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BFS
BFS
BFS - Blue Financial Services Limited - Revised reviewed interim results for the
6 months ended 31 August 2006
Blue Financial Services Limited
(Registration number 1996/006595/06)
("BLUE" or "the Company" or "the Group")
Share code BFS ISIN ZAE0000083655
REVISED REVIEWED INTERIM RESULTS FOR THE 6 MONTHS ENDED 31 AUGUST 2006
The Company`s interim results for the six months ended 31 August 2006 which were
published on SENS on 23 November 2006 are hereby withdrawn and re-published.
This withdrawal is at the request of the JSE Limited after consultation with the
GAAP Monitoring Panel ("GMP"). This revision relates mainly to a fundamental
error on the cash flow statement, the incorrect inclusion of pro-forma
comparatives as well as other areas of non-compliance with IAS34.
A summary of the changes and/or additional information are as follows:
- Revised cash flow statement
- Note on investment in subsidiaries
- Note on the business acquisitions
- Note on issued share capital
- Note on the cash generated from operations
- Segmental analysis
- Additional required information relating to accounting policies.
BALANCE SHEET for the 6 months ended 31 August 2006
Reviewed
consolidated
as at
31 August 2006
R`000
Assets
Non-current assets
Investment property 3,620
Property, plant and equipment 9,826
Goodwill 272,472
Other financial assets 1,745
Deferred tax 292
287,955
Current assets
Inventories 238
Trade and other receivables 63,980
Cash and cash equivalents 20,472
84,690
Total assets 372,645
Equity and liabilities
Equity
Equity attributable to equity holders of parent
Share capital 333,967
Reserves (334)
Retained income 7,958
Minority interest (248)
341,342
Liabilities
Non-current liabilities
Loans from shareholders 2,331
Other financial liabilities 26,343
28,673
Current liabilities
Current tax payable 2,305
Trade and other payables 324
2,629
Total liabilities 31,302
Total equity and liabilities 372,645
Fully diluted net asset value per share in cents 85.34
Fully diluted tangible net asset value per share 17.14
in cents
INCOME STATEMENT for the 6 months ended 31 August 2006
Reviewed
6 months
ended
31 August 2006
R`000
Revenue 45,465
Cost of sales (14,580)
Gross profit 30,885
Operating expenses (21,026)
Profit before tax 9,859
Taxation (2,305)
Profit for the period 7,554
Issued shares 320,000
Weighted average number of shares in issue 301,667
Diluted issued shares 400,000
Fully diluted number of shares in issue 311,530
Earnings per share in cents 2.50
Fully diluted earnings per share in cents 2.42
Headline earnings 2.50
Fully diluted headline earnings per share in 2.42
cents
CASH FLOW STATEMENT for the 6 months ended 31 August 2006
Reviewed
6 months
ended
31 August 2006
R`000
Cash flow from operating activities
Cash receipt from customers 27,262
Cash paid to suppliers and employees (36,742)
Cash used in operations (9,480)
Finance cost (667)
Tax paid (4,130)
Net cash from operating activities (14,277)
Cash from investing activities
Purchase of property plant and equipment (4,855)
Sale of investment property 7,020
Acquisitions of businesses (incl subsidiaries, 3,088
joint ventures and associates)
Net cash from investing activities 5,253
Cash from financing activities
Proceeds on share issue 16,924
Proceeds on redeemable preference shares 35,200
Repayment of other financial liabilities (22,628)
Net cash from financing activities 29,496
Total cash movement for the period 20,472
Cash at the beginning of the period -
Total cash at the end of the period 20,472
STATEMENT OF CHANGES IN EQUITY for the 6 months ended 31 August 2006
Foreign
Total currency
Share Share share translation
Capital Premium capital reserve
R`000 R`000 R`000 R`000
Balance at 1 March - - - -
2006
Currency translation - - - (334)
differences
Net income (expenses) - - - (334)
recognised directly in
equity
Profit for the year - - - -
Total recognised - - - (334)
income and expenses
for the period
Issue of shares 0.320 320,000 320,000 -
STATEMENT OF CHANGES IN EQUITY for the 6 months ended 31 August 2006
(Contd)
Total
attributable
to equity
holders of
Retained the Minority Total
income Group/Company interest equity
Purchase of own/ (0.09) (9,158) (9,158) -
treasury shares
Issue of preference 35,200 - 35,200 -
shares
Listing expenses - (12,075) (12,075) -
Business combinations - - - -
Balance at 31 August 35,200 298,767 333,967 (334)
2006
Balance at 1 March - - - -
2006
Currency translation - (334) - (334)
differences
Net income (expenses) - (334) - (334)
recognised directly
in equity
Profit for the year 7,957 7,957 (403) 7,554
Total recognised 7,957 7,623 (403) 7,220
income and expenses
for the period
Issue of shares - 320,000 - 320,000
Purchase of own/ - (9,158) - (9,158)
treasury shares
Issue of preference - 35,200 - 35,200
shares
Listing expenses - (12,075) - (12,075)
Business combinations - - 156 156
Balance at 31 August 7,957 341,590 (247) 341,343
2006
Material impact and considerations:
Before reviewing the results it is important to note that these results are as a
result of trading activities before the effects of the American International
Group ("AIG") investment or Initial Public Offering (IPO). The effects of the
additional capital being deployed in the operations is expected to have a
material effect on the results for the following six months.
Comments on results:
This is BLUE`s maiden interim results since listing on the JSE Limited`s AltX on
12 October 2006. No comparative information is presented as there were no
audited consolidated published results for the company for the preceding
comparable period.
It must be noted that diluted earnings and net asset value per share is
presented as result of the potential future conversion by AIG of its preference
shares into ordinary shares based on the company achieving its forecasted
profits.
The directors are of the opinion that BLUE is currently on a steep growth curve
with access to capital and new markets. Despite being a new entrant, BLUE has
entered the market with backing from AIG and is already busy with further
transactions.
The Board is ever cognisant of the market`s belief in BLUE`s business model and
the subsequent high expectations placed on the Company. It will be our task to
live up to and even surpass these expectations.
Provision for bad debt
The Company has provided for bad debt to the amount of R1.38 million for the 6
months ending 31 August 2006. The effect of this had no material change to the
deferred tax for the period under review.
Accounting policies and disclosure notes
The interim financial statements for the 6 months ended 31 August 2006 ("the
period") have been prepared in accordance with International Financial Reporting
Standards ("IFRS"). The accounting policies applied in the preparation of the
interim financial statements are consistent with those applied in the annual
financial statements for the year ended 28 February 2006.
1. Investment in subsidiaries
Name of Company % Shareholding Carrying amount
R`000
Blue Employee Benefits (Pty) Ltd 100% 43,030
Blue Incremental Housing Finance 88% 19,884
(Pty) Ltd
Blue Cell (Pty) Ltd 66.67% -
Blue Employee Benefits (Pty) Ltd - 100% 67,538
Botswana
Blue Financial Services Zambia Ltd 100% 54,288
Blue Ltd - Kenya 100% 21,121
Blue Employee Benefits (Pty) Ltd - 100% 31,803
Uganda
Blue Investments Ltd - Cameroon 75% 21,926
Blue Financial Services Ltd - 100% 15,472
Tanzania
Blue Financial Services Ltd - 100% 6,731
Rwanda
281,793
The above mentioned subsidiaries were acquired through a business combination
effective on 1 March 2006. The fair value of the instruments issued to acquire
the above subsidiaries were R1 per share as the share was to be listed on the
JSE at R1 per share. 300,000,000 ordinary shares were issued to acquire the
various companies. The fair value of the subsidiaries purchased was determined
using the discounted cash flow method. No operations have been disposed of as a
result of the combination. The amounts recognised at the acquisition date for
each class of the acquiree`s assets, liabilities and contingent liabilities
immediately before the combination is disclosed in the note regarding
acquisition of businesses.
Goodwill arose from the business combination as a result of the fair value of
the investment that exceeded the fair value of the assets and liabilities. The
initial accounting for the business combination that is reflected in the interim
results is only provisional and will be finalised for the year end results at 28
February 2007.
Goodwill was tested for impairment and no impairment was needed. The Company has
adopted a policy whereby an independent, qualified party will test the Goodwill
for impairment annually on balance sheet date.
2. Acquisition of businesses
Fair value of assets acquired Amount
R`000
Property, plant and equipment 5,550
Investment properties 9,377
Loans receivable 300
Deferred tax 286
Inventories 68
Trade and other receivables 45,776
Shareholders` loans (4,285)
Amounts owing to related parties (7,560)
Long term liabilities (37,686)
Taxation (4,123)
Trade and other payables (987)
Cash and cash equivalents 3,088
Current portion of borrowings (327)
Goodwill 272,472
Outside shareholders (156)
281,793
Net cash outflow on acquisition
Cash acquired 3,087
3. Share capital
Number of shares issued
320,000,000 ordinary shares of
R0.000001 each
Issued share capital R`000
Ordinary shares 0.320
Treasury shares (0.09)
Preference shares 35,200
Share premium 298,767
333,967
There was no repurchase of shares except for the 9,157,500 treasury shares
allocated to the Staff Share Trust.
Due to the nature of the preference shares, no split was made between equity and
liabilities.
4. Cash generated from operations
R`000
Profit before taxation 9,859
Adjustments for:
Depreciation and amortisation 579
(Profit) on sale of assets (1,265)
Finance costs 667
Foreign currency translation (334)
Differences
Other non-cash items 50
Changes in working capital:
Inventories (170)
Trade and other receivables (18,203)
Trade and other payables (663)
(9,480)
5. Segmental analysis
Segment South Africa Botswana Zambia
R`000 R`000 R`000
Revenue 31,407 12,688 7,825
Revenue from external 27,434 12,688 5,342
customers
Intersegmental 3,973 0 2,483
transactions
Segment result 7,263 1,044 2,305
Income tax 0 0 0
Profit for the period 0 0 0
Segment assets 109,624 25,494 12,116
Segment liabilities (45,387) (18,010) (14,789)
Depreciation and 266 257 55
amortisation
Capital expenditure 1,311 948 562
Segment Other Eliminating Consolidated
R`000 R`000 R`000
Revenue 0 (6,456) 45,464
Revenue from external 0 0 45,464
customers
Intersegmental 0 (6,456) 0
transactions
Segment result (754) 0 9,859
Income tax 0 0 (2,305)
Profit for the period 0 0 7,554
Segment assets 10,271 (57,333) 100,172
Segment liabilities (10,448) 57,333 (31,301)
Depreciation and 0 0 578
amortisation
Capital expenditure 363 0 3,184
Unqualified review report:
These interim financial statements have been reviewed by PKF (PTA). Their
unqualified review report is available for inspection at the Company`s
registered office.
Group structure:
On 1 March 2006 Blue Financial Services Limited acquired:
* 100% of Blue Employee Benefits (Pty) Ltd - South Africa
* 88% of Blue Incremental Housing Finance (Pty) Ltd - South Africa
* 66.67% of Blue Cell (Pty) Ltd - South Africa
* 100% of Blue Employee Benefits (Pty) Ltd - Botswana
* 100% of Blue Financial Services Zambia Ltd - Zambia
During the period under review operations commenced in Uganda, Tanzania and
Zanzibar.
Services offered by BLUE:
BLUE specialises in:
* Salary advances
The Company, in partnership with employers provide salary advances to employees.
The approach allows the employer to retain control of salary advances without
damaging its cash flow, and avoids a negative image among employees. BLUE
currently provides a salary advance service to over 100 employers, which include
the Zambian and Botswana governments.
* Bonded housing finance
BLUE has shareholding in an associate company called Greenstart Home Loans,
which provides home loans from R20 000 to R250 000. These are structured over
15 to 20 years at a prime-linked interest rate. This company has access via
Greenstart to a substantial government funding line through the National Housing
Finance Corporation ("NHFC"), enabling it to offer finance in instances where
banks decline applications due to area or credit history.
* Pension backed home loans
Pension fund-backed lending is one of BLUE`s most recent housing products which
allow an individual to access the home loan market, using the individual`s
pension or provident fund as security. This enables individuals with no other
form of security to finance their own property. This product is done at little
to no risk to the lender as the loans are fully guaranteed by the clients
withdrawal benefit in his/her pension fund. BLUE is developing the criteria for
this product in all of the countries in which it currently operates.
* Cell phone sales and services
As the majority of BLUE`s clients are only able to purchase prepaid airtime, due
to poor credit ratings or a perceived high risk status, BLUE saw an opportunity
to provide them with a value-added product. BLUE has entered into agreements
with all three major network service providers (NSPs) and is using its
collection expertise to collect the monthly package/contract fee on behalf of
the networks.
* Incremental housing finance
BLUE offers finance for the purchasing of land, the connection of utilities, and
home improvements. These loans are for housing purposes only and are only
disbursed to suppliers and vendors to ensure delivery of housing products.
Repayments can be structured over 36-months and range from R1 000 to R10 000.
This facility is endorsed and funded in South Africa by the NHFC.
* Funeral insurance
BLUE has an affordable Funeral Insurance product that provides for the funeral
costs of the member, his or her spouse, and up to five children. This product
is underwritten by Capital Alliance in South African and Regent Life in
Botswana. BLUE is in talks with African Life in Zambia and AIG in Uganda. BLUE
also provides Credit Life cover to its clients for credit based products and is
developing short term insurance products for its market.
* Term loans
Loan amounts range from R3 000 to R10 000 and are regarded as general purpose
loans with repayment periods ranging from 12 to 24 months. Term loans are better
priced than salary advances, although the screening and credit approval process
is slightly more rigid and intense. These loans are also based on the ability to
collect and the relevant agreements being in place with the employer in
question. The same BLUE service levels of a one-hour-payout apply.
Products are first being tested and fine tuned before they are rolled out to
operations in Africa. Products currently being evaluated are:
* Asset based finance; and
* SME funding.
Declaration of dividend:
In line with the Group policy no dividend has been declared for the period.
Post balance sheet events:
Changes to the board of directors
Mr Andre Steyn from AIG (American International Group) joined the board on 11
October 2006 as non-executive director.
Forward looking statement:
Given that the second half of the financial year is traditionally a more
profitable trading period as well as the fact that the effects of the IPO and
AIG investment will be realised in the next six months, the Board is confident
that the company`s financial objectives will be achieved.
BLUE welcomes the implementation of the National Credit Act in 2007, and is of
the opinion that it will further the ethical provision of credit to an often
exploited market. The Board is of the opinion that the effective implementation
of the Act will take place in July 2007 and will have no impact on the Company`s
financial performance for the current financial year.
On behalf of the Board
14 June 2007
D van Niekerk - Chairman and CEO
R Swart - COO
Directors: D van Niekerk (Chairman and CEO); R Swart (COO); JS Coetzee
(Financial Director); WJ Smit (Legal Director); MJ Sondiyasi*,
CW Siwale* and A Steyn*
*non-executive
Registered Office: Blue Building, 34 Bouvardia Avenue, Lynnwood Ridge, Pretoria,
South Africa (PO Box 72041, Lynnwood Ridge, 0040)
Transfer Secretaries: Link Market Services (Pty) Ltd, 11 Diagonal Street,
Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000)
Company Secretary: Ms Retha Stolz, Blue Building, 34 Bouvardia Avenue, Lynwood
Ridge, Pretoria, South Africa (PO Box 72041, Lynnwood Ridge, 0040)
Former Designated Advisor: Exchange Sponsors (Pty) Ltd, P O Box 783676, Sandton,
2146
Current Designated Advisor: Ernst & Young Sponsors, (Pty) Ltd, Private Bag X14,
Northlands, 2116
Date: 15/06/2007 09:07:00 Produced by the JSE SENS Department.
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