| Thu 23 Nov 2006, 15:58 | | BLUE - Reviewed interim results and further cautio |
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BFS
BFS
BLUE - Reviewed interim results and further cautionary
Blue Financial Services Limited
(Registration number 1996/006595/06)
("BLUE" or "the Company" or "the Group")
Share code BFS & ISIN ZAE000083655
Gross Revenue up 60.0%
Profit after tax up 228.9%
Earnings per share up 224.7%
Reviewed interim results for the 6 months ended 31 August 2006; and
Further cautionary announcement
Balance sheet for the 6 months ended 31 August 2006
Unaudited Reviewed
Combined* consolidated
as at as at
28 February 31 August
2006 2006
R"000 R"000
Assets
Non-Current Assets
Investment property 7,480 3,621
Property, plant and equipment 7,657 9,826
Goodwill - 272,472
Other financial assets 6,819 1,745
Deferred tax 292 292
22,248 287,955
Current Assets
Inventories 68 238
Trade and other receivables 45,725 63,980
Cash and cash equivalents 5,127 20,472
50,920 84,690
Total Assets 73,168 372,645
Equity and Liabilities
Equity
Equity attributable to equity
holders of parent
Share Capital 791 333,967
Reserves 294 (334)
Retained income 9,449 7,958
Minority interest - (248)
10,535 341,343
Liabilities
Non-Current Liabilities
Loans from shareholders 18,320 2,331
Other financial liabilities 35,641 26,343
53,961 28,673
Current Liabilities
Current tax payable - 2,305
Trade and other payables 6,428 324
Bank overdraft 2,245 -
8,673 2,629
Total Liabilities 62,634 31,302
Total Equity and Liabilities 73,168 372,645
Fully diluted net asset value 3.51 85.34
per share in cents
Fully diluted tangible net 3.51 17.14
asset value per share in cents
INCOME STATEMENT for the 6 months ended 31 August 2006
Unaudited Reviewed Forecast
Combined* 6 months 12 months
12 months ended ending
ended 31 August 28 February
28 February 2006 2007
2006 R"000 R"000
R"000
Revenue 60,942 45,465 175,275
Cost of sales (21,822) (14,580) (60,193)
Gross profit 39,120 30,885 115,083
Operating expenses (28,649) (21,026) 73,888
Profit before tax 10,471 9,859 41,195
Taxation (3,333) (2,3045) 12,379
Profit after Tax 7,138 7,554 28,816
Preference dividend - - 3,021
Net Profit 7,138 7,554 25,795
Issued shares 300,000 320,000 320,000
Weighted average number of 300,000 301,667 311,667
shares in issue
Diluted issued shares 300,000 400,000 400,000
Fully diluted number of shares 300,000 311,530 379,608
in issue
Earnings per share in cents 2.38 2.50 8.28
Fully diluted earnings per 2.38 2.42 6.79
share in cents
Headline earnings 2.38 2.50 8.28
Fully diluted headline 2.38 2.42 6.79
earnings per share in cents
*Extracted from the Pre Listing Statement of Blue dated 12 October 2006.
The Company was dormant as at August 2005 and the consolidation of all the
various operating companies in the various countries, under Blue Financial
Services only took place as at 1 March 2006. Therefore no comparative results
are presented in terms of IFRS. The directors are of the view that shareholders
should rather refer to the historical combined financial information to 28
February 2006 and the forecast to 28 February 2007, both of which are presented
above and has been extracted from the Pre Listing Statement dated 12 October
2006.
The Company is still comfortable that with the current performance they will
achieve the results to 28 February 2007 as presented.
CASH FLOW STATEMENT for the 6 months ended 31 August 2006
6 months
ended
31 August
2006
R"000
Cash flow from operating activities
Cash used in operations (55,733)
Finance cost (667)
Tax paid (292)
Net cash from operating activities (56,691)
Cash from investing activities
Purchase of property plant and equipment (10,405)
Purchase of investment property (7,697)
Sale of investment property 7,020
Acquisitions of businesses (incl Subsidiaries, Joint (272,316)
Ventures and Associates)
Purchase of financial assets (1,745)
Net cash from investing activities (285,143)
Cash from financing activities
Proceeds on share issue 298,767
Proceeds on redeemable preference shares 35,200
Proceeds from other financial liabilities 26,343
Proceeds from shareholders" loans 2,331
Foreign currency translation reserves (334)
Net cash from financing activities 362,306
Total cash movement for the period 20,472
Cash at the beginning of the period -
Total cash at the end of the period 20,472
STATEMENT OF CHANGES IN EQUITY for the 6 months ended 31 August 2006
Foreign
Total currency
Share Share share translation
Capital Premium capital reserve
R"000 R"000 R"000 R"000
Balance at 1 March - - - -
2006
Currency translation - - - (334)
differences
Net income (expenses) - - - (334)
recognised directly
in equity
Profit for the year
Total recognised - - - (334)
income and expenses
for the period
Issue of shares 320 319,999 320,000 -
Purchase of own/ (9) (9,158) (9,158) -
treasury shares
Issue of preference 35,200 - 35,200 -
shares
Listing expenses - (12,075) (12,075) -
Business combinations - - - -
Balance at 31 August 35,200 298,767 333,967 (334)
2006
STATEMENT OF CHANGES IN EQUITY for the 6 months ended 31 August 2006
(Contd)
Total
attributable
to equity
Retained holders of Minority Total
Income the Interest Equity
R"000 Group/Company R"000 R"000
R"000
Balance at 1 March - - - -
2006
Currency translation - (334) - (334)
differences
Net income (expenses) - (334) - (334)
recognised directly
in equity
Profit for the year 7,958 7,958 (403) 7,554
Total recognised 7,958 7,624 (403) 7,220
income and expenses
for the period
Issue of shares - 320,000 - 320,000
Purchase of own/ - (9,158) - (9,158)
treasury shares
Issue of preference - 35,200 - 35,200
shares
Listing expenses - (12,075) - (12,075)
Business combinations - - 156 156
Balance at 31 August 7,958 341,590 (248) 341,343
2006
Material Impact and Considerations:
Before reviewing the results, it is important to note that these results are as
a result of trading activities before the effects of the AIG investment or
Initial Public Offering (IPO). The effects of the additional capital being
deployed in the operations will have a material effect on the financials of the
following six months.
Comments on results.
This is BLUE"s maiden interim results since listing on the JSE Limited"s AltX on
12 October 2006.
The Board is therefore particularly pleased to announce an increase in turnover
from R28.4 million in 2005 to R45.4 million for the six months ended 31 August
2006. Taxed profits increased from R2.3 million in 2005 to R7.6 million in 2006.
Even more pleasing is the increased growth in earnings per share from 0.77 cent
per share to 2.50 cents per share in the review period.
It must be noted that a diluted value per share is brought into the financials
which will be as result of AIG converting its preference shares into ordinary
shares based on the company achieving its forecasted profits.
The directors are of the opinion that BLUE is currently on a steep growth curve
with access to capital and new markets. Despite being a new entrant, BLUE has
entered the market with backing from American International Group ("AIG") and is
already busy with further transactions.
The Board is ever cognisant of the market"s belief in BLUE"s business model, and
the subsequent high expectations placed on the Company. It will be our task to
live up to and even surpass these expectations.
Provision for bad debt
The Company has for the period ending 31 August 2006, provided for 2.4% bad debt
on the loan book.
Accounting Policies and Unqualified Review Report
The interim financial statements for the 6 months ended 31 August 2006 ("the
period") have been prepared in accordance with International Financial Reporting
Standards (IFRS). The Group"s opening balance sheet on 1 March 2006, and
comparative information for 2006, complied with IFRS requirements effective as
at 28 February 2006. The accounting policies applied in the preparation of the
interim financial statements are consistent with those applied in the annual
financial statements for the year ended 28 February 2006. These interim
financial statements have been reviewed by PKF (PTA). Their unqualified review
report is available for inspection at the Company"s registered office.
Group Structure
On 1 March 2006 Blue Financial Services Limited acquired:
* 100% of Blue Employee Benefits (Pty) Ltd South Africa
* 88% of Blue Incremental Housing Finance (Pty) Ltd South Africa
* 66.6% of Blue Cell (Pty) Ltd South Africa
* 100% of Blue Employee Benefits (Pty) Ltd Botswana
* 100% of Blue Financial Services (Z) Ltd Zambia
During the period under review, operations commenced in Uganda, Tanzania and
Zanzibar.
Services offered by BLUE
BLUE specialises in
* Salary advances
The Company, in partnership with employers, provide salary advances to
employees. The approach allows the employer to retain control of salary
advances without damaging its cash flow, and avoids a negative image among
employees. BLUE currently provides a salary advance service to over 100
employers, which include the Zambian and Botswana governments.
* Bonded housing finance
BLUE has shareholding in an associate company called Greenstart Home Loans,
which provides home loans from R20 000 to R250 000. These are structured over
15 to 20 years at a prime-linked interest rate. This company has access via
Greenstart to a substantial government funding line through the National Housing
Finance Corporation ("NHFC"), enabling it to offer finance in instances where
banks decline applications due to area or credit history.
* Pension backed home loans
Pension fund-backed lending is one of BLUE"s most recent housing products which
allows an individual to access the home loan market, using the individual"s
pension or provident fund as security. This enables individuals with no other
form of security to finance their own property. This product is offered at
little to no risk to the lender, as the loans are fully guaranteed by the
clients withdrawal benefit in his/her pension fund. BLUE is developing the
criteria for this product in all of the countries in which it currently
operates.
* Cell phone sales and services
As the majority of BLUE"s clients are only able to purchase prepaid airtime, due
to poor credit ratings or a perceived high risk status, BLUE saw an opportunity
to provide them with a value-added product. BLUE has entered into agreements
with all three major network service providers (NSPs) and is using its
collection expertise to collect the monthly package/contract fee on behalf of
the networks.
* Incremental housing finance
BLUE offers finance for the purchasing of land, the connection of utilities, and
home improvements. These loans are for housing purposes only and are only
disbursed to suppliers and vendors to ensure delivery of housing products.
Repayments can be structured over 36-months and range from R1 000 to R10 000.
This facility is endorsed and funded in South Africa by the NHFC.
* Funeral insurance
BLUE has an affordable Funeral Insurance product that provides for the funeral
costs of the member, his or her spouse, and up to five children. This product
is underwritten by Liberty Life in South African and Regent Life in Botswana.
BLUE is in talks with Zigi Insurance Ltd in Zambia and AIG in Uganda. BLUE also
provides Credit Life cover to its clients for credit based products and is
developing short term insurance products for its market.
* Term loans.
Loan amounts range from R3 000 to R10 000 and are regarded as general purpose
loans with repayment periods ranging from 12 to 24 months. Term loans are better
priced than salary advances, although the screening and credit approval process
is slightly more rigid and intense. These loans are also based on the ability to
collect and the relevant agreements being in place with the employer in
question. The same BLUE service levels of a one-hour-payout apply.
Products are first being tested and fine tuned before they are rolled out to
operations in Africa. Products currently being evaluated are:
* Asset based finance
* SME funding
Declaration of dividend
In line with the Group policy no dividend has been declared for the period.
Post Balance Sheet Events
Changes to the Board of Directors
Mr Andre Steyn from AIG (American International Group) joined the board on 11
October 2006 as non-executive director.
Cautionary announcement
Shareholders are reminded about the cautionary issued on 20 October 2006, in
which shareholders are advised that BLUE has entered into negotiations which, if
successfully concluded, may have a material effect on the price of the Company"s
securities. Accordingly, shareholders are advised to exercise caution when
dealing in the Company"s securities until a full announcement is made.
Forward looking statement
Given that the second half of the financial year is traditionally a more
profitable trading period as well as the fact that the effects of the IPO and
AIG investment will be realised in the next six months, the Board is confident
that the company"s financial objectives will be achieved.
BLUE welcomes the implementation of the National Credit Act in 2007, and is of
the opinion that it will further the ethical provision of credit to an often
exploited market. The Board is of the opinion that the effective implementation
of the Act will take place in July 2007 and will have no impact on the Company"s
financial performance for the current financial year.
On behalf of the Board
23 November 2006
D van Niekerk - Chairman and CEO
R Swart - COO
Directors: D van Niekerk (Chairman and CEO); R Swart (COO); JS Coetzee
(Financial Director); WJ Smit (Legal Director); MJ Sondiyazi*,
CW Siwale* and A Steyn*
*non-executive
Registered Office: Blue Building, 34 Bouvardia Avenue, Lynnwood Ridge, Pretoria,
South Africa (PO Box 72041, Lynnwood Ridge, 0040)
Transfer Secretaries: Link Market Services South Africa (Pty) Ltd, 11 Diagonal
Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000)
Company Secretary: Ms Retha Stoltz, Blue Building, 34 Bouvardia Avenue, Lynwood
Ridge, Pretoria, South Africa (PO Box 72041, Lynnwood Ridge, 0040)
Sponsor: Exchange Sponsors, P O Box 783676, Sandton, 2146
Warning: The listing of ordinary shares in the company is on AltX. Investors
are advised of the risks of investing in a company listed on AltX. Investors
are advised that the JSE does not guarantee the ability or the success of a
company listed on AltX. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Adviser, which is required to, inter
alia, attend all board meetings held by the company to ensure that all the
Listings Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Adviser, it must make arrangements to appoint a new Designated Adviser within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Adviser is not appointed within 30 days of its
suspension, the company faces the termination of its listing without the
prospect of an appropriate offer to minority shareholders.
Date: 23/11/2006 03:58:12 PM Produced by the JSE SENS Department
