Dear XXXX, XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXX it is frightfully clear to me that what you

are dealing with is a case of denial and I would be reasonably concerned if I committed capital to this operation. These gentlemen do not walk a straight line and in my experience one is well served by joining another shooting party. As Tuff says, you should never go shooting with gentlemen you are not comfortable showing your back to. Afterwards, no amount of sherry will make up for the discomfort of a shot up the XXXX, be it incompetence or a well aimed shot. You just need to stay away from these people. The note you sent me on Baobab GF does not explain why it says they Only invest with people we respect and admire. My reading of the situation at P Gould Co butchers that definition to the extreme. Without an understanding of that investment operations other commitments of capital I am unable to establish whether this committed capital is an aberration or the managers are misguided. Your Baker Street boys appear to be swept along by affairs and steering the ship as the tide turns. XXXX unearthed some interesting information and the published information, which is the only bit I am allowed to comment on I am afraid, makes it abundantly clear that this investment operation will say and do what the situation demands to collect on their committed capital. The various demands in their public letters to the managers of the operations they committed capital to clearly contradict the way they are treating their partners in this enterprise. They are paying lip service to an ideal. Before turning my attention to the letter at hand I would share this thought with you. Recently XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX and one of the few advantages of my age is that I have seen many a business enterprise come and go. In my experience The Managing Director and the young flapper will end up like the cat and dog fight in Red Dog. The Managing Director is not a man of means anymore, but is very experienced and the young flapper had the control slip from his grasp with that ill conceived, spur of the moment deal. He is in for the penny and the pound. Now I will attend to your letter. My overarching observation handled pump variety as my enterprises such as these. talk the investment up and stages sell participations from them. Managing Directors Report These are the first annual results since the completion of the AEP takeover on April 2nd 2012. We also believe they are the first is that it is an enterprise of the two old friend over at XXXX likes to refer to It means the managers of the enterprise down as it suits them and at the various to their partners in enterprise or buys it

accounts in the 93 year history of PGC to be completed and managed by an external accounting firm. In April we replaced the internal accounting team at PGC with Deloitte. PwC were appointed as auditor for the 30 June 2012 year-end. The audit will be completed during September with the final audited accounts dispatched to shareholders within the annual report on or about 30 September 2012. It is anticipated that the net loss and total equity in the audited financial statements will not vary materially from those presented today but reclassification between line items and changes between corresponding balances are possible. The accounts presented reflect a restatement of the 2011 financial position to appropriately recognise MARAC financial assets and liabilities of $121 million pursuant to the management agreement with Real Estate Credit Limited (RECL), which were previously not recorded. This restatement is to ensure compliance with the financial asset de-recognition rule, under NZIAS 39. The Managing Director fails to mention he was forced by the situation of the exiting auditing firm and financial authorities to appoint the external accounting team and fails to address the very serious issue of his auditors resigning. This gentleman refrains from talking about it, but much more concerning is that he appears not to think about it. It is a most worrying state of affairs. I made some ghastly investments in my younger days, but Gordon Bennett, I cannot recall ever setting eyes on such chicanery in the opening paragraph of a letter and if I committed capital to this enterprise it would affront me grossly. Forthrightness is expected by the manager of the owners capital and in this letter there is none. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXX You can establish the shortcomings of the explanation on RECL by simply referring to the corresponding disclosures in their neighbour, The Heartland Bank. It should be impossible for these two organisations to have the RECL loans on their books as an asset simultaneously, yet it is what they indeed achieved. It is a most puzzling achievement and potentially contributed to their auditing firm vacating the grounds. The discussion on the core business is a flight of fancy with a good sprinkling of delusions of grandeur. The Managing Director has been able to establish a reputation for himself as an expert in the affairs of enterprises with troubled debt. It is undeserved. Torchlight is his fait accompli, but the transactions prove that P Gould Co purchased a 10% stake for $15m in 2009 at the very depth of the financial crisis and recently acquired an additional 7% for $10m. The first transaction values Torchlight at $150m and the second at $142m for a total return of -5.3%. It is a ghastly performance compared to our Barclays Distressed Index which increased by 45% in the period similar. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. My assistants review does not fully support this notion, but my experience tells me to tread most carefully. You might be dealing with a shell game and the pea ultimately ended up with the owners of the 7%. The game started with a need for the pea to end up in Torchlight

and that is why such drastic actions were taken to grab funds from the Trust cash fund and when he was caught out the gentleman in question simply grabbed a pea from P Gould Cos investments in its two neighbouring companies. It was a drastic action, because it triggered the loan covenant which the investment in the two neighbouring companies supported. The Managing Director had to pay down the loan first before he could access the rest of the cash and then again the pea moved straight back to Torchlight. These events were in very quick succession, which indicates a problem of an extreme kind existing in the financial affairs of these gentlemen. I saw the explanations touting that this enterprise is now debt free, but this is not the real reason. The Managing Director repaid the loan, because it was the only way to access the residual cash. The residual cash was needed to fill a need related to Torchlight. In my experience you will be able to identify the need if you follow the cash that went to the previous holders of the 7% stake in Torchlight. I can argue what transpired under The Managing Directors discussion of the two Torchlight Funds, but I deem it such an obvious state of affairs that it can do without my repeating that which is abundantly clear. The Managing Director and his team at the original P Gould Co are the very same gentlemen now in charge of the affairs of all three these neighbouring companies. It is nearly the same gentlemen that were responsible for the original RECL loans that are now worth about 30% of its original value and now he claims, We are investing at a fraction of peaks from 2006, and expect to realise a substantial premium to our cost, over the next decade. This is the OPPOSITE from the finance companies who helped create the peaks of 2006 and funded clients to acquire land banks at record prices. The gentleman in question is blind to the fact that it is his shooting party that administrated some of those operations including that appalling investment operation, EPIC. I pity you and the others that have committed capital to that investment operation, because you were sold down the river and the deal that The Managing Director made with that investment operation did not escape me. Surely you now share my sentiments that no amount of sherry makes up for the discomfort of that EPIC shot you got up the XXXX. My penultimate observation is that you should not believe the promises of the return of capital. These gentlemen promised to return capital in the beginning of 2011, the very same promise that lead to the entrapment of your American funds Baobab GF and the Baker Street boys. Those promises were never made good. That commoner Mogridge promised not to sell the neighbouring investments, but went ahead and did it anyway. In April 2012 The Managing Director told you that there will be no more dividends or return of capital and now in August he tells his partners in enterprise that he will be returning capital again (two handled pump?). If I had to excuse myself when having tea with this gentleman, I would not expect my milk to still be in my tea upon my return. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX It is of no conciliation, but they deserve each other. His ploy to start a litigation fund is a defensive tactic, not a business opportunity. A boat load of claims are leveled against this enterprise, so what better way to run up legal expenses than under the guise of a legal investment operation. It is not the first time I witness this maneuver. Finally your question of whether I deem it possible that The Managing

Director and The Baker Street boys will buy out the remaining partners in enterprise? Yes, it might be the obvious solution to their predicament, but their actions make one thing abundantly clear, they do not have the capital at their disposal. These strike me as desperate men and desperate men without capital are dangerous. Your friends need to stock up on sherry! Thank you for the extensive material and for cheering up my dreary afternoons. I must admit that reading about this chicanery did sometimes leave me rather miserable. Please send my best regards to XXXX and the nippers. Sincerely yours, XXXX P.S. You can rest assured those gentlemen will not do business on our shores and they will certainly not list their enterprise here.