1. D18-190409-CFSGCFS01-Statutory Report by Liquidator-HG

CFS Private Wealth Pty Ltd ACN 141 584 885 (CFS)

Combined Financial Solutions Pty Ltd ACN 003 152 378 (Combined Financial Solutions)

(Collectively, CFS Group)

Statutory Report to Creditors

We refer to our initial information for creditors dated 5 February 2019 in which we advised you of our

appointment as liquidator and your rights as a creditor in the liquidations.

The purpose of this report is to:

provide you with an update on the progress of the liquidations; and

advise you of the likelihood of a dividend being paid in the liquidations.

Update on the progress of the liquidations

CFS Group’s business

Based on the limited information available to me, it appears that CFS Group operated as a financial

planning business. CFS was the holder of an Australian Financial Services Licence which had listed

Combined Financial Solutions as an Authorised Representative. The Liquidators understand that CFS Group

advised clients, including self-managed superannuation funds to transfer funds to a related company of

CFS Group and used those funds for personal purposes and to make interest repayments to other clients. It

also appears that CFS received trailing commissions in relation to clients’ insurance policies until the

appointment of the Liquidators.

I have been advised that Combined Financial Solutions acted as trustee for The Graeme W Miller Unit Trust;

however, have not received details of any assets held or activities conducted by that trust.

Estimated asset realisations

1.2.1 CFS

The Liquidators identified a bank account held by CFS with credit funds. Funds totalling $5,130.12 have

been transferred to the liquidation bank account.

Information provided to me indicates that CFS had debtors of $1,271 as at 30 June 2016. I have not been

provided with details of the debtors to identify whether amounts continue to be owed.

No other assets held by CFS have been identified.

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1.2.2 Combined Financial Solutions

The Liquidators identified a 2009 Toyota Corolla (Vehicle) owned by Combined Financial Solutions; however,

the Liquidators obtained advice that the value of the Vehicle was approximately $1,000 - $1,500. Due to

costs involved with the retrieval and sale of the Vehicle, it was determined that the Vehicle was

uncommercial to collect and sell. Accordingly, the Liquidators disclaimed the Vehicle.

Registration searches identified a number of other vehicles registered/previously registered in the name of

Combined Financial Solutions. The director has advised that these vehicles were sold or otherwise disposed

of.

In addition, I have recently been provided with a balance sheet as at 30 June 2015 which discloses the

following additional assets held by Combined Financial Solutions at that time:

Combined Financial Solutions – potential assets

Asset

Book value

30/06/15

$ Liquidators’ comments

Cash 62,490 Cash does not appear to have been held on liquidation

Shares: Buru Energy Ltd 149,742 I have written to the share registry to request details

Building improvements 250,587 Investigations to date have not identified any real properties/buildings

Plant & equipment 35,045 Investigations to date have not identified such assets

Motor vehicles 191,697 Refer to comments above regarding vehicles

Office furniture & equipment 37,990 Investigations to date have not identified such assets

Furniture & fittings 10,612 Investigations to date have not identified such assets

Total 738,166

1.2.3 Further asset realisations

The Liquidators will continue investigations into CFS Group’s assets. At this stage and without further

information becoming available, we do not anticipate identifying any further assets of CFS.

Estimated liabilities

The Liquidators have received deficient Reports on Company Activities and Property (ROCAP) from the

director for each the CFS Group entities.

1.3.1 CFS

Based on our investigations to date, no priority creditors have been identified in the liquidation of CFS;

however, we have identified a series of potential unsecured creditors whilst undertaking our statutory

investigations. Searches conducted by the Liquidators have identified one secured creditor registration

against CFS; however, we have not received any responses to requests for further information from this

party.

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An estimate of the liabilities of CFS is as follows:

CFS - Estimated liabilities

Proofs of debt Liquidators' total estimate

Category No. received Value ($) No. Value ($) ROCAP ($)

Priority creditors: wages and superannuation - - - - -

Priority creditors: leave entitlements - - - - -

Secured creditors - - 1 - -

Unsecured creditors 3 182,734 39 3,169,337 -

Unsecured creditors: contingent liabilities - - - - -

Total 3 182,734 40 3,169,337 -

The above estimate is based on the information that has been received to date. We understand that the

actual amount of liabilities of CFS may be materially higher; however, the total amount of liabilities is

unknown due to the limited information provided to us. The estimate assumes that all investments have

been made through CFS; however, due to the limited information in the possession of the Liquidators this is

unable to be verified.

1.3.2 Combined Financial Solutions

Based on investigations to date:

two unsecured creditors have been identified;

a number of secured creditor registrations against Combined Financial Solutions have been

identified; however, the Liquidators have not received any responses to requests for further

information from these parties; and

the Australian Taxation Office has advised that superannuation contributions (a priority claim) may

be outstanding.

An estimate of the liabilities of Combined Financial Solutions is as follows:

Combined Financial Solutions - Estimated liabilities

Proofs of debt Liquidators' total estimate

Category No. received Value ($) No. Value ($) ROCAP ($)

Priority creditors: wages and superannuation - - 1 - -

Priority creditors: leave entitlements - - - - -

Secured creditors - - 4 - -

Unsecured creditors 1 59,276 2 59,276 -

Unsecured creditors: contingent liabilities - - - - -

Total 1 59,276 6 59,276 -

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Investigations

The Liquidators have commenced statutory investigations into the affairs of CFS Group. The progress of

these investigations has been negatively impacted by what appears to have been the failure of CFS Group

to maintain/provide books and records to the Liquidators.

Notwithstanding, the Liquidators have identified a number of suspected voidable transactions totalling

approximately $285,000 in relation to CFS. A voidable transaction is a transaction that is entered into by a

company, which is detrimental to the company and in certain circumstances may be voided by a liquidator

so the money may be returned to be distributed fairly amongst creditors. The Liquidators intend to conduct

further investigations into these potential voidable transactions, and any other identified potential voidable

transactions, and commence recovery actions if/when it is possible to do so.

To date, the Liquidators have not identified potential recovery actions for Combined Financial Solutions.

Our statutory investigations are continuing and we anticipate that the investigations will be finalised three

months from the date of this report, following which we will report our finding to the Australian Securities

and Investments Commission (ASIC) and take any other action considered necessary.

1.4.1 Books and records

The Liquidators made a series of requests to the director of CFS Group for ROCAPs for the CFS Group

entities and the books and records of CFS Group. The Liquidators have received a deficient ROCAP for each

of the CFS Group entities and have been advised that the director is not in possession of any books and

records.

The Liquidators also requested books and records from the pre-appointment accountant of CFS Group, who

has provided limited books and records of CFS Group to the Liquidators, including limited financial

statements. A summary of the financial statements received from the pre-appointment accountant is

enclosed. The 2016 financial year CFS statements which have been summarised were in draft form only.

The Liquidators did not receive any statements for Combined Financial Solutions for the 2016 financial year.

As set out above, my investigations into the assets disclosed in those financial statements are continuing.

The Liquidators are not aware of any other parties who may be in possession of books and records of CFS

Group.

1.4.2 Further investigations to be undertaken

The Liquidators are attempting to undertake the following further investigations, however, the progress has

been negatively impacted by the limited books and records provided to the Liquidators:

whether there have been any further voidable transactions;

whether there has been a breach of directors’ duties; and

whether, and if so when, either entities of CFS Group were trading insolvent prior to the

Liquidators’ appointment. In certain circumstances, the Liquidators may rely of Section 558E of the

Corporations Act 2001 to presume a company was insolvent based on the failure of a company to

maintain proper books and records.

Receipts and payments to date

The only receipt in the liquidation of CFS to date is $5,130.12 that was transferred from a pre-appointment

bank account. The only payment in the liquidation of CFS to date is $3.00 to Suncorp for bank statements

required for the Liquidators’ investigations.

There have been no receipts or payments to date in the liquidation of Combined Financial Solutions.

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Likelihood of a dividend

A number of factors will affect the likelihood of a dividend being paid to creditors, including:

the size and complexity of the liquidation;

the amount of assets realisable and the costs of realising those assets;

the statutory priority of certain claims and costs;

the value of various classes of claims including secured, priority and unsecured creditor claims, and

the volume of enquiries by creditors and other stakeholders.

Based on information available to us at this time, we consider it unlikely that a dividend may be payable to

creditors with admitted claims in the liquidation.

If a dividend is going to be paid, you will be contacted before that happens and, if you have not already

done so, you will be asked to lodge a proof of debt. This formalises the record of your claim in the

liquidation and is used to determine all claims against CFS Group.

Cost of the liquidation

As previously advised in our initial information to creditors, we have estimated that our total remuneration

for the liquidation of CFS Group will be $50,000 to $60,000. I note that the payment of the Liquidators’

remuneration is only payable to the extent of asset realisations in the liquidation.

What happens next?

We will proceed with the liquidation, which will include:

recovering any further available property, if identified;

completing our investigations into CFS Group’s affairs;

if identified, pursuing any viable claims for statutory recovery actions;

completing our reporting to the corporate insolvency regulator, ASIC; and

finalising the liquidation.

If we receive a request for a meeting that complies with the guidelines set out in the initial information

provided to you, we will hold a meeting of creditors.

We may write to you again with further information on the progress of the liquidation.

Subject to the potential recovery actions referred to in this report, we expect to have completed this

liquidation within six months from the date of this report.

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Where can you get more information?

You can access information which may assist you on the following websites:

ARITA at www.arita.com.au/creditors;

ASIC at www.asic.gov.au (search for “insolvency information sheets”); and

http://www.mcgrathnicol.com/creditors/cfs-group/

If you have any queries, please contact Harry Given on (07) 3333 9878.

Dated: 18 April 2019

William Harris

Liquidator

Enclosures:

CFS Group summary financial statements

ARITA Information Sheet – Offences, Recoverable Transactions & Insolvent Trading

Proof of Debt (Form 535) x 2

Proof of Debt Guidance Notes

FY 2016 FY 2015 FY 2014

Income

Commissions received 804,886 548,819 484,795

Interest received 12 19 -

Total Income 804,899 548,838 484,795

Expenses

Accountancy fees 1,800 1,318 -

Auditor's fees 2,000 3,060 3,065

Bank charges 40 95 85

Commission paid 796,025 538,843 467,764

Filing fees - 887 -

Interest paid 10 23 4

Leasing charges 10,863 9,873 7,755

Permits, licences & fees - - 7,290

Total expenses 810,738 554,098 485,964

Profit / (Loss) before income tax (5,840) (5,260) (1,169)

Retained earnings at the beginning of the financial year (6,132) (871) 298

Accumulated losses at the end of the financial year (11,972) (6,132) (871)

FY 2016 FY 2015 FY 2014

Share capital and reserves

Fully paid ordinary shares 10 10 10

Accumulated losses (11,972) (6,132) (871)

Total share capital and reserves (11,962) (6,122) (861)

Current assets

Cash on hand - - 10

Cash at bank - 496 365

Receivables 1,271 1,071 -

GST - - 44

Prepayments - - 676

Total current assets 1,271 1,567 1,095

Total assets 1,271 1,567 1,095

Liabilities

Loan from directors 7,747 7,069 1,723

Bank overdraft 1,685 - -

Accrued charges 3,800 619 233

Total current liabilities 13,233 7,689 1,956

Total liabilities 13,233 7,689 1,956

Net assets (liabilities) (11,962) (6,122) (861)

CFS Private Wealth Pty Ltd (In Liquidation)

Summarised Profit and Loss Statements

CFS Private Wealth Pty Ltd (In Liquidation)

Summarised Balance Sheets

FY 2015 FY 2014

Income

Commissions received 26,171 20,779

Commissions - CFS Private Wealth 470,930 416,455

Interest Received 678 454

FBT Reimbursement 6,481 3,661

Loss on sale of non current assets (10,817) -

Total Income 493,442 441,348

Expenses

Accountancy fees 7,100 550

Advertising - 8,067

Bank charges 211 80

Client expenses 6,038 9,015

Commission 14,500 4,500

Depreciation 51,716 55,085

Fines 440 710

Insurance - 202

Interest expense 6,246 7,093

Leasing charges 4,695 5,805

Legal expenses 7,664 200

Motor vehicle 27,095 42,934

Other expenses 82,751 87,956

Permits, licences and fees - 110

Staff costs 157,905 220,849

Taxes - 1,603

Travel 69,624 39,230

Total expenses 435,985 483,988

Profit / (Loss) before income tax 57,458 (42,641)

Accumulated losses at the beginning of the financial year (492,730) (450,090)

Accumulated losses at the end of the financial year (435,273) (492,730)

Combined Financial Solutions Pty Ltd (In Liquidation)

Summarised Profit and Loss Statements

FY 2015 FY 2014

Share capital and reserves

Fully paid ordinary shares 2 2

Preference shares 2 2

Redeemable preference shares 1,135 1,135

Share premium reserve 112,365 112,365

Accumulated losses (435,273) (492,730)

Total share capital and reserves (321,769) (379,226)

Assets

Current assets

Cash on hand 100 100

Cash at bank 62,390 758

Total current assets 62,490 858

Non- current assets

Shares in listed companies 149,742 149,742

Fixed assets 525,934 517,208

Total non-current assets 675,676 666,950

Total assets 738,166 667,808

Liabilities

Current liabilities

Hire purchase liability 29,345 43,571

Taxation liabilities - 28,350

Accrued charges 62,450 15,455

Non-current liabilities

Loans - related parties 805,390 839,364

Hire purchase liability 188,249 140,464

Less: unexpired interest (25,499) (20,169)

Total non-current liabilities 1,059,935 1,047,034

Total liabilities 1,059,935 1,047,034

Net assets (liabilities) (321,769) (379,226)

Summarised Balance Sheets

Combined Financial Solutions Pty Ltd (In Liquidation)

Creditor Information Sheet Offences, Recoverable Transactions and Insolvent Trading

AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION

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

180 Failure by company officers to exercise a reasonable degree of care and diligence in the exercise of their powers and the discharge of their duties.

181 Failure to act in good faith.

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

183 Making improper use of information acquired by virtue of the officer’s position.

184 Reckless or intentional dishonesty in failing to exercise duties in good faith for a proper purpose. Use of position or information dishonestly to gain advantage or cause detriment. This can be a criminal offence.

198G Performing or exercising a function or power as an officer while a company is under administration.

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

206A, B Taking part in the management of corporation while being an insolvent, for example, while bankrupt.

206A, B Acting as a director or promoter or taking part in the management of a company within five years after conviction or imprisonment for various offences.

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

254T Paying dividends except out of profits.

286 Failure to keep proper accounting records.

312 Obstruction of an auditor.

314-7 Failure to comply with requirements for the preparation of financial statements.

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

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

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

590 Failure to disclose property, concealed or removed property, concealed a debt due to the company, altered books of the company, fraudulently obtained credit on behalf of the company, material omission from Report as to Affairs or false representation to creditors.

Preferences

A preference is a transaction, such as a payment by the company to a creditor, in which the creditor receiving the payment is preferred over the general body of creditors. The relevant period for the payment commences six months before the commencement of the liquidation. The company must have been insolvent at the time of the transaction, or become insolvent because of the transaction.

Where a creditor receives a preference, the payment is voidable as against a liquidator and is liable to be paid back to the liquidator subject to the creditor being able to successfully maintain any of the defences available to the creditor under the Corporations Act.

Uncommercial Transaction

An uncommercial transaction is one that it may be expected that a reasonable person in the company's circumstances would not have entered into, having regard to:

• the benefit or detriment to the company;

• the respective benefits to other parties; and,

• any other relevant matter.

Offences

Recoverable Transactions

AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 2

Version: August 2017 22143 (VA) - INFO - Offences recoverable transactions and insolvent trading v1_1.docx1

To be voidable, an uncommercial transaction must have occurred during the two years before the liquidation. However, if a related entity is a party to the transaction, the period is four years and if the intention of the transaction is to defeat creditors, the period is ten years.

The company must have been insolvent at the time of the transaction, or become insolvent because of the transaction.

Unfair Loan

A loan is unfair if and only if the interest was extortionate when the loan was made or has since become extortionate. There is no time limit on unfair loans – they only must be entered into before the winding up began.

Arrangements to avoid employee entitlements

If an employee suffers loss because a person (including a director) enters into an arrangement or transaction to avoid the payment of employee entitlements, the liquidator or the employee may seek to recover compensation from that person. It will only be necessary to satisfy the court that there was a breach on the balance of probabilities. There is no time limit on when the transaction occurred.

Unreasonable payments to directors

Liquidators have the power to reclaim ‘unreasonable payments’ made to directors by companies prior to liquidation. The provision relates to payments made to or on behalf of a director or close associate of a director. The transaction must have been unreasonable, and have been entered into during the 4 years leading up to a company's liquidation, regardless of its solvency at the time the transaction occurred.

Voidable charges

Certain charges over company property are voidable by a liquidator:

• circulating security interest created within six months of the liquidation, unless it secures a subsequent advance;

• unregistered security interests;

• security interests in favour of related parties who attempt to enforce the security within six months of its creation.

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

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

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

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

• the director was aware such grounds for suspicion existed; and

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

The law provides that the liquidator, and in certain circumstances the creditor who suffered the loss, may recover from the director, an amount equal to the loss or damage suffered. Similar provisions exist to pursue holding companies for debts incurred by their subsidiaries.

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

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

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

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

The proceeds of any recovery for insolvent trading by a liquidator are available for distribution to the unsecured creditors before the secured creditors.

Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances.

Insolvent trading

CFS Private Wealth Pty Ltd

(In Liquidation)

141 584 885

18 January 2019

Combined Financial Solutions

Pty Ltd (In Liquidation)

003 152 378

18 January 2019

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Proof of Debt

Guidance Notes

(Please read carefully before filling in Form 535 or Form 536)

It is a creditor’s responsibility to prove their claim to our satisfaction.

When lodging claims, creditors must ensure:

the proof of debt form is properly completed in every particular; and

evidence, as set out under “Information to support your claim”, is attached to the Form 535 or Form 536.

Directions for completion of a Proof of Debt

1. Insert the full name and address of the creditor.

2. Under “Consideration” state how the debt arose, for example “goods sold to the company on

______________________.”.

3. Under “Remarks” include details of any documents that substantiate the debt (refer to the section “Information

to support your claim” below for further information).

4. Where the space provided for a particular purpose is insufficient to contain all the information required for a

particular item, please attach additional information.

Information to support your claim

Please note that unless you provide evidence to support the existence of the debt, your debt is not likely to be

accepted. Detailed below are some examples of debts creditors may claim and a suggested list of documents that

should accompany a proof of debt to substantiate the debt.

Trade Creditors

Invoice(s) and statement(s) showing the amount of the debt; and

Advice(s) to pay outstanding invoice(s) (optional).

Guarantees/Indemnities

Executed guarantee/indemnity;

Notice of Demand served on the guarantor; and

Calculation of the amount outstanding under the guarantee.

Judgment Debt

Copy of the judgment; and

Documents/details to support the underlying debt as per other categories.

Deficiencies on Secured Debt

Security Documents (eg. mortgage);

Independent valuation of the secured portion of the debt (if not yet realised) or the basis of the creditor’s

estimated value of the security;

Calculation of the deficiency on the security; and

Details of income earned and expenses incurred by the secured creditor in respect of the secured asset since the

date of appointment.

Loans (Bank and Personal)

Executed loan agreement; and

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Loan statements showing payments made, interest accruing and the amount outstanding as at the date of

appointment.

Tax Debts

Documentation that shows the assessment of debts, whether it is an actual debt or an estimate, and separate

amounts for the primary debt and any penalties.

Employee Debts

Basis of calculation of the debt;

Type of Claim (eg. wages, holiday pay, etc);

Correspondence relating to the debt being claimed; and

Contract of Employment (if any).

Leases

Copy of the lease; and

Statement showing amounts outstanding under the lease, differentiating between amounts outstanding at the

date of the appointment and any future monies.