| Thu 28 Feb 2008, 14:26 | | BFS - Blue Financial Services Limited - Sale of as |
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BFS
BFS
BFS - Blue Financial Services Limited - Sale of asset by a subsidiary, change
to the board and renewal of the cautionary announcement
BLUE FINANCIAL SERVICES LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1996/006595/06
JSE Code: BFS
ISIN: ZAE000083655
("Blue" or "the Group")
SALE OF ASSET BY A SUBSIDIARY, CHANGE TO THE BOARD AND RENEWAL OF THE
CAUTIONARY ANNOUNCEMENT
1. SALE OF ASSETS BY A SUBSIDIARY
In terms the JSE Limited`s Listings Requirements, shareholders are
advised that an agreement, dated 28 February 2008, has been entered into
between Blue Financial Services South Africa (Pty) Limited ("Blue SA")
and Northern Spark (108) (Pty) Limited ("Northern Spark"), a company
owned by Mr Riaan Swart ("the agreement"), in terms of which Blue SA has
sold a substantial portion of its non-performing debtors book to Northern
Spark for a total cash consideration of R78 million ("the transaction").
1.1. RATIONALE FOR THE TRANSACTION
Blue`s core focus is on collecting its current performing debtors book,
which is expanding rapidly. The Group received a number of offers for the
non-performing debtors book which was ultimately sold to Northern Spark.
The purchase price, fairly valued by discounting future cashflows at the
current R153 rate of 9.4%, amounts to R70 890 675. This represents a
purchase price of 34.23 cents in the Rand of the gross non-performing
debtors book of R207 100 790. The net book value, after the deduction of
amounts provided and written off, amounts to R67 349 862. The majority of
this non-performing debtors book was acquired by Blue SA at the time of
acquiring Micro Access Financial Services (Pty) Limited, trading as
Future Finance, together with the performing debtors book at the time.
1.2. CONSIDERATION
The purchase price payable by Northern Spark to Blue SA will be R78
million, to be settled by means of electronic transfer of funds to Blue
SA as follows:
- R6 million on or before 29 February 2008;
- R2.75 million on the last business day of every month commencing
March 2008 and ending February 2010; and
- R6 million on or before the last business day of March 2010.
1.3. EFFECTIVE DATE
The effective date of the transaction is 1 February 2008.
1.4. CONDITIONS PRECEDENT
There are no conditions precedent to the transaction.
1.5. FINANCIAL EFFECTS
The unaudited pro forma financial effects, for which the directors are
responsible, are provided for illustrative purposes only to show the
effect of the transaction on earnings and headline earnings as if the
transaction had taken effect on 1 March 2007 and on net asset value and
tangible net asset value per share as if the transaction had taken effect
on 31 August 2007. Because of their nature, the unaudited pro forma
financial effects may not give a fair presentation of the Group`s
financial position and performance. The unaudited pro forma financial
effects have been compiled from the reviewed consolidated financial
statements for the 6 months ended 31 August 2007 and are presented in a
manner consistent with the format and accounting policies adopted by Blue
and have been adjusted as described in the notes below:
Movement
Reviewed Pro forma (cents) (%)
Before the After the
trans-action trans-
Notes action
Earnings per 2 5.31 6.13 0.82 15.4
share (cents)
Headline earnings 5.17 5.17 - -
per share (cents)
Net asset value 2 112.22 112.91 0.70 0.6
per share (cents)
Tangible net 35.23 35.92 0.70 2.0
asset value per 2
share (cents)
Weighted average 369 949 369 949
number of shares
in issue (000`s)
Shares in issue 435 073 435 073
at period end
(000`s)
Notes:
1. The "Audited Before the transaction" column reflects the reviewed results
of Blue for the 6 months ended 31 August 2007.
2. The pro forma financial effects in the "Pro forma After the transaction"
column are based on the following assumptions:
- the consideration payable has been fairly valued by discounting future
cash flows by using the current R153 rate of 9.4% per annum as the risk-
free rate;
- earnings per share have been adjusted to take account of the after
taxation profit on the sale of assets of R3.027 million;
- net asset value and tangible net asset value have been adjusted to take
account of a decrease in loan advances of R67.350 million, an increase in
trade and other receivables as result of the fairly valued purchase
consideration to be received on the sale of assets of R70.891 million, an
increase in retained earnings as a result of the after taxation profit
made on the sale of assets of R3.027 million and an increase in income
tax payable of R0.513 million.
1.6. APPLICATION OF THE SALE PROCEEDS
The sale proceeds will be applied to fund future growth of Blue SA`s
performing debtors book.
1.7. CLASSIFICATION OF THE TRANSACTION
In terms of Section 21.11(a) of the Listings Requirements of the JSE
Limited, the transaction is not regarded as a related party transaction.
2. CHANGE TO THE BOARD
Mr Riaan Swart will resign as an executive director of Blue with effect
from 1 March 2008. He was appointed to the board on 8 March 2006 and was
one of the founders of the Group in 2001. He has performed the role of
Chief Operating Officer.
2.1 RATIONALE
Despite a desperate need, housing finance in Africa remains a foreign
concept. Blue pioneered financing of unsecured, mass-produced affordable
housing in its operational geography. However, in order to satisfy
demand, Blue faced a challenge in sourcing a credible supplier with local
market knowledge. To remedy this, a vehicle for this purpose was
established and it is this company that Riaan Swart will be heading up.
The Board, in preparation for Riaan`s departure, has decided not to fill
the vacant board seat at this stage but has bolstered its operations team
by promoting some senior executives to fulfil this operational role.
The Board wishes to extend their gratitude to Riaan for his valuable
contribution.
3. RENEWAL OF THE CAUTIONARY ANNOUNCEMENT
Shareholders are advised that Blue is in further negotiations which, if
successfully concluded, may have a material effect on the price of its
securities. Accordingly, shareholders are advised to continue to exercise
caution when dealing in Blue`s securities until a further announcement is
made.
Pretoria
28 February 2008
DESIGNATED ADVISOR
Ernst & Young Sponsors (Pty) Ltd
(Registration Number: 2000/031843/07)
Date: 28/02/2008 14:26:01 Produced by the JSE SENS Department.
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