Update on recent developments BLUE FINANCIAL SERVICES LIMITED Incorporated in the Republic of South Africa Registration Number: 1996/006595/06 JSE Code: BFS ISIN: ZAE000083655 ("Blue" or "the Company" or “the Group”) UPDATE ON RECENT DEVELOPMENTS 1. BACKGROUND Shareholders are referred to the announcement published on the Securities Exchange News Service (“SENS”) of the JSE Limited (“JSE”) on 25 June 2013 (“June 2013 SENS”), whereby shareholders were advised of the Company’s continuing negotiations with Mayibuye on the proposed corporate action as well as the voluntary suspension of trading in Blue securities. By way of this announcement, Blue would like to update shareholders on the following key issues. 2. CONVERSION OF DEBT IN TERMS OF THE DEBT RESCHEDULING AGREEMENT (“DRA”) Shareholders are referred to the DRA concluded as part of the R163m recapitalisation of Blue by Mayibuye in December 2010. In terms of the DRA, to the extent there is any shortfall at the end of the debt rescheduling period, being January 2014, between the DRA debt owing to the DRA funders and the DRA assets ring fenced to service the DRA debt, this shortfall would be automatically converted into Blue ordinary shares at the 30-day volume weighted average price at that time. Shareholders are accordingly advised that the DRA funders have notified the Company of their intention to bring forward the conversion date from January 2014 and the parties are in the process of finalising the effective date and calculations for purpose of this conversion. Benefits of accelerating the conversion will be an improved capitalisation of the Company’s balance sheet and a reduced interest and resultant cash flow burden on the Company. 3. PROPOSED CORPORATE ACTION Shareholders are reminded of the renewal of cautionary announcement published on the Securities Exchange News Service (“SENS”) of the JSE Limited (“JSE”) on 13 August 2013 whereby shareholders were advised that the Company is continuing its negotiations with Mayibuye as well as key stakeholders in Mayibuye regarding the recapitalisation of Blue. 4. UPDATE ON INVESTIGATION COMMISSIONED IN 2010 The forensic investigation commissioned by the Board in 2010 has been completed. Horwath Forensics SA was appointed to undertake the investigation. In this regard, the Company has reported to the Directorate of Priority Crimes in terms of section 34 of the Prevention and Combating of Corrupt Activities Act. The Company will continue to offer its full support to all regulatory bodies in their investigation of this matter. 5. NEW INVESTIGATION COMMISSIONED IN 2013 In the June 2013 SENS, the Company advised that the Board had commissioned a new forensic investigation in May 2013. In this regard, Horwath Forensics SA was appointed by the Board to undertake the investigation, which includes inter alia investigating transactions between the Company and Leonox Investments (Pty) Ltd. This investigation is ongoing, however, the Company has reported to the Directorate of Priority Crimes in terms of section 34 of the Prevention and Combating of Corrupt Activities Act. The Company will continue to offer its full support to all regulatory bodies in their investigation of this matter. 6. FEBRUARY 2013 FINANCIAL RESULTS The February 2013 financial results are anticipated to be published as soon as the auditors have completed their audit. The Board is fully aware of the importance of concluding the audit and would therefore like to give shareholders the comfort that the matter is being given the highest priority. 7. TRADING OF SECURITIES The Board will apply to the JSE to recommence trading of Blue securities on the stock exchange once the February 2013 financial results have been published. Until such time the voluntary suspension of trading of Blue’s securities will remain in effect. Johannesburg 26 August 2013 Designated Advisor Grindrod Bank Limited Date: 26/08/2013 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.