200820944 BLUE fins Francois 4pdf.indd by gyvwpsjkko


									Blue Financial Services Ltd.
(Registration number: 1996/006595/06)
                                                            Abridged Audited Results
(“Blue” or “the Group”)
                                                            for the year ended 28 February 2007
Share code: BFS ISIN: ZAE0000083655)                        and renewal of cautionary notice

                                                                                        5 pageser

                                         EM’s trad a
                                        R e
                                        Blu under nary                                  altogeth
                                            ca utio

                                   R 60,9 MILLION
                 UP  232L%NFROM
        REVENUE ,5 MIL IO
              202 ER TAX UP 473%ILLFIONM

          O R
          PROFIT A LION TO R40,
                  FT              9M
           R7,1 MIL
                                             2% TO 13.62c
Abridged Audited Results for the year ended 28 February 2007                                                                                                  Page 1

                                                                                                                                                                   pg 1
 Group Income statement
                                                                                                       Group Balance sheet
                                                                                                                                                                          of 5
                                                                                     year ended                                                           as at
                                                                                      28 February                                                   28 February
                                                                                            2007                                                          2007
                                                                                           R’000                                                         R’000
 Revenue                                                                                 202    520    Assets
 Other income                                                                              4    657    Non-current assets
 Operating expenses                                                                     (118    125)   Investment property                              1    976
                                                                                                       Property, plant and equipment                   20    306
 Operating profit                                                                         89    052    Goodwill                                       269    495
 Investment revenue                                                                             128    Intangible assets                               64    967
 Finance costs                                                                            (31   752)   Related party loans                              2    670
 Profit before taxation                                                                    57   428    Deferred tax                                     1    303
 Taxation                                                                                 (16   526)                                                  360    717
 Profit for the year                                                                       40   902    Current assets
 Attributable to:                                                                                      Available for sale financial assets              1    109
 Equity holders of the parent                                                              40 589      Loan advances                                  207    331
 Minority interest                                                                            313      Trade and other receivables                      2    423
                                                                                                       Cash and cash equivalents                       11    832
 Share capital                                                                      352   000 000
 Treasury shares                                                                     (6   368 241)                                                    222 695
 Issued shares                                                                      345   631 759
 Weighted average number of shares in issue                                         330   530 389      Total assets                                   583 412
 Diluted weighted average number of shares in issue                                 419   080 997      Equity and liabilities
 Earnings per share (cents)                                                                 12.28      Equity
 Headline earnings per share (cents)                                                        13.62      Share capital                                  399 894
 Adjusted headline earnings per share (cents)                                               17.35      Reserves                                           (16)
 Fully diluted earnings per share (cents)                                                    9.69      Retained income                                 40 589
 Fully diluted headline earnings per share (cents)                                          10.74      Minority interest                                  539
 Reconciliation of weighted average issued shares                                                                                                     441 006
 to diluted weighted average issued shares:                                                            Liabilities
 Weighted average number of shares in issue                                         330 530 389        Non-current liabilities
 Shares to be converted                                                              88 550 608        Loans from shareholders                               328
 Diluted weighted average number of shares in issue                                 419 080 997        Borrowings                                       34   602
 Reconciliation of earnings to headline earnings                                                       Finance lease obligation                         10   191
 Earnings                                                                                  40   589    Deferred tax                                     18   846
 Impairment of loan in Blue Cell                                                            4   439                                                     63   967
 Headline earnings                                                                         45   028
 Imputed interest charge1                                                                   5   008    Current liabilities
 Amortisation of intangible assets                                                          7   305    Borrowings                                       10 421
 Adjusted headline earnings                                                                57   341    Current tax payable                              17 464
                                                                                                       Finance lease obligation                          1 801
  Imputed interest charge                                                                              Operating lease liability                           153
 Imputed interest charge resulted from the acquisition of Micro Access Financial Services (Pty) Ltd.   Trade and other payables                         14 163
 Paragraph 24 of IFRS 3: Business Combinations requires that assets given and liabilities incurred     Provisions                                        2 131
 or assumed by the acquirer, in exchange for control of the acquiree, be measured at their fair        Bank overdraft                                   32 306
 values at the date of exchange. Therefore, when settlement of all or any part of the cost of a                                                         78 439
 business combination is deferred, the fair value of the deferred component shall be determined
 by discounting the amounts payable to their fair value of the deferred payment at the date of         Total liabilities                               142 406
 exchange.                                                                                             Total equity and liabilities                    583 412
 This discounting results in an amount of interest incurred (and paid) on settlement of the            Net asset value per share (cents)                127.59
 purchase price of the business combination                                                            Tangible net asset value per share (cents)        30.83
Abridged Audited Results for the year ended 28 February 2007                                                                                                                                 Page 2

   Group Statement of changes in equity
   for the year ended 28 February 2007
                                                                                                                                             Total attributable
                                                                                                       Total      Foreign                             to equity
                                                                     Share             Share          share      currency         Retained      holders of the         Minority          Total
                                                                    capital         premium          capital   translation         income                Group         interest         equity
                                                                     R’000             R’000          R’000         R’000            R’000                R’000          R’000           R’000
   Balance at 1 March 2006                                               –                 –              –              –               –                     –              –              –
   Currency translation differences                                      –                 –              –            (16)              –                   (16)             –            (16)
   Net expenses recognised directly in equity                            –                 –              –            (16)              –                   (16)             –            (16)
   Profit for the year                                                    –                 –              –              –         40 589               40 589             313          40 902
   Total recognised income and expenses for the year                     –                 –              –            (16)        40 589               40 573             313          40 886
   Issue of shares                                                     0.4          393 600       393 600                –               –            393 600                 –        393 600
   Treasury shares                                                    0.01            (6 368)        (6 368)             –               –               (6 368)              –         (6 368)
   Issue of preference shares                                      35 200                  –        35 200               –               –              35 200                –         35 200
   Share issue costs                                                     –           (22 538)      (22 538)              –               –             (22 538)               –        (22 538)
   Minority interest at acquisition date                                 –                 –              –              –               –                     –           226             226
   Balance at 28 February 2007                                     35 200           364 694       399 894              (16)        40 589             440 467              539         441 006

   Group Segmental Analysis
                                                                              South Africa        Botswana            Zambia                  Other             Elimination       Consolidated
                                                                               Year ended        Year ended        Year ended            Year ended             Year ended          Year ended
                                                                              28 Feb 2007       28 Feb 2007       28 Feb 2007           28 Feb 2007            28 Feb 2007         28 Feb 2007
                                                                                     R’000             R’000             R’000                 R’000                  R’000               R’000
   Revenue                                                                        182 596             32 094            22 642                   155                (30 309)           207 177
   External revenue                                                               156 348             32 094            21 297                   155                      –            209 893
   Intersegment transactions                                                        26 248                 –             1 345                     –                (30 309)             (2 716)
   Finance Costs                                                                  (22 365)           (7 011)            (5 184)                   (63)                 3 000           (31 624)
   Expenses                                                                      (105 373)          (17 828)           (10 670)                (5 318)               (21 064)         (118 125)
   Segment result                                                                  54 858             7 254             38 496                  5 536                (54 373)           57 428
   Income taxes                                                                         –                 –                  –                      –                      –           (16 526)
   Profit for the year                                                                    –                –                  –                      –                     –            40 902
   Other disclosures
   Segment assets                                                                 633 901            32 201             28 588                  4 764               (450 503)          248 951
   Segment liabilities                                                           (129 572)          (20 522)           (27 306)                 9 215                68 425            (99 761)
   Depreciation and amortisation                                                    9 740             1 207                 628                   162                      –            11 575
   Capital expenditure                                                             13 168               777               1 175                 2 379                      –            17 498
   Reconciliation of segment assets and assets per balance sheet
                                                                               Year ended
                                                                              28 Feb 2007
   Assets per segments                                                            248 951
   Goodwill on acquisition
   of subsidiaries                                                                269   495
   Intangible assets acquired                                                      72   272
   Amortisation of intangible assets                                               (7   305)
   Assets per balance sheet                                                       583   412
   Abridged Audited Results for the year ended 28 February 2007                                                                                                           Page 3

Group Cash flow statement
                                                                                   year ended
                                                                                  28 February
                                                                                                                   Incrementa ce
Cash flows from operating activities
Cash receipts from customers
                                                                                       (12 659)
                                                                                      122 123                     housing fin
Cash paid to suppliers and employees                                                   (93 982)
Cash generated by operating activities                                                  28 141
Interest paid                                                                          (31 624)
Taxation paid                                                                           (9 176)
Cash flows from investing activities                                                    (96 903)
Expenditure to maintain operating capacity                                              (17 795)
Property, plant and equipment acquired                                                  (17 582)
Impairment of loans                                                                      (4 486)
Loans granted                                                                            (2 370)
Movement in financial assets                                                               (597)
Proceeds on disposal of assets                                                            7 240
Expenditure for expansion                                                               (79 108)
 Subsidiaries acquired
                                                                                                                                  BLUE Financial Se
Cash flows from financing activities                                                    89 088                                                       rvices
Capital raised                                                                         114 486        Salary     Bonded
Repayment of shareholders and related party loans                                      (11 516)      Advances   Housing     Pension    Incremental
Loans repaid                                                                           (13 882)                 Finance     Backed       Housing      Insurance
                                                                                                                          Home Loans                              Term
Decrease in cash and cash equivalents                                                   (20 474)                                         Finance      Products                  Cellular
Net outflow of cash and cash equivalents at beginning of year                                 –
                                                                                                                                                                  Loans        Products
Net outflow of cash and cash equivalents at end of year                                 (20 474)

Non-consolidation of Blue Cell (Pty) Ltd            to members of the company, in view of the
IAS 27, paragraph 21: A parent loses control        insignificant amounts involved, or would
of a subsidiary when it loses the power to          entail expense or delay out of proportion to
govern the financial and operating policies          the value to members of the Company. The
of an investee so as to obtain benefit from          directors of Blue decided that the amounts
its activities. The loss of control can occur       involved were insignificant in relation to
with or without and change in absolute or           the Group Financial Results and did not
relative ownership levels. It could occur, for      include the financial statements for Blue
example, when a subsidiary become subject           Cell (Pty) Ltd in the Group’s audited financial
to the control of a government, court,              statements. Refer to post-balance sheet
administrator or regulator.                         events for further details.
The directors are of the opinion that control       Comments on results
was lost when application for liquidation           Nature of business
was lodged with the High Court of South             Blue is a pan-African financial services
Africa and the regulator intervened in the          supplier, providing ethical, innovative and
process.                                            affordable credit solutions to people within
                                                    Africa. Blue currently operates in South
In terms of Section 291 of the Companies            Africa, Botswana, Uganda, Zambia and
Act, group annual financial statements need          Tanzania (including Zanzibar) and partners
not deal with a subsidiary if the directors of      with employers (governments, parastatals
the Company are of the opinion that it is           and businesses) to provide their employees
impracticable or would be of no real value          with a range of financial services. These
   Abridged Audited Results for the year ended 28 February 2007                                                                                                                        Page 4

partnerships enable Blue to offer the above        Provision for bad debt

                                                                                                                                  Blue Financial Services
solutions to its client base at affordable rates   The Group has, for the year ended
while limiting its risk in doing so. The Group     28 February 2007, provided for doubtful
currently employs more than 600 staff and          debts equal to 3% of the loan book. This is
has more than 100 branches in five countries        higher than normal for the Group due to the
in Africa.                                         inclusion of Micro Access Financial Services
                                                   (Pty) Ltd.

                                                                                                                                                                     Zambia Cameraoon Kenya
Blue targets creditworthy formally employed
                                                   Share issue cost
individuals below LSM 7 (households with           The R22.5 million share issue expenses can                                     South Africa          Botswana
an average income of R7 500 per month or           be contributed to two separate share issues       South Africa
                                                                                                                                          88%                 100%                     100%
less), a sector that remains largely excluded      during the year. All costs directly associated
from main stream credit markets.                   with the issue of shares relating to the
                                                                                                                                Incremental                           Blue                     Blue
                                                   business acquisitions were capitalized against
                                                                                                                                                                   Financial                         d
Financial overview
These are Blue’s maiden annual financial
                                                   the share premium account. This has been
                                                   handled in accordance with section 76(3)         Blue Employee             Housing Finance                      Services (z)               Limite
results since listing on the JSE Limited’s AltX
on 12 October 2006.
                                                   of the Companies Act and is in accordance
                                                   with IFRS requirements.                             Benefits                 (Pty) Limited                         Limited
                                                                                                    (Pty) Limited
Robust trading in the second half of the           Cash Flow Statement
year, coupled with the effects of the AIG
investment, the JSE listing and the acquisition
                                                   Blue financed part of the acquisition of
                                                   Future Finance utilising an overdraft of                                    66,6%
of Micro Access Financial Services (Pty) Ltd       R20 million, which contributed significantly
(trading as Future Finance) (“Future Finance”)     to the negative cash flow. It must be noted
                                                   that the Company turns large amounts                               Blue Cell                                                   Financial
resulted in a 232% increase in turnover from
R60.9 million in 2006 to R202.5 million for        of cash and it is more prudent to lend out                       (Pty) Limited                                                  Services
the year under review. Taxed profits in the
                                                   all available funds. The majority of the
                                                   collections effected on the debtors’ books
comparative periods increased significantly         are done in the first few days of a month.
from R7.1 million to R40.9 million, exceeding      The company is expecting further funding                                               South
the pre-listing statement forecast by some         from various sources, including AIG.                                                   Africa
R15.1 million. The acquisition of Micro Access
                                                   Basis of preparation and unqualified
                                                                                                                 Micro Access
                                                                                                               Financial Services
Financial Services (Pty) Ltd took effect as from
1 April 2006, hence only eleven month’s
audited results are included.
                                                   audited opinion
                                                   The consolidated financial statements
                                                   for the year ended 28 February 2007 has                       (Pty) Limited
                                                                                                                                          100%                100%
Earnings per share (EPS) and headline              been prepared, and comply with IFRS. The
                                                   consolidated financial statements and this                        T/A Future Finance                    Blue
                                                                                                                                                      ployee Benefits
earnings per share (HEPS) of 12.37 cps (EPS)
and 13.72 cps (HEPS) respectively for the          set of summarised financial information                                                          Em
                                                                                                                                                    (Pty) Limited
year under review considerably exceeded the        has been audited by PKF (Pta) Inc. Their
                                                   unqualified audited report is available for
pre-listing statement forecast of 8.28 cps for
                                                   inspection at the Company’s registered
both EPS and HEPS.                                 office.
Goodwill of R269.5 million is as a result
of the Future Finance acquisition and
                                                   Group structure as at 28 February 2007
                                                   Blue Employee Benefits (Pty) Ltd                                                           Tanzania                   Uganda
consolidation of Blue’s subsidiaries. Goodwill     South Africa – 100%
is tested annually for impairment in               Blue Incremental Housing Finance (Pty) Ltd
accordance with IFRS 3. The trading results
of the companies have during the last
year exceeded forecasts and therefore no
                                                   South Africa – 88%
                                                   Blue Cell (Pty) Ltd – 66.6%
                                                   Blue Employee Benefits (Pty) Ltd
                                                                                                                                         100%                                     100%
impairment was necessary.                          Botswana – 100%                                                                              Blue                        Blue
Loans and advances amounted to
                                                   Blue Financial Services (Z) Ltd Zambia – 100%
                                                   Blue Financial Services Ltd (Tanzania) – 100%
                                                                                                                                             Financial                    Employee
R207.3 million in 2007.                            Blue Employee Benefits Ltd (Uganda) – 100%                                                  Services                    Benefits
                                                   Micro Access Financial Services (Pty) Ltd                                                  Limited                     Limited
Diluted EPS and HEPS are included as a result      (trading as Future Finance) – 100%
of the potential convertion of the preference      Blue Financial Services Ltd
                                                                                                                                                                                         pg 4 of
shares held by AIG into ordinary shares,           (Cameroon) – 100%
based on Blue achieving its profit forecasts.       Blue Ltd (Kenya) – 100%
            Abridged Audited Results for the year ended 28 February 2007                                                                                                                      Page 5

pg 5 oProducts and Services offered by Blue                 insurance offering in all its operating      were converted on 18 April 2007. AIG is          to capital and new markets. The Blue board
        Blue specialises in:                                companies. Currently Blue has insurance      obliged in terms of the agreement to elect to    and management will continue to strive
        • Salary advances                                   offerings in South Africa, Botswana          convert the balance of their preferred shares    to make Blue the market leader in Africa
            Blue, in partnership with employers             and is currently rolling out in Zambia,      within 30 days of the publishing of the          in providing financial services to previously
            provide salary advances to employees.           Tanzania and Uganda.                         annual financial results. AIG have indicated      underserved credit markets.
            The approach allows the employer to                                                          that they will be converting preference to
            retain control of salary advances without   •   Term loans                                   ordinary shares.                                 Interim results published on
            damaging its cash flow, and avoids               Structured loans over a fixed term with                                                        23 November 2006
            a negative image among employees.               fixed repayments and interest charges.        Equity investment by Millennium                  The interim results published on SENS for
            Blue currently provides a salary advance        The average term is around 12 to             Partners                                         the six months ended 31 August 2006,
            service to over 100 employers, which            18 months.                                   As per the SENS announcement dated               are currently under review by the JSE. The
            include the Zambian, Botswana,                                                               4 May 2007, Blue has signed an agreement         particular queries relate to the omission
                                                        Certain products are first being tested and       with Millennium Partners which would
            Ugandan and Tanzanian governments.                                                                                                            of certain IFRS related disclosures and the
                                                        fine tuned before they are rolled out to          enable its wholly owned subsidiary in            companies cashflow statement. The final
        •   Bonded housing finance                       operations in Africa. Products currently being   Botswana, Blue Employee Benefits (Pty)            outcome is still to be resolved and revised
            Blue has subsequent to 28 February          evaluated are:                                   Limited Botswana (“Blue Botswana”), to
                                                        • Asset based finance                                                                              interim financial statements will be published
            2007 purchased 100% of a company                                                             issue 300, 14.5%, unsecured guaranteed           on SENS as soon a possible.
            called Greenstart Home Loans, which         •   Small and Medium Enterprises                 debentures due 2010 with a par value of
            provides home loans from R20 000 to             funding                                      R100 000 each (totalling R30 million) to         On behalf of the Board
            R300 000. These are structured over                                                          Millennium European Holdings II S.A.R.L.         D van Niekerk – Chairman and CEO
            15 to 20 years at a prime-linked interest   Impact of the National Credit Act                (“MEH”). Blue has simultaneously granted         R Swart – COO
            rate. This company has access via           (“NCA”)                                          MEH 5 million options to acquire Blue shares     10 May 2007
            Greenstart to a substantial government      Blue welcomes the implementation of              at R3.00 per share. The issue of debentures
                                                        the NCA, anticipated in June 2007. The                                                            Directors:
            funding line through the National                                                            and options are subject to shareholder and/
                                                        provisions of the NCA impacts on only two                                                         D van Niekerk (Chairman and CEO);
            Housing Finance Corporation (“NHFC”),                                                        or regulatory approval.
                                                        of Blue’s products: term loans and salary                                                         R Swart (COO); JS Coetzee (Financial
            enabling it to offer finance in instances
                                                        advances. This impact should be minimised        Liquidation of Blue Cell (Pty) Ltd               Director); WJ Smit (Legal Director);
            where banks decline applications due to
            area or credit history.                     through the uptake of other Blue products in     As announced on SENS on 12 March 2007,           MJ Sondiyazi*, CW Siwale* (Zambian),
                                                        Future Finance branches and the larger sales     Blue Cell, a cellular solutions provider that    A Steyn* and NP Kanabar* (Tanzanian)
        •   Pension backed home loans                   volumes expected due to the Future Finance       markets cell-phone contract packages and         *non-executive
            Pension fund-backed lending is one of       acquisition, which increased Blue’s footprint    related technology solutions to Blue clients,
            Blue’s most recent housing products                                                                                                           Registered Office:
                                                        from 12 to 78 branches in South Africa.          will be liquidated due to irreconcilable
            which allows an individual to access the                                                                                                      Blue Building 34 Bouvardia Avenue,
                                                                                                         differences with the other shareholder. The
            home loan market, using the individual’s    With other geographical areas such as                                                             Lynnwood Ridge Pretoria, South Africa
                                                                                                         High Court of South Africa on 9 May 2007
            pension or provident fund as security.      Tanzania and Uganda starting to contribute       granted the liquidation order.                   (PO Box 72041, Lynnwood Ridge, 0040)
            This enables individuals with no other      more significantly to revenue, any potential                                                       Transfer Secretaries:
            form of security to finance their own        negative impact by the NCA should be             Further cautionary announcement
                                                                                                         Further to the cautionary announcements          Link Market Services (Pty) Ltd 11 Diagonal
            property.                                   minimised.
                                                                                                         dated 22 December 2006, 15 February              Street, Johannesburg, 2001 (PO Box 4844,
        •   Air Time sales and services                 Declaration of dividend                          2007 and 30 March 2007 shareholders              Johannesburg, 2000)
            This product is currently being phased      In line with the Group policy, no dividend       are advised that negotiations are still in       Company Secretary:
            out due to the liquidation of the           has been declared for the year.                  progress, which if successfully concluded,       Ms. Retha Stoltz Blue Building 34 Bouvardia
            particular subsidiary.                      Post balance sheet events                        may have a material effect on the price of       Avenue, Lynnwood Ridge Pretoria, South
                                                        Conversion of AIG’s preferential shares to       Blue’s securities. Accordingly, shareholders     Africa rethas@blue.co.za Tel: (012) 348 8088
        •   Incremental housing finance                                                                   are advised to continue exercising caution
            Blue offers finance for the purchasing       equity. In terms of the agreement signed
                                                        29 July 2006 , which was submitted to the        when dealing in Blue’s securities until a full   Designated Advisor:
            of land, the connection of utilities, and                                                    announcement is made.                            Ernst & Young Sponsors (Pty) Ltd
            home improvements. These loans are          JSE and the South African Reserve Bank, AIG
                                                        had the option to convert preference shares                                                       PO Box 2322, Johannesburg, 2000
            for housing purposes only and are only                                                       Prospects
            disbursed to suppliers and vendors to       to equity in three tranches, based on Blue       Blue is continuously investigating expansion     Investor Relations:
            ensure delivery of housing products.        achieving pre-agreed financial targets. The       opportunities, through either organic growth     Morne Reinders or Eune Engelbrecht Blue
            Repayments can be structured over           first conversion option is due one month          or acquisitions. Countries due for expansion     Building 34 Bouvardia Avenue, Lynnwood
            36-months and range from R1 000 to          after the release of the financial results.       in 2007 are Lesotho, Kenya, Malawi,              Ridge Pretoria, South Africa morner@blue.
            R10 000                                     However, as permited in the agreement            Rwanda and Cameroon.                             co.za or eune@blue.co.za Tel: (012) 348
                                                        AIG opted to convert a portion of the first                                                        8088 or 082 480 4541 or 082 322 1173
        •   Insurance                                   tranch before the release of the results, and    The directors remind stakeholders that Blue
            Blue has an intensive drive to roll out     accordingly 12 000 000 preference shares         remains on a steep growth curve with access      www.blue.co.za
Blue Financial Services Ltd.
(Registration number: 1996/006595/06)
(“Blue” or “the Group”)
Share code: BFS ISIN: ZAE0000083655)

To top