SOUTH CANTERBURY FINANCE LIMITED

PROSPECTUS NUMBER 60

20 October 2009

Issue of $500,000,000 of registered first ranking debenture stock and $50,000,000 of

unsecured deposits

1 

 
TABLE OF CONTENTS

CONTENTS PROSPECTUS
PAGE NUMBER

1. Directorate and Advisers 4

2. Chairman’s Statement 5

3. Chief Executive’s Report 7

4. Business Overview 11

5. Management Discussion and Analysis of the Year to 30 June 2009 16

6. Main Terms of the Offer 19

7. Additional Statutory Information 23

8. New Zealand Deposit Guarantee Scheme 30

9. South Canterbury Finance Ltd and Charging Subsidiary Companies – 33

Summary Financial Information

10. Main Provisions of the Trust Deed 35

11. Trustee’s Statement 43

12. South Canterbury Finance and Charging Subsidiaries Financial Information 44

13. Auditor’s Report 72

14. Brief History of the Company 73

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SECOND SCHEDULE INDEX
(As required by Regulation 5(6) of the Securities Regulations 1983)

CLAUSE PROSPECTUS
NUMBER PAGE NUMBER

1. Main Terms of Offer 19-22

2. Name and Address of Offeror Not Applicable

3. Details of Incorporation of Issuer 23

4. Guarantors 27

5. Directorate and Advisers 4

5A. Restrictions on Directors' Powers 28

6. Activities of Borrowing Group 23-24

7. Summary of Financial Statements 33-34

8. Acquisition of Business or Subsidiary 27-28

9. Material Contracts 24-25

10. Pending Proceedings 25

11. Issue Expenses 25

12. Ranking of Securities 36

13. a. Provisions of Trust Deed and other Restrictions on Borrowing 28 & 35-42

b. Trustee's Statement 43

14. Other Terms of Offer and Securities 29

15-32. Financial Statements (and Associated Notes to Accounts) 44-71

33. Places of Inspection of Documents 23, 25 & 42

34. Other Material Matters 25-26

35. Directors' Statement 29

36. Auditor’s report 72

This Prospectus has been registered after 1 October 2009 but before the close of 30 June 2010. In
accordance with regulation 52 of the Securities Regulations 2009, South Canterbury Finance Limited (the
“Company”, or “South Canterbury Finance”) has elected that the Securities Regulations 1983 apply to its
offer of Stock and Deposits under this Prospectus. This Prospectus is in respect of South Canterbury
Finance and its Charging Subsidiaries (the “Charging Group”, or the “Borrowing Group”).

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DIRECTORATE AND ADVISERS
DIRECTORS

ALLAN JAMES HUBBARD EDWARD ORAL SULLIVAN

B.Com., F.C.A. (Chairman) KSt.J., LL.B.
Timaru Timaru
Chartered Accountant Barrister and Solicitor

The Directors may be contacted through the Registered Office of the Company.

SENIOR MANAGEMENT

LACHIE McLEOD KEVIN GLOAG

B.Ag.Val., Dip. Comm Timaru
Timaru General Manager - Funding
Chief Executive Officer

GRAEME BROWN PETER BOSWORTH

BBS., CA. MBA., B.Com (AGR)
Timaru Christchurch
Chief Financial Officer Group Credit Manager

WARRICK BAXTER
Director – FACE Finance
Christchurch

Auditors Registered Office and location of Securities Register

Woodnorth Myers of the Company
Chartered Accountants 39 George Street,
100-104 Sophia Street, Timaru P.O. Box 125, Timaru
Telephone (03) 688 8117 or 0800 808 117
Solicitors
Bradley West, Timaru Securities Registrar
Raymond Sullivan McGlashan, Timaru The Registrar
Bell Gully, Wellington South Canterbury Finance Ltd
39 George Street, Timaru

Trustee for Stockholders and Depositors

Trustees Executors Ltd
Level 5, 10 Customhouse Quay
P.O. Box 3222, Wellington

FOR FURTHER DETAILS ON ANY INFORMATION CONTAINED IN THIS PROSPECTUS, PLEASE

CONTACT:

Mr. Kevin Gloag

General Manager – Funding
South Canterbury Finance Ltd
Telephone: 0800 808 117
Facsimile: 03 684 9550

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CHAIRMAN’S STATEMENT
A number of developments have occurred in respect of the Company over the 12 months to 30 June
2009 and in the period since then.

In October 2008, South Canterbury Finance amalgamated with its wholly-owned subsidiary finance
companies. As a result, South Canterbury Finance’s name is now recognised throughout New Zealand
and the change in operating structure under the amalgamation (from a number of individual companies to
a single company with regional branch offices) has already resulted in administrative benefits and cost
savings for the Group.

In November 2008, South Canterbury Finance entered into a Deed of Guarantee with the Crown under
the New Zealand deposit guarantee scheme (the “Deposit Guarantee Scheme”)*. In broad terms, this
means that (subject to the terms of the guarantee) debentures and deposits of South Canterbury Finance
will have the benefit of the guarantee from the Crown up until the expiry of the Deposit Guarantee
Scheme at 12.01am on 12 October 2010. The Crown has recently announced an extension to the term of
the Deposit Guarantee Scheme to 31 December 2011 but on materially different terms to those of the
current Deposit Guarantee Scheme. We currently intend applying to take advantage of this extension.
However, at this stage, the Company does not have a Crown guarantee beyond the expiry of the Deposit
Guarantee Scheme at 12.01 am on 12 October 2010 and there is no assurance that it will have a Crown
guarantee after that time.

In an endeavour to reduce the impact of the economic downturn on the Company, Southbury Group
Limited (South Canterbury Finance’s sole ordinary shareholder) introduced a further $20 million in cash
as paid up capital in March 2009 and a further $40 million of new capital in June 2009 under the
acquisition by the Company of 33.6% of Dairy Holdings Limited from Southbury Group Limited for a
purchase price of $75.73 million. The $40 million of new shares issued to Southbury Group Limited
pursuant to this transaction were all credited as fully paid in part consideration for the acquisition of the
Dairy Holdings Limited interest. The Company paid the balance of the purchase price, being $35.73
million, to Southbury Group Limited in cash. This transaction was approved by an independent expert
approved by the Crown who confirmed that the transaction was on arm’s length terms and that the value
paid for the interest in Dairy Holdings Limited represented fair value for South Canterbury Finance.

In August 2009, Standard & Poor’s lowered South Canterbury Finance’s investment grade rating of BBB-
/Stable to BB+/Negative. On 21 September 2009 Standard and Poor’s Ratings Services placed its ‘BB+’
long term rating on South Canterbury Finance on CreditWatch Negative. The implications of the
downgraded rating are explained in more detail in the Chief Executive’s report and on pages 26 to 27 of
this Prospectus. South Canterbury Finance recognises that the independent rating is an important factor
for investors and the Company remains committed to improving the rating over time.

Notwithstanding the best efforts of the Company and its management team, the South Canterbury
Finance Charging Group announced an audited group after tax loss of $57.8 million for the 12 months to
30 June 2009.

In other recent events, the Company announced the retirements of Mr R.A. White and Mr S.J. Nattrass
as South Canterbury Finance directors on 27 August 2009. The Company is currently in advanced
discussions regarding the appointment of additional independent directors to the Board and intends to
move to a board comprised of a majority of independent directors. It is also my intention to step down as
Chairman of the Board within the next 12 months, in favour of appointing a new independent chairman.

These changes to the Board of the Company will introduce a wide range of new commercial skills and
expertise to the Company, and strengthen the independence of the Board and the Company’s
governance.

While the Board and management of South Canterbury Finance recognise that the current economic
environment creates a number of challenges, it also presents the Company with some good and exciting
opportunities as well.

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The Company is in the process of pursuing a number of initiatives to strengthen its capital base and
improve the quality of its overall asset base. In this respect, I look forward to shortly announcing a
restructuring and recapitalisation plan for the Company once we are in a position to do so.

On behalf of the Board, I extend our appreciation and thanks for the support received from individual and
institutional investors and to our loyal staff and management team for their efforts. We look forward to
your continued support during the coming year.

A.J. Hubbard
Chairman of Directors

*Further information about this scheme is set out on pages 30 to 32 of this Prospectus and is also available,
free of charge and at all reasonable times, on the Internet site maintained by or on behalf of the Treasury
(www.treasury.govt.nz).

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CHIEF EXECUTIVE’S REPORT
Like many participants in the finance industry, the Company’s performance has been adversely affected
by the economic downturn and, in particular, the impact of the downturn on its borrowers and their
business activities. The impact of the economic downturn has resulted in the Charging Group taking
$121.3 million of losses and non-cash provisions for non-performing investments and doubtful property
loans in the financial year to 30 June 2009. Of these losses and provisions, $72.3 million was unrealised.
As a result of the provision, the Company has announced an audited after tax loss of $57.8 million for the
Charging Group for the financial year to 30 June 2009.

To mitigate the impact of the Charging Group’s provisions for non-performing loans, the Company’s
shareholder, Southbury Group Limited, injected $60 million of new equity during the year ended 30 June
2009, as noted in the Chairman’s report.

In addition, in October 2008, Mr A.J. and Mrs M.J. Hubbard entered into a security sharing arrangement
effectively purchasing a number of loan receivables either in full or partially for approximately $90 million
from South Canterbury Finance. The majority of these impaired loans were property loans.

As a further step to reduce the impact of non-performing loans, Mr A.J. and Mrs M.J. Hubbard have
entered into a Deed of Underwrite and Guarantee with the Company under which they have agreed to
underwrite losses which the Company may incur in respect of certain specified loans up to a maximum
aggregate amount of $25 million by procuring the payment of that sum, or the transfer of assets of that
value, to the Company. The obligations of Mr A.J. and Mrs M.J. Hubbard under the Deed of Underwrite
and Guarantee are also limited to the value of the assets of North Wind Holdings (2009) Limited. The
effect of the deed was to reduce provisioning within the Charging Group by $25 million.

In July 2009, Standard & Poor’s placed South Canterbury Finance’s BBB- long term rating on
CreditWatch Negative. On 13 August 2009 Standard & Poor’s announced that the Company’s credit
rating had been downgraded to BB+/Negative. Shortly after the downgrade, the Company ceased
allotting securities under its then registered prospectus. On 21 September 2009, Standard and Poor’s
Ratings Services placed its ‘BB+’ long term rating on South Canterbury Finance on CreditWatch
Negative. A CreditWatch Negative listing by Standard & Poor’s implies a one-in-two likelihood of a
downgrade of the credit rating within the next three months. In the Company’s view, the CreditWatch
Negative assignment relates mainly to the fact that the Company did not have a current registered
prospectus and, as a result, could not take debenture investments and deposits. While the Company is
once again able to take debenture investments and deposits following registration of this Prospectus, a
number of other issues need to be addressed for the Company to be removed from CreditWatch
Negative. Further information on the Standard & Poor’s rating is set out on pages 26 to 27 of this
Prospectus.

As a result of the above rating downgrade in August, investors in notes issued by the Company (under
the debenture trust deed) pursuant to a United States private placement in 2008, had the right,
exercisable by notice to the Company 90 days after the downgrade, to require the Company to repay
their notes, in full, together with interest and other amounts calculated in accordance with the terms of the
notes. In addition, the Company gave notice to those noteholders that it is now in breach of certain
financial covenants set out in the private placement documentation. As a result, noteholders could, by a
majority vote, have required the Company to repay their notes, in full, together with interest and other
amounts calculated in accordance with the terms of the notes.

The Company has entered into a binding commitment letter with the noteholders under the United States
private placement under which the Company will make accelerated repayment of the principal sum of
$US100 million to noteholders (together with interest on that sum) by way of instalments, with the last
instalment being due on 31 March 2010. The first instalment of US$45 million will be payable in the
week ending 25 October 2009.. In addition, the agreement in principle provides for the Company to pay
US$5 million on 31 October 2009, US$12.5 million on November 30 2009 and 31 December 2009,
US$7.5 million on 31 January 2010 and 28 February 2010 with the remaining US$10 million to be paid on
maturity, being 31 March 2010.

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In addition, Southbury Group Limited has agreed to pay to the noteholders a refinancing fee of $US15
million by way of three instalments, with the last such instalment also being due on 31 March 2010.
South Canterbury Finance has no obligations to the noteholders, or any other person, in respect of the
payment of the refinancing fee by Southbury Group Limited.

A binding commitment letter and term sheet have been executed on behalf of the Company, Southbury
Group Limited and noteholders, along with an agreement under which the noteholders, subject to the
Company’s compliance with the new repayment schedule and other contractual terms, waive their rights
relating to the credit rating downgrade referred to above and in respect of any existing breaches of the
private placement documentation. The position agreed in these documents is intended to be reflected in
formal amendments to the original private placement documentation, to be entered into as quickly as
possible with the intention that it be entered into by 31 October 2009. A process has been put in place
for finalising this formal documentation but if it is not entered into following this process, the noteholders
will be able to demand repayment in full of all amounts payable to them in respect of their notes under the
terms of the current private placement documentation.

The payments to the noteholders will be in full and final satisfaction of all rights which the noteholders
have in respect of the notes issued to them pursuant to the private placement. If the Company or
Southbury Group Limited fail to pay any of the instalments, in full, on the due dates or fail to comply with
any of their other obligations in respect of the agreement, then the noteholders will be entitled to demand
payment in full of all amounts payable to them in respect of their notes under the terms of the current
private placement documentation. The directors are satisfied that the Company and Southbury Group
Limited will have the necessary funds to enable them to meet their respective payment obligations to
noteholders under this agreement. Any default of the terms of the Trust Deed by the Company will also
entitle the noteholders to demand payment under the terms of their notes.

The agreements with noteholders include certain restrictions including the Company’s ability to pay
dividends to the holder of its ordinary shares, restrictions on related party lending, restrictions on
significant restructuring or asset sales and restrictions on the Company’s usage of amounts borrowed by
way of Prior Charges. It is not intended that any of these restrictions will prevent South Canterbury
Finance from realising assets in accordance with the statements set out in this Prospectus. The
documentation does not and will not impose any financial covenants on the Company other than those
set out in the Trust Deed. The noteholders have, in addition, agreed that their rights to require
prepayment on a rating downgrade will no longer apply.

The uncertain status of the United States private placement as at the date the auditor’s report was
finalised, combined with the fact that the Company was unable at that time to raise funds through the
issue of debenture stock and deposits, resulted in the Company’s auditors stating in their audit report that
there was “fundamental uncertainty” regarding the validity of the going concern assumption on which the
Company’s financial statements have been prepared and that, if the matters highlighted in their report
were unable to be satisfactorily resolved, this could have a significant impact on liquidity and the
recoverable amount of certain assets.

The Company is now able to recommence raising funds from the public through the offer of Stock and
Deposits under this Prospectus and, as indicated above, has reached agreement with the noteholders
under the United States private placement regarding the repayment of their notes. The Directors believe
that these steps should, to some extent, alleviate, but not necessarily resolve, the “fundamental
uncertainty” concern raised by the Company’s auditors. Notwithstanding the Company’s view, the
financial statements for the period to 30 June 2009 are, and remain, subject to the “fundamental
uncertainty” raised by the auditors. The auditors have not been asked by the Company to consider
whether the above steps would cause them to amend or re-consider in any way the opinions expressed
in their audit report and, in expressing their view, the Directors are not intending to indicate or state that
these steps have had that effect.

The Company has recently announced that its $100 million standby banking facilities have been
cancelled by mutual agreement. The facilities had been undrawn and, as previously announced, the
Company had been unable to draw under them because it was in breach of certain covenants contained
in those facilities. Accordingly, their cancellation had no cash impact on the Company. In addition,
cancellation has resulted in a saving of the applicable fees on the facilities. The Company may revisit

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banking facilities and their potential role in its future funding requirements once the restructuring and
recapitalisation plan discussed below is completed. In the meantime, the Company is in the final stages
of arranging a new $75 million credit facility with a third party provider. It is intended that this funding, or
a substantial part of it, will be used to prepay US noteholders as described above.

As at 30 September 2009, South Canterbury Finance had cash on deposit of $41.3 million and realisable
investments of $47.6 million. In addition, as at 14 October 2009, approximately $45.1 million was being
held on trust on behalf of investors because the Company was unable to allot securities to them before
registration of this Prospectus occurred. Each of those affected investors has been given the opportunity
to ask the Company to repay their funds and has not done so to date. Accordingly, the Company is
confident that the majority of the funds held in trust will be invested in Stock and Deposits under this
Prospectus.

The Company has the ability to borrow up to 7.5% of its Total Tangible Assets under prior ranking
charges under the terms of its Trust Deed, which charges rank ahead of all other obligations of the
Company (including the Stock and Deposits offered under this Prospectus). As at 30 September 2009,
there were existing prior ranking charges of $34.1 million. Accordingly, the Company is able to borrow up
to a further $127 million by way of prior ranking charges. This provides a potential source of liquidity to
the Company. The Company currently intends borrowing up to $75 million by way of a prior ranking
charge under the new facility referred to above. The Company confirms that the borrowing restrictions
under the agreements with the noteholders under the United States private placement will not prevent the
Company from borrowing the sum of $75 million by way of prior ranking charge under the new facility. In
addition, the Company may over time borrow by way of prior charges the full amount permitted under the
Trust Deed.

Management accounts for the Company for the period since 30 June 2009 indicate that the Charging
Group has traded profitably over that period. This provides a strong endorsement as to the underlying
profitability of the Company. In the period since the Company ceased allotting securities under its
previous registered prospectus, it has met its obligations to its creditors out of the proceeds of loan
repayments and from the sale of investments. The funds raised under this Prospectus will be used by
the Company to fund its business activities including, where necessary, meeting its repayment
obligations. No further provisions have been made in respect of the Company’s loan portfolio for the
period since 30 June 2009, but there is a risk that further provisioning may become necessary if there is
either deterioration in existing impaired loans or there is deterioration in other loans that have not yet
been identified as being impaired.

The Company has advanced plans to recapitalise its balance sheet and fully restructure its business
operations, to meet both the changed market conditions and the expected new capital requirements
proposed by the Reserve Bank under the new regulatory regime for non-bank deposit takers. Under the
recapitalisation plan, the Company’s parent proposes raising additional capital to enable it to inject further
equity into the Company. The Company understands that its parent initially proposes seeking between
$40 million and $75 million of additional equity or convertible capital by way of a private placement to
selected investors. Based on advice received as at the date of this Prospectus, the Company is
confident that it will receive additional equity of that amount as a result of the proposed private
placement. The Company understands that its parent also intends proceeding with a wider capital raising
once the proposed private placement has been completed and that further additional equity is proposed
to be injected into the Company following that wider capital raising. The successful implementation of the
recapitalisation plan is integral to the Company’s ability to operate profitably in the future. The parent
does not guarantee any of the securities offered in this Prospectus.

As part of its restructuring and recapitalisation process, the Company intends:

• divesting a range of non-core assets over the next 6 to 12 months (including, if appropriate, reducing
its shareholdings in Dairy Holdings Limited and South Island Farm Holdings Limited. The Dairy
Holdings Limited shareholding is, in the Company’s view, a high quality asset and is expected to
attract wide-spread interest should the Company decide to reduce, or sell all of, its shareholding in
that company. South Island Farm Holdings Limited owns shareholdings in some twenty dairy and
other farms across the South Island. In the medium term, the Company is likely to seek to divest its
holding in South Island Farm Holdings Limited to ensure the Company is able to meet proposed
Reserve Bank capital requirements for non-bank deposit takers);

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• refocusing its lending operations on the Company’s traditional business, plant and equipment,
consumer and rural lending areas;

• seeking to reduce related party lending by up to $50 million before 30 June 2010;

• appointing additional independent directors (including an independent chairman within the next 12
months) and new appointments to the senior management team of the Company, and improving its
governance. (The Company expects to announce the appointment of two new independent directors
in the immediate future);

• not making any new capitalised lending in the property development sector other than in very
exceptional circumstances and then only where the loan is extremely well secured; and

• reviewing and implementing further changes to its lending and credit approval processes in light of
the adverse market conditions.

Together with the proposed recapitalisation of the Company, the Board considers these broad-ranging
restructuring initiatives should enable the Company, over the next 18 to 24 months, to comply with the
Crown’s proposed new regulatory regime for non-bank deposit takers should it be introduced in its
current form.

The Company will make a further announcement regarding the restructuring and capital raising process
as soon as it is in a position to do so.

The Company acknowledges that its lending activities have grown significantly with the Charging Group’s
net advances increasing from $1,380.3 million as at 30 June 2008 to $1,629.9 million as at 30 June 2009.
The global financial crisis and, in particular, the deterioration in the property development market has
adversely impacted on the quality of the Charging Group’s property sector loan portfolio, as reflected in
the $48.4 million of specific impairment provisions made by the Charging Group in respect of its property
sector loan portfolio. As indicated above, the Company intends re-focusing its lending operations on its
traditional business, plant and equipment, consumer and rural lending areas and winding down and,
where possible, divesting its exposure to property development lending.

The Company’s internal processes and systems need to be updated to meet the demands of the
Company’s increased loan portfolio and, as indicated above, the Company is reviewing and implementing
changes to its lending and credit approval, and loan management, processes to reflect the current
adverse market conditions. The measures will, once implemented, result in the Company being well
placed to meet the challenges of the future.

In considering the impact of the events of the last year on the Company’s position, it is important to bear
in mind that the Company and its investors still have the benefit of the Crown guarantee under the
Deposit Guarantee Scheme in respect of Stock or Deposits which mature, or otherwise become payable,
on or before 11 October 2010. Further details regarding the terms of the Deposit Guarantee Scheme are
set out on pages 30 to 32 of this Prospectus.

Notwithstanding recent challenges, the Company believes it is well positioned to continue to operate
successfully in the non-bank finance sector. The Company has a number of restructuring initiatives
underway designed to refocus its business on its traditional areas of core lending strength and profitability
and improve the quality of its asset base.

L.J. McLeod

Chief Executive Officer

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BUSINESS OVERVIEW
The South Canterbury Finance Group offers a diverse range of products and services to borrowers in the
business, plant and equipment, property, rural and consumer sectors. The key products and services
offered include hire purchase, floor plans, leasing of plant, vehicles and equipment, personal loans,
business term loans and revolving credit facilities, mortgages over property and other financial
instruments, including consumer loan insurance.

South Canterbury Finance has a presence in most of the main centres throughout New Zealand with 14
regional offices. In addition, Flexi Lease Ltd (a subsidiary of South Canterbury Finance), which is two
years through a three year wind-down process operates in Christchurch and Auckland leasing near-new
cars to the business market. Face Finance Ltd (a 75% subsidiary of the Company) operates from
Christchurch and Auckland providing finance to the plant and equipment sector throughout New Zealand,
and Southbury Insurance Limited is based in Christchurch and provides consumer protection insurance.

As one of New Zealand’s leading non-bank deposit takers, South Canterbury Finance lends to a wide
cross-section of businesses and consumers. As a non-bank deposit taker, it traditionally offers finance to
a wide range of borrowers compared to mainstream banks and accepts a more diverse range of
securities and security positions, and yields on loans, than mainstream banks typically accept.

Business Lending

The business lending sector has been a traditional strength of the South Canterbury Finance Group. The
Company lends to a vast range of businesses throughout New Zealand including businesses involved in
manufacturing, professional services, fishing, tourism, hospitality and importing and exporting
businesses. As at 30 June 2009, the Charging Group had net receivables in this sector of approximately
$618.8 million consisting of 2030 loans with an average loan size of $369,748. Ten business lending
loans are for an amount in excess of $10 million each. The vast majority of the loans in this sector, by
value, are interest only loans with interest being paid, on a regular basis, during the term of the loan and
the principal being repaid on maturity. Approximately 21% of the loans in this sector are amortising over
the term of the loan.

As at 30 June 2009, total impairment provisions relating to the Charging Group’s business lending
portfolio were approximately $21 million, being approximately 3.7% of the portfolio and 1.3% of the
Charging Group’s total net receivables.

Over the last 12 to 18 months, the Company has made a number of larger loans to corporate borrowers
reflecting, to a large extent, the relative absence of liquidity in the mainstream banking sector. A large
number of these loans have since been repaid. As part of the Company’s proposed restructuring and
divestment of non-core assets, and the intended reduction in its lending book, the Company envisages
that, in the future, 90% of its business loans will be for amounts of less than $5 million with the bulk being
below $1 million. The focus, in the sector, will be on loans in the provinces to well-secured, small
businesses with loan exposures of less than $1 million.

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Business loans are typically for business expansion and acquisitions, funding of working capital lines,
guarantees for trade facilities or to finance the purchase of other assets. Loan terms are generally for
two to three years and most customers are provided with a term loan or revolving credit facility. The
Company is willing to roll-over existing loans on their maturity date where the borrower is otherwise
meeting its obligations under its loan and the Company’s security position is satisfactory. As indicated on
page 15, applications for roll-overs are dealt with on the same basis as the application for the original
advance.

The South Canterbury Finance Group is well placed in this sector with specialist business lenders in each
region. South Canterbury Finance has a close working relationship with the trading banks and will often
work together with a trading bank to provide funding to a borrower where South Canterbury Finance
takes a subsequent charging position to the bank. It has a track record of providing flexible solutions for
customers based on a depth of experience built up over many years.

Most lending in the business sector is secured over property and other tangible assets, including plant
and equipment, by way of a general security agreement or a first or second registered mortgage. As at
30 June 2009, approximately $310 million (or approximately 50%) of South Canterbury Finance’s
business sector loans were secured by first ranking charges while the remaining loans were secured by
second ranking or subsequent charges.

With the tightening of the credit cycle, South Canterbury Finance is well positioned to manage its existing
portfolio and capitalise on any future lending opportunities which may present themselves.

Plant and Equipment Lending

South Canterbury Finance, through its network of regional offices and 75% owned Face Finance Ltd,
lends money to businesses and individuals secured over plant and equipment. Face Finance Ltd, with
offices in Christchurch and Auckland, was established in response to strong demand for plant and
equipment lending and the restructuring of other providers in the market. This specialist area of business
financing has provided the Company with considerable growth over recent years.

Plant and equipment lending involves lending to businesses operating in the transport, contracting,
agriculture and horticulture, manufacturing and aviation industries. Lending in this portfolio is well
diversified geographically and by industry, with its key credit exposures in aviation, contracting and
transport.

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As at 30 June 2009, the Charging Group had net plant and equipment receivables of approximately
$267.9 million consisting of 587 loans with an average settlement value of approximately $461,627.
Approximately $237 million (or approximately 89%) of the Charging Group’s plant and equipment sector
loans as at 30 June 2009 were secured by first ranking charges while the remaining loans were secured
by second ranking or subsequent charges. As at 30 June 2009, total impairment provisions relating to the
plant and equipment portfolio were $2.8 million, being approximately 1.1% of the portfolio and 0.2% of the
Company’s total net receivables.

Over the next 12 months, South Canterbury Finance will look to consolidate the growth it has
experienced in this sector and build on the presence and brand of Face Finance Ltd.

Property Lending

The Company is winding down and, where possible, divesting its exposure to property development
lending by proactively working with its existing clients in this sector to reduce their level of borrowings
from South Canterbury Finance. Due to the current lack of liquidity in the property market, it is
anticipated that this will be a gradual process.

As at 30 June 2009, the Charging Group’s net receivables in the property sector were approximately
$485.7 million or approximately 29.8% of its total receivables. As at 30 June 2009, property lending
consisted of approximately 265 loans with an average loan settlement value of approximately $1.89
million. Twelve property loans are for amounts in excess of $10 million each, with the largest property
loan (hotel business) being $44.9 million. Almost all of the loans in the property sector are interest only
loans and, for the majority of those loans, interest is capitalised during the term of the loan and only paid
on maturity. In the Company’s experience, lending of this nature is not uncommon particularly in the
case of loans for property developments.

As at 30 June 2009, total impairment provisions relating to the Company’s property lending portfolio were
$48.4 million, being approximately 9.96% of the portfolio and 3.0% of the Company’s total net
receivables.

Property lending has traditionally been development lending or lending secured over land held for future
development, typically for 6 to 24 months secured by way of a first or second registered mortgage. As at
30 June 2009, approximately $275 million (or approximately 57% of the Charging Group’s property sector
loans were secured by a first ranking mortgage and approximately $210 million (or approximately 43%)
was secured by a second or subsequent ranking mortgage. The Company significantly reduced its
lending of this nature in early 2008 but has been required to continue funding development costs for
existing borrowers to enable the completion of projects. At the time of origination of those loans, there
were clear exit strategies, mainly involving the sale of the project. However, in many cases the exit
strategy has not eventuated for a variety of reasons such as defaults by purchasers and the failure of the
developers to complete subdivisions in time.

Rural Lending
South Canterbury Finance has had a long standing presence in the New Zealand rural lending market as
a result of the background of its Chairman, Directors, and executive team, and their respective
relationships with the rural sector. The General Manager of Rural Lending further enhances this presence
and assists the Company to build on its existing relationships within the rural sector.

As at 30 June 2009, the Charging Group’s rural loan portfolio stood at approximately $178.15 million and
covers a number of loan types from term loans for land use changes through to seasonal funding
arrangements and all forms of rural activities from sheep and beef to dairy farming. As at 30 June 2009,
South Canterbury Finance had approximately 246 rural loans with an average loan settlement value of
approximately $664,800, with two rural loans in excess of $10 million each. As at 30 June 2009, total
impairment provisions relating to the Company’s rural portfolio were approximately $3.9 million, being
approximately 2.2% of the rural portfolio and 0.2% of the Charging Group’s total net receivables. As at
30 June 2009, approximately $144 million or approximately 81% of South Canterbury Finance’s Rural
sector loans were secured by first ranking charges and approximately $34 million (or approximately 19%)
by second ranking charges. 

      13
As a result of the continual growth in the rural sector in New Zealand and the corresponding growth in
demand for funding, South Canterbury Finance sees this sector as continuing to offer key lending
opportunities.

Consumer Lending

The South Canterbury Finance Group lends to a range of customers in the consumer sector for a wide
variety of purposes including the financing of boats, cars, home improvements and personal activities.
Selected car and boat dealers also originate loan facilities on behalf of members of the South Canterbury
Finance Group in a number of regions.

As at 30 June 2009, the Charging Group had net consumer lending receivables of approximately $79.41
million consisting of approximately 9,877 loans corresponding to an average settlement value of
approximately $7,587. These loans were well spread geographically. As at 30 June 2009, total
impairment provisions relating to the Charging Group’s consumer lending portfolio were approximately
$1.6 million, being approximately 2.0% of the consumer portfolio and 0.1% of the Company’s total net
receivables.

Typically, each loan is secured by a mortgage over property or a registered finance charge over a
vehicle. As at 30 June 2009, approximately $71 million (or approximately 89%) of South Canterbury
Finance’s consumer sector loans were secured by a registered charge over specific assets or property.
Loan applications within agreed criteria are approved by the General Manager of Consumer Lending or
otherwise by the National Credit Manager. One of the Company’s key points of difference in the
consumer lending market is that a significant number of applicants are personally interviewed.

Competition has traditionally been very intense in the consumer lending sector which has been
dominated by a number of larger providers, the trading banks and with many smaller operators
competing at the lower end of the market. Over the last 18 to 24 months this sector has undergone
significant rationalisation with a number of key providers and numerous smaller providers withdrawing
from the market.

While South Canterbury Finance has been gradually reducing its exposure to the consumer lending
market over recent years, the rationalisation that has occurred in this segment of the market may provide
some quality lending opportunities. The Company will, however, approach any such opportunities with
caution.

CREDIT CONTROL
South Canterbury Finance has developed a range of policies and procedures that are used in assessing
and approving all loan applications. Industry and product concentrations are managed within established
credit policies and underwriting standards. South Canterbury Finance also has formal provisioning
polices that are monitored and reviewed by both management and the Board.

Over its long history, South Canterbury Finance has established strong relationships with its customers,
many of whom have been clients of the Company for a number of years. This history, and the Company’s
local presence in the communities in which it operates, have enabled the Company to understand
borrowers’ needs, their businesses and, ultimately, their credit capacity to the best extent possible.

Credit Approval process

The Company’s credit approval processes were reviewed and amended in July 2009 to provide for a
more rigorous loan application and credit approval process than was the case previously. The outcome of
this process must be satisfactory to South Canterbury Finance before an advance is made to a borrower.
This process involves in depth analysis of:

• the previous history of the borrower and its past financial performance;

• the strategic and financial viability of the proposed loan and business; and

      14
• the adequacy of security, industry trends and the industry outlook.

Any loan application with an aggregate value (including roll-overs, top-ups and extensions) of greater
than $100,000 must now be approved by the National Credit Manager and the Group Credit Manager
before it is sent to the Company’s newly established Independent Credit Committee, where a unanimous
decision is needed for approval. Previously, all loans up to $1 million were approved by the Chief
Executive, while loans over $1 million had to be approved by Board members with the size of the loan
determining the number of Board members who would be involved in the approval process.

The new Independent Credit Committee comprises the Chief Executive, the General Manager of Plant
Lending (Face Finance) and the Chief Executive of Scales Corporation Ltd. The Company has a well
established credit process to support the new Independent Credit Committee, to monitor existing policies,
and to develop and implement new credit policies to manage ongoing credit risk.

In the case of loans with an aggregate total value of greater than $3 million, a member of the Board sits
on the new Independent Credit Committee in addition to its regular members.

Applications for roll-overs of existing loans are dealt with on the same basis as the application for the
initial advance.

      15
MANAGEMENT DISCUSSION AND ANALYSIS OF THE YEAR TO 30
JUNE 2009
For the year to 30 June 2009, South Canterbury Finance reported an audited Charging Group net loss
after tax of $57.8 million which included losses and provisions on loans and investments totalling $121.3
million before tax. Excluding impairments on loan advances, gains and losses on investments and
intangible assets, and excluding foreign exchange gains and losses, South Canterbury Finance recorded
an underlying trading profit before tax of $32.3 million.

As at 30 June 2009, South Canterbury Finance had net advances of $1,630 million, diversified across
five lending portfolios consisting of Business (38%), Plant and Equipment (16%), Property (30%), Rural
(11%) and Consumer (5%).

South Canterbury Finance Limited and Charging Subsidiaries

Net Advances as at 30 June 2009 ($m)

Consumer
$79.4
5%
 

The Charging Group’s advances included impaired loans with a gross value (before deducting provisions)
of $301.2 million (2008: $61.5 million). The Charging Group has made total impairment provisions in
respect of its advances of $77.9 million (2008: $21.3 million) including $55.1 million of specific provisions
in respect of its loans, a collective provision of $7.2 million and a net present value allowance in relation
to impaired loans of an additional $15.6 million.

A specific loan impairment is recognised when the loan value is greater than the security supporting the
loan receivable. South Canterbury Finance takes into consideration the value of assets and guarantees
pledged as security for the loan in forming this assessment and also relies on a range of information
including independent valuations and the specialist knowledge of its lending team. The collective
provision is recognised for a portfolio of loan receivables, based on that loan portfolio’s historical loss
history over a five year period. South Canterbury Finance is of the view, as at the date of this Prospectus,
that the level of provisioning adopted by it is appropriate based on the information available to it. The
impairment provision made by the Company was reviewed by its auditors in the normal course of their
audit. The Company’s performance and the performance of its loan portfolio since 30 June 2009 has not
currently resulted in any need to make any further impairments in respect of the Company’s loan
portfolio.

      16
There is a risk that, notwithstanding the impairment provisions made by the Company, the Company will
suffer greater losses in respect of its advances than the amount provided due to the inability of borrowers
to meet their repayment obligations or the inability of the Company to recover the full amount of a loan
through the exercise of its enforcement rights. If the Company experienced losses in its loan portfolio
significantly in excess of the amount of its provisions, that may impact adversely on the ability of the
Company to meet its obligations to its creditors (including holders of Stock and Deposits) as and when
they fall due.

As at 30 June 2009, the Company had past due loans of $132.38 million in total (2008: $22.5 million)
including $42.9 million of loans that were past due by more than 30 days (2008: $22.5 million). Of the
total amount of past due loans, the property portfolio accounted for $68.2 million (being 52%) of total past
due loans while the business portfolio accounted for $34.3 million (being 26%) of total past due loans.
The remaining loan portfolios (i.e., plant and equipment, rural and consumer) accounted for past due
loans of $29.8 million (being 22% of total past due loans). Again, a failure of these borrowers to repay in
full may impact adversely on the ability of the Company to meet its obligations to its creditors (including
holders of Stock and Deposits) as and when they fall due if the Company is unable to recover, in full, the
amounts owed to it through the exercise of its enforcement rights in respect of the relevant loans.

As at 30 June 2009, the South Canterbury Finance Charging Group had shares and investments of
$234.9 million including approximately $113.5 million of investments in NZX listed companies/securities
and an investment of $67.2 million in South Island Farm Holdings Limited, the latter being acquired by
South Canterbury Finance as partial consideration for the purchase from the Company of non-performing
property loans in October 2008 by Mr A.J. and Mrs M.J. Hubbard. All of those loans were purchased for
their face value. South Canterbury Finance also had approximately $104.6 million invested in plant,
property and equipment which consisted of approximately $15.2 million of land and buildings and $87.9
million of helicopters and plant.

In addition, South Canterbury Finance had approximately $83.5 million invested in associated companies
which consisted primarily of an investment in 33.6% of the shares in Dairy Holdings Limited, the largest
dairy supplier in New Zealand in the year to 31 May 2009. The Dairy Holdings Limited investment was
acquired by South Canterbury Finance for a purchase price of $75.73 million, which price was paid as to
$35.73 million in cash and as to $40 million through the issue of 40 million of new ordinary shares in
South Canterbury Finance to Southbury Group Limited, all of which were credited as fully paid. The
Company believes that due to (among other factors) the very high quality of Dairy Holdings Limited’s
dairy farms, its 33.6% interest in Dairy Holdings Limited is relatively liquid and retains the value attributed
to it at the time of purchase.

As at 30 June 2009, South Canterbury Finance had $220.3 million of related party loans which includes
loans to entities related by directorships, entities over which directors are able to exercise significant
influence, and entities related to Southbury Group Limited (the parent company of South Canterbury
Finance). The principal related party loans included a $39.1 million loan to Kelt Finance Limited (a 75%
owned subsidiary of the Company that is not currently part of the Charging Group), a $75.1 million loan to
South Canterbury Finance’s parent, Southbury Group Limited (which loan has subsequently been
reduced to $65.2 million via a principal repayment of $9.9 million post balance date), and loans of $20.2
million, $15.3 million and $12.5 million to Helicopters (N.Z.) Limited, Plum Duff Limited and Commtest
Instruments Limited, respectively. The Helicopters (N.Z.) Limited transaction was determined by the
Board and management to be an arm’s length transaction undertaken in the normal course of business.
Commtest Instruments Limited was acquired by the Company as a set off against non-performing loans.
This investment was not independently valued at the time it was acquired but was subsequently
assessed by Ernst & Young. An impairment of $4 million has been taken in respect of the shareholding.
In 2007, the Company acquired a beneficial interest in shares of New Zealand Wool Services
International Limited, a stock exchange listed company, from Plum Duff Limited (formerly Forresters New
Zealand Limited). South Canterbury Finance subsequently agreed to re-transfer the beneficial interest in
those shares to Plum Duff Limited at the request of the Takeovers Panel. The purchase price paid by
Plum Duff Limited for the interest was in excess of market value). To facilitate this transaction, South
Canterbury Finance made the abovementioned advance to Plum Duff Limited. All of the above
transactions are secured, and, except for loans to key management personnel and former directors
(amounting to approximately $21.5 million which are secured against shares in Southbury Group
Limited), are at rates not less than the Company’s cost of funds. The Company, through its Charging

      17
Subsidiary Helicopters Nominees Limited, owns helicopters and has profitably provided operating leases
of those helicopters to Helicopters (N.Z.) Limited for a number of years. In addition, the Company has an
investment of $20 million (at a coupon of 8%) in preference shares issued by Helicopters (N.Z.) Limited
(this investment is in addition to the loan referred to above).

No related party loans are impaired nor were any such loans written off or forgiven during the year to 30
June 2009, nor were any specific provisions made in respect of any such loans.

While the Board of South Canterbury Finance has long considered that some of its best loans are to
related parties due to the Company’s knowledge of the borrowing entities’ financial performance and
position, the Company is seeking to reduce related party lending by at least $50 million over the next 12
months.

The Company is in the process of finalising a restructuring and recapitalisation plan. A key part of this
plan will revolve around positioning the Company to comply with the provisions of the proposed new non-
bank deposit taker regime which, if enacted in its current form, will require a reduction in both related
party lending and non-core assets.

As stated in the Borrowing Group’s audited financial statements on pages 44 to 71 of this Prospectus, the
Company has borrowings of $919.2 million which are due to be repaid by 30 June 2010 and a further
$255.4 million of borrowings which are due to be repaid prior to the expiry of the current Deposit
Guarantee Scheme. In addition, the Company has reached agreement under which the Company will
make accelerated repayment of the principal sum of $US100 million to noteholders (together with interest
on that sum) by way of instalments, with the last instalment being due on 31 March 2010. Further detail
regarding these arrangements is set out in the Chief Executive’s Report on pages 7 to 10 of this
Prospectus.

The directors of the Company are of the view that the Company will, through the issue of Stock and
Deposits under this Prospectus and the realisation of assets, be able to repay its borrowings as and
when they fall due for repayment. The Company has a long and successful history of utilising the
domestic debenture funding market to generate liquidity to meet its financial commitments. Currently, the
Company continues to have the benefit of issuing Stock and Deposits under the Deposit Guarantee
Scheme. The Company’s four week rolling average reinvestment rate, by number, decreased during the
year to 30 June 2009, falling from 67.2% as at 31 December 2008 to 65.15% over the later months of the
financial year while the four week rolling average reinvestment rate, by value, fell from 71.74% to 60.10%
over the same period. The Company attributes this fall in reinvestment rates principally to the interest
rates it was offering compared to those offered by other entities which had the benefit of a guarantee
under the Deposit Guarantee Scheme. The Company is confident that by offering competitive interest
rates, it will be able to improve its reinvestment rates over time and, thereby, raise the funds required to
enable it to meet its commitments through the issue of Stock and Deposits.

The Company acknowledges that it currently holds a number of assets (including loans) that it may have
difficulty realising for their full value in the current economic climate, particularly if it was required to
realise those assets urgently. However, the directors of the Company are confident that, with the
Company once again able to raise funds through the issue of Stock and Deposits under this Prospectus
and with the additional equity which the Company anticipates receiving under the proposed
recapitalisation plan, the Company will be able to realise assets in an orderly manner and, thereby,
recover their full value over time. In addition, there may be borrowers from the Company who, while
currently meeting their interest obligations on their loans, may not be able to repay their loans in full on
the scheduled maturity date. Again, the Company is confident that, over time, it will be able to receive
the amount of those loans in full.

If the Company is unable to realise assets (including loans) as and when required, or to raise sufficient
funds from the issue of Stock and Deposits under this Prospectus, to enable it to repay its indebtedness
as it becomes due during the term of the current Deposit Guarantee Scheme, then that will constitute a
“Default Event” under the Crown guarantee with the result that, subject to the terms of the Deposit
Guarantee Scheme, all eligible investors would be entitled to payment under the terms of the Crown
guarantee irrespective of whether or not their Stock or Deposits were due to mature before or after the
expiry of the Deposit Guarantee Scheme.

      18
MAIN TERMS OF THE OFFER
ISSUER

This offer is being made by South Canterbury Finance Ltd. The Company’s registered office is located at
39 George Street, Timaru.

SECURITIES ON OFFER

This is an offer of an additional $500,000,000 of First Ranking Registered Debenture Stock (“Stock”) with
an aggregate principal amount of $500,000,000 (all of which is being offered at an issue price of $1.00 for
each unit of Stock) and $50,000,000 of Unsecured Deposits (‘Deposits”). This is in addition to any
amount required to replace or renew existing debenture stock and unsecured deposits.

The Stock is first ranking subject to permitted Prior Charges under the Trust Deed and statutorily
preferred claims.

PROSPECTUS

This Prospectus is dated the 20th day of October 2009.

A copy of this Prospectus duly signed together with copies of the documents which are required by
section 41 of the Securities Act 1978, and regulation 7 of the Securities Regulations 1983 (being the
Auditor’s Report (page 72) and the Auditor’s Consent and copies of any new material contracts entered
into during the period of two years preceding the date of this Prospectus) was delivered to the District
Registrar of Companies, Wellington for registration under section 42 of the Securities Act 1978.

STOCK EXCHANGE LISTING

Listing of the Stock and Deposits is not being sought on the New Zealand Stock Exchange.

Stock and Deposits may be transferred to another person by completing a Security Transfer Form and
forwarding it, together with the relevant Stock Certificate or Deposit Certificate, to the Company.

GUARANTORS

Neither the shareholders of the Company nor the Trustee for the Stockholders and Depositors guarantee
repayment of the Stock or Deposits or the payment of interest on them.

NEW ZEALAND DEPOSIT GUARANTEE SCHEME

South Canterbury Finance has a guarantee under the Deposit Guarantee Scheme. Information about this
scheme is set out on pages 30 to 32 of this Prospectus and is also available, free of charge and at all
reasonable times, on the Internet site maintained by or on behalf of the Treasury (www.treasury.govt.nz).

INTEREST

Other than in the limited circumstances outlined below, interest will commence from the date of
acceptance of application monies by the Company, and, at the investors option be payable monthly or
quarterly, or be compounded quarterly. Quarterly interest will be paid or credited on the last days of
March, June, September and December of each year. Compounded interest will be added to the original
investment for payment at maturity. All interest payments will be made to the registered holder of Stock
or Deposits.

In the case of investors who applied for Stock or Deposits under the Company’s previous prospectus
(whether under a new application or a reinvestment) but to whom securities were not able to be allotted

      19
because the Company had suspended allotting securities under that prospectus, the Company will pay
interest to them at the rate of their selected investment under this Prospectus from the date on which
their subscriptions were placed in trust if and to the extent that they apply those subscriptions in
subscribing for Stock or Deposits under this Prospectus. In effect, those investors will have their
investment under this Prospectus backdated to the date on which their initial applications were received
by the Company or, in the case of roll-overs, to the date on which their prior investment would otherwise
have rolled-over.

The Company may decline to accept an application (either in whole or in part) where acceptance would
be in breach of the terms of this Prospectus. In such cases, the application money will be returned to the
investor. Unless the Company decides otherwise, no interest is payable on returned application money.

INVESTMENT OPTIONS

1. First Ranking Stock — The Stock issued under this Prospectus will rank equally with all other
Stock now existing or at any future time issued by the Company pursuant to the Trust Deed. The
Stock does, however, rank behind permitted Prior Charges under the Trust Deed and statutorily
preferred claims. As at 30 June 2009, there was Stock of $2,073.38 million, in total, and there
were permitted Prior Charges of $34.123 million, in total. As indicated above, the Company
currently intends borrowing up to $75 million by way of a prior ranking charge and may over time
borrow by way of prior charges the full amount permitted under the Trust Deed. Stock is available
for investment for terms of between three months and five years.

2. Deposits — These are unsecured, ranking behind First and Second Ranking Stock and any other
secured debts, and behind statutorily preferred claims. The Deposits taken under this Prospectus
will rank equally with all other unsecured deposits now existing or at any future time taken by the
Company and also will also rank equally with other unsecured creditors. As at 30 June 2009,
unsecured deposits and other unsecured creditors totalled $28.173 million. Deposits can be made
at call or for terms of up to five years.

INTEREST WITHHOLDING TAX

The Company is required to deduct resident withholding tax from interest paid or credited to New Zealand
resident investors and non-resident investors who have a fixed establishment (i.e. a branch) in New
Zealand each quarter or on maturity, unless the investor holds a valid RWT Certificate of Exemption
issued by the Inland Revenue Department (“IRD”). If applicable, resident withholding tax will be deducted
at a rate of 19.5%, 33%, or 39% at the option of the investor (although a company cannot elect the 19.5%
rate). The tax withheld can be claimed as a credit by investors against the investor’s New Zealand
income tax liability on income included in their tax returns.

An Annual Certificate is issued to each investor shortly after 31 March each year showing total interest
earned and withholding tax deducted for that year. Investors are required to advise the Company of their
IRD number.

Where no IRD number has been supplied, the Company must deduct resident withholding tax at the no
declaration rate of 39% of interest paid or credited.

The resident withholding tax rates described above are likely to change as a consequence of the
Taxation (Consequential Rate Alignment and Remedial Matters) Bill which was introduced in July 2009.
If passed in its current form, the applicable resident withholding tax rates for individuals (including
corporate trustees) will be 12.5%, 21%, 33% and 38%. The rates for companies will be 30% and 38%
and the "non-declaration" rate will be 38%. These changes are proposed to take effect from 1 April 2010
(other than the 30% company rate which will apply from 1 April 2011 unless the interest payer elects to
withhold at that rate from 1 April 2010).

      20
COMPOUNDING STOCK

Investors who prefer to accumulate capital can increase their total earnings by applying for compounding
Stock. Instead of the interest earned being paid, it is credited to the Stockholder’s account with the
Company (after deduction of withholding tax), thus earning further interest.

PURPOSE OF THIS ISSUE

The purposes of this issue of Stock and Deposits are to provide additional funds for financing the
activities of the Company and to provide for redemptions falling due.

APPLICATIONS

Applications must be on our standard application form, accompanied by a remittance for payment in full,
and may be directed through:

(a) Market participants of NZX Limited.

(b) South Canterbury Finance Ltd, 19 Sophia Street, Timaru (P.O. Box 125).

(c) Members of the Institute of Financial Advisors (IFA).

(d) Professional Advisors.

The offer of Stock and Deposits under this Prospectus opens on the date of registration of this
Prospectus, and will remain open until filled, or closed by the Directors.

South Canterbury Finance reserves the right to cease or suspend receipt of applications for Stock or
Deposits under this Prospectus to ensure its on-going compliance with the Securities Act 1978 and the
terms and conditions of its Trust Deed.

VARIATION OF INTEREST RATES

Interest rates are set by the Company and may be varied during the currency of this Prospectus. The
interest rates currently applying to the Stock and Deposits may be ascertained from the application form
applying at the time of investment.

In the event of any variation in interest rates offered by the Company, applicants whose applications are
lodged on or after the date of variation will be promptly advised of the variation. Where the variation
involves a decrease in interest rates, unless the applicant confirms that such a decrease is acceptable,
their application money will be refunded in full within fourteen days of sending notice of the variation, with
interest at the Company’s then current ‘on call’ rate.

REPAYMENT

Repayment will be affected on surrender of the Certificates for the relevant Stock or Deposits on maturity
or:

(a) in the event of death of a sole Stockholder or Depositor, the Stock or Deposit (as the case may be)
may be retired upon not less than two months notice; or

(b) by arrangement with the Company, Stock or Deposits may be retired upon not less than one
months notice when funds are required to meet unforeseen circumstances.

In the event that early repayment is agreed to by the Company, there is no fee payable. However, the
interest rate payable in respect of the investment may, at the Company’s discretion, be amended to
reflect the reduced term of the investment.

      21
BROKERAGE

Brokerage at the undermentioned rates will be paid by the Company to approved parties on the principal
amount of Stock issued or the amount of Deposits accepted in respect of applications lodged by them
and bearing their stamp:

3 months 0.125% 2 years 1.00%

6 months 0.25% 30 months 1.25%

12 months 0.50% 3 years 1.50%

18 months 0.75% 4 years 1.75%

5 years 2.00%

CERTIFICATES

Certificates for Stock and Deposits will be sent to investors as soon as possible after the acceptance of
their application. The minimum application is $100 for Stock or Deposits.

      22
ADDITIONAL STATUTORY INFORMATION
DETAILS OF INCORPORATION OF ISSUER

South Canterbury Finance Limited was incorporated as a Private Company on 10 February 1926, under
the Companies Act 1908, Registered No. 121022. The Company reregistered under the Companies Act
1993 on 30 May 1995.

The Company’s public file may be viewed on the Companies Office website at www.companies.govt.nz.
Copies of the documents may also be obtained (possibly on payment of a fee) by telephoning the
Companies Office Contact Centre on 0508 266 726.

The Constitution and Trust Deed may be inspected without fee at the registered office of the Company
during normal business hours.

ACTIVITIES OF BORROWING GROUP

South Canterbury Finance and its guaranteeing subsidiaries have, during the five years preceding the
date of registration of this Prospectus, provided a balanced range of consumer finance and finance to the
industrial, farming and commercial sectors. The Company offers a range of finance products by way of
hire purchase, floor plan, leasing, block discounting, mortgages against property and personal loans. The
Borrowing Group consists of:

Interest
South Canterbury Finance Limited
Belfast Park Limited 100%
Braebrook Properties Limited 100%
Face Finance Limited 75%
Fairfield Finance Limited 100%
Flexi Lease Limited 100%
Galway Park Limited 100%
Helicopter Nominees Limited 100%
Hornchurch Limited 100%
Rental Cars Limited 100%
SCFG Systems Limited 100%
Sophia Investments Limited 100%
Southbury Insurance Limited 100%
Tyrone Estates Limited 100%

On 1 October 2008, South Canterbury Finance completed an amalgamation of the following 100%
subsidiaries which were previously members of the Borrowing Group:

Ashburton Finance Limited

Auckland Finance Limited
Canterbury Finance Limited
Otago Finance Limited
Palmerston North Finance Limited
Tasman Bay Finance Limited
Waikato Finance Limited
Wellington Finance Limited

Southland Finance Limited was not previously part of the Borrowing Group but was one of the
subsidiaries which amalgamated with South Canterbury Finance on 1 October 2008.

On 30 June 2005, Face Finance Ltd, a 75% owned subsidiary, became a member of the Charging
Group. Face Finance Ltd operates in the finance industry, focusing on commercial loans. The activities
of Coversure Guarantee Ltd were wound up on 30 June 2005. This company provided insurance broking
services to Palmerston North Ltd. On 19 February 2009, it changed its name to Sophia Investments Ltd.
Southbury Insurance Ltd now provides this service to all companies in the Charging Group. On 1

      23
December 2005, Rental Cars Ltd sold the Thrifty Car Rental franchise to an independent third party at
market value. Rental Cars Ltd is no longer trading. Galway Park Ltd was incorporated on 1 April 2008
as a property investment company.

The principal fixed assets of the Borrowing Group comprise commercial land and buildings, leasehold
improvements, office equipment, motor vehicles and helicopters (that are leased to third parties). These
assets are employed by the Borrowing Group in the conduct of its business activities referred to above.
All of these assets are owned by members of the Borrowing Group.

MATERIAL CONTRACTS

South Canterbury Finance agreed on 9 November 2007 to sell its 12.75% shareholding in Dairy Holdings
Limited to Southbury Group Limited with effect from 30 November 2007.

South Canterbury Finance entered into an underwriting agreement dated 19 November 2007 with Forsyth
Barr Group Limited relating to the underwriting of South Canterbury Finance’s offer of secured bonds in
November 2007. That underwriting agreement was not called upon.

On 11 April 2008, South Canterbury Finance acquired a 100% interest in Fairfield Finance Ltd. This
company operates as a finance company in the Nelson region. The debentures and deposits in this
company, as they mature, are being repaid or reinvested in South Canterbury Finance. Fairfield Finance
Ltd became a member of the Charging Group on 30 June 2009.

South Canterbury Finance entered into an underwriting agreement dated 19 May 2008 with Forsyth Barr
Group Limited relating to the underwriting of South Canterbury Finance’s offer of secured bonds in May
2008. That underwriting agreement was not called upon.

South Canterbury Finance entered into a deed of guarantee with the Crown, dated 19 November 2008,
under the Deposit Guarantee Scheme. Further information about this scheme is set out on pages 30 to
32 of this Prospectus. A copy of the deed of guarantee may be inspected on the Companies Office
website at www.companies.govt.nz or, free of charge, at the registered office of South Canterbury
Finance.

On 30 June 2009, the Company acquired a 33.6% interest in Dairy Holdings Limited from its parent
company, Southbury Group Limited, for $75.73 million. The purchase price was met, in part, through the
issue of 40 million new ordinary shares in the Company to Southbury Group Limited at an issue price of
$1.00 each (which shares were credited as fully paid) with the balance of the purchase price being paid
by the Company in cash. This transaction was reviewed by an independent expert approved by Treasury
in accordance with the terms of the Company’s guarantee under the Deposit Guarantee Scheme. The
independent expert confirmed that the transaction was on arm’s length terms and that the value paid by
the Company for the interest in Dairy Holdings Limited represented fair value for the Company.

The Company entered into a Deed of Underwrite and Guarantee with Mr A.J. and Mrs M.J. Hubbard,
dated 14 August 2009, under which Mr A.J. and Mrs M.J. Hubbard agreed to underwrite losses which the
Company may incur in respect of certain specified loans, up to a maximum aggregate amount of $25
million, by procuring the payment of that sum, or the transfer of assets of that value, to the Company.
The obligations of Mr A.J. and Mrs M.J. Hubbard under the Deed of Underwrite and Guarantee are also
limited to the value of the assets of North Wind Holdings (2009) Limited. Before entering the Deed of
Underwrite and Guarantee, the Company satisfied itself as to the financial position of North Wind
Holdings (2009) Limited and, therefore, the ability of Mr A.J. and Mrs M.J. Hubbard to meet their
obligations under the underwrite and guarantee from the assets of North Wind Holdings (2009) Limited.
Under these arrangements, the Company also entered into an Amending Deed of Underwrite and
Guarantee providing for Subordination, dated 25 September 2009, under which the Company is able to
ensure that North Wind Holdings (2009) Limited maintains sufficient net assets to enable Mr A.J. and Mrs
M.J. Hubbard to meet their obligations under the Deed of Underwrite and Guarantee.

A Noteholder Standstill Agreement dated as of 17 October 2009 was entered into between, amongst
others, the Company and US Noteholders, which sets out the terms on which certain breaches and
covenants are waived pending final form restructuring documents being entered into by the parties. In

      24
addition, a Commitment Letter was entered into between the Company, Southbury Group Limited and US
Noteholders as of 17 October 2009 setting out the revised terms and conditions to apply to their
noteholder arrangements.

The members of the Borrowing Group have not entered into any other material contracts within the last
two years (not being contracts entered into in the ordinary course of business).

Copies of the material contracts described above may be inspected, free of charge, at the registered
office of South Canterbury Finance. Copies of the material contracts may also be obtained (possibly on
payment of a fee) by telephoning the Companies Office Contact Centre on 0508 266 726.

PENDING PROCEEDINGS

In the opinion of the Directors, there are no legal proceedings or arbitrations pending that are likely to
have a material adverse effect on the Borrowing Group.

ISSUE EXPENSES

The estimated amount of expenses for the issue of Stock and Deposits under this Prospectus, including
brokerage, is $5 million and is payable by the Company.

Commission (being brokerage as set out on page 22) in respect of the Stock and Deposits offered under
this Prospectus may be paid by the Company to persons or firms who deal in the placing of securities in
the normal course of their business in respect of Stock issued and Deposits accepted under this
Prospectus.

OTHER MATERIAL MATTERS

On 1 October 2008, Auckland Finance Limited, Waikato Finance Limited, Palmerston North Finance
Limited, Wellington Finance Limited, Tasman Bay Finance Limited, Canterbury Finance Limited,
Ashburton Finance Limited, Otago Finance Limited and Southland Finance Limited (all of which
companies were wholly-owned subsidiaries of South Canterbury Finance) amalgamated with South
Canterbury Finance in accordance with the provisions of the Companies Act 1993. As a result of the
amalgamation, the assets and liabilities of each of those wholly-owned subsidiaries now form part of the
assets and liabilities of South Canterbury Finance.

All of those wholly-owned subsidiaries (with the exception of Southland Finance Limited) were
guaranteeing subsidiaries of South Canterbury Finance and were, therefore, members of the Borrowing
Group and Charging Group. Accordingly, all of their assets were previously charged under the Trust
Deed for the benefit of Stockholders and Depositors.

Southland Finance Limited was not a guaranteeing subsidiary and, therefore, was not a member of the
Borrowing Group or Charging Group prior to its amalgamation with the Company on 1 October 2008.

As at 1 October 2008, Southland Finance Limited had assets of $62 million and liabilities of $48 million.
Those liabilities included advances from South Canterbury Finance of $36.9 million, and first ranking
secured debenture stock of $10.6 million and unsecured deposits of $0.2 million issued by Southland
Finance Limited under its own trust deed.

As a consequence of the amalgamation, the first ranking secured debenture stock issued by Southland
Finance Limited now constitutes a permitted prior charge under the Trust Deed. As a result, it ranks for
payment ahead of the Stock and Deposits offered by South Canterbury Finance under this Prospectus.

As indicated above, Southland Finance Limited had first ranking secured debenture stock of $10.6 million
on issue as at 1 October 2008. Accordingly, the amount of Prior Charges under the Trust Deed has
increased from $3.2 million as at the date of amalgamation to $13.8 million. The amount of this Prior
Charge will reduce as the first ranking secured debenture stock issued by Southland Finance Limited
matures. Under the terms of issue, all of the first ranking secured debenture stock and unsecured
deposits issued by Southland Finance Limited will mature by no later than February 2013. On maturity,

      25
investors will have the option of having their funds repaid to them in cash or reinvesting those funds with
South Canterbury Finance. Any amounts reinvested will no longer rank as a Prior Charge under the
Trust Deed. As at 30 June 2009, the amount of the Southland Finance Limited first ranking debenture
stock had further reduced to $3.2 million.

The Company has elected for the Securities Regulations 1983 to apply to its offer of Stock and Deposits
under this Prospectus.

There are no other material matters relating to this offer of securities (other than contracts entered into in
the ordinary course of business) which have not been set out in this Prospectus.

CREDIT RATING

The Company is required to have a credit rating from an approved agency by 1 March 2010 pursuant to
the Reserve Bank Amendment Act 2009. On 19 March 2009, the Reserve Bank approved the following
rating agencies for the purposes of that Act:

• Fitch Ratings;

• Moody’s Investors Service; and

• Standard & Poor’s Ratings Services.

On 17 February 2009, the Reserve Bank released a consultation paper proposing the type of credit rating
non-bank deposit takers are required to hold from 1 March 2010. The paper proposes the use of local
currency, long term, issuer ratings.

The Company currently has a credit rating from Standard & Poor’s. As at the date of this Prospectus, the
Company’s long term credit rating was BB+/Watch Negative, implying a one-in-two chance that the credit
rating could be downgraded within three months. In the Company’s view, the CreditWatch Negative
assignment reflects a number of factors outlined by Standard & Poor’s including:

• increasing pressure on liquidity;

• still-weak asset quality;

• governance matters (including, but not limited to, related party exposures);

• the fact that the Company had ceased taking funds under its previous prospectus;

• market guidance of an increase to its unaudited net after-tax loss for the year ended 30 June 2009 to
$69 million; and

• the fact that two of the Company’s Directors had resigned and had not been replaced.

In the Company’s view, Standard & Poor’s CreditWatch action was based on not having a debenture
prospectus in the public domain, South Canterbury Finance’s funding flexibility and liquidity were
undermined at the 'BB+' rating level, at least in the short term. In the Company’s view, this particular
issue has been resolved through the registration of this Prospectus, which enables the Company to
resume raising funds from the public through the issue of Stock and Deposits. Standard & Poor’s has not,
however, been asked by the Company to confirm that through the registration of this Prospectus this
matter has now been resolved.

In the Company’s view, Standard & Poor’s considered that the United States private placement investors
were continuing to review their funding support for the Company, and that if they decided to require

      26
repayment of the facility, that would, potentially, significantly exacerbate liquidity concerns and cause a
downward revision of the Company’s rating by multiple notches, potentially into the 'B' rating category.
Conversely, Standard & Poor’s noted that, should United States private placement investors continue
their funding support for South Canterbury Finance, downward rating pressure is likely to be less severe.
As indicated above, the Company has reached an agreement with investors under the United States
private placement under which it will make accelerated repayment of the principal sum of $US100 million
to noteholders (together with interest on that sum) by way of instalments, with the last instalment being
due on 31 March in full satisfaction of their rights and entitlements under their notes.

In the Company’s view, if the credit rating is downgraded further, this may further impact the Company’s
ability to raise funds from local and offshore institutions and investors under its offers of Stock and
Deposits with the result that the Company may not be able to raise the funds it requires to fund its
business activities and meet its payment obligations in respect of the Stock and Deposits offered under
this Prospectus. A further downgrade may also impact on the Company’s eligibility to participate in the
extended Deposit Guarantee Scheme (for further details refer to pages 31 to 32 of this Prospectus) and
its ability to operate as a non-bank deposit taker under the Government’s proposed new regulatory
regime for non-bank deposit takers.

Standard & Poor’s (Australia) Pty Limited has given its consent to the inclusion of its credit rating for
South Canterbury Finance and to being named in this Prospectus.

Analytic services provided by Standard & Poor’s Ratings Services are the result of separate activities
designed to preserve the independence and objectivity of ratings opinions. Standard & Poor’s has
established policies and procedures to maintain the confidentiality of non-public information received
during each analytical process.

Analytic services and products provided by Standard & Poor’s are the result of separate activities
designed to preserve the independence and objectivity of each analytic process. Credit ratings issued by
Standard & Poor’s Ratings Services are solely statements of opinion and not statements of fact or
recommendations to purchase, hold, or sell any securities or make any other investment decisions.

Accordingly, any user of credit ratings issued by Standard & Poor’s Ratings Services should not rely on
any such ratings or other opinion issued by Standard & Poor’s Ratings Services in making any
investment decision. Ratings are based on information received by Standard & Poor’s Ratings Services.
Other divisions of Standard & Poor’s may have information that is not available to Ratings Services. In
Australia, credit ratings are assigned by Standard & Poor’s (Australia) Pty Limited, which does not hold
an Australian financial services licence under the Corporations Act 2001.

Standard & Poor’s (Australia) Pty Limited and its subsidiaries have not authorised or caused the issue of
this Prospectus and have not made any statement that is included in this Prospectus or any statement on
which a statement made in this Prospectus is based, other than as specified above. Standard & Poor’s
(Australia) Pty Limited and its subsidiaries to the maximum extent permitted by law, expressly disclaim,
and take no responsibility for any part of, this Prospectus, other than the reference to their names and the
statements included in this Prospectus as specified above.

GUARANTORS

The following Subsidiary Companies have guaranteed the Stock and Deposits: Belfast Park Ltd,
Braebrook Properties Ltd, Fairfield Finance Ltd, Flexi Lease Ltd, Galway Park Ltd, Helicopter Nominees
Ltd, Hornchurch Ltd, Rental Cars Ltd, SCFG Systems Ltd, Sophia Investments Ltd, Southbury Insurance
Ltd and Tyrone Estates Ltd all of which are wholly owned, and Face Finance Ltd, which is 75% owned.
In addition, South Canterbury Finance has a guarantee under the Deposit Guarantee Scheme. See
pages 30 to 32 of this Prospectus for further information about this scheme. There are no other
guarantors.

ACQUISITION OF BUSINESS OR SUBSIDIARY

During the period of two years preceding the date of registration of this Prospectus, no member of the
Charging Group acquired a business and no member of the Charging Group became a subsidiary of the

      27
Company where the consideration for that business or subsidiary exceeded one-fifth of the total tangible
assets shown in the statement of financial position for the Charging Group set out on page 34 of this
Prospectus. Galway Park Ltd was incorporated on 1 April 2008 and became a Charging Subsidiary.
Belfast Park Ltd, Braebrook Properties Ltd, Tyrone Estates Ltd and Fairfield Finance Ltd became
members of the Charging Group on 30 June 2009. No other companies have been added to the
Charging Group during this period.

ASSET BACKING

Based on the audited Financial Statements of the Company and the Charging Subsidiaries as at 30 June
2009, after the issue of up to $500,000,000 of additional Stock under this Prospectus, excluding any
funds raised by way of Deposits, each $100 worth of Stock issued by the Company will have an asset
backing of $111.

RESTRICTIONS ON DIRECTORS’ POWERS

The following modifications, exceptions or limitations on the powers of the Board are imposed by the
Companies Act 1993:

(a) the Board may not delegate the powers conferred on it by the sections of the Companies Act 1993
listed in the Second Schedule to that Act;

(b) the Board may not authorise a dividend in respect of some but not all of the shares in a class, or
that is of a greater value per share in respect of some shares of a class than it is in respect of other
shares of that class, otherwise than in proportion to the amount paid on the share in satisfaction of
the shareholder’s liability, except where a shareholder has waived its entitlement;

(c) the Directors may not authorise entry into a “major transaction” unless the transaction is approved
by, or contingent on approval by a special resolution. In general terms, a “major transaction” is a
transaction, the value of which exceeds half the value of South Canterbury Finance’s assets before
the transaction;

(d) South Canterbury Finance may not take any action that affects the rights attached to any shares
unless the action has been approved by special resolution of each interest group affected; and

(e) South Canterbury Finance may not buy back or redeem any of its equity securities, or give
financial assistance in connection with the acquisition of any of its equity securities, except as
permitted by the Companies Act 1993, the terms of the Trust Deed and its constitution.

The Companies Act 1993 and South Canterbury Finance’s constitution do not impose any further
modifications, exceptions or limitations on the powers of the Board to manage, supervise or direct the
management of, the business and affairs of South Canterbury Finance other than the modifications,
exceptions or limitations which are required to be imposed on the Board under the Listing Rules or
modifications, exceptions or limitations which are otherwise disclosed in this Prospectus.

RESTRICTIONS ON BORROWING GROUP

In addition to the restrictions set out in the section of this Prospectus headed “Main Provisions of the
Trust Deed”, the agreement for the issue of notes to investors under the United States private placement
provides that South Canterbury Finance is not to permit its subsidiaries to incur indebtedness other than
as permitted under that agreement. In essence, the total indebtedness of South Canterbury Finance’s
subsidiaries cannot exceed, in total, more than 70% of “Consolidated Total Assets” (being all of the
assets of the South Canterbury Finance Group of Companies). This restriction does not apply, amongst
other matters, to indebtedness that existed as at the date of the agreement and indebtedness arising
under the guarantee given by the Charging Subsidiaries in respect of the Stock and Deposits. The
agreements with US noteholders also restrict Charging Subsidiaries from undertaking certain
transactions with non-charging subsidiaries or certain affiliates.

      28
OTHER TERMS OF OFFER AND SECURITIES

All of the terms of the offer of Stock and Deposits under this Prospectus, and all of the terms of the Stock
and Deposits, are set out in this Prospectus, except those:

(a) implied by law; or

(b) which are set out in a document that has been registered with a public official, is available for
public inspection and is referred to in this Prospectus.

DIRECTORS’ STATEMENT

The Directors, after due enquiry by them in relation to the period between 30 June 2009 and the date of
registration of this Prospectus, are of the opinion that no circumstances have arisen that materially
adversely affect:

(a) the trading and profitability of the Charging Group;

(b) the value of the Charging Group’s assets; or

(c) the ability of the Charging Group to pay its liabilities due within the next 12 months.

GROUP, BORROWING GROUP AND CHARGING GROUP

References in this prospectus to ‘Group’, ‘Borrowing Group’ and ‘Charging Group’ all mean the Company
and its Guaranteeing Subsidiaries.

This Prospectus is signed as follows:

Signed by each Director of South Canterbury Finance (or by his agent authorised in writing):

ALLAN JAMES HUBBARD EDWARD ORAL SULLIVAN

      29
NEW ZEALAND DEPOSIT GUARANTEE SCHEME
As indicated above, South Canterbury Finance has a guarantee under the Deposit Guarantee Scheme.

In broad terms, this means that the Crown guarantees the payment of principal and interest on Stock and
Deposits (up to $1 million for each eligible investor):

(a) if and to the extent those amounts are, or become, payable before the Deposit Guarantee Scheme
expires at 12.01am on 12 October 2010; and

(b) South Canterbury Finance does not, for any reason, pay those amounts.

In addition, Stock and Deposits which would otherwise mature after the expiry of the Deposit Guarantee
Scheme will, subject to the terms of the Deposit Guarantee Scheme, have the benefit of the Crown
guarantee if there is an insolvency event in respect of the Company during the term of the Crown
guarantee.

In particular, the Deposit Guarantee Scheme provides that the Crown:

(a) guarantees to eligible Stockholders and Depositors the payment by South Canterbury Finance of
the amounts payable by it in respect of the Stock and/or Deposits (up to a maximum amount of $1
million per eligible Stockholder or Depositor, which amount includes all other amounts payable by
South Canterbury Finance to the Stockholder or Depositor in respect of any other debt securities of
South Canterbury Finance held by that Stockholder or Depositor) in the period from the date of
issue until 12.01 am on 12 October 2010 (being the current expiry date of the Deposit Guarantee
Scheme); and

(b) undertakes to each eligible Stockholder and Depositor that if South Canterbury Finance does not
pay to it when due and payable any amount payable in respect of the Stock and/or Deposits during
the period of the Deposit Guarantee Scheme, then the Crown will pay that amount to the
Stockholder and/or Depositor when it is due and payable (unless any such payment has not been
made by South Canterbury Finance solely as a result of an administrative error or technical error
and is subsequently paid by South Canterbury Finance within seven days of its due date).

In order for a Stockholder and/or Depositor to have the benefit of the Deposit Guarantee Scheme:

(a) they must be a “Creditor” within the meaning of the Deposit Guarantee Scheme;

(b) they must provide the Crown with a notice of claim in respect of the amount payable to it by South
Canterbury Finance; and

(c) the Crown will need to satisfy itself as to the amount payable to the Stockholder or Depositor by
South Canterbury Finance and as to such other matters as the Crown reasonably considers
appropriate to determine the extent of its liability to that Stockholder or Depositor under the Deposit
Guarantee Scheme.

The Deposit Guarantee Scheme does not apply to all investors. Accordingly, potential investors in the
Stock and Deposits should satisfy themselves that the Deposit Guarantee Scheme applies to them.

If the Deposit Guarantee Scheme is withdrawn by the Crown in the future, whether due to a breach of the
terms of the Deposit Guarantee Scheme or the Crown guarantee under it by South Canterbury Finance
or otherwise, the Deposit Guarantee Scheme will (subject to the terms of the guarantee) continue to
apply to all Stock and Deposits issued prior to the date of withdrawal.

As indicated above, the Deposit Guarantee Scheme expires at 12.01am on 12 October 2010 and only
applies to amounts payable by South Canterbury Finance in respect of Stock and Deposits to eligible

      30
investors prior to the expiry of the Deposit Guarantee Scheme. It will not apply to any amounts required
to be paid by South Canterbury Finance in respect of any Stock or Deposits which become payable, in
accordance with the terms of the Stock or Deposits, after the expiry date of the Deposit Guarantee
Scheme.

During the term of the Deposit Guarantee Scheme, South Canterbury Finance will need to comply with
the restrictions imposed under the Deposit Guarantee Scheme. In particular, South Canterbury Finance
must not, and must ensure that its subsidiaries do not, without the prior written consent of the Crown:

(a) make any distribution (within the meaning of the Companies Act 1993) on the ordinary shares of
South Canterbury Finance other than:

(i) through a redemption of shares which it is required to make in accordance with the terms of
those shares (in place as at 12 October 2008) (other than shares which are redeemable at the
option of the holder and which are held by any person who controls, or who is under common
control with, South Canterbury Finance);

(ii) the payment of fixed dividends on shares which are required to be made in accordance with the
terms of those shares (in place as at 12 October 2008);

(iii) the payment of dividends provided the aggregate amount of such dividends in any financial year
does not exceed the profit for the previous financial year of South Canterbury Finance (as shown
in its annual financial statements for that year); or

(iv) the making of a distribution by a subsidiary of South Canterbury Finance to South Canterbury
Finance or to any other member of the South Canterbury Finance Group; or

(b) enter into any transaction (or series of linked or related transactions) having a value exceeding 1%
of the value of South Canterbury Finance’s assets otherwise than on arm’s length terms; or

(c) enter into any transaction (or series of linked or related transactions) having a value exceeding 1%
of the value of South Canterbury Finance’s assets with any person who controls, or who is under
common control with, South Canterbury Finance (other than a wholly-owned subsidiary of South
Canterbury Finance) unless:

(i) that transaction is on arm’s length terms; and

(ii) an independent expert approved by the Crown in writing has certified to the Crown in writing that
the transaction is, in the opinion of the expert, on arm’s length terms.

Further information about the Deposit Guarantee Scheme is available, free of charge and at all
reasonable times, on the Internet site maintained by, or on behalf of, the Treasury
(www.treasury.govt.nz). In addition, the most recent audited statement of financial position of the Crown
is available, free of charge, and at all reasonable times, on the Internet site maintained by, or on behalf
of, the Treasury.

On 9 September 2009, the Crown Retail Deposit Guarantee Scheme Act 2009 was passed. This Act
extends the current Deposit Guarantee Scheme for a further 14 months to 31 December 2011 but on
materially different terms to those of the current Deposit Guarantee Scheme.

A number of the key terms of the existing Deposit Guarantee Scheme will be amended under the
extended scheme after 12 October 2010, including:

• eligible non-bank deposit takers will be guaranteed to a maximum of $250,000 per depositor per
institution and eligible bank deposit takers will be guaranteed to a maximum of $500,000 per
depositor per institution;

      31
• fees paid by participating institutions will be changed to reflect the risk profile of the relevant
institution. Thresholds in the current scheme will be discontinued and the fees will apply to all funds
in the new scheme;

• deposit taking institutions with a credit rating of BB or higher can apply to participate in the
extended scheme. Institutions with a lower credit rating or no credit rating will not be eligible
despite being the beneficiary of a Crown guarantee under the current terms of the New Zealand
Deposit Guarantee Scheme; and

• eligible deposit taking institutions may apply to participate in the extended deposit guarantee
scheme in respect of some or all debt securities issued by that institution, provided that any such
debt securities that are to be guaranteed under the Deposit Guarantee Scheme fall within all other
terms and conditions of the Deposit Guarantee Scheme.

In addition, institutions will need to meet certain eligibility criteria in order to be eligible to apply for
participation in the new extended scheme.

The Company currently intends applying to participate in the extended scheme. However, as at the date
of this Prospectus, the Company has not made a final decision on whether or not to apply to participate in
the extended scheme. That decision will depend on the Company’s view on the benefits it and investors
in its Stock and Deposits will receive compared to the cost involved in participating in that scheme.
Based on publicly available information as at the date of this Prospectus, the Company is of the view that
it will meet the criteria for participation in the extended scheme. However, in order for an applicant to be
accepted for participation in the extended scheme, the Secretary to the Treasury must be satisfied that it
is necessary or expedient in the public interest for the applicant to be accepted into the scheme. The
Company does not currently have a Crown guarantee beyond the expiry of the Deposit Guarantee
Scheme at 12.01 am on 12 October 2010 and there is no assurance that it will have a Crown guarantee
after that time.

      32
SOUTH CANTERBURY FINANCE LTD AND CHARGING SUBSIDIARY
COMPANIES – SUMMARY FINANCIAL INFORMATION
SUMMARY OF FINANCIAL STATEMENTS

The following information has been extracted from the audited financial statements of South Canterbury
Finance and the Charging Subsidiary Companies for the past five years. (NZ IRFS means the New
Zealand equivalent to the International Financial Reporting Standards. Prior NZ GAAP are the
accounting rules that applied prior to the adoption of NZ IFRS). The Auditor’s Report in respect of the
Borrowing Group’s financial statements for the year ended 30 June 2009 while unqualified states that
there is a “fundamental uncertainty” regarding the validity of the going concern assumption on which
these financial statements were prepared. Further information is set out in the Auditor’s Report on page
72 of this Prospectus. The Financial Statements for the Company and the Charging Group (including
the associated notes) for the period ended 30 June 2009 are set out on pages 44 to 71 of this
Prospectus.

INCOME STATEMENT

Year to 30 June 30/06/2009 30/06/2008 30/06/2007 30/06/2007 30/06/2006 30/06/2005

($000’s) Audited Audited Audited Audited Audited Audited
NZIFRS NZIFRS NZIFRS NZ GAAP Prior NZ Prior NZ
GAAP GAAP

Gross Revenue 294,100 275,563 198,044 200,101 162,881 131,971

Interest Expense 179,545 130,575 101,489 101,489 81,108 57,207
Net Profit/(Loss) Before Taxation -71,849 71,781 46,394 49,350 38,707 30,276
Less Subvention Payments - 4,036 11,445 11,445 5,268 -
Less Taxation Provision -14,035 7,297 1,046 1,744 6,190 3,776

Net Profit/(Loss) After Taxation -57,814 60,448 33,903 36,161 27,249 26,500

Distributions:
Ordinary Shares: 24,027 34,000 23,000 23,000 21,000 17,300
Cents per Share 18.48 48.57 32.9 32.9 46.67 69.20
Preference Shares 7,894 8,666 6,386 6,386 3,986 2,574
Cents per Share 6.58 7.22 1.80 1.80 10.25/11.09 6.25/10.25

Profits Retained in the -89,735 17,782 4,517 6,775 2,263 6,626

Charging Group

      33
BALANCE SHEET

Year to 30 June 30/06/2009 30/06/2008 30/06/2007 30/06/2007 30/06/2006 30/06/2005

($000’s) Audited Audited Audited Audited Audited Audited
NZIFRS NZIFRS NZIFRS NZ GAAP Prior NZ Prior NZ
GAAP GAAP

Assets
Cash and Cash Equivalents 123,275 401,244 136,585 136,585 176,381 133,597
Other Short Term Deposits 287 253 231 231 215 202
NZ Government Stock 1,018 503 507 507 509 513
Sundry Current Assets 63,702 44,681 35,935 35,935 27,383 18,105
Property Held for Resale 52,381 5,920 - - - -
Shares and Investments 318,429 85,294 126,858 107,594 48,328 21,795
Financial Assets at Fair Value for 36,833 - - - - -
Trading
Advances 1,629,969 1,380,307 1,251,314 1,251,126 1,003,832 815,546
Property, Plant and Equipment 104,545 44,820 54,428 53,232 30,256 31,266
Deferred Tax 24,120 7,579 1,720 - - -
Total Tangible Assets 2,354,559 1,970,601 1,607,578 1,585,210 1,286,904 1,021,024
Goodwill - 1,427 1,604 1,604 - -
Total Assets 2,354,559 1,972,028 1,609,182 1,586,814 1,286,904 1,021,024

Liabilities
Creditors 21,213 23,680 32,595 14,899 15,010 12,900
Financial Assets at Fair value for - 4,491 - - - -
trading
Deferred Tax - - - 1,262 955 810
Borrowings 2,107,503 1,695,833 1,366,781 1,371,648 1,143,323 901,560
Total Liabilities 2,128,716 1,724,004 1,399,376 1,387,809 1,159,288 915,270

Net Assets 225,843 248,024 209,806 199,005 127,616 105,754

Equity
Attributable to Parent Company 222,673 245,636 208,398 197,597 127,106 105,715
Minority Interest 3,170 2,388 1,408 1,408 510 39
Total Equity 225,843 248,024 209,806 199,005 127,616 105,754

      34
MAIN PROVISIONS OF THE TRUST DEED
DESCRIPTION OF DEBENTURE STOCK AND DEPOSITS

The Stock and Deposits are created and issued pursuant to the terms of the Trust Deed dated 12 April
1976 (as amended by an Amending and Supplemental Trust Deed dated 30 June 1995, a Deed of
Amendment dated 25 March 1999 and a Deed of Modification dated 4 February 2003) hereinafter called
“the Trust Deed”, and made between the Company, the Charging Subsidiaries of the Company, as
guarantors of the Stock and Deposits, and Trustees Executors Ltd as Trustee for the Stockholders and
Depositors. Following the amalgamation of certain wholly-owned finance companies with the Company
on 1 October 2008, the Charging Subsidiaries are Belfast Park Ltd, Braebrook Properties Ltd, Fairfield
Finance Ltd, Face Finance Ltd, Flexi Lease Ltd, Galway Park Ltd, Helicopter Nominees Ltd, Hornchurch
Ltd, Rental Cars Ltd, SCFG Systems Ltd, Sophia Investments Ltd, Southbury Insurance Ltd and Tyrone
Estates Ltd. The Trust Deed provides for the issue by the Company of:

(a) First and Second Ranking Stock (including Bearer Stock);

(b) Security Stock and Variable Notes; and

(c) Unsecured Deposits.

The Trust Deed contains a floating charge and security interest given by the Company and each of the
Charging Subsidiaries over all their undertakings, property and assets, both present and future in relation
to the Stock. Deposits and Variable Notes are not secured by any charge. Neither the repayment of the
Stock nor Deposits nor the payment of interest thereon is guaranteed by the Trustee.

The Trust Deed prohibits South Canterbury Finance and each Charging Subsidiary from making any
distribution (as defined in the Companies Act 1993) except in accordance with applicable laws and only
to the extent that such distribution will not constitute a breach of the Trust Deed. It is an event of default
under the Trust Deed if South Canterbury Finance, without the prior written consent of the Trustee,
makes any distribution (as defined in the Companies Act 1993) while any principal or interest due and
payable under any securities issued under the Trust Deed remains unpaid due to the default of South
Canterbury Finance or a Charging Subsidiary.

Further, the Trust Deed provides that neither South Canterbury Finance nor a Charging Subsidiary may
borrow money from, or lend money to, a Non-Charging Related Company (as defined in the Trust Deed)
on terms or security which are more favourable to such Non-Charging Related Company than those
offered by South Canterbury Finance or the Charging Subsidiary (as the case may be) to other unrelated
borrowers or lenders (as the case may be) of a comparable financial status.

In accordance with the New Zealand Government’s on-going review of the regulatory framework that
applies to New Zealand’s financial services sector, and as a result of recent finance company
receiverships, the Securities Regulations 1983 were amended in September 2007 to provide trustees
with additional powers in relation to their supervision of the activities of finance companies. These
powers, which are deemed to be contained in the Trust Deed, include the power to appoint an
independent auditor to audit the financial statements of the borrowing group of the Company, and to
appoint an expert to assist the Trustee to determine the true financial position of the Company, and
recover the fees and expenses from the Company. This is in addition to the other powers described
under the heading “Duties of the Trustee” on page 41. Finance companies also have new additional
reporting obligations under the regulations, such as the obligation to provide regular reports to the
Trustee about the Company’s financial position and to regularly certify compliance with the Trust Deed.

JOINING OF NEW AND RELEASE OF EXISTING CHARGING SUBSIDIARIES

Each wholly owned subsidiary of South Canterbury Finance is required to become a member of the
Charging Group subject to the terms and conditions of the Trust Deed. This requirement is subject only
to the Trustee having the discretion to not require a particular subsidiary to become a member of the

      35
Charging Group if two Directors of the Company certify that there are sound commercial reasons why the
subsidiary should not become a Charging Subsidiary. Notwithstanding any such exclusion from the
Charging Group, the Trustee may subsequently withdraw such dispensation and require the subsidiary to
become a Charging Subsidiary.

The Trustee may at any time before a Date of Enforcement without any approval by the Stockholders
and/or Depositors release any Charging Subsidiary from its guarantee and other obligations under the
Trust Deed and/or release any part of the Charged Assets from the operation of any charges created by
or pursuant to the Trust Deed on such terms as the Trustee thinks fit unless, in the opinion of the Trustee,
the interests of the Stockholders and/or Depositors would be materially prejudiced.

RANKING OF SECURITIES

The Company and the Charging Subsidiaries are (subject to the financial ratios listed below, one of which
relates to Prior Charges, and no Date of Enforcement having occurred) at liberty to give security in any
form to their creditors in priority to the Trust Deed provided that such Prior Charges must not exceed
7.5% of Total Tangible Assets (as defined in the Trust Deed) except in certain circumstances where, for a
limited time, Prior Charges can increase to 10% of Total Tangible Assets.

As at 30 June 2009, the aggregate amount of securities that were secured by a mortgage or charge over
any of the assets of the Charging Group and that ranked in point of security:

(a) ahead of the Stock being offered under this Prospectus, was $34.123 million; and

(b) ahead of the Deposits being offered under this Prospectus, was $2,045.207 million.

The amount of First Ranking Stock outstanding as at 30 June 2009 was $2,073.38 million, all of which
ranks equally with the Stock offered under this Prospectus, and ahead of unsecured creditors and
Deposits. This amount includes funds raised under the Company’s bond issues and the funds raised
under the United States private placement. As indicated in the Chief Executive’s Report, the Company
currently intends borrowing up to $75 million by way of a prior ranking charge and may over time borrow
by way of prior charges the full amount permitted under the Trust Deed.

All Deposits (including Variable Notes) rank in point of security behind all First and Second Ranking
Stock.

The Trust Deed enables the Company to issue additional Stock and Deposits ranking equally as to
priority with existing Stock and Deposits and the Stock and Deposits offered under this Prospectus.

RESTRICTION OF STOCK AND OTHER LIABILITIES

In the Trust Deed, the Company and the Charging Subsidiaries covenant with the Trustee that none of
them will at any time:

(a) Permit the aggregate of:

(i) the Principal Moneys (other than amounts contingently owing) of First and Second Ranking
Stock;

(ii) the amount of Total Contingent Liabilities secured by First Ranking Security Stock; and

(iii) the principal amounts outstanding under Prior Charges to exceed the aggregate of:

(aa) 98% of Total Readily Realisable Investments;

(bb) 92% of Total Secured Receivables;

      36
 (cc) 85% of Total Unsecured Receivables;

(dd) 70% of Total Real Property; and

(ee) 70% of Total Other Tangible Assets.

As at 30 June 2009, the weighted value of assets set out in (a) (iii) (aa) to (ee) above exceeded the
combined amount of Principal Monies of First and Second Ranking Stock, Total Contingent
Liabilities secured by First Ranking Security Stock and principal monies secured by Prior Charges
by $1.628 million.

(b) Permit the Total Liabilities (excluding Total Contingent Liabilities) to exceed an amount equal to 12
times Shareholders’ Funds.

As at 30 June 2009, Total Liabilities exceeded Shareholders’ Funds by 9.26 times.

(c) Permit the aggregate book value of equity securities (as defined in the Securities Act) in any
Person (other than the Company and the Charging Subsidiaries) held by the Company and the
Charging Subsidiaries other than any of the equity securities held as security for financial
accommodation extended by the Company or a Charging Subsidiary or held as a consequence of
the enforcement of any security interest to exceed 100% of the aggregate amount of Shareholders’
Funds excluding the book value of any holding by the Company of listed equity securities at the
Commencement Date as notified in writing to the Trustee.

As at 30 June 2009, the aggregate book value of all such equity securities held by the Charging
Group represented 90.56% of Shareholders’ Funds.

(d) Permit the Exposure to any Person or any Single Group to exceed an amount equal to 35% of
Shareholders’ Funds provided that, subject in all cases to compliance with (c) above, such
limitation shall not apply where the Exposure of the Company and the Charging Subsidiaries to a
Person or Single Group is more than 35% of Shareholders’ Funds at the Commencement Date as
notified in writing to the Trustee.

As at 30 June 2009, the largest single exposure (excluding banks and Southbury Group and
various of its subsidiaries) represented 33.5% of Shareholders’ Funds.

(e) Permit the Total Contingent Liabilities to exceed 150% of Shareholders’ Funds.

As at 30 June 2009, Total Contingent Liabilities were 4% of Shareholders’ Funds.

(f) Permit Prior Charges to exceed 7.5% total tangible assets.

As at 30 June 2009, Prior Charges were 1.2% of total tangible assets.

(g) The Trust Deed also restricts disposal of assets to, and the giving of guarantees on behalf of, Non-
Charging Subsidiaries.

Further to paragraph (d) above and for the purpose of clarification, it is noted that, at the Commencement
Date (being June 1995), there existed Exposures to Southbury Group Limited (the Company’s parent
company) and various other subsidiaries of Southbury Group Limited. Individually, these Exposures did
not as at the Commencement Date (nor did they as at 30 September 2009) exceed 35% of Shareholders’
Funds. However, when combined as a single entity through ownership by Southbury Group Limited, the
35% threshold was exceeded at the Commencement Date. Accordingly, the restriction referred to in
paragraph (d) above does not apply with the result that the exposure to Southbury Group Limited entities
is not taken into account for the purposes of this restriction in accordance with the exclusion provided in
the Trust Deed. This Exposure includes loans to subsidiaries of South Canterbury Finance which are not
charged under the Trust Deed.

      37
ISSUE OF STOCK AND UNSECURED DEPOSITS

The Trust Deed authorises the Company to issue Stock (including Security Stock to banks or other
lenders as security for banking facilities and/or liabilities and also Bearer Stock) which is secured by the
floating charge contained in the Trust Deed, and Deposits. Issues may be made from time to time
provided the Company does not breach the limitations imposed by the Trust Deed. The Stock of this
issue ranks equally with all other Stock on issue for the time being regardless of maturity dates, including
Stock referred to in the Deed as Existing Stock. Deposits rank equally with other unsecured debts and all
other Deposits which may have been or are hereafter issued under the Trust Deed.

DEFINITIONS

Earlier in this Prospectus there is an outline of the financial restrictions which the Trust Deed imposes on
the Charging Group. The following are the definitions in the Trust Deed of expressions:

“Charging Subsidiaries” means the guaranteeing subsidiaries as described on page 23.

“Commencement Date” means 30 June 1995 or such date that the Company and the Trustee agree in
writing.

“Deposits” means all amounts from time to time deposited with and accepted by the Company as
unsecured deposits constituted under the Trust Deed, and for the time being outstanding, or a specified
position thereof as the case may require, and includes the Principal represented thereby, and includes as
the context permits or requires, Variable Notes.

“Exposure” means the aggregate of:

(a) all amounts (other than uncapitalised interest) payable on any account to the Charging Group and
any amount which the Charging Group is or would if requested be obliged to advance or otherwise
make available under any undrawn commitment of the Charging Group to the relevant Single
Group or Person, (which for purposes of this subparagraph (a) excludes any deposits with, or
credit balances with, a Bank or any other amounts payable or owing by any Bank), but does not
include amounts payable to the Charging Group from any assignor in respect of the assignment
(whether absolute or by way of charge) to the Charging Group or any securities given to the
assignor in the ordinary course of the business of the assignor or given to the assignor in respect
of or to secure transactions entered into by the assignor in the ordinary course of its business
provided that the aggregate amount payable under such assigned security is owed by an
independent third party and is not less than the amount payable to the Charging Group from the
assignor in respect of the assignment; and

(b) all amounts paid or payable by the Charging Group on account of any equity subscription or other
investment in any other Person or Single Group.

“First Ranking Security Stock” means First Ranking Stock issued pursuant to and in accordance with
clause 4.5(a) of the Trust Deed.

“First Ranking Stock” means all Stock constituted and issued by the Company as First Ranking Stock
(including all First Ranking Security Stock) under and pursuant to the Trust Deed from time to time
outstanding and ranking for Principal and interest in priority to Second Ranking Stock and Deposits.
(First Ranking Stock ranks behind permitted Prior Charges and statutorily preferred claims).

“Person” includes an individual, a person sole and any association of persons whether corporate or
unincorporate, any government or department or agency thereof and any legislative body, authority or
agency whether having separate legal personality or not.

      38
“Principal Moneys” means:

(a) in relation to Security Stock, the Security Stock Equally Ranking Amount in respect of such Stock;

(b) in relation to Variable Notes, the Variable Notes Equally Ranking Amount in respect of such
Deposits Notes; and

(c) in relation to Securities other than Security Stock and Variable Notes, the amount (other than
interest) payable on redemption of the Securities inclusive of the premium (if any) on the Security
payable in accordance with the conditions of issue of such Securities.

“Prior Charge” means any Charge on the Charged Assets or any part of the Charged Assets ranking in
priority to the charges in favour of the Trustee created by or pursuant to the Trust Deed or as the case
requires the principal amounts secured by such Charge but shall not include any Charge of the kind
referred to in section 102(11)(b) of the Companies Act 1955 or any Charge which is secured solely over
Assets which for any reason is not taken into account in the calculation of Total Tangible Assets used in
the financial ratios in clause 16 of the Trust Deed.

“Reference Date” means the date at which a calculation is to be made for the purposes of the Trust
Deed.

“Second Ranking Security Stock” means all Stock constituted and issued by the Company as Second
Ranking Stock (including all Second Ranking Security Stock) under and pursuant to the Trust Deed from
time to time outstanding and ranking for Principal and interest immediately after the First Ranking Stock
and includes the Principal Moneys represented thereby. No Second Ranking Security stock is currently
outstanding nor is any being offered in this Prospectus.

“Security Stock” unless the context otherwise requires, includes First Ranking Security Stock and
Second Ranking Security Stock.

“Shareholders’ Funds” means the aggregate of:

(a) the amount by which the Total Tangible Assets of the Charging Group exceeds the Total Liabilities
of the Charging Group (as would be disclosed in a Balance Sheet if one was prepared at the
Reference Date); and

(b) the estimated net proceeds of that portion of any proposed increase in the issued share capital of
the Company which is payable in cash within three months of the date at which the calculation of
the above amounts is being made and which is Underwritten, to the extent that the proposed
increase in paid up capital is (according to a Directors’ Certificate) intended to be applied within
three months in or towards satisfaction of Liabilities other than Convertible Notes or Subordinated
Debt;

adjusted by deducting:-

(c) the book value of all Assets of the Charging Group which are situated overseas and which are not
charged in favour of the Trustee to the Trustee’s satisfaction.

“Single Group” means a group of companies or a partnership or any other commercial association of
Persons which, for trading, consolidation of accounts, raising of credit, debenture trust deed or other
commercial purposes acts as one group.

“Stock” means all securities by whatever name called from time to time issued on the basis that they are
secured by and have the benefit of the charges over the Charged Assets created by or pursuant to the
Trust Deed and that are still outstanding, or a specified portion thereof as the case may require, and
includes the Principal Moneys represented thereby.

      39
“Total Contingent Liabilities” means the aggregate of all uncalled capital held by the Charging Group
in any External Person, plus the aggregate of all other Contingent Liabilities of the Charging Group under
financial guarantees, indemnities, bonds or other similar binding financial obligations in respect of or for
the benefit of any External Person, but does not include Contingent Liabilities:

(a) which are secured to the Charging Group to the satisfaction of the Trustee or in respect of which
the Company or any Charging Subsidiary has to the satisfaction of the Trustee a right of
subrogation to a security approved by the Trustee;

(b) in respect of which any Charging Group Member has been guaranteed or indemnified to the
satisfaction of the Trustee; or

(c) whereby any Charging Group Member guarantees the payment of moneys under any lease of Real
Property by any Charging Group Member or improvements situated thereon,

provided always that in respect of any such financial guarantee, bond, indemnity or other similar binding
financial obligation the Contingent Liability under which is joint and several or several the amount to be
included shall be limited to a proper proportionate part of such liability if in the opinion of the Directors the
other parties to such obligation will be able to meet their proportionate liability thereunder.

“Total Liabilities” means the aggregate of the amounts of all Liabilities of the Charging Group Members
as would be disclosed in a Balance Sheet if one was prepared as at the Reference Date and adjusted by
deducting from those Liabilities:

(a) the Convertible Note Amount; and

(b) all Subordinated Debt.

“Total Other Tangible Assets” means the Total Tangible Assets of the Charging Group other than:

(a) Total Readily Realisable Investments;

(b) Total Secured Receivables;

(c) Total Unsecured Receivables; and

(d) Total Real Property.

“Total Readily Realisable Investments” means the aggregate of the Market Worth of all Readily
Realisable Investments of the Charging Group as would be disclosed in a Balance Sheet if one was
prepared as at the Reference Date.

“Total Real Property” means the aggregate of the Market Worth of all Real Property of the Charging
Group comprised in the Charged Assets as would be disclosed in a Balance Sheet if one was prepared
as at the Reference Date.

“Total Secured Receivables” means the aggregate of the Market Worth of all Secured Receivables of
the Charging Group as would be disclosed in a Balance Sheet of the Charging Group if one was
prepared as at the Reference Date.

“Total Unsecured Receivables” means the aggregate of the Market Worth of all Unsecured
Receivables of the Charging Group as would be disclosed in a Balance Sheet of the Charging Group if
one was prepared as at the Reference Date.

      40
REPORTS TO THE TRUSTEE

The Company and the Charging Subsidiaries are required to produce audited accounts half yearly and
copies of these accounts must be supplied to the Trustee together with a report by the auditor as to the
compliance by the Charging Group with the terms of the Trust Deed and providing information as to
Stock and Deposits on issue, Prior Charges, the liabilities of the Charging Group and the various assets
at balance date. The Directors of the Company must also report at the same time as the accounts are
supplied and provide certificates to the Trustee certifying that the various covenants and restrictions have
been met. In addition, the Directors are required to make quarterly reports to the Trustee.

DUTIES OF THE TRUSTEE

The following is a summary of the duties of the Trustee:

1. To receive and consider the regular financial reports furnished to it by the Company and its
Auditors.

2. On the basis of the provisions of the Trust Deed including any limitations arising from them to
oversee compliance by the Company with all its covenants and obligations under the Trust Deed
and the terms or conditions of issue of any Stock or Deposits.

3. To take and hold all charges by the Company and Charging Subsidiaries provided for by the Trust
Deed.

4. To exercise its discretion whether to enforce the security constituted by the Trust Deed upon the
happening of an event of default in the circumstances outlined in the Trust Deed.

5. To enforce the security constituted by the Trust Deed upon the happening of an event of default in
the circumstances outlined in the Trust Deed and upon the request in writing of the registered
holders of at least one-fifth in nominal amount of the Stock or Deposits for the time being
outstanding or upon being directed to do so by an Extraordinary Resolution. The Trustee also has
certain duties by virtue of the provisions of the Securities Act 1978 and the Securities Regulations
1983.

6. To exercise reasonable diligence to ascertain whether or not any breach of the terms of the Trust
Deed or of the terms of this offer has occurred and except where it is satisfied that the breach will
not materially prejudice the security of the Stock or the interest of the Stockholders, shall do all
such things as it is empowered to do to cause any breach of those terms to be remedied.

7. To exercise reasonable diligence to ascertain whether or not the assets of the Charging Group are
or are likely to be sufficient to repay the amounts of Stock and Deposits as these fall due.

8. In addition to the duties set out in paragraphs 6 and 7 above, to exercise the rights of the Trustee
and monitor the Company’s compliance with its obligations under the Securities Regulations, as
described on page 35 of this Prospectus.

MODIFICATIONS

The Trust Deed permits the Trustee to agree with the Company in making certain modifications to the
provisions of the Trust Deed described above if: the change is of a formal or technical nature; or is
considered by the Trustee not to be or become prejudicial to the general interests of Securityholders; or if
the Trustee is satisfied the change will not be inconsistent with provisions accepted for debenture trust
deeds of financial intermediaries; or if the change is authorised by an Extraordinary Resolution or the
Securityholders approve the change in writing.

The Trustee can also agree to a temporary variation of the Trust Deed with the prior written approval of
the Majority of Stockholders.

      41
WAIVER

The Trust Deed permits the Trustee to waive in whole or in part, and for a specified period or indefinitely,
any breach or anticipated breach by the Charging Group of any of the provisions of the Trust Deed,
subject to: the Trustee being satisfied that the general interests of the Securityholders will not be
materially prejudiced by the waiver, and any direction or request given by Securityholders in terms of the
Trust Deed.

ENFORCEMENT

At the option of the Trustee, the Stock and Deposits become immediately due and repayable and the
security enforceable if there is any default in the payment on due date of the Principal Moneys secured
by the Stock or the Existing Stock or if, after a period of 14 days from the due date, any interest remains
outstanding. Similarly, Stock and Deposits become payable and, in relation to the Stock, the security
enforceable if there is any breach of the covenants of the Trust Deed or upon the happening of a number
of other events which are specified.

MEETINGS OF STOCKHOLDERS AND DEPOSITORS

The Trust Deed provides for meetings of Stockholders and Depositors and the matters which may be
determined by Extraordinary Resolution. Either the Trustee or the Company may convene such
meetings and the Trustee is required to do so at the request in writing of Stockholders or Depositors
holding not less than 10% of the nominal amount of the Stock or Deposits. The powers which are
exercisable by an Extraordinary Resolution are set out in paragraph 15.1 of the second schedule of the
Trust Deed. Most of these matters can be authorised by such a resolution of Stockholders above. On a
resolution, the vote of a majority at a duly convened meeting with the necessary quorum binds all
Stockholders or Depositors. The required majority for passing an Extraordinary Resolution is not less
than three-fourths of the persons at a duly convened meeting voting in favour or on a poll by a majority
consisting of not less than three-fourths of the votes given.

INSPECTION OF THE TRUST DEED

The above is not intended to be a summary of the terms and conditions of the Trust Deed but an
indication of some of the principal covenants of the Company and Charging Subsidiaries. Certain words
beginning with a capital letter are defined or described in the Trust Deed, copies of which are available
and may be inspected during business hours at the office of HC Partners Limited, Chartered
Accountants, 39 George Street, Timaru, or at the office of the Company, 19 Sophia Street, Timaru, or at
the Wellington office of the Trustee, or viewed on the Companies Office website at
www.companies.govt.nz.

Copies of the Trust Deed may also be obtained (possibly on payment of a fee) by telephoning the
Companies Office Contact Centre on 0508 266 726.

      42
TRUSTEE’S STATEMENT
[Drafting Note: Insert letterhead of Trustees Executors]

[●] October 2009

The Directors
South Canterbury Finance Limited
39 George Street
PO Box 125
TIMARU

Dear Sirs

Re: Prospectus No. 60

Clause 13(3) of the Second Schedule to the Securities Regulations 1983 requires us to
confirm that the offer of securities ("the Securities") set out in this Prospectus complies with
any relevant provisions of the Trust Deed dated 12th April 1976, as amended to date (the “Trust Deed”).
These provisions are those which:

(i) entitle South Canterbury Finance Limited to constitute and issue under or with the benefit of
the Trust Deed (as the case may be) the Securities offered in the Prospectus; and

(ii) impose restrictions on the right of South Canterbury Finance Limited to offer the Securities,

and are described in the summary of the Trust Deed in the Prospectus.

The Auditors have reported on the financial information set out in the Prospectus and our statement does
not refer to that information or to any other material in the Prospectus which does not relate to the Trust
Deed.

We confirm that the offer of the Securities set out in the Prospectus complies with the relevant provisions
of the Trust Deed. We have given the above confirmation on the basis:

(a) set out above; and

(b) that, subject to the duties imposed on the Trustee by the Fifth Schedule of the Securities
Regulations 1983, the Trustee relies on the information supplied to it by South Canterbury Finance
Limited pursuant to the Trust Deed and does not carry out an independent check of that
information.

Trustees Executors Limited does not guarantee the repayment of the Securities or the payment of
interest thereon.

Signed for and on behalf of

Trustees Executors Limited

[Drafting Note: Insert name and position of signatory].

      43
SOUTH CANTERBURY FINANCE AND CHARGING SUBSIDIARIES
FINANCIAL INFORMATION

      44
AUDITOR’S REPORT

72 

 
BRIEF HISTORY OF THE COMPANY
South Canterbury Finance, one of New Zealand’s largest privately owned finance companies, has
operated continuously since 1926 when it started trading as South Canterbury Loan & Finance
Company.

Prior to the year ended 30 June 2009, South Canterbury Finance had (with the exception of the 1933
and 1934 depression years) traded profitably and paid dividends throughout its history. The present
owners have held an interest in the Company since the late 1950’s.

Over the past decade, South Canterbury Finance has expanded by promoting and acquiring
ownership of Auckland Finance Ltd, Waikato Finance Ltd, Palmerston North Finance Ltd, Wellington
Finance Ltd, Tasman Bay Finance Ltd, Canterbury Finance Ltd, Ashburton Finance Ltd, Otago
Finance Ltd and Southland Finance Ltd (the regional finance companies), Belfast Park Ltd, Braebrook
Properties Ltd, Fairfield Finance Ltd, Flexi Lease Ltd, Galway Park Ltd, Helicopter Nominees Ltd,
Hornchurch Ltd, SCFG Systems Ltd, Southbury Insurance Ltd, Tyrone Investments Ltd. The
Company also has a 75% holding in Face Finance Ltd and Kelt Finance Ltd and a 50% holding in
Financial Synergy Ltd.

On 1 October 2008, South Canterbury Finance and the above regional finance companies
amalgamated. The regional company office names have now been replaced with South Canterbury
Finance. The change was introduced to bring administrative benefits to the Company, provide a
stronger single brand across the country and facilitate expansion. New offices have also been
opened in the Bay of Plenty and in Wanganui.

73