letter

Following the release of Allco Finance Group's (Allco) annual results for the 2008 financial year on 29 August 2008 and the recent
signing of a new senior debt facility with our banks, we thought we would take the opportunity to give you an update on the progress
Allco has made since we last wrote to you in April.
As you are no doubt aware, the rapid deterioration and turmoil in global credit markets over the past year has had a significant
impact on Allco's business and regrettably has seen a significant fall in our share price.
The group has announced a loss of $1,731.6 million for the year to 30 June, 2008. Whilst we foreshadowed a loss of in excess of
$1,500.0 million in May, it is still something we regret. A significant component of the loss was impairments in goodwill, management
rights, loans and equity accounted investments. As a consequence of the result, there will be no final dividend paid.
We are very conscious of the significant loss in value experienced by our shareholders and that we have a difficult task ahead as we
continue to deal with the current operating environment.
We are responding to this very challenging environment by undertaking both a significant restructuring of the business and an asset
sale program to achieve a rapid reduction in our corporate debt levels with the intention to build shareholder value.
The centrepiece of our plan is to re-focus the business strategy on those asset classes that give us the best opportunity to rebuild
shareholder value - Aviation, Shipping and Private Equity.
While the company remains in a fragile position and the recovery path will be lengthy, we are pleased to inform you that there have
been constructive developments implemented by Allco's management team, including:
A rapid and continuing program of sales of non-core assets to generate cash;
Materially lowering our borrowing levels;
A continued focus on cost reduction;
The recent and very important signing of an agreement for a new senior debt facility; and
Passing a number of milestones in our business restructuring plan to focus the business on our core
capabilities
As part of this restructuring, we have substantially reduced our employee levels to reflect the smaller business.
The new senior debt facility, which we signed on 21 August 2008, represents a significant step for Allco. We now have certainty
regarding our debt servicing requirements until the maturity of the facility on 30 September 2009. Importantly, the terms remove the
market capitalisation review event, which had previously existed. While the interest payments on this facility are not cheap, and will
impact our financial performance in the current financial year, they do reflect the very difficult global credit markets.
As you will know from both earlier correspondence and the restructuring plan we announced on 25 February 2008, we have reviewed
the business plan and structure of Allco to focus on our key strengths. This has involved the implementation of an aggressive
restructuring program to focus on the core capabilities of our business: Aviation, Shipping and Private Equity. Allco's other
businesses - Infrastructure, Financial Assets, Rail and Real Estate - will be exited over time, ensuring we secure appropriate value
for these interests.

Since April 2008, our program of asset sales program has achieved a number of good outcomes, helping to reduce debt and
provide working capital. Some of our recent sales include:
These sales have raised net proceeds of A$565.5 million. Overall to date, we have reduced debt and contingent
commitments by A$369.6 million, bringing Allco's senior debt to A$704 million at 25 August 2008. The balance of the net
proceeds will be used for investment and operating expenditure.
Whilst considerable progress has been made in refocusing and stabilising the financial position of the business, we have
much to do and there is still significant effort, time and risk in implementing our strategy. A number of non-core assets are for
sale, and completing these sales are important in our ability to continue to reduce our corporate debt levels in accordance
with the terms of our agreed senior debt facility. While we believe we have good assets and are in constructive dialogue with
potential buyers, there is a continuing risk that we may not be able to achieve appropriate values for these assets and meet
our debt repayment schedule.
Our strategy of focusing on our core competencies of Aviation, Shipping and Private Equity is, we believe, the best way to
rebuild value for our shareholders. The next critical step for Allco is to raise third party capital for new Aviation and Shipping
funds. Recent meetings with external investors indicate there is interest in investing in these asset classes however we still
need to prove our ability to successfully raise and manage capital in these areas. These businesses have not been immune
from the difficulties faced by Allco this year. There has been little new business written this year, which will directly impact our
near term financial position.
Later this month we will be sending you a Shareholder Review which will provide further information on our annual results,
the new business model and our intended activities for the financial year ahead, including further non-core asset sales, debt
reduction, and the steps we intend to take to build on our asset and funds management expertise. The Finance Report will
also be sent to shareholders who have requested it.
In closing, we would like to emphasise again the commitment of the Board and the Allco team to what will be a long journey
in rebuilding the business and value for our shareholders. This will not be a task that is easy or without risk, however, it is a
task to which the Allco team is committed.