| Fri 28 May 2010, 13:42 | | BFS - Blue - Further Trading Update And Recommencement Of Trading In The |
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BFS
BFS
BFS - Blue - Further Trading Update And Recommencement Of Trading In The
Securities Of The Company
BLUE FINANCIAL SERVICES LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 1996/006595/06)
JSE Code: BFS
ISIN: ZAE000083655
("Blue" or "the Company" or "the Group")
FURTHER TRADING UPDATE AND RECOMMENCEMENT OF TRADING IN THE SECURITIES OF THE
COMPANY
Further Trading Update
Further to the trading update released on SENS on 11 March 2010 and the
announcement requesting a temporary halt in trading of the Company`s securities
released on SENS on 27 May 2010 ("the May 2010 announcement"), the Board regrets
to advise shareholders that the Company is expecting to incur a loss not
exceeding R1.150 billion for the year ended 28 February 2010. This translates
into a basic loss not exceeding 191.97 cents per share and a headline loss not
exceeding 149.31 cents per share attributable to ordinary shareholders, compared
to the restated basic earnings per share and restated headline earnings per
share of 15.92 cents and 12.73 cents respectively, for the previous year.
The decline in the Company`s performance is mainly attributable to:
- reduced levels of funding available to the Group impacting on business
growth;
- rapid expansion of the business in prior periods increasing operating
expense levels which are disproportionately high compared to current
trading levels;
- the weakening in most of the African currencies to the Rand during the
period, impacting negatively on the Rand-based results of many of the
African businesses;
- certain business acquisitions, specifically South African based micro-
financier Credit U Holdings, not meeting original expectations; and
- the deterioration in the overall performance of loan advances.
These factors have necessitated impairments of loan advances, goodwill and
deferred tax assets in excess of R850 million.
The Company has initiated a number of key strategic actions aimed at restoring
the Group to profitability in the medium term and thereby ensuring the overall
sustainability of the business. These actions include:
- aggressive cost rationalisation;
- improved efficiencies in the operating model;
- eliminating unprofitable business segments and product lines;
- amending the Group`s product mix to restore profitability in the near term;
- increasing Group liquidity in the short-term;
- delaying the execution of any further expansion opportunities for the short
term;
- focusing on organic growth and scalability of the Group`s existing
operations; and
- improving business sophistication, including the strengthening of the
collections, treasury management, finance function, and overall business
optimisation;
The Company has also responded to a number of improvements in corporate
governance including separating the role of Chairman and CEO by appointing Mr.
Sipho Twala as independent non-executive chairman from 1 March 2010. The
Company furthermore outsourced its internal audit function to an external audit
firm.
The Company has also made progress on concluding corporate action aimed at
introducing a new strategic shareholder. An announcement in this regard will be
made shortly.
The Board is confident that these strategic actions will restore the Group to
profitability and ensure that it remains well positioned to benefit from its
market position, distribution network, brand and products on the continent.
All of the above matters will be expanded upon in the Company`s reviewed
provisional financial results for the year ended 28 February 2010 which will be
released during the week commencing 7 June 2010.
This trading statement has not been reviewed or reported on by the Company`s
external auditors.
Recommencement of trading
Shareholders are referred to the 27 May 2010 announcement and are advised that
pursuant to the release of today`s further trading update, the Company`s
securities will resume trading on the JSE Limited and Botswana Stock Exchange
with immediate effect.
Pretoria
28 May 2010
Designated Adviser: Grindrod Bank Limited
Date: 28/05/2010 13:42:38 Produced by the JSE SENS Department.
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