors to fill a casual vacancy in the preceding year,
	must retire from office.
	The Chief Executive Officer is exempted from retirement by rotation. A retiring Director is eligible for re-election.
Directors - Voting	Questions arising at a meeting of Directors will be decided by a majority vote. The chairman of the meeting has a casting vote in the event that there is an equality of votes.
Directors' and Officers' Indemnity	The Company may, subject to certain exceptions set out in the Constitution, indemnify each of its current or former Directors, secretaries, officers or senior managers against any liability (incerred by that person in that capacity) and all legal costs incerred in defending or resisting (or otherwise in connection with) proceedings in which a person becomes involved because of that capacity.
	The Company may, subject to certain exceptions set out in the Constitution, insure the same people referred to above against any liability incurred by that person in or arising out of the discharge of their duties.
	Alteration of Constitution The Constitution can only be amended by special resolution passed by at least three quarters of Shareholders present and voting at a general meeting of the Company.

10.4 Existing Group Purchase Arrangenterts

10.4.1 Acquisition of the Existing Group

A purpose of the Offer is to provide funding to enable the Company to acquire the Existing Group from the Existing Shareholders.

The Company has entered into arrangements with the Existing Shareholders under which they have agreed to sell all their shares in Flexirent Holdings to FlexiGroup Subco Pty Ltd ("Subco"), a wholly-owned subsidiary of the Company, for the total purchase price of \$426.9 million. Completion will take place on the day of (but immediately after) completion of the Broker Firm Offer and Institutional Offer. The consideration for the acquisition of the Existing Group will be as follows:

• Eighth SRJ will receive between 37.2% and 37.8% of its consideration in the form of Shares, and the remainder in cash. The actual number of Shares issued to Eighth SRJ in consideration for its shares in Flexirent Holdings will vary depending upon the level of allocations to Reserved Offer Applicants under the Reserved Offer. Eighth SRJ has agreed to apply for any Shares which are not allocated to Reserved Offer Applicants and has entered into a sub-underwriting arrangement with the Underwriters for this, such that Eighth SRJ's maximum interest in Shares at the completion of the Offer is limited to 29.99%. Refer to Section 10.7.1 for further details of the sub-underwriting arrangements.
• Viewlove will receive 25.0% of its consideration in the form of Shares, and the remainder in cash; and
• John and Kylie DeLano, as trustees of the DeLano Trust, will receive 100% of their consideration in the form of Shares

Under these arrangements, between 64,653,875 and 65,228,250 Shares will be issued to Eighth SRJ, 10,534,899 Shares will be issued to Viewlove and 2,880,810 Shares will be issued to John and Kylle DeLano (as trustees of the DeLano Trust). All of the consideration for the shares in Flexirent Holdings will be paid on the day of completion of the Broker Firm Offer and Institutional Offer, except that \$7.0 million worth of consideration payable to Eighth SRJ will be deferred until completion of the Reserved Offer. The deferred amount will be paid to Eighth SRJ as a combination of cash and/or Shares depending upon the level of the allocations to Reserved Offer Applicants under the Reserved Offer.

In total, between 78,047,584 and 78,623,959 Shares will be issued to Existing Shareholders in connection with these arrangements, equating to 35.9-36.1% of the Shares on issue following completion of the Offer. These Shares will be issued subject to disclosure under this Prospectus, and will be subject to the escrow arrangements described in Section 10.7.4. Refer to Section 3.4 for details of the ownership structure of FlexiGroup.

The Existing Shareholders and Dhawan Trust have agreed to procure that the Company issue 1,961,382 Shares to Margaret Jackson and 147,104 Shares to R John Skippen (and/or their associates) and 353,049 Shares to Dhawan Trust under arrangements agreed between the Existing Shareholders. Dhawan Trust and those Directors, These Shares are to be issued as part of the completion of the Offer at the direction of the Existing Shareholders and Dhawan Trust out of the Shares and/or other consideration due to them under the arrangements for the acquisition of the Existing Group and the cancellation of existing performance options and the equity participation entitlement described in this Section 10.4. These Shares will be issued subject to disclosure under this Prospectus and will be subject to the escrow arrangements described in Section 10.7.4.

No stamp duty is payable on the acquisition of the Existing Group.

10.4.2 Cancellation of Equity Participation Entitlement

Dhawan Trest has an equity participation entitlement in Flexirent Holdings under arrangements with the Existing Shareholders and Flexirent Holdings. Dhawan Trust has agreed with the Company, Flexirent Holdings and the Existing Shareholders to cancel this equity participation entitlement in return for a cash payment by Eighth SRJ and Viewfove of \$2.0 million. Dhawan Trust will reinvest some of these proceeds and apply for 379,515 Shares at the Offer Price. These Shares will be issued subject to disclosure under this Prospectus and will be subject to the escrow arrangements described in Section 10.7.4.

Payment of the cash proceeds will be made on the day of (but immediately after) completion of the Broker Firm Offer and Institutional Offer.

10.4.3 Cancellation of Existing Performance Options

Dhawan Trust and certain senior executives of the Existing Group hold performance options in Flexirent Holdings and Flexirent Capital ("Flexirent Optionholders").

As part of the arrangements for the acquisition of the Existing Group, the Company, Flexirent Holdings and Flexirent Capital land in respect of certain Flexirent Optionholders, also the Existing Shareholders) have entered into arrangements with the Flexirent Optionholders for the cancellation of their options in return for cash payments of \$26.2 million in aggregate, some of which will be funded by Flexirent Capital from existing cash reserves and the balance by the Existing Shareholders. These payments will be made as part of completion of the Broker Firm Offer and Institutional Offer. Four of the Flexirent Optionholders have elected to reinvest all or part of the cash proceeds payable to them on cancellation of their options and apply for Shares at the Offer Price.

106

In total, 1,987,019 Shares will be issued to the relevant Flexirent Optionholders in connection with these arrangements, equating to 0.9% of the Shares on issue following completion of the Offer. These Shares will be issued subject to disclosure under this Prospectus, and the Shares issued to John and Kylie DeLano as trustees of the DeLano Trust and Paul McMahon persuant to these arrangements will be subject to the escrow arrangements described in Section 10.74.

10.4.4 Certain Existing Long Term Incentive Plan Entitlements

Key senior executives and sales executives of the Existing Group are participants in long term incentive plans ("Participants") established by Flexirent Capital (a wholly-owned subsidiary of Flexirent Holdings). Under the terms of these long term incentive plans, the Offer will trigger certain incentive payment entitlements becoming payable to the Participants in three separate instalments, conditional broadly on the Participants remaining FlexiGroup employees at the time each instalment is payable.

The Company and Flexirent Capital have entered into arrangements with the Participants for the payment of their incentive payment entitlements as follows:

• The first instalment of their incentive payment (34% of the total amount) is payable on completion of the Broker Firm Offer and Institutional Offer and will be satisfied by Flexirent Capital in the form of cash;
• The obligations of Flexirent Capital in relation to the second and third instalments of their incentive payment (each 33% of the total amount) will be assumed by the Company and will be satisfied by the issue of Shares to the Participants subject to disclosure under this Prospectus at the Offer Price; and
• Shares issued to a Participant will be subject to escrow arrangements and are liable to be released or forfeited if the Participant ceases to be an eligible employee of FlexiGroup (for the perposes of the terms of the long term incentive plans) within two years after the Shares are issued. If the Participant ceases to be an eligible employee due to redundancy, the Participant will become immediately entitled to all the Shares. If the Participant ceases to be an eligible employee during a tranche period due to a reason other than redendancy, semmary dismissal or resignation, the Participant will become immediately entitied to a proportion of the relevant tranche of Shares. relating to that tranche period, pro rata to the length of time since the issue of the Shares or the prior anniversary date of the issue of the Shares (whichever is most recent). If the Participant ceases to be an eligible employee for any other reason, the Participant will forfeit all the Shares which have not be released from the escrow arrangements. If Shares are forfeited, the Participant must procure, or permit the Company to procure, the on-market sale of the relevant number of Shares in the ordinary course of trading on ASX and pay the net proceeds of sale to the Company.

Under these arrangements, a total of 2,416,943 Shares will be issued to Participants. All these Shares will be issued subject to disclosure under this Prospectus and will be subject to the escrow arrangements described in Section 10.7.4.

10.5 Employee Share Plans

The Company has established the following plans to assist in the attraction, retention and motivation of employees, management and Directors of FlexiGroup:

• Employee Share Acquisition (Tax Exempt) Plan (pursuant to which the Employee Gift Offer, open to Eligible Employees, is made);
• Long Term Incentive Plan (pursuant to which the Option Offer, open to the Managing Director and selected senior executives, is made);
• Tax Deferred Employee Share Plan (which the Board intends to use in the future to facilitate some of employees' remuneration being able to be satisfied in Shares);
• Non-Executive Director Share Acquisition Plan (which the Board intends to use in the future to facilitate some of Non-Executive Directors' fees being able to be satisfied in Shares); and
• Loan Funded Share Plan (which the Board intends to use in the future to provide limited recourse loans to employees of FlexiGroup for the perposes of acquiring Shares).

In addition, the Company has established a Retail Partners Option Plan for certain retail partners.

Each plan contains customary and usual terms for dealing with the administration of the plan, variation of the plan and termination and suspension of the plan. A summary of the key terms of each plan is set out below.

10.5.1 Employee Share Acquisition (Tax Exempt) Plan 10.5.1.1 General

The Employee Share Acquisition (Tax Exempt) Plan ("ESAP") is a general employee share plan pursuant to which grants of Shares may be offered to employees of FlexiGroup on terms and conditions as determined by the Board from time to time.

In accordance with current Australian tax legislation and in order that Australian employees can make an election to seek an exemption from tax in relation to Shares acquired under the ESAP, Shares acquired under the ESAP must be held in the ESAP for a minimum of three years (or earlier cessation of relevant employment). During that time, the Shares are subject to a disposal restriction such that the participant cannot deal in (i.e. sell or transfer). the Shares. Shares issued under the ESAP to New Zealand employees will be on the same terms as those issued to Australian employees.

A summary of the rules of the ESAP ("ESAP Rules") is set out in Section 10.5.1.2 below. The ESAP Rules set out the general terms of the ESAP. A grant of Shares under the ESAP is subject to both the ESAP Rales and the terms of the specific grant as determined by the Board.

The Company proposes to make, under the Employee Gift Offer, initial grants of Shares to Eligible Employees in Austraßa and New Zealand. The terms of the proposed initial grant of Shares under the Employee Gift Offer are set out in Section 10.5.1.3 below.

Under the ESAP, a financial benefit may be provided by the Company or a subsidiary to ESAP participants for the purposes of acquiring Shares. The financial benefit may include providing Shares to employees at no cost to the employee or inviting employees to sacrifice salary in return for Shares or to acquire Shares at a discount to the market price of Shares.

10.5.1.2 Summary of the ESAP Rules

The Board is responsible for administering the ESAP in accordance with the ESAP Rules and the terms and conditions of specific grants of Shares to participants in the ESAP. The ESAP Rules include the following provisions:

Eligibility

The Board may determine which persons will be eligible to be offered the opportunity to participate in the ESAP from time to time. The Board may make offers to eligible persons for participation in the ESAP.

Terms of Offer

The Board has the discretion to determine the specific terms and conditions applying to each offer, provided that:

• The terms of the offer do not vary the disposal restrictions imposed on Shares under the ESAP Rules under which Shares acquired under the ESAP cannot be transferred, sold or otherwise disposed of until the earlier of:
• The time when the participant is no longer employed by FlexiGroup or by the company that was the employer of the participant as at the time the Shares were acquired; or
• The third anniversary of the date on which the Shares were acquired; and
• The offer does not include any provisions for forfeiture of Shares acquired under the ESAP in any circumstances.

It is intended that the ESAP will satisfy the requirements of Division 13A of the relevant Australian tax legislation.

Consideration for Grant

The Board may determine the price at which the Shares will be offered to an employee. Shares may be granted at no cost to the employee or the Board may determine that market value or some other price is appropriate.

Allocation of Shares

Shares allocated under the ESAP may be existing Shares or newly issued Shares. Allocated Shares must be held in the name of the employee. Any Shares that are issued under the ESAP will rank equally with those traded on ASX at the time of issue.

A participant under the ESAP is entitled to receive distributions/dividends made in respect of, and exercise voting rights attaching to, Shares held under the ESAP (whether or not the Shares are subject to disposal restrictions).

Restrictions on Shares

Shares acquired under the ESAP will be subject to the disposal restrictions described above. FlexiGroup will implement such arrangements (including a hoiding lock) as it determines are necessary to enforce this restriction.

Once the restriction is removed, and subject to FlexiGroup's Trading Policy, Shares acquired under the ESAP may be dealt with freely.

10.5.1.3 Employee Gift Offer

Pursuant to this Prospectus and the ESAP Rules, Eligible Employees in Australia and New Zealand who accept the Employee Gift Offer will be issued, at no cost to the employee, the nearest number of whole Shares (rounded down) to the value of \$1,000 calculated at the Offer Price.

The acquisition of Shares under the Employee Gift Offer by Australian Eligible Employees will be free of income tax in accordance with the current Australian tax legislation where a tax election is made. The acquisition of Shares under the Employee Gift Offer by Eligible Employees in New Zealand will be subject to income tax; however, any income tax attributable to the acquisition of Shares under the Employee Gift Offer will be reimbursed by the Company.

In summary, approximately 290 Eligible Employees will be eligible to participate in the Employee Gift Offer under the ESAP. If all Eligible Employees choose to participate, this will result in the allocation of approximately 145,000 Shares to Eligible Employees under the Employee Gift Offer.

To the extent any Eligible Employee does not take up its Employee Gift Offer, new Shares will not be issued.

The Employee Gift Offer is only available under this Prospectus. However, solely at the discretion of the Board and subject to the performance of FlexiGroup, similar allocations may be made in subsequent years in accordance with the ESAP Rales.

Taxation Considerations

The Australian and New Zealand tax implications to employees of FlexiGroup who are residents for Australian and New Zealand tax purposes and who hold Shares acquired through the Employee Gift Offer are summarised in Section 10.10.2.6 and Section 10.10.3.

10.5.2 Long Term Incentive Plan

10.5.2.1 General

The Long Term Incentive Plan is part of FlexiGroup's remeneration strategy and is designed to align the interests of FlexiGroup management and Shareholders and assist FlexiGroup in the attraction, motivation and retention of executives. In particular, the LTIP is designed to provide relevant executives with an incentive for future performance, with conditions for the vesting and exercise of Options and Performance Rights under the ETP, thereby encouraging those executives to remain with FlexiGroup and contribute to the future performance of FlexiGroup. The Company's current Shareholders have approved the terms, the implementation and the operation of the LTIP.

Under the LTiP, eligible persons participating in the LTIP may be granted Options and/or Performance Rights on terms and conditions determined by the Board from time to time. An Option and a Performance Right are both rights to acquire a Share, subject to the satisfaction of applicable vesting and/or exercise conditions. The main difference between an Option and a Performance Right is that an exercise price as determined by the Board is required to be paid to exercise a vested Option, whereas a Performance Right has a nil exercise price unless otherwise determined by the Board.

A summary of the rules of the ETIP ("ETIP Rules") is set out in Section 10.5.2.2 below. The LTIP Rules set out the general terms of the £TIP. A grant of Options or Performance Rights is subject to both the LTIP Rules and the terms of the specific grant as determined by the Board.

The number of Options issued under the LTIP will not exceed 10% of the issued capital of the Company from time to time, except the limit may be increased to 12% of the issued capital in aggregate from time to time in circumstances where the limit under the Retail Partners Offer Plan ("RPOP") is not used. The maximum amount of options that can be issued under the £TIP and RPOP is 12% in aggregate of the issued capital of the Company from time to time.

The Company proposes to make, under the Option Offer, initial grants of Options to John DeLano, the Company's Managing Director and CEO, and certain other executives who are not directors of FlexiGroup. The terms of the proposed initial grant of Options to John DeLano under the Option Offer are set out in Section 10.5.2.3 below.

If any additional persons become entitled to participate in the LTIP and their participation requires approval under Chapter 10 of the Listing Rules, they will not participate in the LTIP until shareholder approval is received pursuant to Listing Rule 10.14.

Details of Options and Performance Rights, and Shares allocated on the exercise of Options and Performance Rights. will be published in FlexiGroup's annual reports for the relevant periods in which they are granted or allocated (as the case may be) in accordance with applicable laws.

10.5.2.2 Summary of LTIP Rules

The Board is responsible for administering the LTIP in accordance with the LTIP Rules and the terms and conditions of specific grants of Options and/or Performance Rights to participants in the LTIP. The LTIP Rules include the following provisions:

Eligibility and Participation

The Board may determine which persons will be eligible to participate in the LTIP from time to time. Eligible persons may be invited to apply to participate in the LTIP. The Board may in its discretion accept such applications.

Options and Performance Rights

A person participating in the LTP ("Executive") may be granted Options and/or Performance Rights on terms and conditions, including tenure conditions and performance hurdles, determined by the Board.

The Board will determine the exercise price payable on exercise of a vested Option and may determine the exercise price (if any) payable on exercise of a vested Performance Right. The LTIP Rules provide that a Performance Right has a nil exercise price unless determined otherwise by the Board. The Board may also determine the exercise period of an Option or a Performance Right.

Consideration for Grant

The Board may determine the amount (if any) payable for the grant of an Option or a Performance Right from time to time.

Vesting

Following the satisfaction of the performance hurdles applying to an Option or a Performance Right, the Option or the Performance Right vests on, and becomes exercisable on or after, a date predetermined by the Board ("Vesting Date"), provided that the Executive remains employed by FlexiGroup as at that date.

Accelerated Vesting

Unless the Board determines otherwise, early vesting (prior to the relevant Vesting Date) of an Option or a Performance Right will automatically occur if there is a change of control, reconstruction or amalgamation, winding up or delisting of the Company for the purposes of the LTIP Reles.

The Board may, in its discretion, decide to accelerate the vesting of all or part of the Options or Performance Rights held by an Executive in specified circumstances including the death, total and permanent disablement, or cessation of employment for other reasons (e.g. retirement, redundancy or the Executive's employer ceasing to be an entity in FlexiGroap or its business being transferred to a non-FlexiGroup entity) of that Executive.

Lanse

An unvested Option or Performance Right will lapse on the earliest of:

(a) The expiry of the exercise period applicable to that Option or Performance Right;

• (b) The Board determining that the performance hurdles in respect of the Option or Performance Right are not satisfied and not capable of being satisfied on the relevant testing date or retesting date (as the case may be) and that the Option or Performance Right has lapsed;
• (c) Thirty days after the Executive's death or total and permanent disablement, if death or total and permanent disablement occurs;
• (d) Thirty days after the Executive ceases to be employed by FlexiGroup (including where the Executive's employer ceases to be an entity in FlexiGroup or its business has been transferred to a non-FlexiGroup entity) unless the Board makes a determination that the Option or Performance Right has vested; or

(e) The Board determining that the Executive has committed (or it is evident that the Executive intends to commit) any act of dishonesty, fraud, wilful misconduct or breach of duty, serious and wilful negligence or incompetence in the performance of the Executive's duties, or is convicted of a criminal offence (other than minor/trivial offences) or is quilty of wiful or recklessly indifferent conduct which may injure the reputation or business of a FlexiGroup entity, and that the Option or Performance Right has lapsed.

Upon the occurrence of any of the events set out in (c), (d) (excluding termination of employment with cause) or (e) above, any vested Option or Performance Right held by the Executive may be exercised during a specified period unless that Option or Performance Right lapses on the expiry date applicable to it prior to the end of that specified period. In the event of an Executive's termination of employment with cause, all the Executive's vested Options and Performance Rights that have not been exercised will lapse on the date of termination (excluding any notice period), unless otherwise determined by the Board.

Subject to the Listing Rules, the Board may, in its discretion, extend a period during which an Executive may exercise an Option or Performance Right, provided that the Board does not extend the Exercise Period. If the Board exercises its discretion to extend the period during which an Executive may exercise an Option or Performance Right, the Board will give written notice of such extension to the Executive as soon as reasonably practicable.

Exercise

Following the Vesting Date or the accelerated vesting of an Option or Performance Right, the vested Option or Performance Right may be exercised by the Executive subject to any exercise conditions and the payment of the exercise price (if any), and the Executive will then be allocated or issued Shares on a one-for-one basis.

Delivery of Shares on Exercise of Vested Options or Performance Rights

The Board has the discretion to have Shares issued or transferred to an Executive on the exercise of vested Options or Performance Rights. Any Shares issued under the LTIP will rank equally with those Shares traded on ASX at the time of issue except for any rights attaching to those Shares by reference to a record date prior to the date of issue.

Adiustment

In the event of any capital reorganisation by the Company (including any bonus issues and rights issues), an Executive's Options or Performance Rights, and the Shares allocated to the Executive on exercise of the Executive's Options or Performance Rights, will be adjusted as set out in the ETIP Rules and otherwise in accordance with the Listing Rules. In general, it is intended that the Executive will not receive any advantage or disadvantage from such adjustment.

Restrictions on Disposal of Shares

An Executive may not dispose of, deal in, or grant a security interest over any interest in, a Share allocated to the Executive on exercise of a vested Option or Performance Right for any relevant period determined by the Board. This disposal restriction may be imposed by the Board at the time of grant or at any time after the date of grant prior to the exercise of the Option or Performance Right (subject to the Executive's agreement). The Board may implement such arrangements (including a holding lock) as it determines are necessary to enforce this restriction.

Once the restriction is removed, and subject to FlexiGroup's Trading Policy, Shares acquired on exercise of vested Options or Performance Rights may be dealt with freely.

Transfer of Options or Performance Rights

An Executive may not dispose of, deal in, or grant a security interest over any interest in, an Option or Performance Right without the prior written consent of the Board, which may be given subject to such conditions as the Board sees fit in relation to the proposed dealing. The transfer or transmission of an Option or Performance Right is permitted where it is effected by force of law, on death or legal incapacity of an Executive to the Executive's legal representative.

Administration of the LTIP

Any power or discretion of the Board conferred under the LTIP Rules will be administered in the interests and for the benefit of the Company.

Any nower or discretion of the Board conferred under the LTIP Rules may be delegated by the Board to a committee consisting of the Company's officers and/or employees, a related body corporate and/or a third party for such periods, and on such conditions, as the Board sees fit.

The Board may suspend or terminate the LTIP at any time, and may amend the LTIP Rules, provided that subject to specified exceptions, there is no reduction of the rights of Executives in respect of Shares allocated or Options or Performance Rights granted under the £11P prior to the date of such amendment.

10.5.2.3 Grant of Options under Option Offer

The Board has approved, as part of the Option Offer, an initial grapt of 5.437.500 Options in four tranches to John DeLano, the Company's Managing Director and CEO, on the terms of the LTIP and the terms and conditions described below ("Initial Grant"). and the acquisition of Shares by John DeLano on exercise of those Options. The Initial Grant provides a conditional entitlement to 5,437,500 Shares. The Options comprising each of the four tranches of the Initial Grant will become exercisable on the satisfaction of the tenure conditions and performance hurdles described below. John DeLano, being the only Executive Director of the Company, is the only Director who is currently eligible to participate in the LTIP. There are no previous grants of Options or Performance Rights under the LTIP, if any other Director is to participate in the LTIP, the Company will seek shareholder approval as required by the Listing Rules.

In addition to the initial Grant, the Board has approved, as part of the Option Offer, the grant of Options to other eligible executives of FlexiGroup, on the terms of the LTIP and otherwise on substantially the same terms and conditions as those applying to the initial Grant as described below. The maximum aggregate number of Options that will be granted to these other eligible executives under the Option Offer is 7,612,500 Options. These grants of Options provide a conditional entitlement to 7,612,500 Shares in aggregate.

Consideration for the Grant

Under the Initial Grant, Options will be granted at no cost to John DeLano.

Exercise Price and Conditions

The Board has determined that an exercise price of \$2.00 per Share (which is equal to the Offer Price) is payable by John DeLano on exercise of each vested Option graated under the laitial Grant.

The exercise period for Tranche 1, 2 and 3 Options of the Initial Grant will expire in December 2011 while the exercise period for Tranche 4 Options will expire in December 2012. Vested Options that are not exercised before the relevant expiry date will lapse in accordance with the LTP Bules.

Performance Hurdles

Following the satisfaction of the performance hurdles described below, the Options comprising each tranche of the Initial Grant will vest on, and become exercisable on or after, the relevant Vesting Date specified in the table below.

The Options granted under the Initial Grant will be performance tested against the relevant Earnings Per Share growth targets ("EPS hurdle") and Key Performance indicators ("KPI hardie") described below. In relation to each of the four tranches of the Initial Grant, 80% of the Options comprising that tranche will be tested against the relevant EPS burdle and the remaining 20% will be tested against the relevant KPI hurdle.

Earnings Per Share (EPS)

The basic EPS ("Basic EPS") for the purposes of the initial Grant is equal to 13.0 cents per Share, being the forecast earnings per share of FlexiGroup for FY2007 as calculated under Australian Accounting Standards Board ("AASB") 133, less the Share-based payment expense (as determined under AASB 2) relating to the grants of options over Shares from Eighth SRJ and Viewlove to certain senior executives of the Existing Group including John DeLano (as described in Section 10.6.1) and adjusted for extraordinary items as determined by the Board. The applicable EPS hurdle for each test period is measured on an annual compounding basis to the relevant performance test date set out below, using the Basic EPS as the base line number.

Performance testing against the EPS hurdle will take place on the date of announcement of the relevant annual financial results of FlexiGroup. In respect of Tranches 1, 2, 3 and 4 of the Initial Grant, the EPS hurdle will be tested on the market release of RexiGroup's annual financial results for the financial years ending 30 June 2007, 2008, 2009 and 2010 respectively.

The Board has the discretion to vary at any time the EPS hurdle applicable to all or part of the Options comprising the Initial Grant.

Retesting of the EPS hurdle for any unvested Tranche 1 Options will not be permitted. Tranche 1 Options that do not vest on the measurement of the EPS hurdle will be taken to have lapsed under the LTIP Rules.

Retesting of the EPS hurdle for any unvested Tranche 2, 3 and 4 Options will occur at the testing date in respect of the next financial year end date immediately following the relevant initial testing date, with the measurement period taken from the date of grant of the Options to the relevant retesting date. Performance will be measured on a compounding basis. The Options that do not vest on retesting will be taken to have lapsed under the LTIP Rules.

Key Performance Indicators (KPI)

The KPI hurdle may include any combination of operational, volume/product mix, cultural, financial and other measures as determined and modified by the Board from time to time. The KPI hardle will be performance tested against these measures over each relevant financial year unless otherwise determined and notified by the Board. In the case of FY2007, the relevant KPI hurdle will be determined and notified by the Board by 15 February 2007. The relevant KPI hurdle for each of FY2008, FY2009 and FY2010 will be determined and notified by the Board by 31 August of the relevant financial year.

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The four tranches of Options to be granted to John DeLano under the Initial Grant will be performance tested as follows:

								performance vargets
		TESTING DATE ISATE				,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	EPS HURDLE – % OF TRANCHE OPTIONS VESTIMG :АРРЫСАВLE TO 80% OF EACH TRANCHE)
	SIZE: 信解 IRESTAL 88ARK .	OF ANNOUNCEMENT OF FLEXIGROUP'S АВНИАЕ ГИАНСИА. RESULTS FOR FINANCIAL VEAR 旧船别嫁(3)	VESTIBE RATE*	ede Rimole - 9388888 3883	PROSPECTUS PROSPECTUS FORECAST န္းမွန္တစ္ေန	8% (鐵 EGMAL TO MORE TRAN FORECAST Line Control	FOULLY TO	EGUAL 10	FOUAL TO	FOUAL YO GB MONE 脊髓周 SBC*3 20%	% 8F TRANCHE TIED TO KPI 889489914
	15%	30 Jane 2007	September 2010	Date of grant to -30 June 2007	60%	109%					20%
	28.5%	30 Jane 2008	September 2010	Date of grant to -30 June 2008		,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	19%	33%	75%	108%	20%
	28.5%	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 30 June 2009	September 2010	Date of grant to 30 June 2009			KP.	33%	75%	109%	20%
	28%	.38 Jane 2010 , es accesso es as as as as as as assembles socialistas as as as as as as as as as as as as a	Jiane 2013.	-Date of grant to 30 June 2010			15%	50%	1130%		20%
Total	1.BO%

The Vesting Date is the tenure condition. It means that John DeLano may only exercise Options that vest following the satisfaction of the applicable performance hurdles on or after the Vesting Date, provided that he remains employed by FlexiGroup as at that date. If John DeLano ceases to be employed by FlexiGroup for any reason on or prior to the Vesting Date relating to a tranche of Options, all Options in that tranche will lapse immediately unless the Board makes a determination that those Options have vested.

** EPS is measured on an annual compounding basis to the relevant performance test date, using the Basic EPS of 13.0 cents per Share as set out in the note below as the base line number. Where performance falls between target EPS thresholds (e.g. more than 5% EPS but less than 10% EPS), then pro-rata vesting will apply.

*** The basic EPS ("Basic EPS") for the purposes of the Initial Grant is equal to 13.0 cents per Share, being the forecast earnings per share of FlexiGroup for FY2007 as calculated under Australian Accounting Standards Board ("AASB") 133, less the Share-based payment expense (as determined under AASB 2) relating to the grants of options over Shares from Eighth SRJ and Viewlove to certain senior executives of the Existing Group including John DeLano (as described in Section 10.6.1) and adjusted for extraordinary items as determined by the Board. The applicable EPS hurdle for each test period is measured on an annual compounding basis to the relevant performance test date, using the Basic EPS as the base line number. See Sections 1.3, 7.3 and 7.6 for details of the Basic EPS and details of Share-based payment expenses.

Delivery of Shares on Exercise of Vested Options

Shares will be issued (rather than transferred) to John DeLano and the other eligible executives who are granted Options under the Option Offer on exercise of their vested Options in accordance with the LTIP Refes and the terms and conditions of those Options.

Taxation Consideration

The Australian and New Zealand tax implications to Executives who are residents for Australian and New Zealand tax purposes and who hold Options granted through the Option Offer and Shares acquired on exercise of those Options are summarised in Section 10.10.2.7 and Section 10.10.3.

10.5.2.4 Grant of Performance Rights

No Performance Rights will be granted pursuant to this Prospectus.

10.5.3 Tax Deferred Employee Share Plan

10.5.3.1 General

The Tax Deferred Employee Share Plan ("Deferred Plan") is a general employee share plan to be operated in addition to the ESAP and pursuant to which offers may be made to employees to acquire Shares on terms and conditions determined by the Board. The rules of the Deferred Plan ("Deferred Plan Rules") impose forfeiture conditions in respect of the Shares allocated under the plan.

The Deferred Plan is an optional share purchase scheme for employees. In general, the Deferred Plan is intended to be used in the future to allow permanent full-time and permanent part-time employees of FlexiGroup to elect to sacrifice part of their salary and/or bongs to acquire Shares under the Deferred Plan, or to allow the Company

to make awards of Shares to employees as a performance incentive or reward for exceptional performance, on terms and conditions determined by the Board.

Performance conditions may be imposed in respect of the Shares allocated under the Deferred Plan.

A summary of the Deferred Plan Rules is set out in Section 10.5.3.2 below. The Deferred Plan Rules set out the general terms of the Deferred Plan. A grant of Shares under the Deferred Plan is subject to both the Deferred Plan Rules and the terms of the specific grant as determined by the Board. It is intended that employees will not be invited to participate in the Deferred Plan prior to the 12 month anniversary of listing of the Company.

Under the Deferred Plan, the Company or a subsidiary of the Company may provide financial assistance to participating employees for the purpose of acquiring Shares by inviting employees to sacrifice salary and/or bonus in return for Shares, or by providing Shares to employees at no cost to the employee.

10.5.3.2 Summary of Deferred Plan Rules

The Board and the Deferred Plan Trustee (as defined below) are responsible for administering the Deferred Plan in accordance with the Deferred Plan Rules and the terms and conditions of specific grants of Shares to participants in the Deferred Plan. The Deferred Plan Rules include the following provisions:

Eligibility and Participation

The Board may determine which persons will be eligible to participate in the Deferred Plan from time to time. The Board may invite eligible persons to apply to participate in the Deferred Plan.

Consideration for Grant

The Board may determine the amount (if any) payable for the grant of a Share from time to time.

Allocation of Shares

Shares allocated under the Deferred Plan may be existing Shares or newly issued Shares. Shares will be acquired by the trustee of the Deferred Plan (which will be a subsidiary of the Company or an externally appointed share plan trustee) and held on trust for the relevant participant. The Shares held under the Deferred Plan will be registered in the name of the trustee administering the trust ("Deferred Plan Trustee").

A participant is entitled to receive distributions/dividends made in respect of, and participate in bonus and rights issues in accordance with rights attaching to, Shares held on trust for them under the Deferred Plan (whether or not the Shares are subject to disposal restrictions or performance conditions).

A participant may direct the exercise of any voting rights attaching to Shares held on trust for them under the Deferred Plan, by directing the Deferred Plan Trustee on how the relevant voting rights are to be exercised.

Restrictions on Dealing

Shares acquired pursuant to the Deferred Plan will be held on trust subject to a restriction period ending on the earlier of 10 years after allocation or the date the relevant participant ceases to be employed by a FlexiGroup entity. The Deferred Plan Trustee may implement such arrangements as it determines are necessary to enforce this disposal restriction. If, however, FlexiGroup is subject to a takeover or scheme of arrangement under the Corporations Act, the Board may, in its discretion, determine that the Shares cease to be restricted.

Once the restriction is removed, and subject to FlexiGroup's Trading Policy, Shares held on trust for them under the Deferred Plan are transferred to the relevant participant and may be dealt with freely.

Withdrawal of Shares

A participant is entitled to make an application for the withdrawal of Shares held on trust for them under the Deferred Plan provided that all requirements under the Deferred Plan Rules and the terms and conditions of the offer that must be satisfied before Shares can be withdrawn from the Deferred Plan ("Deferred Plan Requirements") have been satisfied.

The Deferred Plan Trustee may reject a participant's application for the withdrawal of the participant's Shares held under the Deferred Plan, where the participant's employment may be terminated in circumstances which involve an act of fraud, defalcation or gross misconduct in relation to FlexiGroup.

Forfeiture of Shares

A participant will forfeit all Shares held on trust for them under the Deferred Plan for \$1.00 in total if:

• (a) The participant ceases to be employed by FlexiGroup (including where the participant's employer ceases to be an entity in FlexiGroup or its business has been transferred to a non-FlexiGroup entity) at such time as the relevant Deferred Plan Requirements have not been satisfied or waived:
• (b) One or more Deferred Plan Requirements have been breached by the participant or otherwise have not been satisfied or waived; or
• (c) The Board determines that a participant's employment has been, or will be, terminated in circumstances involving an act of fraud, defalcation or gross miscondact in relation to FlexiGroup,

unless otherwise determined by the Board.

10.5.4 Non-Executive Director Share Acquisition Plan

10.5.4.1 General

The Non-Executive Director Share Acquisition Plan ("NED Plan") is an optional share purchase scheme for Non-Executive Directors of the Company ("NEDs"). In general, the NED Plan is intended to be used in the future to allow NEDs of FlexiGroup to elect to sacrifice part of their Director's fees to acquire Shares under the NED Plan on terms and conditions determined by the Board.

A summary of the rates of the NED Plan ("NED Plan Rules") is set out in Section 10.5.4.2 below. The NED Plan Rules set out the general terms of the NED Plan. A grant of Shares is subject to both the NED Plan Rules and the terms of the specific grant as determined by the Board.

10.5.4.2 Summary of NED Plan Rules

The Board and the NED Plan Trustee (as defined below) is responsible for administering the NED Plan in accordance with the NED Plan Rules and the terms and conditions of specific grants of Shares to NEDs in the NED Plan. The NED Plan Rules include the following provisions:

Eligibility and Participation

The Board may determine which NEDs of FlexiGroup will be eligible to participate in the NED Plan. Eligible NEDs who are invited to apply to participate in the NED Plan from time to time.

Level of Participation

The Board may determine the maximum level of participation from time to time.

Allocation of Shares

Shares allocated under the NED Plan may be existing Shares or newly issued Shares. Shares will be acquired by the trustee of the NED Plan (which will be a subsidiary of the Company or an externally appointed share plan trustee) and held on trust for the NED. The Shares held on trust for them under the NED Plan will be registered in the name of the trustee administering the trast ("NED Plan Trustee").

A NED is entitled to receive distributions/dividends made in respect of, and participate in bongs and rights issues attaching to. Shares held on trust for them under the NED Plan (whether or not the Shares are subject to disposal restrictions).

A NED may direct the exercise of any voting rights attaching to Shares held under the NED Plan, by directing the NED Plan Trustee on how the relevant voting rights are to be exercised.

Restrictions on Dealing

Shares acquired pursuant to the NED Plan will be held on trust subject to a restriction period ending on the earlier of a date determined by the Board, ten years after affocation or the date the relevant NED ceases to be a NED of FlexiGroup. The NED Plan Trustee may implement such arrangements as it determines are necessary to enforce this restriction. If, however, FlexiGroup is subject to a takeover or scheme of arrangement under the Corporations Act, the Board may, in its discretion, determine that the Shares cease to be restricted.

Once the restriction is removed, and subject to FlexiGroup's Trading Policy, Shares held under the NED Plan are transferred to the relevant NED and may be dealt with freely.

Withdrawal of Shares

A NED is entitled to make an application for the withdrawal of Shares held on trust for them under the NED Plan.

The NED Plan Trustee may reject an NED's application for the withdrawal of the NED's Shares held under the NED Plan, where the NED's directorship may be terminated in circumstances which involve an act of fraud, defalcation or gross misconduct in relation to FlexiGroup.

Forfeiture of Shares

A NED will forfeit all Shares held on trust for them under the NED Plan for \$1.00 in total if the Board determines that a NED's directorship has been or will be terminated in circumstances involving an act of fraud, defalcation or gross misconduct in relation to FlexiGroup, aniess otherwise determined by the Board.

10.5.5 Loan Funded Share Plan

10.5.5.1 General

The Loan Funded Share Plan ("Loan Plan") is an optional share purchase scheme for employees. In general, the Loan Plan is intended to be used in the future to provide limited recourse loans to employees of FlexiGroup for purposes of acquiring Shares under the Loan Plan on terms and conditions determined by the Board ("Loans").

The Loan Plan provides for the issue or transfer of Shares together with the making of Loans to permanent full-time or part-time employees (including directors holding permanent full-time salaried employment in a FlexiGroup entity) of FlexiGroup.

A summary of the rules of the Loan Plan ("Loan Plan Rules") is set out in Section 10.5.5.2 below. The Loan Plan Rules set out the general terms of the Loan Plan. A grant of a loan for the acquisition of Shares is subject to both the Loan Plan Refes and the terms of the specific grant as determined by the Board.

Under the Loan Plan, the Company or a subsidiary may provide financial assistance to participating employees for the purpose of acquiring Shares by making loans to the employees for the purposes of acquiring Shares.

10.5.5.2 Summary of Loan Funded Share Plan Rules

The Board is responsible for administering the Loan Plan in accordance with the Loan Plan Rules and the terms and conditions of specific grants of Shares and Ioans to participants in the Loan Plan. The Loan Plan Rules include the following provisions:

Eligibility

The Board may determine which persons will be eligible to participate in the Loan Plan from time to time. Eligible persons will be invited to apply to participate in the Loan Plan. The Board may in its discretion accept such applications.

Allocation of Shares

Shares acquired ander the Loan Plan will be sabject to a holding lock antil the expiry of a period determined by the Board, or until the Loan is fully repaid or discharged (as the case may be).

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The Board may invite a participant to apply for a Loan for the purpose of acquiring the Shares offered to them under the Loan Plan. The Board is given discretion to set the terms of the Loan which may be at a less than commercial rate of interest or interest-free, on a secured or unsecured basis. The after-tax amount of any cash distributions paid on the Shares acquired with the Loan must be applied towards payment of interest (if any) and repayment of the principal of the Loan.

Loan Repayment

Loans

Loans will become immediately due and repayable on the earliest to occur of:

• (a) The maturity date specified at the time of making the Loan;
• (b) The relevant participant becoming an insolvent under administration;
• (c) The relevant participant ceasing to be an employee of a FlexiGroup entity;
• (d) A relevant third party making a takeover bid and acquiring the Shares of a relevant participant that are subject to a Loan;
• (e) Any person acquiring the Shares under computsory acquisition or a scheme of arrangement in relation to the Company:
• (f) The disposal of the Shares by the participant.

On the date the Loan is due and repayable, the participant's repayment obligation in relation to the outstanding balance of the Loan will be equal to the lesser of the outstanding balance of the Loan and the market value of the Shares on that date.

Waiver of Right to Repayment

The Board may waive the Company's right to repayment of all or part of any unpaid Loan (including any interest) in the following circumstances:

• (a) On the satisfaction of any conditions for such waiver set out in the invitation in respect of the Shares acquired using the Loan:
• (b) In the event of death or total and permanent disablement of the participant to whom the Loan is made; or (c) In such other circumstances as the Board may, in its sole discretion, determine.

10.5.6 Retail Partners Option Plan

The Retail Partners Option Plan ("RPOP") is FlexiGroup's incentive scheme for certain retail partners. Participants in the RPOP will include both retailer proprietors and salespeople.

Under the RPOP, participants will be granted options on terms and conditions determined by the Board. Typically participants will be granted options for all consideration with a predetermined exercise price. The exercise price will generally be equal to the market value of the underlying Shares at the time of grant. The options will vest subject to meeting predetermined time and performance hurdles determined by the Board. Once vested, participants will be able to exercise the options within the applicable exercise period, after which time the options will lapse.

The number of options issued ander the RPOP will not exceed 2% of the issued share capital of the Company from time to time.

10.6 Directors' Interests

Except as set out in this Prospectus:

• No Director or proposed Director of the Company holds, or has held in the two years before lodgement of this Prospectus with AS(C, an interest in the formation or promotion of the Company or the Offer, or any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer: and
• No amount has been paid or agreed to be paid, and no benefit has been given or agreed to be given, to any Director or proposed Director of the Company, either to induce them to become, or to qualify them as, a Director, or otherwise for services rendered by them in connection with the promotion or formation of the Company, or the Offer

10.6.1 Interests in Shares

As Existing Shareholders, entities associated with Andrew Abercrombie and John DeLano are to be issued 64,651,875 - 65,228,250 and 2,880,810 Shares respectively in connection with the Company's acquisition of the Existing Group under the arrangements described in Section 10.4.1. Approximately \$129.3-130.5 million and \$5.8 million will be reinvested in the Company by Andrew Abercrombie and John DeLano (or entities associated with them) respectively.

The Existing Shareholders and Dhawan Trust (which holds an equity participation entitlement in Flexirent Holdings) have agreed to procure that the Company issue 1,961,382 Shares to Margaret Jackson and 147,104 Shares to R John Skippen (or their associates) and 353,049 Shares to Dhawan Trust at the Offer Price, as part of the completion of the Offer. See Section 10.4.1 for more details.

Dhawan Trust, the entity associated with Rajeev Dhawan, will be issued 379,515 Shares at the Offer Price through the reinvestment of part of the cash consideration payable on the cancellation of its equity participation entitlement and/or the cancellation of its performance option and directions by Existing Shareholders and Dhawan Trust under the arrangements described in Sections 10.4.1, 10.4.2 and 10.4.3.

Shares issued to the Directors and their associates on completion of the Offer in accordance with the arrangements described in Section 10.4 will be subject to the escrow arrangements described in Section 10.7.4.

Eighth SRJ has agreed to grant options over 6,995,034 Shares to be issued to Eighth SRJ, and Viewlove has agreed to grant options over 1,704,966 Shares to be issued to Viewlove, on completion of the Offer. The options are in favour of certain senior executives of the Existing Group including John DeLano (who will receive options over a total of 7,612,500 Shares). These options are subject to the same terms and conditions, including as to achievement of performance hardles, as the initial Options to be granted to these executives ander the LTIP (see Section 10.5.2).

To addition, the Directors (and their associates) are entitled to apply for further Shares under the Offer and John DeLano is entitled to apply for Options under the Option Offer as set out in Section 10.5.2.

Set out below are details of the expected interests of the Directors (and their associates) in Shares and Options on the completion of the Offer (including through receiving them in exchange for selling their interests in the Existing Group and as otherwise described in Section 10.4 and assuming Shares and Options are issued in full to Directors on their proposed applications above).

DRECTOR	INTERESTS IN SHARES IN FLEXIGROUP 紅閉路灯に迎き	% OWNLEASH OF SMARES IN FLEXKGROUP ESIMPTERS	OFTHESIS FROM EKSNIH SRJ AND ALERANT CAARS	0271038 FROM FLEXKOROSF LIGHTTED	fully diluted % OF OWNERSMAP OF FLEXKOROSP LIGHTEEL
Margaret Jackson	1.961.382*
R John Skippen	147.1043	11 D 7%
Rajeev Dhawan	732.5642.3	0.34%			A 32%
John DeLano	2.880.810*	1.32%-	7,612,500° 5,437,500		.6.91% 3
Andrew Abercrombie	64,651,875–65,228,250°	29.73-29.99%	(6,995,034) 7		25.01–25.26%
Total	70,373,735-70,950,110	32.36~32.62%	617.466	5.437.500	33.15~33.40%

Notes:

1. Shares to be issued at the direction of Existing Shareholders and Dhawan Trust as part of the acquisition of the Existing Group. See Section 10.4.1 for details.

Shares held by Dhawan Trust

1. Comprising 732,564 Shares to be issued on the reinvestment of part of the cash proceeds from the cancellation of Dhawan Trust's equity participation entitlement and/or from the reinvestment of part of the cash consideration payable to Dhawan Trust on cancellation of its performance option and/or at the direction of Existing Shareholders and Dhawan Trust. See Section 10.4.2, Section 10.4.1 and Section 10.4.3 for more details.

2. Shares held by John and Kylie DeLand as trustees of the DeLand Trust and issued as consideration for the sale of shares in Flexirent Holdings and from the reinvestment of part of the cash payable on cancellation of its performance option. See Section 10.4.1 and Section 10.4.3 for details.

3. Shares held by Eighth SRJ and issued as consideration for the sale of shares in Flexirem Holdings. The precise number depends on the level of allocations to Reserved Offer Apolicants under the Reserved Offer. See Section 10.4.1 and Section 10.7.1 for more details.

4. Comprising 6,120.665 options over issued Shares to be granted by Eighth SR3 plus 1,491,845 options over issued Shares to be granted by Viewlove

5. Comprising options over issued Shares to be granted to senior executives of the Existing Group including 6.120.655 options. to John DeLano as described above

6. Assuming all options proposed to be granted by FlexiGroup Limited, Eighth SRJ and Viewlove, as described in this Prospectus, are exercised in full.

10.6.2 Remuneration

The Directors are entitled to receive remuneration for the services they provide, as the Directors decide, but the total amount paid for such services to non-executive Directors must not exceed in aggregate the sum determined by the Company in general meeting. The carrent maximum aggregate sum is \$1.2 million.

The total annual fee of the Chairman will be \$150,000. Andrew Abercrombie will be paid a base annual fee of \$120,000. The other non-executive Directors will be paid a base annual fee of \$80,000. Such fees are exclusive of superannuation and fees for sitting on Board committees. A chairman of a Board committee will be entitled to an additional \$10,000 per annum in respect of duties carried out as chairman of that committee.

A Director may also be paid a retirement benefit and is entitled to reimbursement for reasonable travelling. accommodation and other expenses in attending meetings and carrying out their duties.

10.6.3 Remuneration - Managing Director

John DeLano's remuneration has been structured so that he receives a base salary package of \$550,000 per annum (inclusive of superannuation), together with the capacity to qualify for an annual bonus of up to 125% of his base salary as short term incentive compensation, depending on certain performance criteria relating to financial and operational goals being met.

3ohn DeLano's employment may be terminated by either John DeLano or FlexiGroup upon provision of three months notice of termination. Where FlexiGroup terminates John DeLano's employment with notice he is entitled to receive a payment equal to the greater of nine months' salary package plus accrued bonus entitlements (being an amount of approximately \$1,068,750 for FY2007) or \$1,000,000, unless termination is for a failure to meet his agreed minimum performance targets in which case he is only entitled to accrued bonds entitlements.

In addition to the above cash compensation, John DeLano will also be entitled to participate in the Long Term Incentive Plan described in Section 10.5.2.

10.6.4 Deed of Access, Indemnity and Insurance

The Company has entered into a deed of access, indemnity and insurance with each Director, which confirms the Director's right of access to Board papers and requires the Company to indemnify the Director for liability incurred as an officer of the Company, subject to the restrictions imposed by the Corporations Act and the terms of the Constitution.

10.7 Combacts

10.7.1 Underwriting Agreement

The Company, Flexirent Holdings and the Joint Lead Managers entered into the Underwriting Agreement on or about the 21 November 2006. Under the Underwriting Agreement, the Joint Lead Managers have agreed to underwrite the offer of Shares under the Broker Firm Offer and the institutional Offer by subscribing for, or providing subscriptions for, those Shares for which valid applications have not otherwise been received.

Under the Underwriting Agreement, the Company will pay the Joint Lead Managers:

• An enderwriting fee of 2.25% of the cash proceeds raised ender the Offer; and
• An incentive fee of up to 0.75% of the cash proceeds raised under the Offer provided however that such incentive fee will be paid at the sole discretion of the Company.

Reasonable costs, charges and expenses of the Offer incurred by the Joint Lead Managers in respect of the Offer are to be reimbursed by the Company.

Under the Underwriting Agreement, the Company and Flexirent Holdings gives certain representations, warranties and undertakings. The Company's and Flexirent Holdings' undertakings include that they will not, during the period following the date of the agreement until 180 days after the date of issue of Shares to successful Applicants under the Broker Firm Offer and Institutional Offer, allot or agree to allot or indicate that they may or will allot or agree to allot any shares or options or other securities that are convertible or exchangeable into equity, or represent the right to receive equity in the Company (other than pursuant to the Offer and the Underwriting Agreement, an employee incentive plan, a dividend reinvestment plan or as otherwise described in this Prospectus) without the prior written consent of the Joint Lead Managers (such consent not to be unreasonably withheld or delayed).

Subject to certain exceptions relating to, among other things, fraud, bad faith, wilful default, wilful misconduct and gross negligence by the Joint Lead Managers and certain affiliated parties (an "indemnified Party"), the Company and Flexirent Holdings agree to keep an Indemnified Party indemnified from losses suffered in connection with the Offer.

Part A

Each Joint Lead Manager may terminate the Underwriting Agreement by notice to the Company and the other Joint Lead Manager, if one or more of a listed set of termination events occurs at any time before 10.00am on the date of issue of Shares to successful Applicants under the Broker Firm Offer and Institutional Offer. The following termination events allow a 3cint Lead Manager to terminate automatically:

• A Joint Lead Manager reasonably forms the opinion that a statement contained in the documents issued or published by or on behalf of the Company in respect of the Offer to investors to apply for the Shares including the pathfinder prospectus, the Prospectus, any Application Forms, any public information and any supplementary prospectus ("Offer Documents") is or becomes misleading or deceptive in a materially adverse respect or a material matter is omitted from the Offer Documents (having regard to the provisions of sections 710, 711 and 716 of the Corporations Act):
• Any person gives notice under section 730 of the Corporations Act;
• The Company issues or, in the reasonable opinion of the Joint Lead Managers, becomes required to issue a supplementary prospectus pursuant to section 719 of the Corporations Act:

120

• Listing on ASX or quotation of the Shares is refused or not granted (other than subject to customary conditions) by 7 December 2006 or if granted, ASIC approval is subsequently withdrawn, qualified (other than subject to customary conditions) or withheld:
• ASIC issues an order or interim order under section 739 of the Corporations Act or an application is made by ASIC for an order Part 9.5 of the Corporations Act in relation to the Prospectus or ASIC commences any investigation lother than an application which does not become public and is dismissed or withdrawn within three Business Days. provided the application is dismissed or withdrawn by 10.00am on 5 December 2006) or a hearing under Part 3 of the Australian Securities & Investments Commission Act 2001 (Cth) commences in relation to the Offer;
• ASIC gives notice of an intention to hold a hearing in relation to the Prospectus under section 739(2) of the Corporations Act (other than a notice which does not become public and is dismissed or withdrawn within three Business Days, provided the notice is dismissed or withdrawn by 10.00am on 5 December 2006);
• Any person, other than a Joint Lead Manager, withdrawing their consent, where that person previously provided a consent in connection with this Prospectus (or any supplementary prospectus);
• The Company or Flexirent Holdings fails to deliver a certificate in compliance with the requirements of the Underwriting Agreement ("Certificate") certifying among other things, material compliance with the Underwriting Agreement and that generally no termination events have occurred;
• A member of the FlexiGroup becoming insolvent or having steps taken against it suggesting it is nearing insolvency;
• The Company withdraws the Offer Documents or the Offer or fails to proceed with the Offer;
• $-$ There is:
• A suspension or material limitation in trading in securities generally on ASX, the New Zealand Stock Exchange. the London Stock Exchange or the New York Stock Exchange for more than one Business Day on which that exchange is open for trading; or
• There is a general moratorium on commercial banking activities in Australia, New Zealand, the United States or the United Kingdom is declared by the relevant authorities, or there is a material disruption in commercial banking or securities settlement or clearance services in those places,

in either case the effect of which is such as to make it, in the opinion of the Joint Lead Managers (acting reasonably) impracticable to market the Offer or to enforce contracts to subscribe for the Shares; or

• An event specified in the Timetable, is delayed for more than:
• Three Business Days, except for a delay caused by an event or circumstance specified in relation to Timetable matters in Part B below; or
• Seven days, regardless as to the cause of such delay.

Part B

The following termination events allow a Joint Lead Manager to terminate if: (a) the event has or is likely to have a material adverse effect on the success, outcome or settlement of the Offer or the ability of the Joint Lead Managers to market the Offer; or (b) the event would give rise to a liability for a Joint Lead Manager under any applicable law or regulation; or (c) the event has or is (kely to have a materially adverse effect on the price at which the Shares will trade on ASX in the first week after their issue pursuant to the Broker Firm Offer and Institutional Offer or on the willingness of institutional investors to pay the Offer Price:

• ASIC extending the exposure period or the Company being required to amend the Prospectus as a result of comments received from ASIC giving rise to an event specified in the Timetable being delayed for more than three Business Days:
• There occurs a new circomstance that has arisen since the Prospectus was lodged that would have been required by the Corporations Act to have been included in the Prospectus if it had arisen before the Prospectus was lodged in relation to any entity in FlexiGroup:
• The due difigence committee report or any other information supplied by or on behalf of the Company or Flexirent Holdings to the Joint Lead Managers in relation to the Company, Flexirent Holdings or the Offer is misleading or deceptive:

• The Offer Documents or any aspect of the Offer does not comply with the Corporations Act, the Listing Rules or any other applicable law or requiation (as amended or waived);

• Any information supplied by, or with the knowledge and consent of, the Company or Flexirent Holdings or on behalf of the Company or Flexirent Holdings to the Joint Lead Managers in relation to the Company or Flexirent Holdings or the Offer is misleading or deceptive:

• Any adverse change occurs in the assets, liabilities or financial position or performance, profits, losses, or prospects of FlexiGroup (insofar as the position in relation to the entity in FlexiGroup affects the overall position of the Company) from the position disclosed in the Prospectus including any adverse change in the assets. liabilities, financial position or performance, profits, losses or prospects of FlexiGroup from those respect disclosed in the Offer Documents;
• There is introduced, or there is a public announcement of a proposal to introduce, into the Parliament of Australia or any State of Australia, a new law, or the Reserve Bank of Australia, or any Federal or State authority of Aestralia adopts or annoences a proposal to adopt a new law or policy (other than a law or policy which has been announced before the date of this agreement), any of which does or is likely to prohibit or adversely regulate or affect the Offer, capital issues or stock markets;
• The occurrence of any other calamity or crisis or any change in financial, political or economic conditions or currency exchange rates or controls in Australia, New Zealand, Singapore, Hong Kong, the United States of America or the United Kingdom or elsewhere;
• A change in senior management or the board of Directors of the Company occurs;
• A contravention by the Company or Flexirent Holdings, or a director or a senior manager of the Company or Flexirent Holdings, of the Corporations Act, the Trade Practices Act, the Company's or Flexirent Holdings' constitution, the Listing Refes or any other applicable law or regulation;
• The Company or Flexirent Holdings or any of their directors or officers (as that term is defined in the Corporations Act), engage in any fraudulent conduct or activity whether or not in connection with the Offer;
• A director or senior manager is charged with an indictable offence or a director of the Company or Flexirent Holdings is disgualified from holding office under Part 2D.6 of the Corporations Act;
• Legal proceedings are commenced against any director of the Company or Flexirent Holdings in his or her capacity as such or a regulatory body announces that it intends to take such action;
• Hostilities not presently existing commence (whether war has been declared or not) or a major escalation in existing hostilities occurs (whether war has been declared or not) involving any one or more of the United States, Aestralia, any member state of the European Union, New Zealand, Israel, People's Republic of China, South Korea, North Korea, indonesia or Japan or the declaration by any of these countries of war or a major terrorist act is perpetrated anywhere in the world;
• Any Certificate given under the Underwriting Agreement by the Company or Flexirent Holdings in respect of compliance with its obligations under the Underwriting Agreement and under the Offer and the status of representation and warranties and termination events is false, misleading, deceptive or inaccurate;
• A default by either of the Company or Flexirent Holdings in the performance of any of its obligations under the Underwriting Agreement occurs; or
• A representation or warranty contained in the Underwriting Agreement on the part of the Company or Flexirent Holdings is not true or correct or is misleading or deceptive.

Under the Underwriting Agreement, if one Joint Lead Manager terminates, the other Joint Lead Manager must give notice in writing to the Company within 5 Business Days of the terminating Joint Lead Manager stating whether it will also terminate or whether it will assume the obligations of the terminating Joint Lead Manager. If no such notice is given within that period, the remaining Joint Lead Manager will be deemed to have terminated.

Eighth SRJ and the Underwriters have entered into an agreement dated on or about 21 November 2006 under which the Underwriters have agreed to sub-underwrite the Reserved Offer at the Offer Price, on the basis that the Underwriters will each subscribe for, or procure subscriptions for, their 50% proportion of any Shares offered under the Reserved Offer that are not allocated to Reserved Offer Applicants to the extent that Eighth SRJ would otherwise acquire an interest in more than 29.99% of the issued capital in the Company on completion of the Offer (including as a result of Eighth SRJ's obligations to underwrite the Reserved Offer).

10.7.2 Harvey Norman

Harvey Norman and FlexiGroup first entered into a relationship in 1995. In 2002, further arrangements were agreed (and documented in 2003). Pursuant to those arrangements, as further amended, Harvey Norman has an entitlement (agreed with FlexiGroup to be borne by the two majority shareholders of Flexirent Holdings) to commission proceeds amounting to 10% of the total value of the FlexiGroup business plus excess as described in the paragraph below realised on an initial public offering prior to 31 March 2007 (less costs associated with the initial public offering, including any value payable on the exit transaction relating to FlexiGroup's senior management incentive schemes calculated to be \$41.0 million) and a monthly commission payment by the relevant FlexiGroup companies of approximately 5% of the FlexiGroup business' profit before tax until an initial public offering. The two majority shareholders of Flexirent Holdings will satisfy the former entitlement out of their cash proceeds from the Offer and the monthly commission payment will cease at the completion of the Offer.

In addition, if the total value of the FlexiGroup business realised on an initial public offering prior to 31 March 2007 exceeds \$425 million, then Harvey Norman is entitled to further commission proceeds amounting to 10% of the excess of the value realised over \$425 million on an initial public offering. Any such additional commission entitlement will be satisfied by the Existing Shareholders out of their cash proceeds from the Offer.

The key terms of the agreement with Harvey Norman are as follows:

Background	Flexirent Capital Pty Limited and Flexirent Capital (New Zealand) Limited (together the "FlexiGroup Parties") are party to an operating agreement with Yoogalu Pty Ltd and Harvey Norman Stores (N.Z.) Pty Limited (together "Harvey Norman") ("HN Agreemeat"). In Australia, Harvey Norman has independent franchisees ("HN Franchisees") who operate franchised retail outlets. In New Zealand, Harvey Norman operates retail outlets directly. Both the franchised retail outlets and the directly operated retail outlets (the "HN Stores") sell, among other things, computers, office equipment and electrical items. The HN Franchisees are not party to the agreement and Harvey Norman does not control them, but Harvey Norman must use its best endeavours to ensure they abide by the obligations which are relevant to them. The HN Agreement sets out the terms on which the FlexiGroup Parties provide their products to customers of HN Stores.
Overview of Services	The FlexiGroup products made available include the Ezyway, Flexirent and MiniLease products in Australia and the Ezyway, MiniLease, FlexiOwn and Flexirent products in New Zealand ("FlexiGroup Prodects").
	The FlexiGroup Parties must use their best endeavours to make the FlexiGroup Products available in accordance with prescribed service levels and must provide training to Harvey Norman staff.
Fees	The FlexiGroup Parties pay:
	- (In Australia) administration fees to Harvey Norman (based on a percentage of total monthly sales to customers who use FlexiGroup Products); Sales assistance fees to HN Stores (based on a percentage of total monthly sales to customers who use FlexiGroup Products). These fees are intended to be used to promote FlexiGroup Products in the HN Stores; and A proprietor's rebate to HN Stores on each sale to a customer who uses a FlexiGroup Product. The amount of the rebate is primarily based on the value of the sales.

Term	The HN Agreement expires in the first half of calendar year 2015.
FlexiGroup Priority	if a castomer of an HN Store wants to lease or rent goods covered by the FlexiGroup Products, then Harvey Norman must use its best endeavours to ensure that the HN Store:
	- Grants priority access rights to the customer for the FlexiGroup Products; and Does nothing to discourage the customer from using the RexiGroup Products.
	Harvey Norman is not to supply services similar to the FlexiGroup Products to the HN Stores and must use its best endeavours to ensure that HN Franchisees do not supply such services, other than services offered as at February 2003.
	After early 2011, if HN reasonably believes that leasing or rental facilities which a competitor of FlexiGroup proposes to make available to customers of Harvey Norman Stores are more competitive than FlexiGroup's, then unless FlexiGroup varies the terms of the facilities it offers within 3 months to be as favourable to Harvev Norman. and customers of Harvey Norman Stores as those proposed to be offered by FlexiGroup's competitor, Harvey Norman may make the competing facilities available notwithstanding the priority access rights that otherwise apply in favour of FlexiGroup.
Restriction on FlexiGroup	The FlexiGroup Parties may not offer the Flexirent Products to a national competitor of Harvey Norman, but may provide national competitors of Harvey Norman with a l differentiated offering. This restriction does not apply to products that the FlexiGroup- Parties were providing as at the date of the HN Agreement.
Termination by FlexiGroup Parties	The FlexiGroup Parties and Harvey Norman may terminate the HN Agreement on:
or Harvey Norman	– Inselveacy; or - Government action (such as the commencement of an investigation) which will, in the reasonable opinion of a party, have a material adverse effect on a party; or - Material breach which is irremediable or which is not remedied on 30 days' notice (except for those mentioned below).
Termination by FlexiGroup Parties	The FlexiGroup Parties may terminate the HN Agreement if:
	- The parties fail to agree a change to the fees within 120 days of the FlexiGroup Parties' request, and this is not remedied within a further 30-day notice period; or - Harvey Norman fails to use its best endeavours to promote the FlexiGroup Products and this is not remedied after two 30-day notice periods.
Termination by Harvey Norman	Harvey Norman may terminate the HN Agreement if the FlexiGroup Parties fail to:
	- Provide the RexiGroup Products, and this is not remedied within a 30-day notice period: or
	- Comply with the service levels and this is not remedied after two 30-day notice periods; or
	- Pay the relevant fees and this is not remedied after two 30-day notice periods; or - Pay any other payment due and this is not remedied after two 30-day notice periods.

10.7.3 Noel Leeming Contract

The key terms of the agreement with Noel Leeming are as follows:

Background	Operating Agreement between Flexirent Capital (New Zealand) Limited ("Flexirent NZ") and Noel Leeming Group Limited ("Noel Leeming") ("N'L Agreement").
	Noel Leeming operates retail outlets operating under the name of Noel Leeming and Bond and Bond. The NL Agreement applies in respect of retail outlets operating under those brands or others owned by Noel Leeming ("NL Stores").
	The NL Agreement sets out the terms on which Flexirent NZ provides products to castomers of NL Stores.
Overview of Services	The FlexiGroup products available include the EasyLease, Smartway Leasing and Flexirent Commercial (Flexiline of credit) products ("FlexiGroup Products").
	Flexirent NZ is required to meet certain prescribed service levels and provide training to Noel Leeming staff.
Fees	Flexirent NZ pays a store rebate to Noel Leeming by monthly instalments calculated according to a formula based on the amount financed under, and the term of, the FlexiGroup Products.
Term	The NL Agreement expires in the second half of calendar year 2011.
FlexiGroup Priority	If a customer of an NL Store wants to lease or rent to bay goods covered by the FlexiGroup Products, Noel Leeming must ensure that the NL Store:
	- Grants priority access rights to the customer for the FlexiGroup Products; and - Does acthing to discourage the customer from using the FlexiGroup Products.
	Noel Leeming must easure that before an NL Store offers other leasing or rental facilities to its customers, it must first give Flexirent NZ the opportunity to provide such other facilities.
Restriction on FlexiGroup	Flexirent NZ may not use the "EasyLease" or "Smartway Leasing" brands in its dealings with a large scale competitor of Noel Leeming.
Termination	Either party may terminate the NL Agreement on:
	Material breach which is irremediable or not remedied within 30 days' notice; or - lasolvency event.
	Flexirent NZ may terminate the NL Agreement if:
	The parties fail to agree to change the fees within 320 days of a request by Flexirent. NZ to do so to take account of market coaditions; or Where in its reasonable opinion Noel Leeming is failing to promote the FlexiGroup Products in accordance with the agreement, and this is not remedied within a 30-day notice period.
	Noel Leeming may terminate the NL Agreement if Flexirent NZ fails to:
	- Provide the FlexiGroup Products, by immediate written notice; or Comply with the service levels, and this is not remedied within a 30-day notice period; or - Pay the fees, and this is not remedied within a 30-day notice period.

Trademarks	Noel Leeming is entitled to the "EasyLease" and "Smartway Leasing" trademarks on the termination or expiry of the agreement, except in particular cases of defacit by Noel Leeming.
10.7.4 Escrow Arrangements
Background	Each of the Existing Shareholders, Dhawan Trust and Paul McMahon has entered into escrow deeds with the Company in respect of all the Shares to be held by them on completion of the Offer ("Escrow Shares") pursuant to the arrangements described in Section 10.4.1 relating to the sale of their shares in Flexirent Holdings and/or the reinvestment of part of the cash consideration payable on cancellation of their performance options and/or equity participation entitlement.
	Each of Margaret Jackson and John Skippen (and/or their associates) and Dhawan Trust has entered into escrow deeds with the Company in respect of all the Shares to be issued to them on completion of the Offer ("Escrow Shares") ander the arrangements agreed between the Existing Shareholders, Dhawan Trust and those Directors as described in Section 10.4.1 and Section 10.6.1.
	Each of the participants in the long term incentive plans of the Existing Group has entered into escrow deeds with the Company in respect of all the Shares to be issued to them on completion of the Offer ("Escrow Shares") under arrangements described in Section 10.4.4.
Restrictions	Under the escrow arrangements, the relevant Shareholder may not:
	- Deal directly or indirectly in any or all of its Escrow Shares or Deal directly or indirectly in any interest or right in respect of all or any part of its Escrow Shares; - Create, or agree or offer to create, a security interest or encumbrance over or affecting any or all of its Escrow Shares; or - Do or omit to do any act which would have the effect of transferring effective ownership or control of any or all of its Escrow Shares.
Moratorium period	The Existing Shareholders and Paul McMahon have entered into escrow deeds with the Company under which they will be restricted from selling their Shares until two Business Days after the date on which the Company announces to ASX its results for FY2007.
	Dhawan Trust has entered into escrow deeds with the Company restricting it from selling 379,515 Shares until two Business Days after the date on which the Company announces to ASX results for FY2007 and from selling a further 353,049 Shares until two Business Days after the date on which the Company announces to ASX its results for EY2010.
	Margaret Jackson and R John Skippen and/or their associates have entered into escrow deeds with the Company restricting them from selling their Shares until two Business Days after the date on which the Company announces to ASX its results for FY2010.
	Participants in the long term incentive plans of the Existing Group have entered into escrow deeds with the Company restricting them from selling 50% of their Escrow Shares until 12 months after their issue and from selling the remaining 50% of their Escrow Shares until 24 months after their issue. If the relevant participant ceases to be an eligible employee (for the purposes of the terms of the long term incentive plans) due to redundancy, the participant will become immediately entitled to all their Escrow Shares. If the participant ceases to be an eligible employee during a tranche period due to a reason other than redundancy, summary dismissal or resignation, the participant will become immediately entitled to a proportion of the

	relevant tranche of Escrow Shares relating to that tranche period, pro rata to the length of time since the issue of the Shares or the prior anniversary date of the issue of the Shares (whichever is most recent). If the participant ceases to be an eligible employee for any other reason, the participant will forfeit all their Escrow Shares. If Escrow Shares are forfeited, the participant must procure, or permit the Company to procure, the on- market sale of the relevant number of Shares in the ordinary course of trading on ASX and pay the net proceeds of sale to the Company.
	From the day which is 2 Business Days after the date on which the Company announces to ASX its results for FY2007, the Company may release Margaret Jackson and John Skippen (and/or their associates) and Dhawan Trust from all or part of their applicable escrow restriction by giving written notice to the relevant Director, provided that the relevant Director does not participate in any deliberation or vote in relation to any such release.
	The Company may release a participant in the long term incentive plans of the Existing Group from all or part of their escrow restriction by giving written notice to the participant.
Exceptions	The relevant escrowed Shareholder is permitted to deal in its Escrow Shares that are subject to the escrow arrangements only if:
	The Company becomes subject to a takeover bid in respect of all Shares under the Corporations Act, and acceptances of that bid are received from the holders of at least 50% of the Shares. If the takeover bid does not become enconditional, the escrow arrangements will continue to apply to any Escrow Shares that the relevant Shareholder has tendered into the takeover bid; The Company is involved in a merger by way of scheme of arrangement under the Corporations Act provided that any Escrow Shares which are the subject of the scheme of arrangement will remain subject to the escrow arrangements if the merger by scheme of arrangement does not take effect; The Shareholder may transfer any or all of its Escrow Shares to a Permitted Transferee (as defined below) provided the transferee of the Escrow Shares enters into a deed on the same terms as the escrow deed prior to any transfer, and where such a transferee ceases to be a Permitted Transferee, it will immediately notify the Company of such event and shall within 5 days of such event transfer any Escrow Shares transferred to it, or options granted to it, to the relevant Shareholder; or in the case of Eighth SRJ and Viewlove, it relates to the grant of an option over Shares to certain senior executives of the Existing Group including John DeLano as described in Section 10.6.1 and any transfer of Shares in accordance with the terms of that option.
Permitted Transferee	A Permitted Transferee means a family member, trustee of a family trust or family controlled company associated with the escrowed Shareholder.

10.8 Regulation – Australia

10.8.1 Consumer Credit Issues

10.8.1.1 Scope of Consumer Credit Code

FlexiGroup's consumer credit products are subject to the requirements of the Uniform Consumer Credit Code (UCCC). The UCCC and related legislation contain requirements relevant to licensing, disclosure, procedures (including enforcement) and systems.

10.8.1.2 Licence Requirements

In some Australian States and Territories, FlexiGroup is required to be ficensed or registered in order to legally provide consumer credit.

10.8.1.3 Maximum Annual Percentage Rates

Maximum annual percentage rates (APRs) have been imposed in New South Wales. Victoria and the Australian Capital Territory, which cap the rate of interest that may be charged on regulated credit contracts. This does not affent looses

In New South Wates and the Australian Capital Territory, fees and charges are incorporated into the calculation for the purposes of determining whether the maximum APR has been breached. In Victoria, fees and charges are not taken account of, however, a lower maximum APR applies to secured credit.

10.8.1.4 UCCC Comparison Rate Provisions

Since 1 July 2003, consumer credit providers have been required to include a comparison rate in any advertisement which contains an annual percentage rate for a fixed term non-continuing credit product (which does not include leasing products, but would include a fixed rate, fixed term personal loan). For those products, comparison rate schedules must also be displayed at the credit provider's premises, wherever the consumer credit products are advertised, and must accompany any application for credit regulated by the UCCC.

A review of comparison rates is currently being undertaken. The sunset date was extended by one year to 30 June 2007 to allow for the completion of the review.

10.8.2 Trade Practices Issues

The Trade Practices Act (TPA), the ASIC Act and the Fair Trading Acts of each of the States and Territories probibit misleading or deceptive conduct, false representations, debtor harassment and other forms of conduct which may be injurious to "consumers" (as defined in the relevant legislation), and small businesses (where applicable).

In respect of its leasing products that are within the ambit of refevant legislation. FlexiGroup, as lessor, is also the supplier of the leased goods and, so, is subject to a range of provisions concerning the supply, including implied warranties.

In addition, the TPA provides that "linked credit providers" are jointly and severally liable with suppliers of goods or services where a consumer suffers loss or damage as a result of a misrepresentation, breach of contract, failure of consideration in relation to the contract, or as a result of a breach of a condition or warranty implied into the contract by the TPA. In some situations, FlexiGroup may be a linked credit provider as defined by the TPA.

The TPA caps the liability of linked credit providers at the sam of the amount financed under the contract, the amount of interest or damages awarded against the linked credit provider by the court and the amount of costs awarded by the court.

The TPA allows linked credit providers to avoid flability in certain circumstances. The circumstances include where a linked credit provider has made due enquiry of a supplier before and after becoming a linked credit provider to them.

10.8.3 Unfair Contracts

Under the Contracts Review Act (NSW) a "consumer" (as defined in the Act) may apply to a court for a range of orders in respect of a contract (including a lease or loan contract) or a provision of a contract formed in New South Wates. A court may make orders where the court has found that the contract was uniust in the circumstances at the time the contract was made. The orders available include refusing to enforce any or all of the provisions of the contract, declaring the contract void and varying the contract.

10.8.4 Unfair Contract Terms - Fair Trading Act (Vic)

Under the Fair Trading Act (Vic), a term is unfair if, contrary to the requirements of good faith and in all the circumstances, it causes a significant imbalance in the parties rights and obligations arising under a contract to the detriment of the "consumer" (as defined in the Act). A court can make a range of orders, if it finds a term to be unfair.

These provisions do not currently apply to contracts that are requiated by the UCCC and, therefore, this legislation does not apply to FlexiGroup's leases regulated by the UCCC. However, the Report of the Consumer Credit Review in Victoria has recommended that these unfair terms provisions be extended to cover UCCC regalated contracts. The report also recommended that the amounts of fees payable in connection with consumer credit not unreasonably exceed the cost of the services corresponding to the fees.

10.8.5 Secret Commissions

Each State and Territory has legislation dealing with the payment of secret commissions to agents and advisers. FlexiGroup must comply with that legislation.

10.8.6 Financial Transaction Reports Act

10.8.6.1 Reporting Requirements of Cash Dealers in the FTRA FlexiGroup has obligations under the Financial Transaction Reporting Act (Cth) (FTRA), including the requirement to make reports of significant cash transactions over \$10,000 and suspect transactions to AUSTRAC and keeping relevant records.

10.8.6.2 Replacement of Current Anti-Money Laundering Regime

The Commonwealth Government is in the process of reforming Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regulatory regime, including the FTRA.

On 1 November 2006, the Federal Government released an amended draft of the AML/CTF Bill.

It is anticipated that FlexiGroup's products will fall within the new regime. FlexiGroup will be required to develop and implement a compliant AML/CTF program, including customer identification, ongoing customer due diligence and transaction monitoring, employee due diligence and training, reporting to AUSTRAC and record keeping.

10.8.7 Privacy and Related Matters

10.8.7.1 Privacy Act

FlexiGroup must comply with the Privacy Act (Cth) concerning its handling of personal information in Australia. When handling personal information in Australia relating to individuals' creditworthiness and credit history, FlexiGroup must also comply with Part IIIA of the Privacy Act and the Credit Reporting Code of Conduct ("Code").

The Privacy Act is cerrently being reviewed by the Australian Law Reform Commission (ALRC) and changes are anticipated to be made. Positive credit (or "full file") reporting is being considered by the ALRC.

FlexiGroup mest also comply with a range of telecommunications legislation, including in respect of recording telephone conversations.

In addition, FlexiGroup must comply with the Spam Act (Cth) when sending commercial electronic messages.

10.8.7.2 Do Not Call Register

The Do Not Call Register Act 2006 (Cth) has passed through both houses of Parliament. It is presently awaiting Royal Assent. In essence, the purpose of the Act is to prohibit the making of unsolicited "telemarketing calls" to numbers registered on the Do Not Call Register.

10.8.8 Financial Sector (Collection of Data) Act

As a general rule, registrable corporations are required to register with APRA as financial corporations. Registrable corporations must lodge certain information with APRA. Registration also gives rise to various ongoing reporting obligations. FlexiGroup intends to register.

10.9 Requistion - New Zealand

10.9.1 Credit Contracts and Consumer Finance Act 2003

The Credit Contracts and Consumer Finance Act 2003 ("CCCF") applies to every credit contract and consumer lease made in New Zealand after 1 April 2005, it is based on similar Australian legislation, It regulates disclosure, fees and charges and enforcement of credit contracts (including "in substance credit contracts" such as finance leases). Most of the requirements under the CCCF apply only to consumer credit contracts (that is, contracts entered into by natural persons primarily for personal, domestic, or household purposes).

If a creditor fails to provide information it is required to disclose ander the CCCF, it may not be able to enforce the contract until it discloses the information. Further, statutory damages may apply if a creditor has breached certain provisions of the CCCF, regardless of whether the debtor has, in fact, suffered a loss.

10.9.2 Fair Trading Act 1986

The purpose of the Fair Trading Act 1986 ("FTA") is to prohibit misleading or deceptive conduct and practices in trade, to provide for the disclosure of consumer information relating to the supply of goods and services, and to promote product safety.

Unlike the position in Australia the FTA applies to contracts that are regulated by the CCCF, and applies to services supplied to both consumers and business customers.

Under the FTA, prosecution may result in fines of up to \$60,000 per offence for an individual and \$200,000 per offence for a company. Other remedial orders may also be made by a court including orders that a contract be altered.

10.9.3 Consumer Guarantees Act 1993

The Consumer Guarantees Act 1993 ("CGA") provides consumers with certain basic guarantees in relation to goods and services supplied by "suppliers" (as defined in the CGA). The CGA provides consumers with remedies against suppliers where the goods or services fail to comply with one or more of the guarantees, for example a consumer may have a right to cancel the contract and demand a refund of money paid under that contract. In contrast to the FTA, the CGA is only applicable to consumers, who are defined in similar terms as under the CCCF.

10.9.4 Personal Property Securities Act 1999

The Personal Property Securities Act 1999 ("PPSA") governs the priority of security interests in personal property in New Zealand. Under the PPSA, finance leases, and any lease for a term of more than one year, are deemed to create a security interest. Where a security interest exists, priority is generally determined (subject to some exceptions) by who has registered first in time on the Personal Property Securities Register ("PPSR"), rather than by who has title to the property. This means that lessors of leases which are security interests under the PPSA should register on the PPSR in order to protect their interests.

10.9.5 Credit (Repossession) Act 1997

The Credit (Repossession) Act 1997 ("CRA") applies to in substance security interests in consumer goods. The CRA sets out the rules that apply when a creditor takes possession of consumer goods under its security agreement. Under the CRA, creditors face restrictions in taking possession of goods from the consumer including a requirement to give notice to the debtor (and quarantor if applicable) prior to taking possession and provisions. relating to sale of the goods.

10.9.6 Legislative Reform

The Ministry of Consemer Affairs has commenced a review of the redress and enforcement provisions in the FTA and CGA. The purpose of this review is to try to measure the effectiveness of the current redress and enforcement provisions in the legislation and assess whether there is a need to amend either the FTA or CGA. To date only an initial think-piece document has been released which sets out the scope of the project and no imminent legislative change is anticipated.

10.10 Tax Considerations

This is a general discussion of the Australian income taxation implications for investors who acquire Shares through the Broker Firm Offer or Institutional Offer. It seeks to provide Australian tax-resident individual Shareholders, Australian tax-resident complying superannuation fund Shareholders, Australian tax-resident corporate Shareholders and tax non-resident Shareholders with an overview of the relevant Australian income taxation considerations. associated with the payment of dividends by the Company and the future disposal of their Shares.

The following information is based on the Income Tax Assessment Act 1936 (Cth) las amended) and the Income Tax Assessment Act 1997 (Cth) (as amended) as applicable at the Prospectus Date, except where stated otherwise, and on practice at the Prospectus Date.

The Australian taxation laws are complex. The following information is of necessity general in nature and is not intended to be an authoritative or complete statement of the applicable law. The taxation implications for Shareholders may differ depending on their individual circumstances. In particular, the information may not apply to a Shareholder who is regarded as a trader or who holds Shares as part of a business activity. Accordingly, Shareholders are advised to seek professional taxation advice in relation to their own positions. The comments in this Section 10.10 are not, and are not intended to be, taxation advice to any Applicant. Investors should note that the Australian taxation rules continue to be subject to considerable change.

10.10.1 Taxation of the Company

The Company is taxed as a company. It intends to elect to be the head entity of a tax consolidated group once it acquires Flexirent Holdings. Dividends paid by the Company may be franked to reflect tax paid by it. Any tax losses incerred by the Company (income or capital) cannot be passed to Shareholders. Instead, any such tax losses are available for later utilisation by the Company subject to satisfying certain tests for the utilisation of losses.

10.10.2 Taxation of Australian Tax-Resident Shareholders

10.10.2.1 Taxation of Dividends

Dividends may be paid to Shareholders out of accounting profits of the Company. Where the Company has paid tax in relation to these profits, dividends paid from these profits may have "franking credits" attached to them reflecting the underlying corporate tax paid by the Company. A dividend may be fully franked, partially franked or not franked at all. Where a dividend is partially franked, the franked portion is fully franked and the remainder of the dividend is unfranked.

Shareholders should be aware that the definition of dividend for Australian income tax purposes is broad and can include amounts paid under certain capital returns and off-market share buy-backs.

Individuals and Trustees of Superannuation Funds

A dividend received from the Company by a Shareholder who is a resident of Australia for taxation purposes. and is either an individual or the trustee of a superannuation fund will need to be included in the Shareholder's assessable income for the year in which the dividend is paid. Where the dividend is franked, the Shareholder will also be required to include an amount equal to the franking credit attached to the dividend in its assessable income (i.e. the dividend is "arossed up").

A "tax offset" equal to the amount of the franking credit included in its assessable income should normally be available for offset against tax payable by the Shareholder. Any excess tax offset (after offset against the Shareholder's tax payable) should normally be refundable to the Shareholder.

A Shareholder may not be able to obtain the tax offset in respect of a franked dividend received unless the "holding period rule" and the "related payments rule" are satisfied. Broadly speaking, the holding period rule requires that the relevant Shares be held "at risk" for more than 45 days. The application of the "holding period rule" and the "related payments rule" can be complicated and Shareholders should, where appropriate, seek their own advice as to whether these rules deay them an entitlement to the franking credit.

An unfranked dividend received by a Shareholder who is a tax-resident of Australia for taxation purposes and is either an individual or the trustee of a superannuation fund will need to be included in the Shareholder's assessable income for the year in which the dividend is paid. An unfranked dividend will not be grossed up and will not attract any tax offset.

Companies

A dividend received from the Company by a Shareholder who is a tax-resident of Australia for taxation purposes and is a company will need to be included in the Shareholder's assessable income for the year in which the dividend is paid.

Where the dividend is unfranked, the Shareholder company will, in effect, be taxed on the dividend unless it has current year deductible losses or outgoings, or deductible losses brought forward from earlier years, which can be set off against it.

Where the dividend is franked, the franking credits, as well as the dividend payment, must be included in the Shareholder company's assessable income (i.e. the dividend is again grossed up). The Shareholder company may be entitled to a tax offset equal to the amount of franking credits included in its assessable income. This will, in effect, result in the Shareholder company not being taxed on a fully franked dividend.

In addition, in a situation where the Shareholder company has tax losses brought forward from earlier years or has current year tax losses, it can choose to utilise the tax offset first against the tax payable on the franked dividend and the assessable gross-up in respect of the franking credit before applying those tax fosses. This will ensure a Shareholder company does not waste tax losses against otherwise effectively non-taxable franked dividends.

The Shareholder company should be able to credit its franking account with the franking credit attached to the dividend.

A Shareholder company may not be able to obtain the tax offset in respect of a franked dividend received unless the "holding period rule" and the "related payments rule" are satisfied. Broadly speaking, the "holding period rule" requires that the share be held at risk for more than 45 days. The application of the "holding period rule" and "related payments rule" can be complicated and Shareholders should, where appropriate, seek their own tax advice as to whether this will affect them.

Other Investors

Shareholders who are tax-residents of Australia for taxation purposes and who are not individuals or trustees of superannuation funds or companies, should consider how they would be treated in relation to the taxation of dividends paid to them by the Company. Such investors include exempt bodies, partnerships and the trustees of trusts other than superannuation funds.

10.10.2.2 Sale of Shares

Where a Shareholder who is a tax-resident of Australia for taxation purposes disposes of a Share, a capital gains tax ("CGT") calculation will be required in respect of that disposal (provided the Shareholder does not hold the Shares on revenue account or trade in Shares in the ordinary course of their business).

Any resultant capital gain or loss will need to be taken into account in determining the net capital gain to be included in the assessable income of the Shareholder in the year in which the contract for the disposal is entered into. A net capital gain for a year will be included in assessable income. A net capital loss for a year may be carried forward until the Shareholder has realised capital gains against which the net capital loss can be offset. Such carry forward and offset by Shareholders is subject to the satisfaction of certain tests.

Where a Shareholder seeks to offset a capital loss against a discount capital gain, the discount gain must be grossed up to the nominal gain prior to offsetting the capital losses.

The capital gain or loss on the disposal of a Share is generally calculated as follows:

• The disposal proceeds are compared with the cost base (which would include the incidental costs of acquisition and disposal respectively);
• The capital gain or loss is the difference between the disposal proceeds and the cost base of the Share. If those proceeds exceed the cost base, a capital gain arises and if the cost base exceeds those proceeds a capital loss arises.
• If the Share has been held for less than 12 months and a gain arises, the gain is included in the Shareholder's net capital gain for that year; and
• If the Share has been held for at least 12 months (not including the days of acquisition and disposal) and there is a gain, a discounting factor may be available to certain Shareholders. The discounting factor is as follows:
• Individuals and trusts 50%; and
• Certain superannuation entities 331/3%.

10.10.2.3 Australian Taxation of Shareholders who are not Residents of Australia for Tax Purposes Taxation of Dividends

Fully franked dividends paid by the Company to Shareholders who are not residents of Australia for taxation purposes will not be subject to Australian Dividend Withholding Tax ("DWHT").

Unfranked dividends paid by the Company to such Shareholders will generally be subject to DWHT at 30%, unless the Shareholder is a resident of a country with which Australia has a Double Taxation Agreement, in which case the DWHT is generally payable at a 15% rate.

In certain circumstances, non-resident Shareholders may instead be assessable to Australian tax on any dividends paid.

Non-resident Shareholders should consider the impact of the receipt of Australian dividends under their domestic tax regime.

Sales of Shares

A Shareholder who is not a resident of Australia for taxation perposes and who holds a Share on capital account will not generally be subject to Australian CGT on the disposal of a Share unless funder current law) that Shareholder (together with its associates) held 10% or more of the issued capital of the Company at any time during the five years before the disposal.

If a non-resident were to be subject to Australian CGT under this test, the possible relevance of any applicable Double Taxation Agreement should be considered.

The Tax Laws Amendments (2006 Measures No. 4) Bill 2006, which was recently introduced to Parliament. contains proposed amendments which are intended to limit the circumstances in which Australian CGT is imposed on non-residents. The following comments are made on the assumption that the Bill will enacted in its current form, as passed by the House of Representatives. In broad terms, if the Bill is enacted before the date that a Shareholder is taken to have disposed of their Shares under the Offer, a non-resident Shareholder should not be subject to Australian CGT on the disposal of their Shares unless both of these conditions are satisfied:

• That Shareholder holds 10% or more of the issued shares in the Company (taking into account the holdings of associates) either:
• At the time that the Offer is accepted; or
• Dering the whole of any continuous period of 12 months within the 24 months prior to the acceptance of the Offer and
• 50% or more of the value of the Company's assets at the time the Offer is accepted are attributable to real property (and {imited other assets} in Australia.

If you buy and sell shares in the ordinary course of business, or acquired the shares for resale at a profit, any gain could be taxed in Australia as normal income and not as a capital gain. In those cases, you should seek your own advice

You should seek advice from your tax adviser as to the taxation implications of accepting the Offer in your country of residence.

In certain circumstances, non-resident Shareholders may be assessable to tax on the sale of shares. Non-resident Shareholders should consider the impact of the sale of their Shares under their domestic tax regime.

10.10.2.4 Taxation of Financial Arrangements

On 16 December 2005 the Minister for Revenue and Assistant Treasurer issued an exposure draft of proposed new rules for the "Taxation of Financial Arrangements". It is intended that the new rules (if enacted) would represent a new Australian tax code for the taxation of receipts and payments in relation to financial arrangements. It is expected that the draft rules (in their form as at the date of the option) would not affect the tax treatment of the Company or distributions to Shareholders.

10.10.2.5 Tax File Numbers

You do not need to quote your Tax File Number ("TEN") to the Company. However, if a Shareholder who is a resident of Australia for taxation purposes does not quote a TFN or claim an exemption, tax is required to be deducted by the Company from certain distributions. The deduction rate is currently the highest marginal rate plus the Medicare levy (currently 46.5%).

10.10.2.6 Employee Gift Offer - Taxation

Australian employees of FlexiGroup who receive Shares under the Employee Gift Offer will need to consider the application of special taxation rules dealing with employee share plans.

Broadly, provided employees make a tax election for the year in which the Shares are acquired and the value of the Shares as calculated for tax purposes does not exceed \$1,000, no taxation consequences will arise on the issue of Shares. In this case, the tax consequences on the receipt of dividends and the subsequent disposal of Shares will generally be as outlined above for ordinary Shareholders, except for the fact that the CGT cost base of the Shares will be equal to their tax value at the time of issue.

While the tax value of the Shares is expected to be approximately \$1,000, the tax value per Share will not necessarily be equal to the Offer Price of the Shares. Depending on the circumstances at the time of issue, it is possible that the tax value could exceed \$1,000. In this case an employee who makes the tax election referred to above, would need to include the excess over \$1,000 in their income tax return for the income year in which the Shares are issued.

Where an employee does not make the tax election, no taxation consequences will arise at the time of issue of the Shares: however, the employee will instead be subject to income tax on the full value of the Shares once restrictions on disposal of the Shares are lifted (i.e. a maximum of three years after issue). The value of the Shares at this time will then become the CGT cost base of the Shares.

Employees should obtain advice which takes into account their own personal circumstances as to whether or not it would be beneficial to make the tax election.

10.10.2.7 Long Term Incentive Plan - Taxation

Australian tax resident executives of FlexiGroup who receive Options under the Long Term Incentive Plan will need to consider the application of special taxation rules dealing with employee share and option plans. The Options will be "qualifying options", which means the executives can benefit from the tax concessions contained in the employee share scheme tax rules. The concessions allow the executive to defer tax on their options beyond the date of grant.

Therefore, in the income vear the executive acquires the Options, they will need to make a decision as to how they want their Options to be taxed:

• Utilise the deferral concession: or
• Elect to be taxed at grant.

Alternative 1 - Tax Deferral

Grant and Vesting

On grant and at vesting the executive under this alternative will not be subject to Australian income tax.

Cessation Time

Tax on their Options is automatically deferred until the "cessation time". As there may be restrictions on the disposal of the shares that will be acquired upon exercise, the cessation time will be the earliest of:

• Ten years from the date of grant; or
• Disposal of the Option by exercise or sale; or
• If exercised, tax will become payable when any disposal restrictions on the sale of shares lift.

Sale of Options

Where Options are sold, income tax will be payable on the market value of the Options (which is equivalent to the proceeds received from safe provided that the transaction is at arm's length).

Exercise of Options and Sale of Shares within 30 days

Tax will be payable on the amount received for the shares less the exercise price, at their marginal rate of tax (top marginal rate is 46.5%, including Medicare levy). In this case there will be no CGT implications.

If the Underlying Shares are not Sold within 30 days of Cessation Time

• Tax at cessation

Tax will be payable on the market value of the shares less the exercise price at their marginal rate of tax. As the shares will be listed the market value will be calculated with reference to the weighted average price at which the FlexiGroup shares are traded during the one week ap to and including the day of cessation.

Tax at sale

CGT may also be payable when the underlying shares are sold. Upon sale of the shares, CGT will be payable on the capital proceeds received from the sale, less the cost base of the shares. The cost base will be equal to the market value of the shares at the date the restrictions lift.

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If the shares are held for more than 12 months before safe (i.e. post exercise), only 50% of the gain is taxable. The capital gain is the difference between the sale proceeds and the market value of the shares at the date of cessation plus the exercise price.

Alternative 2 - Election to be Taxed at Grant

The executive may elect to pay tax up front on their Options. If they make this election they will be required to fund this tax liability when they lodge their income tax return for the year in which the Options are granted. By electing to pay tax at grant, they are able to maximise the amount of growth in the value of the underlying shares which is taxed under the CGT rules, where they may potentially access the CGT 50% discount concession.

If they do not elect to pay tax on the options at grant, income tax will be automatically deferred, as described in the Tax Deferral section.

Grant

The executive will be taxed on the market value of their Options in the year they are granted. In calculating the market value of the Options, three variables are required:

• The exercise price of the option to acquire the share;
• The market value of the underlying share at the time of grant; and
• The life of the option.

The executive's taxable value is the greater of:

• The market value of shares at grant less the lowest amount that must be paid to exercise the option to acquire the share: or
• A valuation amount determined in the Employee Share Scheme tax legislation (for example, for a 10 year option plan, with the exercise price equal to the market value of the underlying share, the amount subject to tax is 18.4% of the exercise price).

The taxable value is taxed at the executive's marginal tax rate (top marginal rate is 46.5%, including 1.5% Medicare Levy).

Vesting/Cessation Time

On grant and at vesting the executive will not be subject to Australian income tax.

Sale of Ontions

Where the Options are sold, CGT will be payable on disposal proceeds received from the sale less the cost base, being the amount reported as income when the Options were granted. Provided the options have been held for more than 12 months from the date the Options are granted, only 50% of the capital gain will be taxed.

Sale of Shares

Where the Shares acquired on exercise of the options are sold, CGT will be payable on the capital proceeds received from the sale, less the cost base of the Shares, at marginal tax rates. The cost base will be equal to the sum of the exercise price paid plus the market value of the option at grant.

If the Shares are held for more than 12 months before sale (i.e. post exercise), only 50% of the gain is subject to CGT.

Other Considerations

When making any decision on up-front elections, the executive will need to consider the commercial implications of doing so. In particular, the need to fund the initial income tax charge at the time the options are granted where the options are exercised, the funding of the exercise price for at least one year by some means other than the disposal proceeds from the sale of the shares (as the shares must be held for more than one year prior to disposal to obtain concessional capital gains tax treatment) the market risk of the share price.

Where tax has been paid up front and, having not exercised the Options, the Options lapse, the executive can claim a refund for the taxes paid up front.

An election to be taxed at grant applies to all employee Shares and Options acquired under any Employee Share/ Option Plan in any one income tax year. This means that should a executive receive other employee Shares or Options in the same year, they will also be subject to tax at grant (i.e. the Gift Offer). Alternatively, should the executive choose tax deferral for the Options, Employee Gift Offer shares will not be tax exempt.

The tax election needs to be made before lodgement of the executive's income tax return for the year in which the Options were granted.

The decision to be taxed at grant should be made after considering your personal circumstances. Accordingly, we recommend that you consult your tax adviser prior to making any decisions in relation to your options.

10.10.3 Taxation for New Zealand Residents

Employee Gift Offer

New Zealand employees of FlexiGroup who receive shares under the Employee Gift Offer will need to consider the application of special taxation rules dealing with employee share plans.

The tax provisions which ordinarily apply to employee share plans in New Zealand will apply to the Employee Gift Offer. The effect is to include in a New Zealand employee's income, in the tax year of acquisitions of the shares. the difference between the market value of the shares at that time and the price (if any) paid by the employee for the shares.

When such a taxable benefit does arise, this taxable benefit must be declared by the employee in an annual income tax return which may necessitate them to file a return, where they would not ordinarily do so.

Long Term Incentive Plan

The granting of an Option or Performance Right to acquire shares, to an employee, under a Share Purchase Plan, is not a taxable event in New Zealand. Only when the option or right to acquire is exercised and the share is acquired is there a taxable event for the employee.

Benefits provided to New Zealand resident employees or associates under a Share Purchase Agreement are taxable as income in the year the shares under the plan are acquired. The LTIP will qualify as a Share Purchase Agreement for New Zealand tax purposes.

The benefit under the plan will be calculated as the difference between the amount paid for the Shares on exercise of the Option and value of those Shares at the time of acquisition. The tax payable on the benefit is payable regardless of the fact that the Shares may be subject to a restriction concerning the sale of those Shares. The restriction cannot be taken into account in valuing the Shares unless it applies for at least eight years or on the death of an employee.

Employees should obtain specific advice which takes into account their own personal circumstances before making any decisions taking into account the impact of tax in New Zealand.

10.11 Interests of Persons Named In this Prospectus

Except as set out below:

• Neither the Joint Lead Managers nor any person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of the Prospectus holds, or has held in the two vears before lodgement of this Prospectus with ASIC, an interest in the formation or promotion of FlexiGroup or the Offer, or any property acquired or proposed to be acquired by FlexiGroup in connection with its formation or promotion of the Offer;
• No amount has been paid or agreed to be paid and no benefit has been given or agreed to be given to any person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus or the Joint Lead Managers, in connection with the formation or promotion of FlexiGroup or the Offer;
• Mallesons Stephen Jagues has acted as Legal Adviser to FlexiGroup in connection with the Offer, has performed work in relation to the Australian legal due diligence enquiries on legal matters and advised FlexiGroup on Australian legal matters generally in relation to the Offer. FlexiGroup has paid or agreed to pay approximately \$1.4 million (inclusive of GST) in relation to these services, to the date of this Prospectus. Further amounts may be paid to Mallesons Stephen Jaques in accordance with its time-based charges;

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• PricewaterhouseCoopers Securities Ltd has acted as Investigating Accountant in respect of the Offer, has prepared an Investigating Accountant's Report included in this Prospectus and has performed work in relation to financial and taxation due diligence enquiries. FlexiGroup has paid or agreed to pay PricewaterhouseCoopers Securities Ltd approximately \$2.2 million (inclusive of GST) for these services in accordance with its time-based charges, to the date of this Prospectus;
• Goldman Sachs JBWere Pty Ltd and UBS AG. Australia Branch have acted as Joint Lead Managers to the Offer. The amount which FlexiGroup has agreed to pay Goldman Sachs JBWere Pty Ltd and UBS AG. Australia Branch is set out in Section 10.7.1:
• UBS Wealth Management Australia Pty Etd and Bell Potter Securities Eimited have acted as Co-Managers to the Offer. In respect of these roles, all of the amounts payable to the Co-Managers will be payable from the fees received by the Joint Lead Managers under the Underwriting Agreement referred to in Section 10.7.1; and
• Swish Pty Limited, a company associated with Rajeev Dhawan, has provided consultancy and advisory services to Flexirent Capital in respect of the Offer. FlexiGroup has agreed to pay Swish Pty Limited \$550,000 for those services.

10.12 Consents of Exparts and Disclainer of Liability

Each of the parties referred to as consenting parties who are named below:

• (a) Has given, and has not before the lodgement of this Prospectus with AS(C withdrawn, its written consent to being named in this Prospectus in the form and context in which it is named;
• (b) Has not made any statement, that is included in this Prospectus or on which a statement made in this Prospectus is based, other than as specified in paragraph (d);
• (c) To the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statements in or omissions from this Prospectus, other than the reference to its name and a statement included in this Prospectus with the consent of that person as specified in paragraph (d); and
• (d) In the case of PricewaterhouseCoopers Securities Ltd has given, and has not before lodgement of this Prospectus with ASIC withdrawn, its consent to the inclusion of its Investigating Accountant's Report in Section 9 in the form and context in which it is included

ROLE	COMSENTIME PARTIES
Joint Lead Managers.	Goldman Sachs JBWere Pty Ltd and UBS AG, Australia Branch
Co-Managers.	Bell Potter Securities Limited and UBS Wealth Management Australia Pty Ltd
Australian Legal Adviser -	Mallesons Stephen Jaques
Share Registry	Liak Market Services Limited
Auditor	PrícewaterhouseCoopers
Investigating Accountant	PricewaterhouseCoopers Securities Ltd

None of the persons referred to above has caused or authorised the issue of this Prospectus. Accordingly, none of the persons referred to above makes any representation regarding, and has any responsibility for, any other statements or material in, or omissions from, this Prospectus. This applies to the maximum extent permitted by law and does not apply to any matter to the extent to which consent is given above.

10.13 Oversenig Restrictions

The sale and purchase of Shares is requlated by a number of laws that restrict the level of ownership or control by any one person (either alone or in combination with others). This Section 10.13 contains a general description of these laws.

10.13.1 Foreign Acquisitions and Takeovers Act 1975 (Cth)

Generally, the Foreign Acquisitions and Takeovers Act 1975 (Cth) applies to acquisitions of shares and voting power in a company of 15% or more by a single foreign person and its associates ("substantial interest"), or 40% or more by two or more unassociated foreign persons and their associates ("aggregate substantial interest"). Where an acquisition of a substantial interest meets certain criteria, the acquisition may not occur unless notice of it has been given to the Federal Treasurer and the Federal Treasurer has either stated that there is no objection to the proposed acquisition in terms of the Australian Government's "Foreign Investment Policy" or a statutory period has expired without the Federal Treasurer objecting.

An acquisition of a substantial interest or an aggregate substantial interest that the Treasurer considers to be contrary to Australia's national interest may result in divestment orders unless a process of notification, and either a statement of no objection or expiry of a statutory period without objection, has occurred.

10.13.2 Corporations Act

The takeovers provisions in Chapter 6 of the Corporations Act restrict acquisition of shares in listed companies. and unlisted companies with more than 50 members, if the acquirer's (or other party's) voting power would increase to above 20%, or would increase from a starting point that is above 20% and below 90%, unless certain exceptions apply.

The Corporations Act also imposes notification requirements on persons having voting power of 5% or more in the Company.

10.14 ASIC Relief

The Company has applied to ASIC for the following relief:

• An exemption from having to produce half yearly accounts for the period from its date of incorporation to 14 May 2007, the date six months after incorporation; and
• Relief so that the takeovers provisions of the Corporations Act will not apply to certain "relevant interests" that the Company would otherwise acquire in its own Shares by reason of the voluntary escrow arrangements described in Section 10.7.4.

10.15 ASX Walvers and Exemptons

In connection with its application to ASX for admission to the official list, the Company will apply to ASX for the following confirmations and waivers:

• A waiver from the requirement in Listing Rule 4.2A to permit it to not file a half yearly report for the period ending 14 May 2007:
• A waiver from Listing Rule 7.1 such that the issue of Shares under the Reserved Offer will not require the approval of Shareholders or count toward the 15% limit in Listing Rule 7.1;
• A confirmation that the issue of Shares to Directors (and/or any entities associated with them) in connection with the acquisition of the Existing Group (see Section 10.4.1) will not raise any issues under Listing Rule 10.11;
• A waiver from Listing Refe 10.11 to permit the issue of Shares to Andrew Abercrombie's associate, Eighth SRJ, under the Reserved Offer (see Section 10.4.1); and
• A waiver from Listing Refe 10.11 and Listing Rule 10.14 to permit the grant of Options to John DeLano under the LTIP (see Section 10.5.2.3) and to Shares on exercise of those Options, without Shareholder approval.

10.16 Costs of the Offer

If the Offer proceeds, the Company's total estimated costs in connection with the Offer (including advisory, legal, accounting, tax, stamp duty, listing and administrative fees, as well as printing, advertising and other expenses) are currently estimated to be approximately \$8.1 million. As noted in Section 3.3, the Existing Shareholders are responsible for settlement of the underwriting fees payable to the Joint Lead Managers.

The costs of the Offer will reduce the net proceeds payable to the Existing Shareholders as a result of the Offer.

10.17 Documents Available for Inabextics:

During the Offer, a copy of the Company's Constitution will be available for inspection free of charge between 9.00am and 5.00pm AEDT time, Monday to Friday, at the Company's registered office.

10.18 Porelen Selling Nestrictions

The distribution of this Prospectus (including an electronic copy) in jurisdictions outside Australia may be restricted by law. If you come into possession of this Prospectus in jurisdictions outside Australia, then you should seek advice on and observe, any such restrictions. If you fail to comply with such restrictions, that failure may constitute a violation of applicable securities laws.

This Prospectus or Shares have not been, and will not be, registered in any jurisdiction other than Australia. This Prospectus does not constitute an offer or invitation in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer.

The Shares have not been and will not be registered under the US Securities Act of 1933, as amended ("US Securities Act") and may not be offered or sold in the US.

Each Applicant in the Retail Offer, the Reserved Offer and Employee Gift Offer will be taken to have represented, warranted and agreed as follows:

• It is not in the US, or a US (as defined in Rule 902 under the US Securities Acti Person and is not acting for the account or benefit of a US person; and
• The Applicant will not offer to sell the Shares in the US or in any other jurisdiction outside Australia except in compliance with all applicable faws in the jurisdiction in which such Shares are offered and sold.

The Shares may not be offered or sold in any jurisdiction by means of this Prospectus or otherwise, except to persons to whom such offering or safe is permitted under applicable law.

10.19 Litigation and Claims

So far as the Directors are aware, there is no current or threatened civil litigation, arbitration proceeding or administrative appeal, or criminal or governmental prosecution of a material nature in which FlexiGroup is directly or indirectly concerned which is likely to have a material adverse impact on the business or financial position of FlexiGroup.

10.20 Governing Law

This Prospectus and the contracts that arise from the acceptance of the Applications and bids under this Prospectus are governed by the law applicable in New South Wales and each Applicant and bidder submits to the exclusive jurisdiction of the courts of New South Wales.

10.21 Consents to Lodgement

Each Director has consented to the lodgement of this Prospectus with ASIC as required by section 720 of the Corporations Act.

Glossary and
Industry Terminology

139

Sior cents	Australian currency
\$ or dollars	Australian dollars
ABN	Australian Business Number
ACN	Australian Company Number
Add-on	where an existing FlexiGroup customer enters into a new FlexiGroup contract to obtain additional assets
AEDT	Australian Eastern Daylight Time
AIFRS	Australian equivalents to International Financial Reporting Standards effective for financial years beginning on or after 1 January 2005
Applicant	person who lodges a valid Application Form under this Prospectus
Application	application made on the conditions set out in this Prospectus by using an Application Form
Application Form	application form accompanying this Prospectus
Application Monies	monies received from Applicants in respect of their Applications
ASIC	Australian Securities and Investments Commission
ASTC	ASX Settlement and Transfer Corporation Pty Limited
ASTC Settlement Rules	settlement rules of the ASTC, as amended or replaced from time to time
ASX	Australian Stock Exchange Limited (ABN 98 008 624 691)
Australian Accounting Standards	accounting principles and practices applying by law or otherwise generally accepted in Australia consistently applied
Australian GAAP or AGAAP	generally accepted accounting principles in Australia prior to the adoption of AIFRS
Average Receivables Outstanding	net receivables balance from the portfolio of leases and loans averaged on a monthly basis.
Board	the board of Directors
Broker	ASX participating organisation
Broker Firm Applicant	Applicant under the Broker Firm Offer
Broker Firm Offer	offer of Shares open to Australian resident retail investors who have received a firm allocation from their Broker
Business Day	ɗay that is not a Saturday, Sunɗay, bank or public holiday in New South Wales, Australia
CAGR	compound annual growth rate
Chairman	chairman of Directors

CHESS Clearing House Electronic Sub-register System operated by an associate of the ASX Closing Date in relation to the Broker Firm Offer, the last day on which Application Forms may be accepted for the Broker Firm Offer, expected to be 7 December 2006 in relation to the Reserved Offer, Employee Gift Offer and Option Offer the last day on which Application Forms may be accepted for the Reserved Offer, Employee Gift Offer and Options Offer expected to be 15 December 2006 in relation to the Institutional Offer, the date notified by the Company through the Joint Lead Managers, expected to be 5 December 2006 Co-managers Bell Potter Securities Limited and UBS Wealth Management Australia Pty Ltd Company or Issuer FlexiGroup Limited (ACN 122 574 583) Corporations Act Corporations Act 2001 (Cth) Cross-sell process of marketing Add-ons, Protect Products and loans to existing FlexiGroup customers Deals Settled total number of Originations, Add-ons and Trade-ups in a given period. Dhawan Trust BR Dhawan Pty Ltd, the trustee of the BR Dhawan Trust, a trust associated with Rajeev Dhawan Directors directors of the Company Eighth SRJ Eighth SRJ Pty Limited, the Existing Shareholder associated with Andrew Abercrombie. Eighth SRJ holds shares in Flexirent Holdings as trustee of the Philadelphia Trust Eligible Employee (1) in respect of employees of FlexiGroup in Australia, Australian permanent full-time and part-time employees (who have completed a minimum of three months of service); and (2) in respect of employees of FlexiGroup in New Zealand, New Zealand permanent full-time and part-time employees (who have completed a minimum of three months of service) of Flexirent Capital (New Zealand) Limited, on 17 November 2006. Employee Gift Offer Offer of the nearest number of Shares to the value of \$1,000 (rounded down). at the Offer Price, at no cost to the employee Employee Offer Applicant Eligible Employee who lodges a valid Application Form under the Employee Gift ESAP or Employee Share Employee Share Acquisition Plan as described in Section 10.5.1 Acquisition Plan Existing Group group of companies comprised of Flexirent Holdings and its subsidiaries. that will be acquired from the Existing Shareholders as part of the restructure described in Section 10.4. Existing Shareholders Eighth SRJ, Viewłove, and John and Kylie DeLano (as trastees of DeLano Trust)

Glossary and Industry Terminology

Expiry Date	date on which this Prospectus expires, being 13 months after the date of this Prospectus
F	forecast
FlexiGroup	FlexiGroup Limited (ACN 122 574 583) and its wholly-owned subsidiaries after Flexirent Holdings has been acquired by the Company
Flexirent	traditional leasing product of FlexiGroup
Flexirent Capital	Flexirent Capital Pty Limited (ACN 064 046 046), a wholly-owned subsidiary of Flexirent Holdings
Flexirent Holdings	Flexirent Holdiags Pty Limited (ACN 103 556 127)
Flexirent Optionholders	interests associated with Rajeev Dhawan and certain senior executives of the Existing Group holding performance options in Flexirent Holdings and Flexirent Capital
FlexiGroup Share Offer Information Line	1800 881 432 (within Australia) or +61 2 8280 7927 (outside Australia)
Forecast Financial Information	the pro-forma consolidated forecast income statement and pro-forma consolidated forecast statement of cash flows of FlexiGroup for FY2007
Funders	four financial institutions with which FlexiGroup currently has funding arrangements
FY2004	financial year ended 30 June 2004
FY2005	financial year ended 30 June 2005
FY2006	financial year ended 30 June 2006
FY2007 ⊙r Forecast Period	financial year ending 30 3une 2007
Goldman Sachs JBWere	Goldman Sachs JBWere Pty Ltd (ABN 21 006 797 897)
HIN	Holder Identification Number
Historical Financial Information	pro-forma consolidated income statement, statement of cash flows and balance sheet for FlexiGroup for the years ended 30 3une 2005 and 30 June 2006
Historical Period	period from 1 July 2004 to 30 June 2006
HΥ	half year ended/ending 31 December
Institutional Investor	investor to whom offers or invitations in respect of securities can be made without the need for a lodged prospectus (or other formality, other than a formality with which FlexiGroup is willing to comply), including in Australia persons to whom offers or invitations in respect of securities can be made without the need for a lodged prospectus under section 708 of the Corporations Act
Institutional Offer	offer of Shares open to Australian and certain international (non-US) institutions on the terms set out in this Prospectus
Joint Lead Managers	Goldman Sachs JBWere and UBS

Listing Rules	listing refes of ASX
Loss Reserve Portion	the amount set aside in relation to possible future bad debts
LTIP or Long Term Incentive Plan	FlexiGroup Long Term Incentive Plan as described in Section 10.5.2
Net Margin	interest income net of direct sales costs less interest expense (which includes all fees and charges)
NPAT	net profit after tax
ΝZ	New Zealand
Offer	invitation made by the Company pursuant to this Prospectus for prospective investors, including management and Eligible Employees, to apply for (or be issued) Shares and Options
Offer Period	Opening Date to Closing Date of the relevant part of the Offer, expected to be from 9.00am (AEDT) on 29 November 2006 to 5.00pm (AEDT) on 7 December 2006 for the Broker Firm Offer, from 9.00am (AEDT) 29 November 2006 to 5.00pm (AEDT) on 15 December 2006 for the Reserved Offer and Employee Gift Offer and from 9.00am (AEDT) on 5 December 2006. to 5.00pm (AEDT) on 5 December 2006 for the Institutional Offer
Offer Price	price at which the Shares are being offered, being \$2.00 per Share
Opening Date	first day on which Application Forms will be accepted, expected to be 29 November 2006
Options	options to acquire Shares in accordance with the LTIP
Option Offer	invitation made by the Company pursuant to this Prospectus for certain executives to be granted Options
Optionholder	holder of an Option.
Origination	where a new customer first enters into a contract with FlexiGroup
Performance Rights	performance rights to acquire Shares in accordance with the LTIP
Prospectus	this prospectus relating to the Offer lodged with the ASIC on the Prospectus Date
Prospectus Date	21 November 2006, being the date on which a copy of this Prospectus was lodged with ASIC
Reserved Offer	offer of shares open to certain retail partners of FlexiGroup and Eligible Employees
Reserved Offer Applicant	applicant under the Reserved Offer
Retail Investors	Australian resident investors who are not Institutional Investors
RPOP or Retail Partners Option Plan	Retail Partners Option Plan as described in Section 10.5.4
Share Registry	Link Market Services Limited (ABN 54 083 214 537)

Glossary and Industry Terminology

mana a

Shareholder	holder of shares in the capital of the Company from time to time
Shares	fully paid ordinary shares in the Company
SRN	Shareholder Reference Number
Subco	FlexiGroup Subco Pty Limited (ACN 122 713 357)
Trade-up	where, at the end of their FlexiGroup contract, a customer enters into a new contract to upgrade their product/equipment
UBS	UBS AG. Aestralia Branch (ABN 47 088 129 613)
Underwriting Agreement	agreement described in Section 10.7.1
US	United States of America
Viewlove	Viewlove Pty Limited, the Existing Shareholder associated with David Berkman. Viewlove holds shares in Flexirent Holdings as trustee of the David Berkman Family Trust

Your Guide to the Application Form

• Insert the number of Shares you wish to apply for. The Application must А be for a minimum of 2,000 and thereafter in multiples of 500 Shares.
• Insert the relevant amount of Application Monies. The Offer price is \$2.00 R per Share. Amounts should be in Australian dollars. Please make sure the amount of your payment equals this amount.
• Write the full name you wish to appear on the register of Shares. This 'n. must be either your own name or the name of a company. Up to three joint Applicants may register. The table below shows the correct form of registrable name.
• Please enter your postal address for all correspondence. All communications D. to you from FlexiGroup and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.
• E ... If you are already a CHESS participant or sponsored by a CHESS participant, write your HIN here.
• Please enter your telephone number(s), area code and contact name in F case we need to contact you in relation to your Application.

Acknowledgements

By returning this Application Form, I/we agree to the following statements. I/We:

• have personally received a paper or electronic copy of the Prospectus that this Application Form accompanies and have read it in full;
• am/are at least 18 years of age if I/we am/are an individual(s);
• have completed this Application Form correctly;
• acknowledge that once FlexiGroup receives this Application Form, I/we
• may not withdraw it; apply for the number of Shares at the Australian dollar amount shown on the front of this Application Form:
• agree to being allotted the number of Shares that I/we apply for or a lower number allotted in a way allowed under the Prospectus or no Shares at all:
• authorise the Joint Lead Manager. FlexiGroup and their respective officers or agents, to do anything on my/our behalf necessary for Shares to be

Please complete payment details as follows:

G

• make your cheque(s) payable in accordance with the instructions from the Broker from which you received your firm allocation of Shares;
• the amount should agree with the amount shown in section B;
• sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected; and
• pin (do not staple) your cheque(s) to the Application Form where indicated.

If you are a Broker Firm Offer Applicant, send your Application Form and your Application Monies to your Broker. Your Broker will settle a successful Application on a delivery versus payment basis through CHESS. The transaction will not have the benefit of coverage by the National Guarantee Fund. Applications received by FlexiGroup after 5:00pm (Sydney time) on 7 December 2006 will not be processed.

allotted to me/us, including without limitation to sign any documents necessary for Shares to be allotted to me/us, and to act on instructions received by the Share Registry using the contact details in section F and my/our registered address:

• acknowledge that the information contained in the Prospectus is not investment advice or a recommendation that Shares are suitable to me/us. given my/our investment objectives, financial situation or particular needs:
• represent and warrant that I/we have received the Prospectus in Australia; and
• represent and warrant that I am/we are not in the United States and I am/we are not a United States person (and not acting for the account or benefit of a United States person), and I/we will not offer, sell or resell Shares in the United States to, or for the account or benefit of, any United States person.

Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your shareholding and if some or all of the information is not collected then it might not be possible to administer your shareholding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Type of Investor	Correct Form of Registration	incorrect Form of Registration
Individual Use given names in full, not initials	Mrs Katherine Clare Edwards	K Ö Edwards
Company Use Company's full title, not abbreviations	Liz Biz Pty Ltd	Liz Biz R/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Harold Post Harold Post Deceased.
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate designation	Mrs Sally Hamilton.	Master Henry Hamilton
Partnerships Use the partners' personal names	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son.
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs/Unincorporated Bodies/Business Names Use office bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

here
(da not

Adviser Code

Broker Firm Offer Application Form

This Application Form relates to the Prospectus dated 21 November 2006 issued by FlexiGroup Limited (ACN 122 574 583). The Application Form should be read in conjunction with the Prospectus. Capitalised words and certain terms used in this Application Form have the meanings given to them in the Prospectus.

Until the Offer Closing Date, paper copies of the Prospectus and Application Form may be obtained free of charge on request by calling the FlexiGroup Share Offer Information Line on 1800 881 432.

By returning this Application Form, you are deemed to accept the Offer. There is no need to sign this Application Form.

This Application Form is important. If you are in doubt as how to deal with it, please contact your accountant, financial adviser, stockbroker, lawyer or other professional adviser without delay. You should read the Prospectus carefully and in full before completing the form.

Any person who gives another person access to the Application Form must at the same time and by the same means give the other person access to the Prospectus.

The Closing Date for all Applicants is 5:00pm (Sydney time) on 7 December 2006.

Number of Shares applied for				Issue price per Share		I/We lodge full Application
				A\$2.00
			(minimum 2,000 Shares, thereafter in multiples of 500 Shares)
			PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)
		Applicant Surname/company name

Title First name

Joint Applicant #2 Surname

Title First name Middle name

Middle name

Designated account e.g. (or Joint Applicant #3)

PLEASE COMPLETE ADDRESS DETAILS

PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)

Unit number/level Street number Street name

Suburb/city or town.

State

Postcode

Monies

CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here) E X

D

F

G

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares issued as a result of the Offer will be held on the issuer sponsored subregister.

Telephone number where you can be contacted during business hours

Contact name (PRINT)

Account number

Broker Firm Offer Applicants: Investors who have received a firm allocation of Shares from their Broker should follow the lodgement procedures provided by that Broker.

BSB

Cheque or money order number

FXL IPO001

Filment and the second of the second and the second second and second and second second and second and second and second and second and second and second and second and second and second and second and second and second a

Your Guide to the Application Form

• Insert the number of Shares you wish to apply for. The Application must А be for a minimum of 2,000 and thereafter in multiples of 500 Shares.
• Insert the relevant amount of Application Monies. The Offer price is \$2.00 R per Share. Amounts should be in Australian dollars. Please make sure the amount of your payment equals this amount.
• Write the full name you wish to appear on the register of Shares. This 'n. must be either your own name or the name of a company. Up to three joint Applicants may register. The table below shows the correct form of registrable name.
• Please enter your postal address for all correspondence. All communications D. to you from FlexiGroup and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.
• E ... If you are already a CHESS participant or sponsored by a CHESS participant, write your HIN here.
• Please enter your telephone number(s), area code and contact name in F case we need to contact you in relation to your Application.

Acknowledgements

By returning this Application Form, I/we agree to the following statements. I/We:

• have personally received a paper or electronic copy of the Prospectus that this Application Form accompanies and have read it in full;
• am/are at least 18 years of age if I/we am/are an individual(s);
• have completed this Application Form correctly;
• acknowledge that once FlexiGroup receives this Application Form, I/we
• may not withdraw it; apply for the number of Shares at the Australian dollar amount shown on the front of this Application Form:
• agree to being allotted the number of Shares that I/we apply for or a lower number allotted in a way allowed under the Prospectus or no Shares at all:
• authorise the Joint Lead Manager. FlexiGroup and their respective officers or agents, to do anything on my/our behalf necessary for Shares to be

Please complete payment details as follows:

G

• make your cheque(s) payable in accordance with the instructions from the Broker from which you received your firm allocation of Shares;
• the amount should agree with the amount shown in section B;
• sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected; and
• pin (do not staple) your cheque(s) to the Application Form where indicated.

If you are a Broker Firm Offer Applicant, send your Application Form and your Application Monies to your Broker. Your Broker will settle a successful Application on a delivery versus payment basis through CHESS. The transaction will not have the benefit of coverage by the National Guarantee Fund. Applications received by FlexiGroup after 5:00pm (Sydney time) on 7 December 2006 will not be processed.

allotted to me/us, including without limitation to sign any documents necessary for Shares to be allotted to me/us, and to act on instructions received by the Share Registry using the contact details in section F and my/our registered address:

• acknowledge that the information contained in the Prospectus is not investment advice or a recommendation that Shares are suitable to me/us. given my/our investment objectives, financial situation or particular needs:
• represent and warrant that I/we have received the Prospectus in Australia; and
• represent and warrant that I am/we are not in the United States and I am/we are not a United States person (and not acting for the account or benefit of a United States person), and I/we will not offer, sell or resell Shares in the United States to, or for the account or benefit of, any United States person.

Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your shareholding and if some or all of the information is not collected then it might not be possible to administer your shareholding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Type of Investor	Correct Form of Registration	incorrect Form of Registration
Individual Use given names in full, not initials	Mrs Katherine Clare Edwards	K Ö Edwards
Company Use Company's full title, not abbreviations	Liz Biz Pty Ltd	Liz Biz R/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Harold Post Harold Post Deceased.
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate designation	Mrs Sally Hamilton.	Master Henry Hamilton
Partnerships Use the partners' personal names	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son.
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs/Unincorporated Bodies/Business Names Use office bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

here
(da not

Adviser Code

Broker Firm Offer Application Form

This Application Form relates to the Prospectus dated 21 November 2006 issued by FlexiGroup Limited (ACN 122 574 583). The Application Form should be read in conjunction with the Prospectus. Capitalised words and certain terms used in this Application Form have the meanings given to them in the Prospectus.

Until the Offer Closing Date, paper copies of the Prospectus and Application Form may be obtained free of charge on request by calling the FlexiGroup Share Offer Information Line on 1800 881 432.

By returning this Application Form, you are deemed to accept the Offer. There is no need to sign this Application Form.

This Application Form is important. If you are in doubt as how to deal with it, please contact your accountant, financial adviser, stockbroker, lawyer or other professional adviser without delay. You should read the Prospectus carefully and in full before completing the form.

Any person who gives another person access to the Application Form must at the same time and by the same means give the other person access to the Prospectus.

The Closing Date for all Applicants is 5:00pm (Sydney time) on 7 December 2006.

Number of Shares applied for				Issue price per Share		I/We lodge full Application
				A\$2.00
			(minimum 2,000 Shares, thereafter in multiples of 500 Shares)
			PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)
		Applicant Surname/company name

Title First name

Joint Applicant #2 Surname

Title First name Middle name

Middle name

Designated account e.g. (or Joint Applicant #3)

PLEASE COMPLETE ADDRESS DETAILS

PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)

Unit number/level Street number Street name

Suburb/city or town.

State

Postcode

Monies

CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here) E X

D

F

G

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares issued as a result of the Offer will be held on the issuer sponsored subregister.

Telephone number where you can be contacted during business hours

Contact name (PRINT)

Account number

Broker Firm Offer Applicants: Investors who have received a firm allocation of Shares from their Broker should follow the lodgement procedures provided by that Broker.

BSB

Cheque or money order number

FXL IPO001

Filment and the second of the second and the second second and second and second second and second and second and second and second and second and second and second and second and second and second and second and second a

Your Guide to the Application Form

• Insert the number of Shares you wish to apply for. The Application must А be for a minimum of 2,000 and thereafter in multiples of 500 Shares.
• Insert the relevant amount of Application Monies. The Offer price is \$2.00 R per Share. Amounts should be in Australian dollars. Please make sure the amount of your payment equals this amount.
• Write the full name you wish to appear on the register of Shares. This 'n. must be either your own name or the name of a company. Up to three joint Applicants may register. The table below shows the correct form of registrable name.
• Please enter your postal address for all correspondence. All communications D. to you from FlexiGroup and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.
• E ... If you are already a CHESS participant or sponsored by a CHESS participant, write your HIN here.
• Please enter your telephone number(s), area code and contact name in F case we need to contact you in relation to your Application.

Acknowledgements

By returning this Application Form, I/we agree to the following statements. I/We:

• have personally received a paper or electronic copy of the Prospectus that this Application Form accompanies and have read it in full;
• am/are at least 18 years of age if I/we am/are an individual(s);
• have completed this Application Form correctly;
• acknowledge that once FlexiGroup receives this Application Form, I/we
• may not withdraw it; apply for the number of Shares at the Australian dollar amount shown on the front of this Application Form:
• agree to being allotted the number of Shares that I/we apply for or a lower number allotted in a way allowed under the Prospectus or no Shares at all:
• authorise the Joint Lead Manager. FlexiGroup and their respective officers or agents, to do anything on my/our behalf necessary for Shares to be

Please complete payment details as follows:

G

• make your cheque(s) payable in accordance with the instructions from the Broker from which you received your firm allocation of Shares;
• the amount should agree with the amount shown in section B;
• sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected; and
• pin (do not staple) your cheque(s) to the Application Form where indicated.

If you are a Broker Firm Offer Applicant, send your Application Form and your Application Monies to your Broker. Your Broker will settle a successful Application on a delivery versus payment basis through CHESS. The transaction will not have the benefit of coverage by the National Guarantee Fund, Applications received by FlexiGroup after 5:00pm (Sydney time) on 7 December 2006 will not be processed.

• allotted to me/us, including without limitation to sign any documents necessary for Shares to be allotted to me/us, and to act on instructions received by the Share Registry using the contact details in section F and my/our registered address:
• acknowledge that the information contained in the Prospectus is not investment advice or a recommendation that Shares are suitable to me/us. given my/our investment objectives, financial situation or particular needs:
• represent and warrant that I/we have received the Prospectus in Australia; and
• represent and warrant that I am/we are not in the United States and I am/we are not a United States person (and not acting for the account or benefit of a United States person), and I/we will not offer, sell or resell Shares in the United States to, or for the account or benefit of, any United States person.

Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your shareholding and if some or all of the information is not collected then it might not be possible to administer your shareholding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Type of Investor	Correct Form of Registration	incorrect Form of Registration
Individual Use given names in full, not initials	Mrs Katherine Clare Edwards	K Ö Edwards
Company Use Company's full title, not abbreviations	Liz Biz Pty Ltd	Liz Biz R/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Harold Post Harold Post Deceased.
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate designation	Mrs Sally Hamilton.	Master Henry Hamilton
Partnerships Use the partners' personal names	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son.
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs/Unincorporated Bodies/Business Names Use office bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

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C

D

F

G

Adviser Code

Broker Firm Offer Application Form

This Application Form relates to the Prospectus dated 21 November 2006 issued by FlexiGroup Limited (ACN 122 574 583). The Application Form should be read in conjunction with the Prospectus. Capitalised words and certain terms used in this Application Form have the meanings given to them in the Prospectus. Until the Offer Closing Date, paper copies of the Prospectus and Application Form may be obtained free of charge on request by calling the FlexiGroup Share Offer Information Line on 1800 881 432. By returning this Application Form, you are deemed to accept the Offer. There is no need to sign this Application Form. This Application Form is important. If you are in doubt as how to deal with it, please contact your accountant, financial adviser, stockbroker, lawyer or other professional adviser without delay. You should read the Prospectus carefully and in full before completing the form. Any person who gives another person access to the Application Form must at the same time and by the same means give the other person access to the Prospectus. The Closing Date for all Applicants is 5:00pm (Sydney time) on 7 December 2006. Issue price per Share I/We lodge full Application Monies Number of Shares applied for B AS A\$2.00 Α at 1

(minimum 2,000 Shares, thereafter in multiples of 500 Shares)

PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) Applicant Surname/company name

Title Middle name First name

Joint Applicant #2 Surname

Title First name Middle name

Designated account e.g. (or Joint Applicant #3)

PLEASE COMPLETE ADDRESS DETAILS.

PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)

Unit number/level Street number Street name

Suburb/city or town

State.

CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here)

E. X

BSB

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares issued as a result of the Offer will be held on the issuer sponsored subregister.

Telephone number where you can be contacted during business hours

Contact name (PRINT)

Account number

Broker Firm Offer Applicants: Investors who have received a firm allocation of Shares from their Broker should follow the lodgement procedures provided by that Broker.

Cheque or money order number

FXL IPO001

Postcode

N AN AN HUNTER THE STATE OF ALL STATE OF A

Your Guide to the Application Form

• Insert the number of Shares you wish to apply for. The Application must А be for a minimum of 2,000 and thereafter in multiples of 500 Shares.
• Insert the relevant amount of Application Monies. The Offer price is \$2.00 R per Share. Amounts should be in Australian dollars. Please make sure the amount of your payment equals this amount.
• Write the full name you wish to appear on the register of Shares. This 'n. must be either your own name or the name of a company. Up to three joint Applicants may register. The table below shows the correct form of registrable name.
• Please enter your postal address for all correspondence. All communications D. to you from FlexiGroup and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.
• E ... If you are already a CHESS participant or sponsored by a CHESS participant, write your HIN here.
• Please enter your telephone number(s), area code and contact name in F case we need to contact you in relation to your Application.

Acknowledgements

By returning this Application Form, I/we agree to the following statements. I/We:

• have personally received a paper or electronic copy of the Prospectus that this Application Form accompanies and have read it in full;
• am/are at least 18 years of age if I/we am/are an individual(s);
• have completed this Application Form correctly;
• acknowledge that once FlexiGroup receives this Application Form, I/we
• may not withdraw it; apply for the number of Shares at the Australian dollar amount shown on the front of this Application Form:
• agree to being allotted the number of Shares that I/we apply for or a lower number allotted in a way allowed under the Prospectus or no Shares at all:
• authorise the Joint Lead Manager. FlexiGroup and their respective officers or agents, to do anything on my/our behalf necessary for Shares to be

Please complete payment details as follows:

G

• make your cheque(s) payable in accordance with the instructions from the Broker from which you received your firm allocation of Shares;
• the amount should agree with the amount shown in section B;
• sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected; and
• pin (do not staple) your cheque(s) to the Application Form where indicated.

If you are a Broker Firm Offer Applicant, send your Application Form and your Application Monies to your Broker. Your Broker will settle a successful Application on a delivery versus payment basis through CHESS. The transaction will not have the benefit of coverage by the National Guarantee Fund. Applications received by FlexiGroup after 5:00pm (Sydney time) on 7 December 2006 will not be processed.

allotted to me/us, including without limitation to sign any documents necessary for Shares to be allotted to me/us, and to act on instructions received by the Share Registry using the contact details in section F and my/our registered address:

• acknowledge that the information contained in the Prospectus is not investment advice or a recommendation that Shares are suitable to me/us. given my/our investment objectives, financial situation or particular needs:
• represent and warrant that I/we have received the Prospectus in Australia; and
• represent and warrant that I am/we are not in the United States and I am/we are not a United States person (and not acting for the account or benefit of a United States person), and I/we will not offer, sell or resell Shares in the United States to, or for the account or benefit of, any United States person.

Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your shareholding and if some or all of the information is not collected then it might not be possible to administer your shareholding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Type of Investor	Correct Form of Registration	incorrect Form of Registration
Individual Use given names in full, not initials	Mrs Katherine Clare Edwards	K Ö Edwards
Company Use Company's full title, not abbreviations	Liz Biz Pty Ltd	Liz Biz R/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Harold Post Harold Post Deceased.
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate designation	Mrs Sally Hamilton.	Master Henry Hamilton
Partnerships Use the partners' personal names	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son.
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs/Unincorporated Bodies/Business Names Use office bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

Registered Office FlexiGroup Limited Level 8. The Forum 201 Pacific Highway St Leonards NSW 2065 Australia

Joint Lead Managers Goldman Sachs J8Were Pty Ltd Level 42, Governor Phillip Tower 1 Farrer Place Sydney NSW 2000 Australia

UBS AG, Australia Branch Level 25, Governor Phillip Tower 1 Farrer Place Sydney NSW 2000 Australia

Co-Managers Bell Potter Securities Limited

Level 33, Grosvenor Place 225 George Street Sydney NSW 2000 Australia

UBS Wealth Management Australia Pty Ltd Level 27, Governor Phillip Tower 1 Farrer Place Sydney NSW 2000 Australia

Australian Legal Adviser Mallesons Stephen Jaques Level 60, Governor Phillip Tower 1 Farrer Place Sydney NSW 2000 Australia

Auditor PricewaterhouseCoopers Darling Park Tower 2 201 Sussex Street Sydney NSW 1171 Australia

Investigating Accountant PricewaterhouseCoopers Securities Ltd Darling Park Tower 2 201 Sussex Street Sydney NSW 1171 Australia

Share Registry Link Market Services Limited Level 12 680 George Street Sydney NSW 2000 Australia

www.flexirent.com

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