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Quarterly Update
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”)
QUARTERLY UPDATE
Shareholders are referred to the announcements published on the Stock Exchange News Service (“SENS”) since
26 June 2013, whereby shareholders were advised of the Company’s voluntary suspension of trading in Blue
Securities, as well as the various quarterly update and other announcements published on SENS since then,
whereby shareholders were updated on the developments at Blue.
Update on the audit
1. As previously indicated in various SENS announcements, the 2012 consolidated financial statements for
the Blue Group were finalised during the 2013 calendar year. At that stage, however, there remained
twenty individual sets of subsidiary annual financial statements, which required completion for the
financial years ending February 2010 to February 2012. Those included:
a. five South African subsidiaries;
b. twelve African subsidiaries;
c. three Mauritian subsidiaries.
2. In August 2014 the Blue Group provided to Deloitte the necessary trial balances for the aforementioned
entities in order to enable Deloitte to complete the audits. Despite the provision of that information, the
vast majority of the audits remain outstanding. The audits up to February 2012 currently outstanding still
consist of:
a. Blue Kenya Ltd - the audits are now complete and the 2012 financial statements are with the
board of directors for adoption;
b. Blue Financial Services Mauritius Ltd – the audits are now complete for the 2010, 2011 and 2012
financials and will be tabled for adoption by the Mauritian board of directors on the 29th of April
2016;
c. Blue Financial Services Malawi Ltd - both the February 2011 and February 2012 financials are still
outstanding and await completion by Deloitte;
d. Blue Financial Services Namibia Ltd - the February 2012 financials are still outstanding and await
completion by Deloitte;
e. Blue Financial Services (South Africa) (Pty) Ltd - the February 2012 financials are still outstanding
and await completion by Deloitte; and
f. BFS Shared Management Services (Pty) Ltd - the February 2012 financials are still outstanding
and await completion by Deloitte;
g. Blue Financial Services Swaziland Ltd - in respect of which the company is awaiting sign-off by
Synergy of the February 2012 financials. This transpired when the auditors in Swaziland advised
that the audit work performed by Deloitte was done too long ago and they can no longer place
reliance on these numbers even tough Deloitte only recently provided them with these numbers.
h. The annual financial statements for Makhulong Multi Finance (Pty) Ltd (Blue Lesotho) for the 2012
financial year was signed off in March 2016.
3. The Company is unable to appoint substitute auditors as long as Deloitte remains in office i.e. not
completing the 2012 audits. In order to address any further unnecessary delays in providing the market
with updated information the Company has, however, in order to advance the audit process, engaged
alternate auditors to perform the audits as “agreed upon procedures” until they can formally be
appointed once Deloitte has completed its work and resigned as the Group auditors.
4. The current status of the financials of the various entities post the 2012 financial year up to December
2014 are:
Company December 2013 December 2014
Blue Financial UHY Voscon UHY Voscon
Services Ghana
Completed by the due Completed in the 2015
Ltd
date in the 2014 calendar calendar year.
year.
Company February 2013 February 2014 February 2015
Blue Financial Nexia Baker and Arenson Nexia Baker and Arenson Nexia Baker and Arenson
Services Mauritius Preliminary procedures Audit not yet commenced Audit not yet commenced
Ltd performed. Auditors
awaiting Deloitte sign off
of 2012 and resignation
prior to commencement.
Blue Kenya Ltd Mbaya and Associates Mbaya and Associates Mbaya and Associates
Audit commenced. Audit commenced. Audit commenced.
Awaiting Deloitte sign off Awaiting Deloitte sign off Awaiting Deloitte sign off
of 2012 and resignation. of 2012 and resignation. of 2012 and resignation.
Company February 2013 February 2014 December 2014
Blue Financial Grant Thornton Grant Thornton Grant Thornton
Services Zambia Ltd Completed in the 2016 Completed in the 2016 Completed in the 2016
calendar year. calendar year. calendar year.
Blue Employee BDO BDO BDO
Benefits
Completed in the 2016 Completed in the 2016 Completed in the 2016
Botswana (Pty)Ltd calendar year. calendar year. calendar year.
Blue Employee BDO BDO BDO
Benefits Uganda Completed in the 2016 Completed in the 2016 Completed in the 2016
Ltd calendar year. calendar year. calendar year.
Blue Financial Ernst & Young Ernst & Young Ernst & Young
Services Malawi Auditors finalising audit. Auditors finalising audit. Auditors finalising audit.
Ltd Pending approval of 2011 Pending approval of 2011 Pending approval of 2011
and 2012 financial and 2012 financial and 2012 financial
statements. statements. statements.
Blue Financial BDO BDO BDO
Services Namibia Audit has commenced. Audit has commenced. Audit has commenced.
(Pty) Ltd BDO awaiting Deloitte sign BDO awaiting Deloitte BDO awaiting Deloitte
off of 2012 and sign off of 2012 and sign off of 2012 and
resignation. resignation. resignation.
Blue Financial Synergy Synergy Synergy
Services Final review of financials Final review of financials Final review of financials
Swaziland (Pty) statements. statements. statements.
Ltd
Blue Financial Enslins Enslins Enslins
Services Lesotho Audit has commenced. Audit has commenced. Not applicable. Next
Ltd Waiting for auditors to list Waiting for auditors to list financial year end is
outstanding issues, if any. outstanding issues, if any. February 2015. Audit has
commenced.
Mobile U (Pty) Ltd SNG SNG SNG
Company dormant. Audit Company dormant. Audit Company dormant. Audit
not yet started not yet started not yet started
Blue Financial SNG SNG SNG
Services (South Audit not yet started Some initial work has Some initial work has
Africa) (Pty) Ltd commenced during the commenced during the
2015 year, although same 2015 year, although same
is currently pended. is currently pended.
BFS Shared SNG SNG SNG
Management Company dormant. Audit Some initial work has Company dormant. Audit
Services (Pty) Ltd not yet started commenced during the not yet started
2015 year, although same
is currently pending -
Company dormant.
5. In respect of the Consolidated Financial Statements for the company for the financial year ending 2013
and subsequent periods. We wish to advise as follows:
a. The consolidated audit for the 2013 financial year began in January 2013 in preparation for the
February year end.
b. In June 2013 Deloitte advised that, owing to a lack of capacity on its part, it would be unable to
commence the audit of the Group consolidated financials until the end of July 2013 which led to
the voluntary suspension of the company with the JSE.
c. Despite an undertaking in this regard, Deloitte failed to finalise the consolidated audit by August
2013. The Company was provided with the assurance, however, that the audit would be
completed by the end of September 2013. The audit was not completed by that date.
d. In December 2013 (some 6 months after the originally contemplated completion in July 2013)
Deloitte advised that it would not be in a position to recommence the audit immediately after the
festive season as a result of continuing capacity issues. Deloitte pledged to recommence the
consolidated audit in February 2014. Deloitte anticipated that a further four to five weeks would
be required to finalise the consolidated audit, projecting completion by the end of March 2014.
e. Although Deloitte did recommence the consolidated audit in February 2014, it did not adhere to
its undertaking and the audit was not completed by the end of March 2014.
f. Finally, in June 2014, Deloitte advised the Company that it would not hold itself eligible for the
2013 audit, either on a consolidated basis or on an individual subsidiary basis and stopped all work
in completing the 2013 consolidated audit.
6. The process in respect of consolidated financial statements can only be restarted once all the individual
subsidiary audits have been completed.
Briefing Session with Stakeholders
7. The Company is proposing to have a briefing session for its stakeholders during the course of June 2016
at which stakeholders will be appraised on recent developments within the Company. This will not be a
formal shareholders meeting, however, facilities will be made available for shareholders to participate.
Settlement of related party Liabilities
8. The Blue Group is currently indebted to certain companies within the Mayibuye Group of Companies
(“Mayibuye”) in the sum of R 69,476,935.55, to which interest must be added at the respective rates and
from the respective start dates.
9. The debt of Mayibuye was secured against a cession and pledge of Blue’s rights, title and interest in the
shareholding of all its investments.
10. In additional to the aforegoing the Blue Group is indebted to Cycas Investments (Pty) Ltd in the amount
of ZAR 6,630,711.22 (six million six hundred and thirty rand seven hundred and eleven rand twenty two
cents), to which interest must be added at the respective rates and from the relevant start dates.
11. The debt of Cycas was secured against a cession and pledge of Blue’s rights, title and interest in the
shareholding in Blue Financial Services Ltd Ghana which ranks prior to the pledge and cession from
Mayibuye.
12. Mayibuye and Cycas called on Blue to provide it with terms of repayment within 90 days which time period
will expire on the 10th of May 2016. Simultaneously, Mayibuye and Cycas have taken control of the
investments as envisaged in terms of the securities.
13. The parties are completing the relevant discussions and the process is anticipated to be concluded shortly.
Johannesburg
3 May 2016
Designated Adviser
Grindrod Bank Limited
Date: 03/05/2016 08:45:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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