Investor meeting presentation Sydney 24 Nov 05

Meeting of InvestorsHeritage Fine Wines Pty Ltd(In Liquidation) (Receiver and Manager Appointed): 

Meeting of Investors Heritage Fine Wines Pty Ltd (In Liquidation) (Receiver and Manager Appointed) Sydney Masonic Centre 24 November 2005 CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Chairman introduction and confirmation All attendees to sign Attendance register Tabling of Proxy Register CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Agenda: Consider report on progress of receivership Consider formal resolutions (7) General discussion CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Progress report: Reconciliation update – Steve Arblaster Recoverable wine – Walt Shellshear Wine storage and distribution /Sale of business – Nick Crouch Sales Advisory Committee – Nicholas Crouch Legal process update – Chris Perry CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines RECONCILIATION OF INVESTOR WINE OBJECTIVES (Steve Arblaster) Label pallets (254 no number) Design & build Warehouse database Stock-take Establish wine label code integrity Populate Warehouse database Create Variance Analysis platform Prove veracity of barcodes Reconciliation of Investor & Warehouse databases CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines CHALLENGES Lack of functionality of RSSQL warehouse system (no quantity/wine label code) Computer System (inability to access at Administrator level) Re-codify wine labels - 300,000 bottles out of 1,600,000 Identify data not loaded into WIMS - V590 & V591 - Stock releases - Private Holdings Validate barcodes - 47,500 bottles out of 51,900 (ownership confirmed by WIMS) - 8% invalid (old cartons used)

Heritage Fine Wines: 

Heritage Fine Wines WINE LABEL CODES Initially over 2,000 Parent/child amendments - up to 5 codes for 1 wine label - 160,000 investor bottles re-coded Removed 1,000 label codes Added 300 new label codes Today = 1,261 wine labels

Heritage Fine Wines: 

Heritage Fine Wines WIMS (INVESTOR SALES) DATABASE Investor database integrity - good Mail-out to investors - July & November Veracity of 99.7 %

Heritage Fine Wines: 

Heritage Fine Wines WAREHOUSE DATABASE Archive first cut Excel spreadsheet extract – 10/6 Supplement with wine label coding – 23/6 Stock-take data available - 28/7 Reconcile Warehouse database records with Stock-take data – 21/8

Heritage Fine Wines: 

Heritage Fine Wines INVESTOR / WAREHOUSE RECONCILIATION 1,616,000 investor bottles v 1,320,000 warehouse bottles Started - 5/8 Variance Analysis – Overs/Unders by wine label code High Value warehouse data sheets – nine iterations Completed 17/10

Heritage Fine Wines: 

Heritage Fine Wines VARIANCE ANALYSIS

Heritage Fine Wines: 

Heritage Fine Wines ANALYSIS OF UNDERS 282,000 Shortfall bottles (never delivered into warehouse) 13,000 Unexplained Unders (poor transaction processing) 34,000 Overs (17,000 Troy Kalleske Mouthpiece clean skins) 19,000 “R etention of Title” bottles (held in warehouse)

Heritage Fine Wines: 

Heritage Fine Wines RECOVERABLE WINE (Walt Shellshear) Recoveries to Date: 68,217 bottles $2,871,071 (Approx Investor Cost) Potential Recoveries Outstanding: 72,399 bottles $2,096,099 (Approx Investor Cost)

Heritage Fine Wines: 

Heritage Fine Wines

Heritage Fine Wines: 

Heritage Fine Wines

Heritage Fine Wines: 

Heritage Fine Wines RETENTION OF TITLE CLAIMS Claims to Date: 10 labels 19,470 bottles $622,891 (Approx Investor Cost)

Heritage Fine Wines: 

Heritage Fine Wines

Heritage Fine Wines: 

Heritage Fine Wines 100% LOSSES Known 100% Losses to Date: 72 labels 130,801 bottles $3,855,891 (Approx Investor Cost) Majority of loss across 10 labels: 121,951 bottles $3,416,683 (Approx Investor Cost)

Heritage Fine Wines: 

Heritage Fine Wines

Heritage Fine Wines: 

Heritage Fine Wines WINE STORAGE AND DISTRIBUTION / SALE OF BUSINESS (Nicholas Crouch) Tenders called / negotiations continuing Main asset is investor database Cost effective solution for distribution and medium term storage Election process Subject to Court approval

Heritage Fine Wines: 

Heritage Fine Wines SALES ADVISORY COMMITTEE Assistance to investors in determining wine strategy Propose election from body of investors May engage external expert assistance Report to investors generally Costs to be paid as cost of receivership Subject to investor views and Court consideration CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines LEGAL ISSUES (Chris Perry, Parry Carroll Solicitors) Recap: Proof of debt, cut off deadline and advertising; Expansion of scope of receivership; Directions for service and substituted service – Application for distribution; Application for remuneration Apportionment of losses CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines LEGAL ISSUES Existing: Application for distribution of wine – outline of orders; Service options Hearing 12 December 2005 – Supreme Court of NSW Other: Application for delivery up of wine by P Ngan Accounting of P Ngan fees – effect upon levy Redemption of P Ngan charge Focus distribution of wine. Examinations to follow. CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Resolutions CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Resolution A: “That the Receiver and Manager’s recommendations concerning the allocation of title to wine held by the company be accepted.” CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Resolution B: “That, if considered appropriate by the Receiver and Manager, the distribution of wine be undertaken by a third party.” CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Resolution C: “That the payment of a further levy by investors be approved in the range of $1.00 per bottle to $1.75 per bottle (plus GST).” CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Resolution D: “That a Sales Advisory Committee be formed for the purposes of advising investors on potential wine sale options and that the costs of this Committee be paid as a cost of the receivership.” CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Resolution E: “That the Receiver and Manager’s fees for the period 8 October 2005 to 31 October 2005 in the amount of $259,727 (inclusive of GST) be approved and paid.” CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Resolution F: “That the Receiver and Manager’s fees for the period 1 November 2005 to 22 November 2005 in the amount of approximately $247,522 (inclusive of GST) be approved and paid.” CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines Resolution G: “That , in the event that distribution and storage is undertaken by a third party, investors shall be liable to that third party for storage and distribution fees and charges for a period estimated at between two (2) to four (4) months. Such fees and charges shall be at competitive market rates.” CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Heritage Fine Wines: 

Heritage Fine Wines General Discussion Meeting closure CROUCH INSOLVENCY CHARTERED ACCOUNTANTS

Slide33: 

CELLARIT – Scott Witt NSW-based Wine Storage & Sales specialists with 6 years experience Focus on best-practice infrastructure, technology, efficiency & value for money 100% integrated with SWADS, Australia’s top-performing national warehouse and logistics company, recently purchased by Australia Post Licensed for retail wine sales, wine auction sales and wine export

Slide34: 

Storage & Distribution Secure individual online account available 24/7 Short “lock-in” period of 2 - 4 month’s fees (wine can be withdrawn during), then no further obligations Storage Rates (All per bottle, incl. GST): Consolidation, transport, handling-in No Charge Storage (sliding scale by volume) $0.125 – $0.15 per bottle/month Handling-out $0.50

Slide35: 

Next-Day Delivery (1st/add’l per dozen)* Sydney $9.95/6.00 Melbourne $14.95/9.25 Brisbane $15.65/10.05 Other $As per rate schedule Insurance (All per bottle, incl. GST): Storage $0.125/$1000/month (1.8% p.a. rate) Transit 1% of value

Slide36: 

Other Late and Default fees: 3% or $10min Account Fee: No Charge for online credit card payment, $10/mo for cheques or direct deposit (Superannuation Accounts excepted) “Tasting Dozens”: Surcharge of $1.25/extra label(s)/dozen