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BFS
BFS
BFS - Blue - Reviewed Provisional Condensed Results For The Year Ended 28
February 2009
BLUE FINANCIAL SERVICES LIMITED
(Registration number 1996/006595/06)
(Incorporated in the Republic of South Africa)
JSE Code: BFS
BSE Code: BLUE
ISIN: ZAE000083655
("Blue" or "the Group")
SUMMARY OF REVIEWED CONDENSED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2009
* Operating Income up by 161% from R282.0 million to R736.3 million
* Earnings of R118.9million up 92.6%
* Headline Earnings Per Share up 5.5% from 12.28cps to 12.96cps
* Loan book increased by 201% from R482 million to R1,45 billion
GROUP INCOME STATEMENT for the year ended 28 February 2009
Audited Reviewed
12 months to 12 months to
29 Feb 28 Feb
2008 2009 Change
R`000 R`000 %
Interest income 182 720 531 541 190,90
Interest expense (65 985) (140 778) 113,35
Net interest income 116 735 390 763 234,74
Administration and insurance
income 148 339 201 174 35,62
Other operating income 16 898 144 369 754,36
Operating income 281 971 736 307 161,13
Non-loan advances gross profit 37 278
Non-loan advances sales (4 236)
Non-loan advances cost of sales 33 042
Other income 35 622 149 509 318,71
Impairment of loan advances (4 472) (93 185) 1983,74
Operating expenses (212 633) (526 391) 147,56
Operating profit 64 867 149 773 130,89
Investment revenue 12 563 6 649 (47,07)
Fair value adjustments 6 162 (1 509) (124,49)
18 724 5 139 (72,55)
Profit before taxation 83 591 154 912 (85,32)
Taxation (21 849) (44 047) (101,60)
Profit after taxation 61 742 110 865 101,60
Attributable to:
Equity Holders of the parent 61 742 118 958
Less Minority Interest - (8 093)
Reconciliation of earnings to
headline earnings
Profit after taxation 61 742 110 865
Less: Minority interest - (8 093)
Earnings 61 742 118 958
Less: Negative goodwill (418)
Add: Goodwill impairment - -
Less: Profit on sale of property, (3 162) -
plant and equipment
Less: Fair value adjustments (6 162)
Less: Profit on sale of shares - (80 499)
Headline earnings 52 000 66 927
Number of shares in issue (net of 465 659 582 338
treasury shares) (`000)
Weighted number of shares in issue 423 520 516 428
(`000)
Fully diluted number of shares in 470 548 556 305
issue (`000)
Earnings per share in cents 14,58 23,03
Headline earnings per share 12,28 12,96
Diluted earnings per share 13,93 21,82
Diluted Headline earnings per share 11,86 12,47
GROUP BALANCE SHEET as at 28 February 2009
Audited Reviewed
29 Feb 28 Feb
2008 2009
R`000 R`000
Assets
Cash and cash equivalents 66 976 177 818
Loan advances 481 941 1 448 100
Trade and other receivables 8 362 44 310
Other financial assets 122 842 53 237
Inventory - 3 632
Property, plant and equipment 44 101 107 212
Current tax receivable 1 496 5 608
Deferred tax 19 786 106 157
Intangible assets 67 515 54 779
Goodwill 295 714 651 333
Total assets 1 108 732 2 652 187
Equity and liabilities
Equity
Share capital 526 906 925 992
Reserves 2 052 (966)
Retained income 93 800 221 182
Minority interest (198) 36 227
Total equity 622 565 1 182 435
Liabilities
Bank overdraft 12 835 89 083
Trade and other payables 22 633 107 729
Current tax payable 35 748 120 272
Other financial liabilities 385 199 828 681
Finance lease obligation 9 055 17 390
Loans from shareholders - 270 785
Provisions 2 355 8 518
Operating lease liability 830 3 824
Deferred tax 17 511 23 469
Total liabilities 486 166 1 469 751
Total equity and liabilities 1 108 732 2 652 186
Net asset value per share in cents 133,41
Tangible net asset value per share 55,34
in cents
GROUP CASH FLOW STATEMENT for the year ended 28 February 2009
Audited Reviewed
12 months 12 months
to to
29 Feb 28 Feb
2008 2009
R`000 R`000
Cash flows from operating activities
Cash generated by/(utilised in)
operations (185 183) (433 220)
Interest expense (65 985) (140, 778)
Investment revenue 12 563 6 649
Taxation paid (23 869) (11 133)
Non-cash items 606
Net cash from operating activities (261 868) (578 482)
Cash flows from investing activities
Property, plant and equipment acquired (32 186) (65 933)
Proceeds on disposal of property,
plant and equipment 6 063 470
Proceeds on disposal of investment
property - (1 500)
Acquisition of businesses (41 988) (29 665)
Purchase of financial assets -
Proceeds on disposal of financial assets (44 932) 71 315
Proceeds on disposal of investment
in Nigeria 101 923
Net cash from investing activities (113 043) 76 610
-
Cash flows from financing activities
Proceeds on issue of ordinary shares 84 233 75 016
Proceeds on issue of redeemable preference 35 000 37 426
shares
Proceeds from other financial liabilities 333 558 384 334
Finance lease repayments (2 938) 2 904
Shareholders` loan repaid (328)
Net cash from financing activities 449 525 536 466
Total cash movement for the year 74 613 34 594
Cash and cash equivalents at beginning
of the period (20 474) 54 140
p
Cash and cash equivalents at end of the year 54 140 88 735
GROUP STATEMENT OF CHANGES IN EQUITY for the year ended 28 February 2009
Total Foreign Revaluation
share currency reserve
capital translation
reserve
Figures in Rand
Balance at 1 March 2007 399 894 (16) -
Changes in equity
Currency translation - 2 075 -
differences
Total recognized income and - 2 075 -
expenses for the year
Profit for the year
Total recognized income and - 2 075 -
expenses for the year
Issue of shares 123 657 - -
Purchase of 1 748 - -
own/treasury ordinary
shares
Employee share option 3 373 - -
Scheme: Proceeds of
shares issued
Redemption of preference (35 200) - -
shares
Issue of preference
Shares 35 000 - -
Share issue costs (1 567)
Acquired through business
combinations - - -
Total Changes 127 011 2 075 -
Accumulated Total Minority
Profit attributable interest
to equity
holders of the
group/company
Figures in Rand
Balance at 1 March 2007 32 057 431 935 539 Changes in
equity
Currency translation 2 075
differences
Total recognized income and 2 075
expenses for the year
Profit for the year 61 742 61 742
Total recognized income and 61 742 63 816
expenses for the year
Issue of shares 123 657
Purchase of 1 748
own/treasury ordinary
shares
Employee share option 3 373
Scheme: Proceeds of
shares issued
Redemption of preference (35 200)
shares
Issue of preference shares 35 000
Share issue costs (1 567 )
Acquired through business
combinations - (738 )
Total Changes 61 742 190 873 (738 )
Balance at 1 March 2008
Changes in equity
Total equity
Figures in Rand
Balance at 1 March 2007 432 475
Changes in equity
Currency translation 2 075
differences
Total recognized income and 2 075
expenses for the year
Profit for the year 61 742
Total recognized income and 63 816
expenses for the year
Issue of shares 123 657
Purchase of
own/treasury ordinary 1 748
shares
Employee share option 3 373
Scheme: Proceeds of
shares issued
Redemption of preference (35 200 )
shares
Issue of preference shares 35 000
Share issue costs (1 567 )
Acquired through business (738 )
combinations -
Total Changes 190 089
Balance at 1 March 2008
Changes in equity
Total Foreign Revaluation
share currency reserve
capital translation
reserve
Figures in Rand
Balance at 1 March 2008 526 905 2 058
Changes in equity
Fair value gains, net 5 552
Of tax: Land
and buildings
Currency translation (8 576)
differences
Total recognized income and (8 576) 5 552
expenses for the year
Profit for the year
Total recognized income and (8 576) 5 552
expenses for the year
Issue of shares 394 298
Purchase of 2 362
own/treasury ordinary
shares
Redemption of preference (35 000 )
shares
Issue of preference 37 426
Shares
Share issue costs
Acquired through business
combinations
Total Changes 399 086 (8 576 ) 5 552
Balance at 28 Feb 2009 925 992 ((6 518) 5 552
Accumulated Total Minority
Profit(Loss) attributable interest
to equity
holders of the
group/company
Figures in Rand
Balance at 1 March 2008 93 799 622 763 (198)
hanges in equity
Fair value gains, net of 5 552
Tax: Land and buildings
Currency translation (8 576)
differences
Total recognized income and (3 024) (
expenses for the year
Profit for the year 118 958 (8 093)
Total recognized income and 115 933 (8 093)
expenses for the year
Issue of shares 394 298 Transfer
treasury shares
Issued to staff 2 362
Employee share option 8 425
Scheme: Proceeds of
shares issued
Redemption of preference (35 000)
shares
Issue of preference shares 37 426
Share issue costs
Purchase of minority interest 198
Acquired through business 44 320
combinations
Total Changes 523 445 36 426
Balance at 1 March 2008
Changes in equity
Total equity
Figures in Rand
Balance at 1 March 2008 622 565
Fair value gains, net of 5 552
Tax: Land and buildings
Currency translation (8 576)
differences
Total recognized income and (3 024)
expenses for the year
Profit for the year (110 865)
Total recognized income and
expenses for the year 107 841
Issue of shares 394 298
Transfer treasury shares 10 787
Issued to staff
Redemption of preference (35 000 )
shares
Issue of preference shares 37 426
Share issue costs 198
Acquired through business 44 320
combinations
Total Changes 559 870
Balance at 28 February 2009 1 182 435
GROUP SEGMENTAL ANALYSIS for the year ended 28 February 2009
Southern Africa East Africa
Reviewed Audited Reviewed Audited
Reviewed Audited
12 months 12 months 12 months 12 months
12 Months 12 Moths
to 28 Feb to 29 Feb to 28 Feb to 29 Feb
to 28 Feb to 28 Feb
2009 2008 2009 2008
2009 2008
R`000 R`000 R`000 R`000
R`000 R`000
Interest income (341 534) (146 401) (84 068) (15 415)
(105 939) (20 903)
Interest expense 109 166 52 987 32 911 5 707
18 740 7 291
Net interest (232 368) (93 414) (51 157) (9 709) (87
199) (13 612)
income
Administration and (99 983) (91 291) (56 390) (31 957))
(44 801) (43 550)
insurance income
Net sales (33 042)
Intersegment
administration and
insurance income
Other operating
income (139 611) (11 267) (1 320) (4 373)
(93 877) (1 258)
Operating income (505 004) (195 972) (108 866) (46 039)
(225 877) (58 420)
Impairment of loan
advances 74 826 1 105 11 490 1 027
6 869 2 340
Operating expenses 417 309 172 525 96 493 34 587
103 028 23 980
Operating profit (12 869) (22 342) (884) (10 425)
(115 981) (32 010)
Investment revenue (26 670) (12 563)
(18)
Fair value
adjustments 1 509 (6 162)
Segment result:
profit before
taxation (38 030) (41 066) (884)(10 425)
(115 999) (32 100)
Taxation - - - - -
-
Profit after
taxation - - - - - -
-
Other disclosures
Segment assets 3 296 357 873 112 339 744 143 366
667 842 91 534
Segment
liabilities (2 178 510 ) (602 560) (326 811) (132 913)
(466 027) (67 086)
Fair value
adjustments 1 509 (6 162)
Depreciation 16 518 6 134 3 669 1 421
1734 659
Amortisation 14 941 6 850 783 267
Impairment -
intangible and
goodwill
10 236
Capital
expenditure 18 233 1 747 981
Reconciliation of segment assets and asset per balance sheet
2009 2008
Assets per segments 4,303,943,222 1,108,012,118
Intercompany loans -1,501,596,409 -366,394,549
eliminated
Goodwill 585,862,165 309,273,696
Intangible assets 53,278,460 60,909,640
Investments eliminated -778,865,070
Amortization of -6,672,396
intangible assets
Deferred tax assets -10,435,812 4,312,025
Assets per balance sheet 2,652,186,556 1,109,440,533
Reconciliation of segment liabilities and liabilities per
balance sheet
Liabilities per segment -2,971,347,643 -802,558,736
Intercompany loans 1,501,596,409 366,394,549
eliminated
Deferred tax liabilities -15,780,271
Income tax -37,007,000
Liabilities per balance -1,469,751,234 -488,951,458
sheet
Basis of preparation
The audited financial results of the company at and for the year ended 28
February 2009 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 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 28 February
2009. These assumptions are subject to ongoing review and possible amendments.
DISCLOSURE NOTES
Related Parties
Relationships
Shareholder of the entity with significant influence Dave van Niekerk
Related Party Balances
2009 2008
Loan Accounts - Owing (to) by related parties
Dave van Niekerk 36,785,456 -
Notes to the Annual Financial Statements
Group
Figures in Rand 2009 2008
1. Cash used in operations
Profit (loss) before taxation 154,912 83,591
Adjustments for:
Depreciation and amortisation 37,737 15,330
Profit on sale of assets (470) (6,702)
(Profit) loss on foreign exchange - (2,292)
Dividends received - -
Interest received (6,649) (12,563)
Interest expense 140,778 65,985
Fair value adjustments 1,509 (6,162)
Impairment loss (reversal) 26,959 (419)
Movements in operating lease assets
and accruals 2,643 677
Movements in provisions (9,678) 73
Foreign currency differences (8,095) 1,826
Profit on sale of shares (93,604) -
Share-based payments 10,787 5,121
Changes in working capital:
Inventories 825 14
Other receivables (13,154) (337,038)
Loan and advances to customers (726,071) -
Trade and other payables 48,349 7,378
(433,220) (185,183)
3. Acquisition of businesses
Fair value of assets acquired
Property, plant and equipment 11,948 506
Intangible assets 21,157 15,589
Other financial assets 1,046 288
Deferred tax 34,201 (663)
Goodwill 348,415 30,692
Negative goodwill - (419)
Trade and other receivables 29,368 10,862
Inventory - 14
Other financial liabilities (290,973) (10,779)
Cash and cash equivalents 31,455 (2,954)
Loan advances 252,679 -
Operating lease liabilities (351) -
Inventories 4,457 -
Provisions (15,840) (151)
Taxation 4,534 (65)
Trade and other payables (36,746) (1,094)
Minority shareholders (44,519) 738
Finance lease obligations (5,431) -
Total net assets acquired 345,403 42,564
Net assets acquired 345,403 42,564
345,403 42,564
Consideration paid 2008 2009
Cash (61,121) (39,035)
Credit U Shares (284,282) -
Deferred payments - Fair Value - (871,398)
Equity - 938,197 ordinary shares in
Blue Financial Services Limited - (2,658)
Loan accounts - -
(345,403) (42,564)
Net cash outflow on acquisition
Cash consideration paid (61,121) (39,035)
Cash acquired 31,455 (2,954)
(29,665) (41,988)
NATURE OF BUSINESS:
Blue is a Pan-African financial services provider, offering ethical, innovative
and affordable credit solutions to people in Africa. Blue currently operates
through more than 300 branches in 14 African countries, namely Botswana, Kenya,
Lesotho, Namibia, Malawi, South Africa, Tanzania, Uganda, Zambia, Rwanda,
Swaziland, Nigeria, Cameroon and Mauritius.
FINANCIAL OVERVIEW:
Blue generated earnings of R118.9 million for the financial year ended 28
February 2009 (2008 financial year: R61.7 million), up 93% on the comparative
reporting period. The Group achieved Headline earnings of R67 million (2008
financial year: R52 million), up 28.8% in the period under review. Blue`s loan
book increased by 201% to R1,45 billion (2008 financial year: R481.9 million),
of which organic growth accounted for approximately R700 million. Although the
adverse economic circumstances have not had a significant impact on the Group`s
ability to recover advances to customers, management deemed it appropriate to
increase the loan book provisions from 6.15% to 9.4% in the period under review.
The main drivers contributing to the improvement in the current year`s results
were organic growth, expansion in Africa, as well as the acquisitions of Credit
U in South Africa and Nedfin in Zambia. Group long term borrowings increased
from R385 million to R828 million, which were mainly used to fund the growth in
the loan book.
NOTABLE ISSUES:
Blue incurred a foreign exchange loss of R47 million due to the rand`s
volatility to the US dollar. (R9.98 as at 28 February 2009). Much of this
exchange loss has been recovered since the year end as the rand has
strengthened. Blue is implementing a hedging strategy to avoid a repetition of
these adjustments to earnings.
The cost of transferring shares to junior and middle level staff, under the
equity-based employee compensation scheme, resulted in an after tax charge of
R10.7 million in the current year. Blue made an R80.5 million profit net of
capital gains tax on the sale of an interest in the Nigerian operation.
The Group deemed it appropriate to impair Goodwill on the Kenyan and RSA
operations to the extent of R28.8 million.
Blue`s headline earnings would have been substantially higher had the Group not
incurred the R56.7 million extra-ordinary expenses relating to the Forex loss
and staff share allocation. In the absence of these adjustments, the Group would
have reported headline earnings at over of R120 million, resulting in a
significant increase in headline earnings.
CHANGES TO THE BOARD OF DIRECTORS
On 20 May 2008, Ms Genevieve Sangudi was appointed as a non-executive director.
Mr Johan Maritz resigned from the board with effect 30 June 2008 and was
replaced by Mr Grant Chittenden as executive finance director. Mr Navin Kanabar
- having been re-elected at the Group`s annual general meeting - retracted his
election as independent non-executive director on 22 September 2008. Mr Christo
Klopper was elected to the board as executive director and Mr Michael Meehan as
independent non-executive director with effect from 26 February 2009.
DIVIDENDS
In line with the Group`s policy no dividend has been declared for the period.
POST BALANCE SHEET EVENTS
There have been no events after the year end which require comment.
PROSPECTS
Blue remains well positioned to maintain its strong growth path through
expansion into new geographies, in addition to organic growth across existing
operations. The directors believe that the acquisition of Credit U has brought
critical mass to Blue`s South African operations, and the enlarged branch
network creates significant potential for growth in the local market. Similarly,
the Nigerian operation, whilst still new, holds significant potential, which is
currently being unlocked by the rapid expansion of branches and kiosks. The
Group will exercise prudence in its expansion plans given the current economic
climate.
SYSTEMS
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 centrally maintain strong
corporate governance and risk management practices. The Group is the first in
South Africa to get ICASA approval to have a private electronic network. The
Group`s in house debtors management system allows centralised credit control.
FUNDING
As the foundation of its business model, Blue borrows long and lends short. In
the current financial year to February 2010, the Group has already raised
approximately R500 million in wholesale funding. Despite international economic
circumstances the Group is confident it will be able to meet its funding
requirements for further growth in its loan books across the various countries
in which Blue is operational. Furthermore it is important to note that much of
the Group`s existing funding lines are payable over a seven to 10 year period.
COSTS
The Group is currently consolidating operations gained during last year, and
plans to implement extensive cost cutting measures in the new financial year,
with the aim of improving the cost to income ratio by leveraging the shared
services model and IT infrastructure among other cost cutting measures.
ARREARS AND BAD DEBTS
The Group collects primarily on payroll deductions in Africa and only certain
countries have a bank deduction model. The largest country in which Blue deducts
by way of debit orders on bank accounts is South Africa, and in terms of this
approach is extremely prudent in its provisioning policy. In addition the Group
has tightened its lending criteria and manages its exposure to various sectors
very carefully. It is important to note that 78% of Blue`s customer base are
civil servants and the Group`s exposure to the mining and automobile sectors is
very limited. The credit life that clients are required to take as part of their
loan applications covers death, disability and retrenchment.
UNMODIFIED REVIEW OPINION
KPMG Inc, the Group`s independent auditors, have reviewed the condense
consolidated provisional financial statements that comprise the balance sheet at
28 February 2009, income statement, statement of changes in equity and cashflow
statement for the financial year then ended, and explanatory notes, and have
expressed an unmodified review conclusion on these financial statements. Their
review report is available for inspection at Blue`s registered office.
For and on behalf of the Board
D van Niekerk G Chittenden
Chairman and CEO Financial Director
21 May 2009
Directors: D van Niekerk (Chairman and CEO); G Chittenden(Financial Director);
WJ Smit (Legal Director); CB Klopper (Operations Director); MJ Sondiyazi*,A
Steyn*; A Couloubis*; G Sangudi*+; and MG Meehan*
*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:
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 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
Date: 21/05/2009 17:47:02 Produced by the JSE SENS Department.
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