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BFS
BFS
BFS - Blue Financial Services - Audited abridged results for financial year
ended 29 February 2008
BLUE FINANCIAL SERVICES
Registration number: 1996/006595/06
JSE code: BFS ISIN: ZAE000083655
("The group" or "the Company" or "Blue")
AUDITED ABRIDGED RESULTS FOR FINANCIAL YEAR ENDED 29 FEBRUARY 2008
- Loan book increased by 133% from R207 million to R482 million.
- Earnings increased by 93% from R32 million to R61.7 million.
- Earnings per share increased by 41% from 10,37 cents to 14,58 cents.
GROUP INCOME STATEMENT for the year ended 29 February 2008
Audited Reviewed Difference Audited %
12 months 12 months to between 12 change
to 29 Feb 29 Feb reviewed months between
and audited to 28 audited
2008 and Feb 2008
results and
audited
2007
2008 2008 2007
R `000 R `000 R `000
Interest income (*1) 182,720 199,848 (17,128) 114,337 60
Interest expense (65,985) (65,985) - (25,167) 162
Net interest income 116,735 133,863 (17,128) 89,170 31
Administration and 148,338 131,210 17,128 32,404 358
insurance income
(*1)
Other operating 16,898 16,898 - 4,373 286
income
Operating income 281,971 281,971 - 125,947 124
Impairment of loan (4,472) (4,472) - (3,314) 35
advances
Operating expenses (212,633) (212,359) (274) (80,948) 163
Operating profit 64,866 65,140 (274) 41,685 56
Investment revenue 12,562 12,562 - 334 3,661
Fair value 6,162 6,162 - - -
adjustments
Profit before 83,590 83,864 (274) 42,019 99
taxation
Taxation (*2) (21,848) (23,536) 1,688 (9,648) 126
Profit after 61,742 60,328 1,414 32,371 91
taxation
Reconciliation of
earnings to headline
earnings:
Profit after 61,742 60,328 1,414 32,371 91
taxation
Less minority (313) (100)
interest
Earnings 61,742 60,328 1,414 32,058 93
Less: Negative (419) (419) - - -
goodwill
Less: Profit on sale (3,162) (3,162) - - -
of property, plant
and equipment
Less: Fair value (6,162) (6,162) - - -
adjustments
Add: Impairment of - - - 4,439 (100)
loan - Blue Cell
(Pty) Ltd
Headline earnings 51,999 50,585 1,414 36,497 42
Number of shares in 465,659 465,659 345,632 35
issue (net of
treasury shares)in
million
Weighted number of 423,520 423,520 309,139 37
shares in issue in
million
Fully diluted number 470,548 470,548 397,689 18
of shares in issue
in million
Earnings per share 14.58 14.24 0.34 10.37 41
in cents
Fully diluted 13.93 13.63 0.30 8.77 59
earnings per share
in cents
Headline earnings 12.28 11.94 0.34 11.81 4
per share
Fully diluted 11.86 11.56 0.30 9.89 20
headline earnings
per share in cents
GROUP BALANCE SHEET as at 29 February 2008
Audited Reviewed Audited
12 months 12 months Difference 12 months %change
to 29 Feb to 29 Feb between to 28 Feb between
reviewed and audited
audited 2008 and
results for audited
2008 2007
2008 2008 2007
R `000 R `000 R `000
Assets
Cash and cash 66,976 66,976 - 11,833 466
equivalents
Loan advances 481,941 481,940 1 207,098 133
Trade and other 8,362 8,363 (1) 2,656 215
receivables
Other financial 122,841 122,841 - 3,779 3,151
assets
Investment property - - - 1,976 (100)
Property, plant and 44,101 44,101 - 20,306 117
equipment
Current tax 1,496 1,496 - - -
receivable
Intangible assets 67,515 54,237 13,278 59,058 14
(*3)
Goodwill (*3) 295,714 309,274 (13,560) 265,022 12
Deferred tax (*2) 19,786 20,213 (427) 1,303 1,418
Total assets 1,108,732 1,109,441 (709) 573,030 93
Equity and
liabilities
Equity
Share capital 526,905 526,905 - 399,894 32
Reserves (*3) 2,058 2,122 (64) (16) (12,963)
Retained income 93,799 92,386 1,413 32,058 193
Minority interest (198) (198) - 538 (137)
Total equity 622,564 621,215 1,349 432,474 44
Liabilities
Bank overdraft (*1) 12,835 106,384 (93,549) 32,306 (60)
Trade and other 22,634 22,626 8 14,163 60
payables
Current tax payable 35,749 38,503 (2,754) 17,464 105
(*2)
Other financial 385,199 291,651 93,548 44,887 758
liabilities (*1)
Finance lease 9,055 9,055 - 11,992 (24)
obligation
Loans from - - - 328 (100)
shareholders
Provisions 2,355 2,355 - 2,131 11
Operating lease 830 830 - 153 442
liability
Deferred tax (*2) 17,511 16,822 689 17,132 2
Total liabilities 486,168 488,226 (2,058) 140,556 246
Total equity and 1,108,732 1,109,441 (709) 573,030 93
liabilities
Net asset value per 133.70 133.41 0.29 125.13 7
share in cents
Tangible net asset 55.69 55.34 0.35 31.36 78
value per share in
cents
GROUP CASH FLOW STATEMENT for the year ended 29 February 2008
Audited Reviewed Audited
12 months 12 months Difference 12 %
to 29 Feb to 29 Feb between months change
reviewed to 28 between
and Feb Audited
audited 2008
results and
for 2008 Audited
2007
2008 2008 2007
R `000 R `000 R `000 R `000
Cash flows from operating (261,868) (261,868) - (27,115) (866)
activities
Cash generated by (185,183) (185,839) 656 4,830 (3,934)
(utilised in) operations
Interest expense (65,985) (65,985) - (25,167) (162)
Investment revenue 12,562 12,562 - 334 3,661
Taxation paid (23,868) (23,212) 656 (7,973) (199)
Non cash items 606 606 - 861 (30)
Cash flows from investing (113,043) (113,043) - (96,486) (17)
activities
Property, plant and (32,186) (32,186) - (17,246) (87)
equipment acquired
Proceeds on disposal of 6,063 6,063 - 211 2,773
property, plant and
equipment
Proceeds on disposal of - - - 7,020 (100)
investment property
Acquisition of businesses (41,988) (41,988) - (79,164) 47
Purchase of financial - - - (2,868) 100
assets
Proceeds on disposal of (44,932) (44,932) - - -
financial assets
Impairment of loans - - - (4,439) 100
Cash flows from financing 449,525 355,977 93,548 103,127 336
activities (*1)
Proceeds on issue of 84,233 84,233 - 82,602 2
ordinary shares
Proceeds on issue of 35,000 35,000 - 35,200 (1)
redeemable preference
shares
Finance lease repayments (2,938) (2,938) - - -
Shareholders loan repaid (328) (328) - - -
Financial liabilities 333,558 240,010 93,548 (14,675) 2,373
raised / (repaid)
Increase / (decrease) in 74,614 (18,934) 93,548 (20,474) 464
cash and cash equivalents
Cash and cash equivalents (20,474) (20,474) - - -
at beginning of the period
Cash and cash equivalents 54,140 (39,408) 93,548 (20,474) 364
at end of the period
GROUP STATEMENT OF CHANGES IN EQUITY for the year ended 29 February 2008
Share Foreign Retained Total
capital and currency income attributable
premium translation to equity
reserve holders of
the group
R `000 R `000 R `000 R `000
Balance at 1 Mar 2006 - - - -
Currency translation - (16) - (16)
differences
Profit for the period - - 32,058 32,058
Issue of ordinary shares 393,600 - - 393,600
Purchase of own / (6,368) - - (6,368)
treasury ordinary shares
Issue of preference 35,200 - - 35,200
shares
Share issue costs (22,538) - - (22,538)
Business combinations - - - -
Balance at 28 Feb 2007 399,894 (16) 32,058 431,936
Currency translation - 2,074 - 2,074
differences
Profit for the period - - 61,742 61,742
Issue of ordinary shares 123,657 - - 123,657
Transfer treasury 5,121 - - 5,121
ordinary shares to staff
Redemption of preference (35,200) - - (35,200)
shares
Issue of preference 35,000 - - 35,000
shares
Share issue costs (1,567) - - (1,567)
Purchase of minority - - - -
interest
Balance at 29 February 526,905 2,058 93,800 622,763
2008
GROUP STATEMENT OF CHANGES IN EQUITY for the year ended 29 February 2008
(contd.)
Minority Total
interest equity
R `000 R `000
Balance at 1 Mar 2006 - -
Currency translation differences - (16)
Profit for the period 313 32,371
Issue of ordinary shares - 393,600
Purchase of own / treasury ordinary - (6,368)
shares
Issue of preference shares - 35,200
Share issue costs - (22,538)
Business combinations 225 225
Balance at 28 Feb 2007 538 432,474
Currency translation differences - 2,074
Profit for the period - 61,742
Issue of ordinary shares - 123,657
Transfer of treasury ordinary shares - 5,121
to staff
Redemption of preference shares - (35,200)
Issue of preference shares - 35,000
Share issue costs - (1,567)
Purchase of minority interest (737) (737)
Balance at 29 February 2008 (199) 622,564
GROUP SEGMENTAL ANALYSIS for the year ended 29 February 2008
South Africa Botswana
Audited Audited Audited Audited
12 months 12 months 12 months 12 months
to 29 Feb to 28 Feb to 29 Feb to 28 Feb
2008 2007 2008 2007
R `000 R `000 R `000 R `000
Interest income 109,619 82,076 30,332 22,791
Interest expense (35,621) (12,908) (15,499) (7,011)
Net interest income 73,998 69,168 14,832 15,780
Administration and insurance 56,776 14,490 21,153 8,755
income
External administration and 38,316 10,429 21,153 8,755
insurance income
Intersegment administration 18,460 4,061 - -
and insurance income
Other operating income 8,316 4,045 2,819 274
Operating income 139,090 87,703 38,804 24,809
Impairment of loan advances 2,311 (1,806) (2,684) (1,061)
Operating expenses (142,167) (50,972) (24,787) (17,746)
Operating profit (766) 34,925 11,333 6,002
Investment revenue 12,562 334 - -
Fair value adjustments 6,162 - - -
Segment result: profit before 17,958 35,259 11,333 6,002
taxation
Segment assets 709,679 215,768 92,868 32,189
Segment liabilities (497,584) (75,119) (66,964) (22,205)
Fair value adjustments 6,162 - - -
Depreciation and amortisation 9,822 6,538 2,043 1,207
Capital expenditure 10,329 12,915 8,144 777
GROUP SEGMENTAL ANALYSIS for the year ended 29 February 2008 (contd.)
Zambia Malawi
Audited Audited Audited Audited
12 months 12 months 12 months 12 months
to 29 Feb to 28 Feb to 29 Feb to 28 Feb
2008 2007 2008 2007
R `000 R `000 R `000 R `000
Interest income 20,598 9,397 3,750 -
Interest expense (7,291) (5,184) (1,677) -
Net interest income 13,307 4,213 2,073 -
Administration and insurance 43,855 13,138 21,714 -
income
External administration and 43,855 13,138 21,714 -
insurance income
Intersegment administration - - - -
and insurance income
Other operating income 948 54 1,238 -
Operating income 58,110 17,405 25,024 -
Impairment of loan advances (2,341) (400) (327)
Operating expenses (23,271) (11,021) (4,303) -
Operating profit 32,498 5,984 20,394 -
Segment result: profit before 32,498 5,984 20,394 -
taxation
Segment assets 91,617 28,588 44,681 -
Segment liabilities (55,335) (26,920) (23,863) -
Depreciation and amortisation 1,090 628 92 -
Capital expenditure 981 1,175 1,765 -
GROUP SEGMENTAL ANALYSIS for the year ended 29 February 2008 (contd.)
Other Eliminated
Audited Audited Audited Audited
12 months 12 months 12 months 12 months
to 29 Feb to 28 Feb to 29 Feb to 28 Feb
2008 2007 2008 2007
R `000 R `000 R `000 R `000
Interest income 18,421 72 - -
Interest expense (5,897) (63) - -
Net interest income 12,525 9 - -
Administration and insurance 23,300 82 (18,460) (4,061)
income
External administration and 23,300 82 - -
insurance income
Intersegment administration - - (18,460) (4,061)
and insurance income
Other operating income 3,578 - - -
Operating income 39,402 91 (18,460) (4,061)
Impairment of loan advances (1,431) (47)
Operating expenses (36,565) (5,270) 18,460 4,061
Operating profit 1,406 (5,226) - -
Segment result: profit before 1,406 (5,226) - -
taxation
Segment assets 165,254 4,764 (366,395) (33,663)
Segment liabilities (158,813) (15,379) 366,395 33,663
Depreciation and amortisation 2,283 162 - -
Capital expenditure 10,967 2,379 - -
GROUP SEGMENTAL ANALYSIS for the year ended 29 February 2008 (contd.)
Consolidated
Audited Audited
12 months to 12 months to
29 Feb 28 Feb
2008 2007
R `000 R `000
Interest income 182,720 114,337
Interest expense (65,985) (25,167)
Net interest income 116,735 89,170
Administration and insurance 148,338 32,404
income
External administration and 148,338 32,404
insurance income
Intersegment administration and - -
insurance income
Other operating income 16,898 4,373
Operating income 281,971 125,947
Impairment of loan advances (4,472) (3,314)
Operating expenses (212,633) (80,948)
Operating profit 64,866 41,685
Investment revenue 12,562 334
Fair value adjustments 6,162 -
Segment result: profit before 83,590 42,019
taxation
Taxation (21,848) (9,648)
Profit after taxation 61,742 32,371
Other disclosures
Segment assets 737,704 247,647
Segment liabilities (436,164) (105,960)
Fair value adjustments 6,162 -
Depreciation and amortisation 15,330 8,534
Capital expenditure 32,186 17,246
Reconciliation of segment assets
and assets per balance sheet
Assets per segments 1,104,099 281,310
Intercompany loans eliminated (366,395) (33,663)
Sub-total 737,704 247,647
Goodwill 295,714 265,022
Intangible assets 67,515 59,058
Deferred tax assets 7,798 1,303
Assets per balance sheet 1,108,732 573,030
Reconciliation of segment
liabilities and liabilities per
balance sheet
Liabilities per segments (802,559) (139,623)
Intercompany loans eliminated 366,395 33,663
Sub-total (436,164) (105,960)
Deferred tax liabilities (15,750) (17,132)
Income tax liabilities (34,253) (17,464)
Liabilities per balance sheet (486,168) (140,556)
COMMENTS ON DIFFERENCES BETWEEN REVIEWED AND AUDITED FINANCIAL RESULTS FOR THE
12 MONTHS ENDED 29 FEBRUARY 2008
(*1) From the Reviewed Financial Statements to the Audited Financial Statements
certain reclassifications were proposed and adopted to ensure more appropriate
financial presentation.
(*2) From the Reviewed Financial Statements to the Audited Financial Statements,
the final calculations of income and deferred taxation were reperformed and
audited.
(*3) In the financial statements of the company operating in Kenya, a final
purchase price allocation was performed that lead to a decrease in Goodwill and
a subsequent increase in the Intangible Asset of that company.
NOTES
BASIS OF PREPARATION
The audited financial results of the company at and for the year ended 29
February 2008 comprise the company and its subsidiaries (together referred
to as the "group"). The group`s principal accounting policies have been
applied consistently over the current and prior financial years. These audited
financial results have been prepared in accordance with the recognition and
measurement criteria of IFRS, interpretations issued by the International
Financial Reporting Interpretations Committee (IFRIC), and the presentation
and disclosure requirements of International Accounting Standard: Interim
Financial Reporting (IAS34). In the preparation of these financial results
the group has applied key assumptions concerning the future and other
indeterminate sources in recording various assets and liabilities. These
assumptions were applied consistently to both the company and group financial
statements for the year ended 29 February 2008. These assumptions are subject
to ongoing review and possible amendments.
DISCLOSURE NOTES
1. Investments in subsidiaries
Name of company % holding % holding Carrying Carrying
amount amount
Feb 2008 Feb 2007 Feb 2008 Feb 2007
R`000 R`000
Blue Employee Benefits (Pty) Ltd 100% 100% 9 43,030
Blue Incremental Housing Finance 100% 88% 0.01 19,884
(Pty) Ltd
Blue Employee Benefits (Pty) Ltd 100% 100% 67,538 67,538
Botswana
Blue Financial Services Zambia Ltd 100% 100% 54,288 54,288
Blue Ltd Kenya 100% 100% 27,833 27,833
Blue Employee Benefits Ltd 100% 100% 31,803 31,803
Uganda
Blue Investments Ltd Cameroon 75% 75% 21,926 21,926
Blue Financial Services Ltd 100% 100% 15,472 15,472
Tanzania
Blue Financial Services Ltd 100% 100% 6,731 6,731
Rwanda
Blue Financial Services (South 100% 100% 97,927 97,927
Africa)(Pty) Ltd
Greenstart Homeloans (Pty) Ltd 100% 15% 1 0.1
African Mobile Cellular (Pty) Ltd 100% - 0.01 -
Makhulong Multi Finance (Pty) Ltd 100% - 1,441 -
Blue Financial Services Ltd 100% - 0.01 -
Malawi
Bonus Finance (Pty) Ltd 100% - 17,881 -
342,851 386,432
All investments in subsidiaries are being held by Blue Financial Services
Limited, with the exception of African Mobile Cellular (Pty) Ltd, which is
held by Blue Financial Services (South Africa) (Pty) Ltd, previously known
as Micro Access Financial Services (Pty) Ltd ("Future Finance").
Blue remains on a strong growth curve and the nature of the business is
acquisitive. As a result, the following consolidations and acquisitions took
place during the year ended 29 February 2008:
Blue acquired the remaining 12% in Blue Incremental Housing Finance (Pty) Ltd
on 1 March 2007 by issuing 100,000 Blue Financial Services Ltd shares at R3.20
per share. These shares were issued at a premium of 1.9% to the 30 business day
volume weighted average price on 1 March 2007.
The Company formed Blue Financial Services Ltd - Malawi on 1 March 2007 at a
formation cost of R539. The acquiree`s profit since the acquisition of the
interest amounted to R14,173,504.
As a result of the Future Finance acquisition, the Company acquired a 100%
holding in African Mobile Cellular (Pty) Ltd through its wholly owned subsidiary
Blue Financial Services (South Africa) (Pty) Ltd, previously known as Micro
Access Financial Services (Pty) Ltd, on 1 March 2007, for a cash consideration
of R1,100,000. The acquiree`s profit since the acquisition of the interest
amounted to R1,718,353.
Blue increased its shareholding in Greenstart Homeloans (Pty) Ltd from 15%
to 100% with effect from 15 March 2007 by issuing 838,197 Blue shares at
R2.7887 per share and a cash consideration of R2,337,500. The shares for the
acquisition of the 85% interest in Greenstart Homeloans (Pty) Ltd were issued
at the 30 business day volume weighted average price on 31 January 2007. The
acquiree`s profit since the acquisition of the interest amounted to R18,708,963.
This amount includes capital profit of R11,573,103 on intercompany sale of
assets and liabilities as part of the restructuring process. These profits
were eliminated on consolidation.
The Company acquired 100% of the shareholding in Makhulong Multi Finance
(Pty) Ltd, incorporated in Lesotho, on 29 March 2007 for a deferred cash
consideration of R1,441,398 of which R570,000 has been paid to date. The
acquiree`s profit since the acquisition of the interest amounted to R6,398,904.
Blue acquired 100% of the shareholding in Bonus Finance Namibia (Pty) Ltd
("Bonus Finance"), incorporated in Namibia, for a cash consideration of
R16,100,000 and the business conducted by NFIT 2 Trust, NFIT 3 Trust and NFIT 5
Trust in Namibia for a cash consideration of R5,400,000, with effect from 1
October 2007. The acquiree`s profit since the acquisition of the interest
amounted to R2,119,731. The group profits would have been R759,731 higher if
this entity was consolidated from the start of the financial year.
No operations acquired have been subsequently disposed of. The amounts
recognised at the acquisition date for each class of the acquiree`s assets,
liabilities and contingent liabilities determined in accordance with IFRS
immediately before the combination is disclosed in note 4 (Acquisition of
businesses). The initial accounting for the business combination (on the new
acquisitions) that is reflected in the financial results is only provisional
and will be finalised within the timeframe specified by IFRS 3: Business
Combinations. The carrying amounts of subsidiaries are shown net of impairment
losses.
2. Share capital
Feb 2008 Feb 2007
Authorised R`000 R`000
1,000,000,000 Ordinary shares of par value R0.000001 1 1
each
140,000,000 Class A Preference shares of R0.0001 each - 14
90,000,000 Class B Preference shares of R0.0001 each 9 9
70,000,000 Class C Preference shares of R0.0001 each 7 7
17 31
Reconciliation of number of shares issued: Feb 2008 Feb 2007
Reported as at beginning of period 345,631,759 -
Treasury shares 1,747,636 (6,368,241)
Issue of shares - ordinary shares 118,279,438 352,000,000
465,658,833 345,631,759
All unissued ordinary shares are under the control of the directors in terms of
a resolution of members passed at the last annual general meeting. This
authority remains in force until the next annual general meeting.
Feb 2008 Feb 2007
Issued R`000 R`000
Ordinary shares (net of treasury shares) 0.466 0.352
Class A Preference shares - 35,200
Class B Preference shares 35,000 -
Share premium 491,904 364,694
526,905 399,894
Class A preference shares have been redeemed and
cancelled.
3. Cash (used in) / generated from operations
Feb 2008 Feb 2007
R`000 R`000
Profit before taxation 83,591 42,019
Adjustments for:
Depreciation and amortisation 15,330 8,534
Profit on sale of assets (6,702) (3,860)
Profit on foreign exchange (2,292) -
Investment revenue (12,562) (334)
Interest expense 65,985 25,167
Fair value adjustments (6,162) -
Impairments (419) 4,439
Movements in operating lease assets and accruals 677 153
Movements in provisions 73 (743)
Foreign currancy differences 1,826 (16)
Realisation of revaluation through profit /(loss) - 4,248
Other non-cash items 5,120 300
Change in working capital:
Inventories 14 -
Trade and other receivables (337,037) (82,024)
Trade and other payables 7,375 6,947
(185,183) 4,830
4. Acquisition of businesses
Feb 2008 Feb 2007
R`000 R`000
Fair value of assets acquired
Property, plant and equipment 506 7,299
Intangible assets 15,589 63,574
Other financial assets 288 911
Investment properties - 9,376
Deferred tax (663) (17,879)
Goodwill 30,273 265,022
Trade and other receivables 10,862 127,730
Inventory 14 -
Cash and cash equivalents (2,954) 5,036
Shareholders loans - (11,898)
Amounts owning to related parties - (7,047)
Long term liabilities - (38,349)
Other financial liabilities (10,779) -
Provisions (151) (2,875)
Taxation (65) (13,739)
Trade and other payables (1,094) (7,215)
Outside shareholders 738 (227)
42,564 379,719
Consideration paid
Cash (39,035) (84,200)
Equity - 281,972,500 ordinary shares in Blue - (281,973)
Financial Services Limited
Equity - 938,197 ordinary shares in Blue Financial (2,658) -
Services Limited
Deferred payments - fair value (871) (13,547)
(42,564) (379,720)
Net cash outflow on acquisition
Cash consideration paid (39,035) (84,200)
Cash acquired (2,954) 5,036
(41,989) (79,164)
COMMENTARY ON THE RESULTS
Nature of business:
Blue is a pan-African financial services supplier, providing ethical,
innovative and affordable credit solutions to people within Africa. Blue
currently operates in Botswana, Kenya, Lesotho, Namibia, Malawi, South Africa,
Tanzania, Uganda and Zambia and acquired a micro-financier in Namibia after
the reporting period. The group currently employs more than 1,700 staff and
has more than 175 branches in 12 countries in Africa.
Key features:
The key features of the reviewed results for the year ended 29 February 2008
are as follows:
* Loan book increased by 133% from R207 million to R482 million.
* Earnings increased by 93% from R32 million to R62 million.
* Earnings per share increased by 41% from 10,37 cents to 14,58 cents.
Financial overview:
Blue generated earnings of R61,7 million for the year ended 29 February 2008
(2007: R32,4 million), up 93% on the prior year. The loan book increased by
133% to R481,9 million (2007: R207 million). The inclusion of the Micro Access
Financial Services (Pty) Ltd (Future Finance) operation acquired in December
2006 for the entire reporting period, the success in growing the Botswana and
Zambian operations and developing new operations in Lesotho, Malawi and Namibia
were the main drivers of the comparative improvement in these results.
CHANGES TO THE BOARD OF DIRECTORS
Mr Navin P Kanabar (Tanzanian) was appointed as non-executive director on
13 March 2007. Mr Antonius Couloubis (Tony) from American International Group
(AIG) joined the Board as non-executive director on 1 June 2007. Mr Reynier van
der Westhuizen replaced Ms Margaretha Stoltz (Retha) as company secretary on
13 August 2007. Mr Johan C Maritz joined the Board on 1 September 2007 as
financial director, following the resignation of Mr Johan S Coetzee as financial
director with effect from that date. Mr Ceaser W Siwale retired by rotation at
the annual general meeting on 27 September 2007. On 28 February 2008 Mr Riaan
Swart resigned as an executive director of Blue with effect from 1 March 2008.
DIVIDENDS
In line with the group policy no dividend has been declared for the period.
POST BALANCE SHEET EVENTS
1. Formation of a subsidiary in Nigeria
An agreement, dated 6 March 2008, has been entered into between Blue Employee
Benefits (Pty) Limited - Botswana ("BEB"), Blue, Intercontinental Bank plc
("ICB") and AIG Capital Partners, Inc ("AIG")("the parties") in terms of which
Blue will introduce its products to Nigeria and ICB will expand its product
offering to its clients to include Blue`s products. A company, Blue
Intercontinental Micro Finance Bank ("BIMFB") ("the new project"), will be
established for this purpose ("the Agreement").
BIMFB will be a newly formed entity, established by BEB for the purpose as set
out above and will have no prior operations. BIMFB will not have any
liabilities, indebtedness or obligations other than in terms of the Agreement.
BIMFB will be registered in such a manner that its legal structure meets the
requirements of the Central Bank of Nigeria to qualify for a Micro Finance
Banking License ("MFB license"). In order to obtain a MFB license, an amount
of one billion Nigerian Naira (approximately US$8.7 million) was deposited
into an account as designated by the Central Bank of Nigeria ("the deposit").
BEB and ICB provided the funding for the deposit as set out below.
Subject to the ICB conditions precedent, the following initial subscriptions
will be made for BIMFB shares:
- 520 000 shares by BEB for a total subscription price of US$1 million;
and
- 280 000 shares by ICB for a total subscription price of US$10.8 million.
Subject to the AIG conditions precedent, AIG will purchase from BEB that
number of shares which will result in AIG holding 10% of BIMFB for US$5
million.
At the same time as the shares are sold to AIG, further BIMFB shares will be
subscribed for as follows:
- 130 000 shares by BEB for a total subscription price of US$6 million;
and
- 70 000 shares by ICB for a total subscription price of US$3.2 million.
The resulting shareholding in BIMFB will be as follows:
Shareholder % shareholding BEB or another
member of the Blue 55 group of companies ("the BEB shares") ICB
("the ICB shares") 35 AIG ("the AIG shares") 10 100
2. Acquisition of Nedfin Limited
On 8 May 2008, Blue announced that Blue Employee Benefits (Pty) Limited
Botswana, a wholly-owned subsidiary of Blue ("BEB"), has entered into a sale
agreement in terms of which BEB purchased the entire share capital inand claims
against Nedfin Limited ("Nedfin").
Nedfin, a company duly incorporated in Zambia under registration number 56964,
commenced trading in July 2005 and was granted its Non-Banking Financial
Institution Licence by the Bank of Zambia in September 2005. It is involved in
the micro-lending business, providing small to medium size loans to individuals
who are gainfully employed and where repayments in respect of such loans are
collected in cash, debit order or through payroll deduction. The business
focuses on short-term lending through its 8 Zambian branches. The Acquisition
of Nedfin will result in Blue having a combined branch network in Zambia of 20
branches and will effectively make Blue the single biggest micro financier in
Zambia.
In terms of the sale agreement, Blue acquired the entire issued share capital
in and claims against Nedfin, with effect from 1 April 2008, for a cash
consideration of $9 million (United States Dollars).
3. Issue of unsecured convertible bonds
On 15 April 2008, Blue advised shareholders that the Company has entered into
an agreement with a new foreign inventor, EMP Africa FII Investments LLC
("EMP"), in terms of which Blue will issue and sell 10 convertible bonds
("convertible bonds") for US$10 million ("the transaction").
The terms of the convertible bonds are as follows:
Issue and price: 10 convertible unsecured bonds at an
aggregate value of US$10 million.
Interest rate: 10% per annum payable bi-annually in
February and August.
Maturity date: 28 February 2013.
Conversion: All the bonds.
Conversion event: Event of material default / mandatory
conversion.
Mandatory conversion: At a price of R5.30 per Blue ordinary share
(conversion price"), operative immediately
when the price of Blue`s ordinary shares,
based on the weighted average traded price
on the JSE Limited ("JSE"), equals or
exceeds R5.83 for 30 consecutive days.
Currency: Converts to Rand at the actual exchange rate
upon initial receipt of the funds.
A circular dated 5 May 2008 was sent to shareholders, and at the general
meeting of shareholders held 21 May 2008, the resolution to issue and sell
the above 10 unsecured convertible bonds was approved by 99,9% of the
shareholders present and voting at the general meeting.
4. Botswana dual-listing
Effective 15 May 2008, the current share capital of Blue which is listed on
the JSE Limited became available for trade on the Botswana Stock Exchange
("BSE") after the Company`s dual listing on the BSE. No additional share
capital was issued.
5. Resignations and appointments to the board
Mr. Johan Christof Maritz resigned as executive finance director with
effect from 30 June 2008 due to family commitments. He will however remain
a consultant to Blue. Mr Grant Chittenden was appointed as executive finance
director in his stead. Me Genevieve Sangudi were appointed as non - executive
director on 20 May 2008.
FORWARD LOOKING STATEMENT
Blue Financial Services remains well positioned to maintain a strong growth
path through its expansion into new geographies as well as organic and
acquisitive growth in current operational areas. The focus for the year ahead
will be to kick off and bed down the Nigerian operation, build critical mass
in our East African operations consisting of Kenya, Tanzania and Uganda,
commence operations in at least 2 additional countries, further diversify
our loan product offering and to accelerate the group`s insurance product
roll-out. Strong emphasis will be placed on the enhancement of our business
processes, operating systems and communication platforms over the next 12
months.
UNMODIFIED AUDIT OPINION
PKF (Pta) Inc, the group`s independent auditors, has audited the financial
statements that comprise the balance sheet at 29 February 2008, income
statement, statement of changes in equity and cashflow statement for the year
then ended, and explanatory notes, and have expressed an unmodified audit
conclusion on these financial statements. The audit report is available for
inspection at the company`s registered office.
NOTICE OF ANNUAL GENERAL MEETING AND MAILING OF ANNUAL REPORT
Shareholders are advised that the annual report for the financial year ending
29 February 2008 will be mailed shortly. This report will contain details of
the annual general meeting of shareholders. Additional announcements regarding
the date, time and venue of the annual general meeting of shareholders will be
made in the daily press.
For and on behalf of the Board
D van Niekerk G Chittenden
Chairman and CEO Financial Director
22 July 2008
Directors: D van Niekerk (Chairman and CEO); G Chittenden(Financial Director);
WJ Smit (Legal Director); MJ Sondiyazi*,A Steyn*; A Couloubis*, NP
Kanabar*(Tanzanian) and G Sangudi* *non-executive
Registered Office:
Blue Building, 10 Boardwalk Office Park, 107 Haymeadow Street, Faerie Glen,
Pretoria, 0081
PO Box 72041, Lynnwood Ridge, 0040
Auditors:
PKF (Pta) Inc
Registration number 2000/026635/21
Designated Advisor:
PSG Capital (Pty) Limited
Registration number 2006/015817/07
Transfer Secretaries:
Link Market Services (Pty) Ltd11 Diagonal Street, Johannesburg, 2001(PO Box
4844, Johannesburg, 2000)
Company Secretary:
Mr. Reynier van der Westhuizen 10 Boardwalk Office Park, 107 Haymeadow Street,
Faerie Glen, Pretoria, 0081
reynier@blue.co.zaTel: (012) 990 8400
Group head office: Tel: +27 12 990 8400 Fax: +27 86 637 6033
E-mail: blue@blue.co.za
www.blue.co.za
0081, South Africa
Date: 23/07/2008 09:02:43 Produced by the JSE SENS Department.
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