EDWAFIN INVESTMENT HOLDINGS LIMITED

(IN LIQUIDATION)

SECOND CIRCULAR TO ALL DEBENTURE HOLDERS AND CREDITORS

DATED 12 AUGUST 2009

Many of the creditors and investors would have visited our website www.edwafinliquidation.co.za. You will note
that we have outlined the procedures relating to liquidations in general, in the section “Liquidation Procedure
and Timeline”.

Accordingly, we advise that on 02 July 2009 we reached the “Final Date of Liquidation” stage, as the Final Order of
Liquidation was granted on this date. The next step in the administration is the First Meeting of Creditors which is
convened by the Master of the High Court. We are expecting to be notified of the date shortly.

The agenda for this first meeting is inter alia the submission and proof of claims, interrogating directors and other
relevant parties. We recommend that creditors and debenture holders do not at this stage lodge claims for proof.
There will be other opportunities to do so, should it ultimately be required. With regards to the interrogation, the
Joint Liquidators have decided to convene a specific meeting. The interrogation will take place once a date is
allocated by the Master of the High Court, alternatively the High Court.

In general, we are able to report progress on the following:

1. EDWAFIN INVESTMENT HOLDINGS LIMITED: Other than the shares it owns in its subsidiaries, Edwafin had
moveable assets which were sold by public auction on 27 July 2009, which sale realised an amount slightly
in excess of R380 000.00. At this stage that is all we can realistically expect to recover in the short term.
Unfortunately this relatively small amount only just allows us to tie up administration issues such as tax
certificates for investors and IRP5’s for employees.

2. DYNAMIC MOTOR COMPANY (PTY) LTD: The liquidation of DMC proceeded according to plan and was
provisionally wound up on 17 June 2009. Mr Glen Usher of Glen Usher Attorneys was appointed Joint
Provisional Liquidator with P M Voller and C M Nkomo. The assets of this Company are to be sold by
public auction on the 30th of June 2009. We do not expect to make a large recovery from the sale of these
assets belonging to DMC.

3. RAINBOW PAINTS AND ADHESIVES (PTY) LTD: The Joint Provisional Liquidators decided to liquidate the
subsidiary as we are unhappy with the transaction when the business of this entity was sold. We believe
the creditors of Edwafin stand to gain if these transactions are cancelled and the business resold. The
quantum of the recovery in this matter is still very much in question. We believe there is some value to
creditors and will pursue it vigorously. The Company was provisionally liquidated on the 22nd of July 2009
and messrs. N Button, XMB Zondo and P Singh were appointed Joint Provisional Liquidators.

4. ALEXIA INVESTMENTS (PTY) LTD : Edwafin owns 100% of the shares of Alexia. Prior to liquidation it sold its
shares for R2 Million, of which amount R1,2 Million was to be paid to the bondholder, FNB. Part of the
balance of the purchase price was paid to a subsidiary company. The contract was not yet complete at
the date of liquidation (i.e. it was still executory in nature). The Liquidators must make an election
whether to abide by or resile from the contract. It is our recommendation that creditors instruct us to
resile from the contract and sell the property out of the Company.
 5. FORENSIC AUDIT: Unfortunately, as previously advised, the sale of the moveable assets of Edwafin
Investment Holdings is unlikely to provide the resources to conduct a full and thorough investigation by
the liquidators. As mentioned in the First Circular, we strongly believe that it is necessary for a forensic
audit. We have discussed this with the Commercial Crime Unit of the SAPS and the investigating officer
has indicated that he would do his utmost to motivate that the State conduct a forensic audit as part of
their investigation. If the State agrees to do this, it will be of immense value to us as liquidators and we
are very hopeful that it will lead to further recoveries for the benefit of creditors. A final decision is
awaited from the CCU of the SAPS.

If this does not materialise the only other option is to approach creditors to each pay in a pre-designated
amount to create a fund for purposes of conducting further investigations. We have not finalised the
exact mechanics involved in doing this as yet and will revert to creditors and debenture holders shortly,
setting out the process.

6. FRAUD POLICY

The Company concluded an insurance policy with Hollard Insurance Company pre-liquidation, protecting
the Company against fraud and theft by its employees. The annual policy ran from 01/08/2008 to
31/07/2009. On the Liquidators notifying the insurers of the potential claim, the Liquidators gained the
impression that the Insurers would defend any claim. The Liquidators will use the interrogation process
to establish the fraud.

7. GENERAL MEETING

To enable creditors to ask questions and to determine the way forward especially in regard to the Enquiry
and Forensic Audit and the funding thereof, meetings will be held in Kwazulu-Natal and the Western Cape
to debate these issues and get directions from creditors (investors / debenture holders).

It is recommended that you attend the meeting, alternatively send a representative, as the decisions to
be taken at the meeting will determine the destiny of this liquidation process and especially the potential
recovery on the Fraud Policy referred to above and from the Directors.

The time, date and place of this meeting will be circulated shortly.

In conclusion, it is prudent to advise that it remains unlikely that investors and creditors will make any recovery.
We cannot speculate on what may or may not be recovered as a result of our investigations, however as stated
herein, we are hopeful. It is vital that a forensic audit and enquiry be held, because without these processes, we
simply will not be able to properly determine the affairs of the company in liquidation and its subsidiaries.

Our next circular to creditors and debenture holders will incorporate our Second Meeting report, and provide
more details of the General Meeting.