Wrap Text
Un-Audited condensed consolidated interim financial results for the six months ended 31 August 2012
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”)
UN-AUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2012
Condensed Consolidated Income Statement for the period ended
31 August 2012
Un-audited Reviewed % Audited
six months six months change year
ended 31 ended 31 ended 29
Aug 2012 Aug 2011 Feb 2012
R’000 R’000 R’000
Interest revenue 184,349 227,599 (19.00) 416,773
Interest expense (40,639) (50,529) (19.57) (94,896)
Net interest revenue 143,710 177,070 (18.84) 321,877
Administration and
commission income 36,220 29,352 23.40 94,621
Other operating income 20,276 14,950 35.63 28,067
Operating income 200,206 221,372 (9.56) 444,565
Net impairment of loan
advances and receivables (7,191) (26,093) (72.44) (73,715)
Operating expenses (154,955) (175,348) (11.63) (357,967)
Profit before foreign
exchange differences 38,060 19,931 90.96 12,883
Net loss on foreign
exchange differences (11,556) (7,436) 55.41 (20,303)
Profit / (loss) before
taxation 26,504 12,495 >100 (7,420)
Taxation (2,152) 9,320 >(100) 49,696
Profit for the period 24,352 21,815 11.63 42,276
Attributable to:
Equity holders of the
parent 29,769 21,669 37.39 49,534
Minority interest (5,417) 146 >(100) (7,258)
24,352 21,815 11.63 42,276
Per share ratios (cents)
Earnings per share 0.46 0.38 22.88 0.86
Headline earnings per
share 0.46 0.40 15.36 0.88
Diluted earnings per share 0.46 0.38 22.88 0.86
Diluted headline earnings
per share 0.46 0.40 15.36 0.88
Net asset value per share
- R/share 0.06 0.01 >100 0.01
Condensed Consolidated Statement of Comprehensive Income for
the period ended 31 August 2012
Un-audited Reviewed % Audited
six months six months change year
ended 31 ended 31 ended 29
Aug 2012 Aug 2011 Feb 2012
Profit/(loss) for the
period 24,352 21,815 11.63 42,276
Other comprehensive loss:
Exchange differences on
translation of foreign
operations (23,629) (14,061) 68.05 (24,724)
Other comprehensive loss
for the period, net of tax (23,629) (14,061) 68.05 (24,724)
Total comprehensive profit
for the period 723 7,754 (90.68) 17,552
Total comprehensive profit
attributable to:
Equity holders of the
parent 6,140 17,877 (65.65) 35,086
Minority interest (5,417) (10,123) (46.49) (17,534)
723 7,754 (90.68) 17,552
Condensed Consolidated Statement of Financial Position as at
31 August 2012
Un-audited Audited % change
six months year ended
ended 31 29 Feb 2012
Aug 2012
Assets
Cash and cash equivalents 73,703 90,492 -19
Loan advances to customers 781,137 770,501 1
Trade and other receivables 21,403 19,688 9
Inventories 74 74 0
Taxation receivable 22,520 22,520 0
Other financial assets - - -
Property, plant and equipment 48,035 52,584 -9
Deferred taxation 29,368 24,201 21
Intangible assets 19,871 19,963 -0
Goodwill 444,353 426,620 4
Total Assets 1,440,464 1,426,643 1
Equity and Liabilities
Equity
Share capital 1,772,857 1,366,034 29.78
Share based payment reserve 5,512 5,512 -
Other deficits (100,088) (76,459) 31
Accumulated loss (1,180,889) (1,210,658) -2
Equity attributable to equity
holders of parent 497,392 84,429 >100
Non-controlling interest (11,388) (5,971) 91
Total Equity 486,004 78,458 >100
Liabilities
Bank overdraft 15,099 15,600 -3
Derivative financial
liabilities - 13,148 -100
Trade and other payables 238,902 253,726 -6
Taxation payable 90,771 96,565 -6
Finance lease obligations 2,648 4,752 -44
Long-term liabilities 601,627 958,038 -37
Operating lease liabilities 2,511 2,434 3
Deferred taxation 2,902 3,922 -26
Total Liabilities 954,460 1,348,185 -29
Total Equity and Liabilities 1,440,464 1,426,643 1
Condensed Consolidated Statement of Changes in Equity for the
period ended 31 August 2012
Share Share Other (Accumulat
Capital based Reserves / ed Loss)/
and payment (Deficit) Retained
Premium reserve Earnings
R’000 R’000 R’000 R’000
Balance at 1 March 2010
- audited 928,250 - (948,107) 445
Total comprehensive
loss for the period - - (275,559) (57,244)
Share-based payment to
employees - 2,732 - -
Issue of ordinary
shares due to
recapitalisation 163,000 - - -
Issue of ordinary
shares on debt to
equity conversion 271,828 - - -
Share-based payment to
employees 2,956 - (2,956) -
Convertible instrument
reserve - - 4,822 (4,822)
Contingency reserve - - 390 (390)
Business combinations - - (38,782) -
Balance at 28 February
2011 - audited 1,366,034 2,732 (1,260,192) (62,011)
Balance at 1 March 2011
- audited 1,366,034 2,732 (1,260,192) (62,011)
Total comprehensive
profit for the period - 49,534 (14,448)
Share-based payment to
employees - 2,780 - -
Balance at 29 February
2012 - audited 1,366,034 5,512 (1,210,658) (76,459)
Balance at 1 March 2012
- audited 1,366,034 5,512 (1,210,658) (76,459)
Issue of ordinary
shares on debt to
equity conversion 406,823 - - -
Total comprehensive
profit for the period - - 29,769 (23,629)
Balance at 31 August
2012 - consolidated 1,772,857 5,512 (1,180,889) (100,088)
Total
attributable
to equity Non-
holders of controlling Total
the parent interest Equity
R’000 R’000 R’000
Balance at 1 March 2010 -
audited (19,412) 16,529 (2,883)
Total comprehensive loss for
the period (332,803) (1,989) (334,792)
Share-based payment to
employees 2,732 - 2,732
Issue of ordinary shares due
to recapitalisation 163,000 - 163,000
Issue of ordinary shares on
debt to equity conversion 271,828 - 271,828
Convertible instrument reserve - - -
Contingency reserve - - -
Business combinations (38,782) (2,977) (41,759)
Balance at 28 February 2011 -
audited 46,563 11,563 58,126
Balance at 1 March 2011 -
audited 46,563 11,563 58,126
Total comprehensive profit for
the period 35,086 (17,534) 17,552
Share-based payment to
employees 2,780 - 2,780
Balance at 29 February 2012 -
audited 84,429 (5,971) 78,458
Balance at 1 March 2012 -
audited 84,429 (5,971) 78,458
Issue of ordinary shares on
debt to equity conversion 406,823 - 406,823
Total comprehensive profit for
the period 6,140 (5,417) 723
Balance at 31 August 2012 -
consolidated 497,392 (11,388) 486,004
Condensed Consolidated Statement of Cash Flows for the period
ended 31 August 2012
Un-audited Reviewed % Audited
six months six months change year
ended 31 ended 31 ended 29
Aug 2012 Aug 2011 Feb 2012
Cash flows from operating
activities
Cash generated from
operations 67,476 64,900 4 185,814
Interest expense (40,639) (50,529) -20 (94,896)
New loans to customers (96,301) (138,255) -30 (225,841)
Tax paid 2,012 (1,254) >(100) 6,028
Net cash used in operating
activities (67,452) (125,138) -46 (128,895)
Cash flows from investing
activities
Purchase of non-current
assets (3,688) (3,802) -3 (5,479)
Sale of non-current assets 70 58 22 1,591
Other investing activities - - 0 935
Net used in investing
activities (3,618) (3,744) -3 (2,953)
Cash flows from financing
activities
Net proceeds from long-
term liabilities 63,484 52,417 21 13,554
Net finance lease payments (2,105) (3,092) -32 (9,178)
Net cash from financing 61,379 49,325 24 4,376
activities
Total net cash movement
for the period (9,691) (79,557) >100 (127,472)
Net cash at the beginning
of the period 74,892 209,045 -64 209,045
Effect of exchange rates (6,597) (4,493) >100 (6,681)
Total net cash at end of
the period 58,604 124,995 -53 74,892
Segment report
Un-audited 31 Aug 2012
South
Africa Botswana Zambia Uganda
R ‘000 R ‘000 R ‘000 R ‘000
Interest income 94,350 22,568 23,572 7,004
- External customers 67,295 14,914 23,346 7,004
- Inter - segment interest 27,055 7,654 226 -
Interest expense (28,865) (12,530) (2,020) 298
Net interest income 65,485 10,038 21,552 7,302
Administration and
commission income 22,581 7,662 8,416 2,054
- External customers 3,586 7,662 8,416 2,054
- Inter - segment interest 18,995 - - -
Other operating income 10,080 1,080 1,673 1,996
Operating income 98,146 18,780 31,641 11,352
Net impairment of loan
advances and receivables 4,094 (3,367) 724 (1,829)
Operating expenses (63,856) (12,441) (22,719) (5,961)
Profit before foreign
exchange differences 38,384 2,972 9,646 3,562
Foreign exchange gain /
(loss) (8,164) (266) (1,108) 1,173
Management operating
(loss)/profit 30,221 2,706 8,539 4,736
Segment result:
Profit/(loss) before
taxation 30,221 2,706 8,539 4,736
Taxation - (141) (86)
Profit/(loss)after taxation 30,221 2,565 8,539 4,650
Net investment in foreign
operation adjustment - (1,768) (1,962) (3,441)
Management profit/(loss)
after taxation 30,221 797 6,577 1,209
Other material non-cash
items included in
segment profit/(loss):
Depreciation on property,
plant and equipment 8,414 508 491 167
Amortisation of intangible
assets - - - -
Segment assets 1,495,702 79,845 148,322 24,486
Segment liabilities (581,749) (189,459) (90,458) (10,255)
Tanzania Malawi Mauritius Nigeria
R ‘000 R ‘000 R ‘000 R ‘000
Interest income 13,910 12,150 2,139 5,025
- External customers 13,910 12,150 - 5,025
- Inter - segment interest - - 2,139 -
Interest expense (245) (1,474) (29,425) (1,050)
Net interest income 13,665 10,676 (27,286) 3,975
Administration and
commission income 890 3,286 - 767
- External customers 890 3,286 - 767
- Inter - segment interest - - - -
Other operating income 1,877 1,349 108 212
Operating income 16,432 15,311 (27,178) 4,954
Net impairment of loan
advances and receivables (4,902) (3,677) - (1,300)
Operating expenses (6,964) (10,563) (224) (10,187)
Profit before foreign
exchange differences 4,566 1,071 (27,402) (6,533)
Foreign exchange gain /
(loss) (688) 128 (2,658) 978
Management operating
(loss)/profit 3,877 1,200 (30,059) (5,555)
Segment result:
Profit/(loss) before
taxation 3,877 1,200 (30,059) (5,555)
Taxation (375) (597) (445) (69)
Profit/(loss)after taxation 3,502 603 (30,504) (5,624)
Net investment in foreign
operation adjustment (3,551) (3,901) - -
Management profit/(loss)
after taxation (49) (3,298) (30,504) (5,624)
Other material non-cash
items included in
segment profit/(loss):
Depreciation on property,
plant and equipment 208 428 - 1,082
Amortisation of intangible
assets - - - -
Segment assets 34,387 84,261 650,937 26,390
Segment liabilities (8,812) (8,734) (310,673) (17,133)
CMA Other Eliminations Consolidated
R ‘000 R ‘000 R ‘000 R ‘000
Interest income 29,912 6,066 (32,347) 184,349
- External customers 29,912 6,066 4,727 184,349
- Inter - segment
interest - - (37,074) -
Interest expense (1,408) (935) 37,015 (40,639)
Net interest income 28,504 5,131 4,668 143,710
Administration and
commission income 5,945 3,614 (18,995) 36,220
- External customers 5,945 3,614 - 36,220
- Inter - segment
interest - - (18,995) -
Other operating
income 673 1,472 (244) 20,276
Operating income 35,122 10,217 (14,571) 200,206
Net impairment of
loan advances and
receivables 2,649 (1,112) 1,529 (7,191)
Operating expenses (16,337) (9,235) 3,532 (154,955)
Profit before foreign
exchange differences 21,434 (130) (9,510) 38,060
Foreign exchange gain
/ (loss) - (3,062) 2,111 (11,556)
Management operating
(loss)/profit 21,432 (3,192) (7,401) 26,504
Segment result:
Profit/(loss) before
taxation 21,432 (3,192) (7,401) 26,504
Taxation (218) (372) 151 (2,152)
Profit/(loss)after
taxation 21,214 (3,564) (7,250) 24,352
Net investment in
foreign operation
adjustment (3,169) (4,288) 22,080 -
Management 18,045 (7,852) 14,830 24,352
profit/(loss) after
taxation
Other material non-
cash items included
in
segment
profit/(loss):
Depreciation on
property, plant and
equipment 374 377 - 12,049
Amortisation of
intangible assets 38 111 4,892 5,041
Segment assets 193,855 81,695 (1,379,416) 1,440,464
Segment liabilities (56,632) (11,373) 330,818 (954,460)
Audited year ended 29 Feb 2012
South
Africa Botswana Zambia Uganda
R'000 R'000 R'000 R'000
Interest income 252,527 41,726 46,709 13,456
- External customers 172,061 30,145 46,049 13,456
- Inter-segment 80,466 11,581 660 -
Interest expense (88,947) (25,365) (4,371) 894
Net interest income 163,580 16,361 42,338 14,350
Administration and
commission income 45,358 18,897 21,866 4,322
- External customers 7,185 18,897 21,866 4,322
- Inter-segment 38,173 - - -
Other operating income 26,499 1,645 62 73
Operating income 235,437 36,903 64,266 18,745
Net impairment of loan
advances (26,793) (14,958) 1,740 (7,723)
Operating expenses (173,165) (24,121) (44,800) (10,730)
Foreign exchange (loss)
/ gain (14,604) (543) (2,465) 3,823
Management operating
profit /(loss) 20,875 (2,719) 18,741 4,115
Segment result : Profit
/(loss)before taxation 20,875 (2,719) 18,741 4,115
Taxation 26,760 7,792 (9,468) 266
Profit /(loss) after
taxation 47,635 5,073 9,273 4,381
Net investment in
foreign operation
adjustment - (5,304) (5,885) (3,654)
Management profit 47,635 (231) 3,388 727
/(loss) after taxation
Other material non-cash items included in
segment profit / (loss):
Depreciation on
property, plant and
equipment 16,132 1,116 982 329
Amortisation of
intangible assets - - - -
Interest income
Segment assets 1,541,961 82,314 152,909 25,243
Segment liabilities (599,741) (195,319) (93,256) (10,572)
Tanzania Malawi Mauritius Nigeria
R'000 R'000 R'000 R'000
Interest income 28,260 24,958 6,643 9,686
- External customers 28,260 24,958 - 9,686
- Inter-segment - - 6,643 -
Interest expense (736) (4,391) (61,329) (2,944)
Net interest income 27,524 20,567 (54,686) 6,742
Administration and
commission income 1,708 7,198 - 1,578
- External customers 1,708 7,198 - 1,578
- Inter-segment - - - -
Other operating income 119 215 - 134
Operating income 29,351 27,980 (54,686) 8,454
Net impairment of loan
advances (15,237) (10,954) - (7,292)
Operating expenses (13,857) (16,449) (529) (20,956)
Foreign exchange (loss) /
gain (1,404) 261 (5,424) 1,996
Management operating
profit /(loss) (1,147) 838 (60,639) (17,798)
Segment result : Profit
/(loss)before taxation (1,147) 838 (60,639) (17,798)
Taxation 1,133 4,791 12,068 (208)
Profit /(loss) after
taxation (14) 5,629 (48,571) (18,006)
Net investment in foreign
operation adjustment (2,974) (3,765) - -
Management profit /(loss)
after taxation (2,988) 1,864 (48,571) (18,006)
Other material non-cash
items included in segment
profit / (loss):
Depreciation on property,
plant and equipment 410 877 - 2,172
Amortisation of
intangible assets - - - -
Interest income
Segment assets 35,451 86,867 671,069 27,206
Segment liabilities (9,085) (9,004) (320,281) (17,663)
CMA Other Elimination Consolidated
R'000 R'000 R'000 R'000
Interest income 64,419 14,247 (85,858) 416,773
- External customers 64,419 14,247 13,492 416,773
- Inter-segment - - (99,350) -
Interest expense (4,160) (2,804) 99,257 (94,896)
Net interest income 60,259 11,443 13,399 321,877
Administration and
commission income 24,167 7,700 (38,173) 94,621
- External customers 24,167 7,700 - 94,621
- Inter-segment - - (38,173) -
Other operating income 1,573 98 (2,351) 28,067
Operating income 85,999 19,241 (27,125) 444,565
Net impairment of loan
advances 9,159 (6,243) 4,585 (73,716)
Operating expenses (30,242) (17,906) (5,212) (357,967)
Foreign exchange (loss)
/ gain - (6,248) 4,305 (20,303)
Management operating
profit /(loss) 64,916 (11,156) (23,447) (7,420)
Segment result : Profit
/(loss)before taxation 64,916 (11,156) (23,447) (7,420)
Taxation 3,373 1,133 2,056 49,696
Profit /(loss) after
taxation 68,289 (10,023) (21,391) 42,276
Net investment in
foreign operation
adjustment (9,506) (4,820) 35,908 -
Management profit
/(loss) after taxation 58,782 (14,845) 14,521 42,276
Other material non-cash
items included in
segment profit /
(loss):
Depreciation on 705 852 - 23,575
property, plant and
equipment
Amortisation of
intangible assets 75 163 5,208 5,446
Interest income
Segment assets 199,850 84,222 (1,480,446) 1,426,646
Segment liabilities (58,383) (11,725) (23,156)(1,348,185)
Reviewed six months 31 Aug 2011
South Botswana Zambia Uganda
Africa
R‘000 R‘000 R‘000 R‘000
Interest income 120,524 27,304 24,007 7,557
- External customers 119,824 15,922 23,990 7,557
- Inter - segment 700 11,382 17 -
interest
Interest expense (21,158) (12,226) (1,688) -
Net interest income 99,366 15,078 22,319 7,557
Administration and 21,802 2,373 6,282 1,197
commission income
- External customers 3,536 2,373 6,282 1,197
- Inter - segment 18,266 - - -
interest
Other operating income 9,248 1,141 (673) (6,996)
Operating income 130,416 18,592 27,928 1,758
Net impairment of loan (44,950) (5,244) 433 2,237
advances and receivables
Operating expenses (86,460) (13,203) (23,357) (7,152)
Management operating (994) 145 5,004 (3,157)
profit/(loss)
Segment result: (994) 145 5,004 (3,157)
profit/(loss)before
taxation
Taxation (3,553) (1,240) 573 (8)
Profit/(loss) after (4,547) (1,095) 5,577 (3,165)
taxation
Net investment in foreign - - - (6,669)
operation adjustment
Management profit/(loss) (4,547) (1,095) 5,577 (9,834)
after taxation
Other material non-cash
items included in
segment profit/(loss):
Depreciation on property, 9,110 409 492 172
plant and equipment
Amortisation of - - - -
intangible assets
Segment assets 710,218 307,687 157,190 51,585
Segment liabilities (709,216) (215,213) (73,472) (110,947)
Non-current assets other
than financial
instruments and deferred 390,748 69,588 62,089 25,278
taxation
Tanzania Malawi Mauritius Nigeria
R‘000 R‘000 R‘000 R‘000
Interest income 13,470 11,492 (225) 5,390
- External customers 13,470 11,492 - 5,390
- Inter - segment interest - - (225) -
Interest expense - (30) (26,947) (207)
Net interest income 13,470 11,462 (27,172) 5,183
Administration and commission 1,176 785 - 588
income
- External customers 1,176 785 - 588
- Inter - segment interest - - - -
Other operating income (7,877) (8,349) (2,108) 258
Operating income 6,769 3,898 (29,280) 6,029
Net impairment of loan advances 530 (76) - 3,391
and receivables
Operating expenses (7,036) (15,240) (142) (9,604)
Management operating (loss)/profit 263 (11,418) (29,422) (184)
Segment result: (loss)/profit 263 (11,418) (29,422) (184)
before taxation
Taxation (7) - 12,068 -
(Loss)/profit after taxation 256 (11,418) (17,354) (184)
Net investment in foreign (7,680) (7,939) - 188
operation adjustment
Management (loss)/profit after (7,424) (19,357) (17,354) 4
taxation
Other material non-cash items
included in
segment profit/(loss):
Depreciation on property, plant 214 408 - 1,074
and equipment
Amortisation of intangible assets - - - -
Segment assets 57,346 80,355 293,439 32,236
Segment liabilities (91,310)(123,066)(733,223)(51,732)
Non-current assets other than
financial instruments and deferred
taxation 12,830 1,780 226,430 3,888
CMA Other Elimination Consolidated
R‘000 R‘000 R‘000 R‘000
Interest income 25,316 3,950 (11,186) 227,599
- External customers 25,316 3,950 688 227,599
- Inter - segment - - (11,874) -
interest
Interest expense (65) - 11,792 (50,529)
Net interest income 25,251 3,950 606 177,070
Administration and 6,817 1,730 (13,398) 29,352
commission income
- External customers 6,817 1,730 4,868 29,352
- Inter - segment - - (18,266) -
interest
Other operating income 1,398 (8,472) 31,661 9,231
Operating income 33,466 (2,792) 18,869 215,653
Net impairment of loan 14,678 2,908 - (26,093)
advances and
receivables
Operating expenses (18,770) (9,799) 13,698 (177,065)
Management operating 29,374 (9,683) 32,567 12,495
(loss)/profit
Segment result: 29,374 (9,683) 32,567 12,495
(Loss)/profit before
taxation
Taxation 3,170 (18) (1,665) 9,320
(Loss)/profit after 32,544 (9,701) 30,902 21,815
taxation
Net investment in - (8,043) 30,143 -
foreign operation
adjustment
Management 32,554 (17,744) 61,045 21,815
(loss)/profit after
taxation
Other material non-
cash items included in
segment profit/(loss):
Depreciation on 418 275 - 12,572
property, plant and
equipment
Amortisation of 38 111 4,892 5,041
intangible assets
Segment assets 178,372 76,402 (604,641) 1,340,186
Segment liabilities (99,927) (140,985) 1,074,785 (1,274,306)
Non-current assets
other than financial
instruments and 17,797 10,876 (325,284) 496,020
deferred taxation
1. BASIS OF PREPARATION
The condensed consolidated interim financial results of the
Group for the six month period ended 31 August 2012, comprise
the company and its subsidiaries.
These consolidated 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 AC
500 standards as issued by the Accounting Practices Board,
International Accounting Standard: Interim Financial Reporting
(IAS 34), the JSE Listing Requirements and the Requirements of
the Companies Act of South Africa.
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.
The Group`s principal accounting policies and assumptions have
been applied consistently over the current and prior financial
periods.
2. COMMENTARY ON THE RESULTS
Nature of business:
The Group (“Blue”) is an innovative pan-African diversified
financial services group that trades under banking licences,
insurance licences as well as general financial services
licences and is well positioned as an enabler of progress,
upliftment and improvement in people's lives through its
financial solutions in respect of housing as well as unsecured
lending.
As a truly Pan-African financial services group, Blue has a
presence in 15 countries and currently provides retail
financial services to customers in 12 African countries.
Holding the belief that every person across the African
continent should have access to financial empowerment, Blue
aims to uplift its customers, as well as achieve a positive
social impact in the communities it serves.
Blue was recapitalised in December 2010 with the subscription
by Mayibuye Group (Pty) Ltd ("Mayibuye") and since then the
Group has totally transformed from the business that faced
near collapse. Support from shareholders and funders to the
Group have further enabled the two subsequent debt: equity
conversions that have strengthened the balance sheet and
better positioned the Group for future growth.
The Group now operates in West Africa (Ghana and Nigeria),
East Africa (Kenya, Malawi, Tanzania and Uganda), Central
Africa (Zambia, Malawi and has a presence in the Republic of
Congo and Zimbabwe) and Southern Africa (Botswana, Lesotho,
Namibia, South Africa and Swaziland.) Blue is listed on the
Alt-X of the JSE Limited ("JSE") and the Botswana Stock
Exchange ("BSE").
Blue is committed to meet the needs of people who have been
under-served and under-banked in the past by understanding the
individual circumstances and requirements of each customer,
and to providing first-class customer service through Blue's
extensive pan-African network and product range.
Financial overview:
The Group generated a net profit after tax of R24.35 million
for the period ended 31 August 2012, compared to a net profit
after tax of R21.8 for the comparative period ended 31 August
2011.
This represents an 11.63% improvement but more fundamentally
the operating profit increased from R19.9m in 2012 to R38.06m
in 2013 which constitutes an increase of 90.96%.
The 2013 interim financial results represent an improvement
from those reported in 2012 and 2011 as can be seen in the
table below:
31-Aug- 31-Aug-
12 11 31-Aug-10
R ‘000 R ‘000 R ‘000
Operating profit
/ (loss) 38,060 19,931 (163,765)
Profit /(loss)
for the period 24,352 21,815 (168,164)
Post implementation impairment on new lending is below 5%.
The total historical credit impairments excluding the
provision on the previously written off book improved from
44.93% to 43.79% as at 31 August 2012.
This satisfactory results is attributed to the effects of the
turnaround strategy which includes:
- Appointment of a new and experienced management team and
Group Board.
- Launch of a new vision, mission and values.
- Recapitalisation of the Group in the amount of R844.5m,
which reduced the Group's financing cost burden, which is
made up as follows:
o Mayibuye subscription in the amount of R163m;
o First early debt to equity conversion in the amount
of R274.7m; and
o The second early debt to equity conversion in the
amount of R406.8m.
- Further cost reductions of 11.63% since the interim
results for 2011, which now represents a total cost
reduction of 44% since August 2010.
- The following major operational improvements:
o The design and implementation of a fit for purpose
management and operational structure across all
operations.
o The start of the roll out of the Group's new
enterprise system with the assistance of Mayibuye
o The impairment charge has reduced following the
focused collection efforts on the non-performing
loans and enhanced credit controls on new loans
advanced. A total of R33m of the historical book
was rehabilitated during this period.
o The recovery of historically non-performing loans
will remain a focus.
o Driving compliance across all entities.
o Improvements in internal controls.
o Implementation of a new back-office, credit granting
and collection systems through Mayibuye, leading to
improved quality of the book; post implementation
impairment on new lending now below 5%.
o Overall improvement in business sophistication and
optimisation.
The Group continues to explore ways to minimise its exposure
to fluctuations to foreign currencies which resulted in losses
of R11.5 million on the translation of the financial results
of the foreign subsidiaries during the reporting period.
The Group is actively engaged with taxation authorities across
all affected entities to address the outstanding tax
obligations of the Group.
3. Forward looking statement
As a subsidiary of Mayibuye, with the recapitalisation of
almost R850m since December 2010, and positive impact of the
turnaround strategy, the Group has delivered positive and
sustainable improvements in financial results, business
sophistication and overall business fundamentals.
The turnaround strategy was implemented in a structured manner
with an initial focus on restoring the Group to solvency,
thereafter focusing on much needed and on-going improvements
in operational, governance and controls which have lead the
Group to profitability as was previously reported as well as
with this report.
With the Group’s turnaround strategy nearing completion, focus
has shifted to further strengthening the Group’s balance sheet
as a strong and well-capitalised balance sheet is paramount in
driving future growth of the Group.
The Group is also focusing on leveraging its extensive
distribution network and technology by introducing further
innovation and convenience into its customer proposition and
distribution network. This is aimed at significantly
increasing customer access to the Group and its products.
Core focus areas for financial products will be growth in the
provision of aspirational finance through developmental
products such as housing and education.
The board is confident that these actions will ensure that the
Group remains well positioned to benefit from its market
position, distribution, brand and products on the continent.
The Group however, remains exposed to foreign currency
movements on its non-Rand denominated external funding as well
as its non-Rand denominated results of its subsidiary
companies, which may have an impact on its reported earnings
going forward.
4. Other operating income
Un-audited Reviewed Audited 12
six months six months months
ended ended ended
31 Aug 29 Feb
2012 31 Aug 2011 2012
R ‘000 R ‘000 R ‘000
Net mobile revenue 4,574 1,730 8,508
Profit on cancellation of
derivative 9,458 - -
Reversal of insurance
premiums provision not due - 10,661 10,661
Commission received 1,640 - 3,958
Other 4,604 2,559 4,940
20,276 14,950 28,067
Net mobile revenue comprises: 4,574 1,730 8,508
Gross mobile and related
revenue 13,994 14,910 34,151
Subscriptions and cost of
sales (9,420) (13,180) (25,643)
5. Loan advances to customers
Un-audited Audited 12
six months months
ended ended
31 Aug
2012 29 Feb 2012
R ‘000 R ‘000
Gross loan advances 1,648,899 1,605,381
Less: Deferred initiation
fees (46,276) (41,920)
Less: Allowance for
impairment of loan advances (821,486) (792,961)
781,137 770,500
Movement on allowance for
impairment
Opening balance (792,961) (601,506)
Net recovery (charge) for the
period 17,806 (74,990)
Impairment on previously
written off book (24,997) (77,032)
Foreign exchange movement (21,334) (39,433)
(821,486) (792,961)
Analysis of gross loan
advances by territory:
South Africa 825,913 831,041
Rest of Africa 822,986 774,341
1,648,899 1,605,382
Analysis of impairment on loan advances by territory:
South Africa (574,082) (553,463)
Rest of Africa (247,404) (239,498)
(821,486) (792,961)
6. Long-term liabilities
Contractual repayment profile of interest bearing debt
Less than
1 Year 2-5 Years +5 Years Total
R’000 R’000 R’000 R’000
31 Aug 2012 (147,683) (448,930) (5,014) (601,627)
29 Feb 2012 (144,787) (807,536) (5,715) (958,038)
Un-
audited
six Audited 12
months months
ended ended
31 Aug
2012 29 Feb 2012
R ‘000 R ‘000
The following related party balances were outstanding at the end
of the reporting period:
? Absa Bank Limited - cross currency
swap - 13,148
? Nederlandse Financierings
Maatschappij voor
Ontwikkenlingslanden N.V 22,150 182,161
? Integer (Pty) Ltd
55,924 53,217
7. Reconciliation of headline earnings
Un-audited Reviewed Audited 12
six months six months months
ended ended ended
31 Aug 29 Feb
2012 31 Aug 2011 2012
R ‘000 R ‘000 R ‘000
Earnings attributable to
ordinary equity holders of
the parent entity 29,770 21,669 49,535
Non headline items:
Net profit on disposal of
non-current assets - - 13
Impairment of non-current
asset - - 1,500
Profit on disposal of
subsidiary - - -
Headline earnings 29,770 21,669 51,048
Number of ordinary shares in
issue in thousands 7,662,880 5,791,989 5,791,989
Weighted number of ordinary
shares in issue in thousands 6,432,566 5,791,989 5,791,989
Diluted weighted number of
shares in issue in thousands 6,444,395 5,803,818 5,803,818
8. Reconciliation of the number of ordinary shares issued:
Number of Share Share
shares capital premium
‘000 R ‘000 R ‘000
Opening balance 01/03/2011 5,791,989 5.79 1,366,028
Closing balance 29/02/2012 5,791,989 5.79 1,366,028
Opening balance 01/03/2012 5,791,989 5.79 1,366,028
Issue of ordinary shares -
Conversion of long-term
liabilities 914,209 0.91 406,821
Issue of ordinary shares -
Anti-dilution provisions 956,682 0.96 -
Closing balance 31/08/2012 7,662,880 7.66 1,772,849
9. Commitments and contingencies
Commitments
Blue Microfinance Bank Limited (previously Blue
Intercontinental Micro Finance Bank)
The Group has requested Mayibuye to intervene to resolve this
issue. The discussions, should they be concluded, will also
provide the mechanism whereby the Group would regularise its
affairs in Nigeria to meet the requirements and expectations
of the Nigerian Central Bank following the establishment of
the entity in 2008.
As at date hereof the discussions have not yet been completed.
Contingent liabilities
Various legal matters
There are certain potential claims against the Group, the
outcome of which cannot at present be foreseen. The claims are
not regarded as substantial either on an individual or Group
basis considering their estimated probability of success and
should not exceed R3.0 million (29 February 2012: R3.0
million; 2011: R3.5 million) in aggregate.
Taxation
The Group has considered all matters in dispute with the
taxation authorities. Deferred taxation assets have only been
recognised where it is probable that the Group will succeed in
its position with the taxation authorities.
Warranty Claims
In terms of the Subscription Agreement concluded on 10
December 2010, the Group provided a number of warranties in
favour of Mayibuye. Should the Group have breached any of
these warranties during a period of up to 3 months in certain
instances or up to 12 months in other instances after the
Subscription Date and upon a final determination of the
quantum of Mayibuye’s claims, by a committee of the Blue
Board consisting only of directors who are independent of
Mayibuye, or an order of court or arbitration award (Claim
Amount), Mayibuye will be entitled to the issue of such number
of Ordinary Shares which in aggregate would be equal to the
value of the final assessed Claim Amount.
The minimum Claim Amount must exceed R5 million in aggregate
and the maximum amount is capped at an amount equivalent to
the Aggregate Subscription Consideration being R163 million.
The foregoing maximum limitation does not apply in respect of
a breach by the Group of the warranty contained in the
Subscription Agreement pertaining to regulatory offences.
The Warranty Shares will be allotted and issued to Mayibuye at
an issue price per Warranty Share equal to the 30-day VWAP per
Ordinary Share as at 12:00 on the business day immediately
preceding the date on which Mayibuye first notified the
Company of the applicable claim in writing. Upon the allotment
and issue of the Warranty Shares to Mayibuye, the obligation
of the company to pay the Claim Amount shall be deemed to have
been set off against Mayibuye’s obligation to pay the
subscription consideration for the Warranty Shares.
The event(s) that may give rise to a risk of warranty claims
have been recorded in the prior year Group’s financial
statements and interim results. To the extent that the
warranty claims are settled they will not have any impact on
the Company’s Income Statement or Net Asset Value.
Blue has formed a committee to review these claims which
consists of the Non-executive directors being S. Twala, L.
Fine and R. Emslie with S. Twala serving as chairman of this
committee.
10. Going concern:
The Group generated a net profit of R24.35 million for the
period ended 31 August 2012, compared to a profit of R42.27
million for the full year ended 29 February 2012 and a profit
of R21.8 million for the comparative period ended 31 August
2011.
The Group will continue to enhance all its business processes,
internal controls and operational efficiencies.
The consolidated results have been prepared on a going concern
basis.
11. Subsequent events:
No subsequent events were identified.
12. Change to the board of directors
There were no changes to the board of directors for the period
under review.
Mrs E Waldeck resigned as company secretary with effective
from 30 September 2012. Subsequently, Mrs C Stein was
appointed as company secretary with effect from 1 October
2012.
13 Dividends
No dividend has been declared for the period under review.
Forward looking statement and disclaimer
This announcement contains certain forward-looking statements
with respect to the financial condition and results of
operations of Blue Financial Services Limited and its group
companies, which by their nature involve risk and uncertainty
because they relate to events and depend on circumstances that
may or may not occur in the future. Any forward-looking
statement included in this announcement has not been reviewed
or reported on by the Group's independent auditors.
Preparer of financial statements
These condensed consolidated financial statements have been
prepared under the supervision of D Bekker CA(SA), the Groups
Chief Financial Officer.
For and on behalf of the Board
J Meiring D Bekker
Chief Executive Officer Chief Financial Officer
05 November 2012
Directors:
Executive Directors: J Meiring (Group CEO), D Bekker (Group
CFO), S Strydom
Non - Executive Directors: S M Twala* (Chairman), R R Emslie*
(Deputy Chairman), A Ber*, L H Fine*, J A French* (American),
R M Mashishi (*Independent)
Registered Office:
Mayibuye Place
355 Kent Avenue
Randburg
PO Box 2731, Randburg, 2125
Auditors:
Deloitte & Touche
Designated Advisor:
Grindrod Bank Limited
Transfer Secretaries:
Link Market Services South Africa (Pty) Ltd, 13th floor Rennie
House, 19 Ameshoff Street Braamfontein. (PO Box 4844,
Johannesburg, 2000)
Company Secretary:
C Stein, Mayibuye Place
355 Kent Avenue, Randburg
carlas@blue.co.za Tel: (011) 504 6065
Date: 06/11/2012 08:00:00 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
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