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BFS
BFS
BFS - Blue Financial Services - Reviewed Condensed Consolidated Interim
Financial Results For Six Months Ended 31 August 2008
BLUE FINANCIAL SERVICES
Registration number: 1996/006595/06
JSE code: BFS & ISIN: ZAE000083655
("The Group" or "the Company" or "Blue")
REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR SIX MONTHS
ENDED 31 AUGUST 2008
SALIENT HIGHLIGHTS
* Loan book increased by 236% from R261 million to R876 million (FY `08 R482
million).
* Earnings increased by 167% from R19.6 million to R52.6 million (FY `08
R61.7 million).
* Earnings per share increased by 112% from 5.31 cents to 11.27 cents
(FY 08 14.58 cents).
GROUP INCOME STATEMENT for the six months ended 31 August 2008
Reviewed Reviewed % Audited year
6 months 6 months change ended
Ended Ended 29 Feb 2008
31 Aug 31 Aug R`000
2008 2007
R`000 R`000
Interest income 187,360 87,913 113 182,720
Interest expense (61,438) (15,875) 287 (65,985)
Net interest income 125,922 72,038 75 116,735
Administration and 117,701 233 148,338
insurance income 35,330
Other operating 13,317 2,565 419 16,898
income
Operating income 256,940 109,933 134 281,971
(Impairment)/Reversal (19,146) 791 (4,472)
of loan advances 2,771
Operating expenses (165,116) (85,914) 92 (212,632)
Operating profit 72,678 26,790 171 64,867
Investment revenue 3,511 - - 12,562
Fair value - - - 6,162
adjustments
Profit before 76,189 26,790 184 83,591
taxation
Taxation (23,603) (7,129) 231 (21,848)
Profit for the period 52,586 19,661 167 61,742
Reconciliation of
earnings to headline
earnings:
Profit after taxation 52,586 19,661 167 61,742
Less minority - - - -
interest
Earnings 52,586 19,661 167 61,742
Less: Negative - (418) (100) (418)
goodwill
Less: Profit on sale (351) 185 (3,162)
of property, plant
and equipment (123)
Less: Fair value - - (6,162)
adjustments -
Headline earnings 52,235 19,120 173 52,000
Number of shares in 479,998 465,659
issue (net of
treasury shares)in
million 435,073
Weighted number of 466,516 423,520
shares in issue in
million 369,949
Fully diluted number 548,035 470,548
of shares in issue in
million 445,380
Earnings per share in 11.27 112 14.58
cents 5.31
Fully diluted 10.09 115 13.93
earnings per share in 4.70
cents
Headline earnings per 11.20 117 12.28
share 5.17
Fully diluted 10.03 119 11.86
headline earnings per
share in cents 4.58
GROUP BALANCE SHEET as at 31 August 2008
Reviewed Reviewed % Audited
6 months 6 months change year
ended ended ended
31 August 31 August 29 Feb
2008 2007 2008
R`000 R`000 R`000
Assets
Cash and cash 40,182 140,623 (71) 66,976
equivalents
Loan advances 876,460 260,620 236 481,941
Other receivables 47,003 3,955 1088 8,362
Inventories 145 6 2317 -
Other financial 87,777 6,697 1211 122,841
assets
Investment property - 1,942 (100) -
Property, plant and 70,139 26,004 170 44,101
equipment
Current tax 12,460 - - 1,496
receivable
Deferred tax 34,309 7,834 338 19,786
Intangible assets 64,825 57,396 13 67,515
Goodwill 358,729 277,574 29 295,714
Total assets 1,592,029 782,651 103 1,108,732
Equity and
liabilities
Equity
Share capital 640,332 437,228 46 526,906
Reserves 3,130 (518) 704 2,057
Accumulated profit 146,385 51,719 183 93,799
Minority interest (198) (200) 1 (198)
Total equity 789,649 488,229 62 622,564
Liabilities
Bank overdraft 77,077 16,135 378 12,835
Trade and other 40,885 20,920 95 22,634
payables
Current tax payable 84,356 17,663 378 35,749
Other financial 553,576 211,228 162 385,199
liabilities
Finance lease 10,102 11,179 (10) 9,055
obligation
Loans from 16,958 328 5070 -
shareholders
Provisions 3,782 174 2074 2,355
Operating lease 840 145 479 830
liability
Deferred tax 14,804 16,650 (11) 17,511
Total liabilities 802,380 294,422 173 486,168
Total equity and 1,592,029 782,651 103 1,108,732
liabilities
Net asset value per 164.51 112.22 47 133.70
share in cents
Tangible net asset 76.27 35.23 116 55.69
value per share in
cents
GROUP CASH FLOW STATEMENT for the six months ended 31 August 2008
Reviewed Reviewed % Audited
6 months 6 months change 12 months
Ended Ended ended
31 Aug 31 Aug 29 Feb
2008 2007 2008
R`000 R`000 R`000
Cash flows from
operating activities
Cash (used in)/ (246,931) 114 216706 (185,184)
generated by
operations
Interest income 3,511 - - 12,563
Interest expense (60,672) (15,875) 282 (65,985)
Taxation paid (7,126) (14,600) 51 (23,868)
Other non cash items - 606 100 606
Net cash utilised in (311,218) (29,755) 946 (261,868)
operating activities
Cash flows from
investing activities
Property, plant and (29,990) (9,037) 432 (32,186)
equipment acquired
Proceeds on disposal 351 166 111 6,063
of property, plant
and equipment
Acquisition of other (1,500) (1,855) 19 -
intangible assets
Acquisition of (59,761) - - (41,988)
businesses
Loans advanced to - - - -
group companies
Purchase of financial - (2,919) 100 (44,932)
assets
Proceeds on disposal 37,000 - -
of financial assets
Net cash utilised (53,900) (13,645) 295 (113,043)
investing activities
Cash flows from
financing activities
Proceeds on issue of - - - 84,233
ordinary shares
Proceeds on issue of 37,426 34,676 8 35,000
redeemable preference
shares
Redemption of - - - -
redeemable preference
shares/debentures
Finance lease
received/(repayments) 281 - (2,938)
Shareholders loan 16,958 - - (328)
received/(repayments)
Financial liabilities 219,418 153,685 43 333,558
raised / (repaid)
Net cash generated 274,083 188,361 46 449,525
from financing
activities
Total cash movement (91,035) 144,961 (163) 74,614
for the period
Cash and cash 54,140 (20,474) 364 (20,474)
equivalents at
beginning of the
period
Total cash at the end (36,895) 54,140
of the period 124,487 (130)
GROUP STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 August 2008
Total share Foreign Retained Total
capital currency Income attributable
translation to equity
reserve holders of the
group
R `000 R `000 R `000 R `000
Balance at 1 March 399,893 (16) 32,058 431,935
2007
Currency translation - (502) - (502)
differences
Total income - (502) - (502)
recognised directly in
equity for the period
Profit for the period - - 19,661 19,661
Total recognised - (502) 19,661 19,159
income and expenses
for the period
Issue of ordinary 37,858 - - 37,858
shares
Treasury shares issued - - - -
to staff
Employees share option - - - -
scheme: Proceeds of
shares issued
Redemption of (35,200) - - (35,200)
preference shares
Issue of preference 34,676 - - 34,676
shares
Share issue costs - - - -
Purchased minority - - - -
interest
Total changes 37,334 (502) 19,661 56,493
Balance at 31 August 437,227 (518) 51,719 488,428
2007
Balance at 1 September 437,227 (518) 51,719 488,428
2007
Currency translation - 2,575 - 2,575
differences
Total income - 2,575 - 2,575
recognised directly in
equity for the period
Profit for the period - - 42,081 42,081
Total recognised - 2,575 42,081 44,656
income and expenses
for the period
Issue of ordinary 85,800 - - 85,800
shares
Treasury shares issued 1,748 - - 1,748
to staff
Employees share option 3,373 - - 3,373
scheme: Proceeds of
shares issued
Redemption of - - - -
preference shares
Issue of preference 324 - - 324
shares
Share issue costs (1,567) - - (1,567)
Purchased minority - - - -
interest
Total changes 89,679 2,575 42,081 134,334
526,906 2,057 93,799 622,762
Balance at 29 February
2008
Changes in equity
526,906 2,057 93,799 622,762
Balance at 1 March
2008
- 1,073 - 1,073
Total income
recognised directly in
equity for the period
Profit for the period - - 52,586 52,586
Total recognised - 1,073 52,586 53,659
income and expenses
for the period
Issue of ordinary 76,000 - - 76,000
shares
Issue of preference 37,426 - - 37,426
shares
Total changes 113,426 1,073 52,586 167,085
Balance at 31 August 640,332 3,130 146,385 789,847
2008
GROUP STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 August 2008 (contd.)
Minority Total
interest equity
R `000 R `000
Balance at 1 March 2007 540 432,475
Currency translation differences - (502)
Total income recognised directly - (502)
in equity for the period
Profit for the period - 19,661
Total recognised income and - 19,159
expenses for the period
Issue of ordinary shares - 37,858
Purchase of own / treasury - -
ordinary shares
Employees share option scheme: - -
Proceeds of shares issued
Redemption of preference shares - (35,200)
Issue of preference shares - 34,676
Share issue costs - -
Purchased minority interest (738) (738)
Total changes (738) 55,755
Balance at 31 August 2007 (198) 488,230
(198) 488,230
Balance at 1 September 2007
- 2,575
Currency translation differences
Total income recognised directly - 2,575
in equity for the period
Profit for the period - 42,081
Total recognised income and - 44,656
expenses for the period
Issue of ordinary shares - 85,800
Purchase of own / treasury - 1,748
ordinary shares
Employees share option scheme: - 3,373
Proceeds of shares issued
Redemption of preference shares - -
Issue of preference shares - 324
Share issue costs - (1,567)
Purchased minority interest - -
Total changes - 134,334
Balance at 29 February 2008 (198) 622,564
(198) 622,564
Changes in equity
Balance at 1 March 2008
- -
Currency translation differences - 1,073
Total income recognised directly - 1,073
in equity for the period
Profit for the period - 52,586
Total recognised income and - 53,659
expenses for the period
Issue of ordinary shares - 76,000
Issue of preference shares - 37,426
Total changes - 167,085
Balance at 31 August 2008 (198) 789,649
GROUP SEGMENTAL ANALYSIS for the six months ended 31 August 2008
South Africa Botswana
Reviewed Reviewed Audited Reviewed Reviewed Audited
6 months 6 months 12 months 6 months 6 months 12
to To to to to Months
31 Aug 31 Aug 29 Feb 31 Aug 31 Aug To
29 Feb
2008 2007 2008 2008 2007 2008
R `000 R `000 R`000 R `000 R `000 R`000
Interest 72,597 65,863 36,632 12,148
income 109,619 30,332
Interest (44,631) (8,597) (12,469) (3,033)
expense (35,621) (15,499)
Net 27,966 57,266 24,163 9,115
interest 73,998 14,833
income
Administ 35,178 19,883 20,467 7,518
ration
and 21,153
insuranc 56,776
e income
External 18,873 8,563 20,467 7,518
administ
ration
and 21,153
insuranc 38,316
e income
Interseg 16,305 11,320 - -
ment
administ
ration 18,460 -
and
insuranc
e income
Other
operatin
g income 10,482 2,327 8,316 358 236 2,819
Operatin 73,626 79,476 44,988 16,869
g income 139,090 38,805
Impairme (4,861) 4,504 (2,924) (78)
nt of 2,311 (2,684)
loan
advances
Operatin (103,918) (61,880) (12,524) (12,614)
g (142,167) (24,787)
expenses
Operatin (35,153) 22,100 29,540 4,177
g profit (765) 11,334
Investme 3,511 - - -
nt 12,563 -
revenue
Fair - - - -
value 6,162 -
adjustme
nts
Segment (31,642) 22,100 29,540 4,177
result:
profit
before 17,194 11,334
taxation
1,091,210 366,137 165,074 66,450
Segment 709,679 92,868
assets
Segment (778,668) (198,947) (195,473) (50,236)
liabilit (497,584) (66,964)
ies
Fair - - - -
value 6,162 -
adjustme
nts
Deprecia 3,869 5,305 241 995
tion and
amortisa 9,822 2,043
tion
Capital 17,314 5,174 8,213 220
expendit 10,329 8,144
ure
GROUP SEGMENTAL ANALYSIS for the six months ended 31 August 2008 (contd.)
Zambia Malawi
Reviewed Reviewed Audited Reviewed Reviewed Audited
6 months 6 months 12 months 6 months 6 months 12
To To to to to months
31 Aug 31 Aug 29 Feb 31 Aug 31 Aug to
29 Feb
2008 2007 2008 2008 2007 2008
R `000 R `000 R`000 R `000 R `000 R`000
47,014 8,106 20,598 10,955 - 3,750
Interest
income
Interest (11,548) (3,666) (7,291) (2,933) - (1,677)
expense
Net 35,466 4,440 13,307 8,022 - 2,073
interest
income
Administrat 29,216 15,311 20,957 -
ion and
insurance 43,855 21,714
income
External
administrat
ion and
insurance 29,216 15,311 43,855 20,957 - 21,714
income
Intersegmen - - - -
t
administrat
ion and - -
insurance
income
Other 38 - - -
operating 948 1,238
income
Operating 64,720 19,751 28,979 -
income 58,110 25,025
Impairment (980) (962) (2,068) -
of loan (2,340) (328)
advances
Operating (18,857) (10,214) (7,033) -
expenses (23,271) (4,303)
Operating 44,883 8,575 19,878 -
profit 32,499 20,394
Segment 44,883 8,575 19,878 -
result:
profit 32,499 20,394
before
taxation
Segment 192,425 46,126 91,617 94,271 - 44,681
assets
Segment (126,164) (36,725) (65,311) -
liabilities (55,335) (23,863)
Fair value - - - - - -
adjustments
Depreciatio 426 523 177 -
n and
amortisatio 1,090 91
n
Capital 122 892 979 -
expenditure 981 1,765
GROUP SEGMENTAL ANALYSIS for the six months ended 31 August 2008 (contd.)
Other Eliminated
Reviewed Reviewed Audited Reviewed Reviewed Audited
6 months 6 months 12 months 6 months 6 months 12 months
to 31 to 31 Aug To to 31 Aug to 31 To
Aug 29 Feb Aug 29 Feb
2008 2007 2008 2008 2007 2008
R `000 R `000 R`000 R `000 R `000 R`000
Interest -
income 1,797 18,421 (22,032) -
42,194
Interest (5,897)
expense (11,889) (580) 22,032 - -
Net interest
income 30,305 1,217 12,524 - - -
Administrati
on and
insurance 28,188 3,938 23,300 (16,305) (11,320) (18,460)
income
External
administrati
on and
insurance 28,188 3,938 23,300 - - -
income
Intersegment
administrati
on and
insurance - - - (16,305) (11,320) (18,460)
income
Other 2
operating
income 2,441 3,578 - - -
Operating 5,157
income 60,934 39,402 (16,305) (11,320) (18,460)
Impairment (693)
of loan (8,312) (1,432) - - -
advances
Operating (12,526) 11,320
expenses (39,089) (36,565) 16,305 18,460
Operating (8,062)
profit 13,533 1,405 - - -
Segment (8,062)
result:
profit
before 13,533 1,405 - - -
taxation
Segment 257,996 35,008 165,254 (639,659) (73,874) (366,395)
assets
Segment (48,075)
liabilities (263,008 (158,813) 639,659 73,874 366,395
)
Fair value - - - - - -
adjustments
Depreciation 429
and
amortisation 1,946 2,283 - - -
Capital 2,751
expenditure 3,363 10,967 - - -
GROUP SEGMENTAL ANALYSIS for the six months ended 31 August 2008 (contd.)
Consolidated
Reviewed Reviewed Audited
6 months to 6 months to 12 months
31 Aug 31 Aug to 29 Feb
2008 2007 2008
R `000 R `000 R`000
Interest income 187,360 87,914 182,720
Interest expense (61,438) (15,876) (65,985)
Net interest income 125,922 72,038 116,735
Administration and insurance 117,701 35,330 148,338
income
External administration and 117,701 35,330 148,338
insurance income
Intersegment administration - - -
and insurance income
Other operating income 13,319 2,565 16,899
Operating income 256,942 109,933 281,972
Impairment of loan advances (19,145) 2,771 (4,473)
Operating expenses (165,116) (85,914) (212,633)
Operating profit 72,678 26,790 64,866
Investment revenue 3,511 - 12,563
Fair value adjustments - - 6,162
Segment result: profit 76,189 26,790 83,591
before taxation
Taxation (23,603) (7,129) (21,849)
Profit after taxation 52,586 19,661 61,742
Other disclosures
Segment assets 1,161,317 439,847 737,704
Segment liabilities (788,965) (260,109) (436,164)
Fair value adjustments - - 6,162
Depreciation and 6,659 7,252 15,329
amortisation
Capital expenditure 29,991 9,037 32,186
Reconciliation of segment
assets and assets per
balance sheet
Assets per segments 1,800,977 513,721 1,104,099
Intercompany loans (639,659) (73,874) (366,395)
eliminated
Sub-total 1,161,318 439,847 737,704
Goodwill 358,729 277,574 295,714
Intangible assets 64,825 61,049 67,515
Amortisation of Intangible - (3,653) -
Assets
Deferred tax assets 7,157 7,834 7,798
Assets per balance sheet 1,592,029 782,651 1,108,731
Reconciliation of segment
liabilities and liabilities
per balance sheet
Liabilities per segments (1,428,625) (333,893) (802,559)
Intercompany loans 639,659 73,874 366,395
eliminated
Sub-total (788,966) (260,019) (436,164)
Deferred tax liabilities 13,414 (16,650) (15,750)
Income tax liabilities - (17,663) (34,253)
Liabilities per balance (802,380) (294,332) (486,167)
sheet
NOTES
BASIS OF PREPARATION
The reviewed condensed consolidated interim financial results of the company
at 31 August 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 periods. These reviewed interim 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), the presentation and disclosure
requirements of International Accounting Standard: Interim Financial
Reporting (IAS34) and the JSE Listings Requirements. In the preparation of
these interim 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 the Group financial statements
for the six months ended 31 August 2008. These assumptions are subject to
ongoing review and possible amendments.
1. Loans and advances to customers
Reviewed Reviewed 6 Audited
6 months months 12 months
to to to
31 Aug 31 Aug 29 Feb
2008 2007 2008
R`000 R`000 R`000
Gross loans and advances 935,405 270,428 513,508
Less: Allowance for impairment of (9,808) (31,567)
loans and advances (58,945)
876,460 260,620 481,941
Movement on allowance for
impairment
Opening balance (31,567) (6,640) (6,640)
Change for the period (18,848) (3,168) (16,556)
Subsidiaries acquired (8,530) - (8,371)
(58,945) (9,808) (31,567)
2. Goodwill
Reviewed 6 months ended
31 Aug 2008
Cost/ Accumulated Carrying
valuation amortization value
R`000 R`000 R`000
Goodwill 358,729 - 358,729
Reviewed 6 months ended
31 Aug 2007
Cost/ Accumulated Carrying
valuation amortization value
R`000 R`000 R`000
Goodwill
Reconciliation of goodwill Reviewed 6 months ended
31 Aug 2008
Opening Additions Foreign Total
Balance Through exchange R`000
R`000 Business movements
Combination R`000
R`000
Goodwill 295,714 62,943 72 358,729
Reconciliation of goodwill Reviewed 6 months ended
31 Aug 2007
Opening Additions Total
Balance Through R`000
R`000 Business
Combination
R`000
Goodwill 265,022 12,552 277,574
3. Acquisition of
businesses
Reviewed 6 Reviewed 6 Audited 12
months to months months
31 Aug 2008 to to
31 Aug 2007 29 Feb
2008
R`000 R`000 R`000
Fair value of assets
acquired
Property, plant and 2,706 218 506
equipment
Intangible assets - 2,029 15,589
Other financial assets - 288
Deferred tax 702 (588) (663)
Goodwill 62,943 12,134 30,692
Negative goodwill - - (419)
Trade and other receivables 28,916 2,148 10,862
Inventory - 33 14
Other financial liabilities (14,054) (10,366) (10,779)
Cash and cash equivalents 9,556 2,153 (2,953)
Provisions (6,095) (151) (151)
Taxation (4,628) (49) (66)
Trade and other payables (6,852) (762) (1,094)
Minority shareholders - 738 738
73,194 7,537 42,564
Consideration paid
Cash (69,317) (4,008) (39,035)
Deferred payments - Fair (3,877) (871) (871)
value
Equity - 938,197 ordinary - (2,658) (2,658)
shares in Blue Financial
Services Limited
(73,194) (7,537) (42,564)
Net cash outflow on
acquisition
Cash consideration paid (69,317) (4,008) (39,035)
Cash acquired 9,556 2,153 (2,953)
(59,761) (1,855) (41,988)
Blue acquired 100% of the shareholding in Nedfin Limited, incorporated in
Zambia, with effect from 1 April 2008, for a cash consideration of US$9
million.
No operations acquired have been subsequently disposed of. The initial
accounting for the business combination that is reflected in the results is
only provisional and will be finalised within the timeframe specified by IFRS
3 - Business Combinations. Management are currently in the process of
finalising the purchase price allocation.
4. Related parties
Relationships
Entity of which the directors are also directors of that company: Blue
Easybuild (Pty) Limited
Capital Alliance (Pty) Limited Shareholder of entity with significant
influence: Northern Spark Trading 108 (Pty) Limited
Related party balances Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
31 Aug 31 Aug 2007 29 Feb
2008 R`000 2008
R`000 R`000
Loan accounts - owing (to) by
related parties
Blue Easybuild (Pty) Limited 2,293 5,201 14,319
Northern Spark Trading 108 (Pty) 63,303 - 64,503
Limited
Blue Developments (Pty) Limited - - 16,397
D. Van Niekerk (16,958) (164)
(shareholder/director)
R. Swart (shareholder/director) (164)
Related party transactions
Sale of debtors book
Northern Spark Trading 108 (Pty) - - 70,891
Limited
Sale of Aeroplanes
Capital Alliance (Pty) Limited - - 3,042
5. Re-classification of comparative results (31 August 2007)
Balance Sheet - In line with IAS 1, par 60, Blue elected in 2008 to present
their financial results with no split between long-term and short-term assets
and liabilities and present only assets, liabilities and equity in order of
liquidity.
Income Statement - The income statement for the comparative period has been
amended to more appropriately reflect the various income streams from Blue`s
products.
Previously presented
R` 000
Revenue 124,095
Other income 1,713
Operating expenses (83,143)
Operating profit 42,665
Net finance cost (15,875)
Profit before taxation 26,790
Currently presented
Interest Income 87,913
Interest expense (15,875)
Net interest income 72,038
Administrative and insurance 35,330
income
Other operating income 2,565
Operating income 109,933
(Impairment)/ reversal of loan 2,771
advances
Operating expenses (85,914)
Profit before taxation 26,790
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, Zambia, Namibia and Rwanda. After the reporting
period, Blue Intercontinental Microfinance Bank commenced trading in Nigeria.
Blue holds a 55% equity stake in this partnership with Intercontinental Bank
plc ("ICB") and American International Group ("AIG") and manages the day to
day operations.
The Group currently employs more than 2,000 staff and has more than 193
branches in 12 countries on the continent.
Financial overview:
Blue generated earnings of R52,6 million for the six months ended 31 August
2008 (2007 interim period: R19,6 million), up 168% on the comparative
reporting period. The loan book increased by 236% to R876 million (2007
interim period: R261 million). More importantly, the loan book has increased
by 82% from R482 million as at 28 February 2008.
This has culminated in a growth in Earnings per share of 112% from 5.31 cents
(2007 interim period) to 11.27 cents (2008 interim period).
The main catalyst for the comparative improvement has been the Groups`s
ability to capitalize on organic growth across all it`s existing operations,
whilst being able to roll out new operations efficiently and quickly as a
result of extensive investment in technology, business process and
centralized operational support.
South Africa, Botswana and Zambia continued to perform well with strong loan
book growth since 28 February 2008 of 65%, 76% and 83% respectively. East
Africa also performed admirably with a loan book growth of 87% over the last
six months, since 28 February 2008, and these operations are expected to add
significantly to earnings in future. Malawi and Namibia exceeded all
expectations with loan growth of 134% and 111% respectively over the last six
months.
The Group is also pleased to report that despite the rapid growth in the loan
book and expansion over the comparative 6 month reported on, the Group`s
funding liabilities have only increased by 162% from R211.2 million (2007
interim period) to R553.6 million as at 31 August 2008. This is made possible
by consistent group collections and the implementation of strong cash flow
management processes which ensure optimal usage of available working capital.
CHANGES TO THE BOARD OF DIRECTORS
On 21 May 2008, Ms. Genevieve Linda Sangudi was appointed as non-executive
director. Mr Johan C Maritz resigned from the board with effect 30 June 2008
and was replaced by Mr Grant Chittenden as Executive Finance Director. After
the reporting period, Mr. Navin P Kanabar - having been re-elected at the
Group`s annual general meeting - retracted his election as independent non-
executive director on 22 September 2008.
DIVIDENDS
In line with the Group policy no dividend has been declared for the period.
POST BALANCE SHEET EVENTS
Formation of a subsidiary in Nigeria
An agreement, dated 6 March 2008, was 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"), was
established and launched on 17 September 2008.
The resulting shareholding in BIMFB will be as follows:
Shareholder
%
Shareholding
BEB or another member of the Blue group
of companies ("the BEB shares") 55
ICB ("the ICB shares") 35
AIG ("the AIG shares") 10
100
Credit U Holdings Limited offer to purchase
Blue Financial Services Limited has made a firm offer to the board of Credit
U Holdings Limited ("Credit U") on 7 August 2008 to acquire the entire issued
ordinary share capital of Credit U, excluding the 2 250 000 treasury shares
held by the Employee Share Incentive Scheme ("the Credit U acquisition").
The offer entails that Credit U ordinary shareholders will be offered 44.5
Blue ordinary shares for every 100 Credit U ordinary shares held. The offer
amounts to a total purchase consideration of R278 147 250 (based on 115 750
000 Credit U ordinary shares in issue excluding 2 250 000 treasury shares
held by the Credit U Employee Share Incentive Scheme), which effectively
translates into a price of 240 cents per Credit U ordinary share. Blue will
issue 51 508 750 ordinary shares at an issue price of 540
cents per share.
AIG Class B preference share conversion and issue of Blue ordinary shares
American International Group ("AIG") converted 61 801 756 Blue Class B
preference shares, based on agreed upon conversion calculations as more fully
set out in Annexure 12 of the Company`s pre-listing statement dated 11
October 2006 (available on www.blue.co.za). The 48 461 893 Blue ordinary
shares (the AIG conversion shares) were issued and listed on the JSE Limited
with effect from the commencement of trade on Friday, 19 September 2008. The
issue of the AIG conversion shares results in AIG having an effective
interest of 22% in Blue.
Results of Annual General Meeting
Blue held an annual general meeting on 22 September 2008. The results of the
ordinary and special resolutions accepted were published on SENS on 22
September. All resolutions were passed by shareholders.
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 directors believe that
the acquisition of Credit U will further enhance Blue`s South African
operations and footprint, making Blue the undisputed largest non-deposit
taking micro-financier in the country. Similarly, the Nigerian operation
holds significant potential, which is currently being unlocked.
The second half of the financial year usually produces stronger results. Blue
will also focus over the next six months to continue building critical mass
in the Group`s East African operations consisting of Kenya, Tanzania, Uganda
and Rwanda.
The Group`s emphasis on the enhancement of its business processes, operating
systems and communication platforms continues. Blue`s investment in ICT
infrastructure over the last 12 months allows it to maintain an aggressive
expansion strategy without compromising on its Corporate Governance and risk
management practices.
Negotiations to expand to new countries in various stages and shareholders
will be advised as soon as the relevant Central Bank approval to operate in
these territories have been obtained.
UNMODIFIED REVIEW OPINION
PKF (Pta) Inc. and KPMG Inc., the Group`s independent auditors, have jointly
reviewed the interim financial statements that comprise the condensed
consolidated balance sheet at 31 August 2008, condensed consolidated income
statement, condensed consolidated statement of changes in equity and
condensed consolidated cashflow statement for the six months then ended, and
selected explanatory notes, and have expressed an unmodified review
conclusion on these financial statements. Their review report is available
for inspection at the company`s registered office.
For and on behalf of the Board
D van Niekerk G Chittenden
Chairman and CEO Financial Director
20 October 2008
Directors: D van Niekerk (Chairman and CEO); G Chittenden(Financial
Director); WJ Smit (Legal Director); MJ Sondiyazi*,A Steyn*; A Couloubis*;
and G Sangudi*+
*non-executive+ Tanzanian
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
KPMG Inc.
Registration number 1992/021543/21
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 Westhuizen10 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: 20/10/2008 08:31:10 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.
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