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Za bfs 2012_fy

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Information about Za bfs 2012_fy

Published on March 12, 2014

Author: AfricanisCool

Source: slideshare.net

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REVIEWED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2012 1. Condensed Consolidated Income Statement for the year ended 29 February 2012 Reviewed year ended 29 Feb 2012 Audited year ended 28 Feb 2011 % change R’000 R’000 Interest income 39430,394 309,034 Interest expense (94,896) (145,609) (35) Net interest income 335,498 163,425 105 Administration and commission income 94,621 87,092 9 Other operating income 28,067 20,533 37 Operating income 458,186 271,050 69 Net impairment of loan advances and receivables (87,336) (27,440) 218 Operating expenses (357,967) (522,084) (31) Goodwill impairments - (3,187) -100 Operating profit / (loss) 12,883 (281,661) >100 Net (loss) / profit on foreign exchange differences (20,303) 32,457 (163) Loss before taxation (7,420) (249,204) (97) Taxation 49,696 (35,700) >100 Net profit/(loss) for the year 42,276 (284,904) >100 Attributable to: Equity holders of the parent 49,534 (275,559) >100 Non-controlling interest (7,258) (9,345) 22 42,276 (284,904) >100 Per share ratios (in cents) Earnings/(loss) per share 0.73 (29.59) >100 Headline earnings/(loss) per share 0.76 (27.77) >100 Diluted earnings/(loss) per share 0.73 (29.59) >100 Diluted headline earnings/(loss) per share 0.75 (27.77) >100 Net asset value per share 0.01 0.01 - 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”)

Condensed Consolidated Statement of Comprehensive Income for the year ended 29 February 2012 Reviewed year ended 29 Feb 2012 Audited year ended 28 Feb 2011 % change R’000 R’000 Net profit / (loss) for the year 42,276 (284,904) >100 Other comprehensive income for the year, net of taxation (14,448) (49,888) (71) Total comprehensive profit / (loss) 27,829 (334,792) >100 Total comprehensive profit / (loss) attributable to: Equity holders of the parent 45,363 (332,803) >100 Non-controlling interest (17,534) (1,989) >100 27,829 (334,792) >100 2. Condensed Consolidated Statement of Financial Position as at 29 February 2012 Reviewed year ended 29 Feb 2012 Audited year ended 28 Feb 2011 % change R’000 R’000 Assets Cash and cash equivalents 90,492 232,299 (61) Loan advances to customers 770,501 544,578 41 Trade and other receivables 19,688 19,697 - Inventories 74 90 (18) Taxation receivable 22,520 504 >100 Other financial assets - 441 (100) Property, plant and equipment 52,584 66,540 (21) Deferred taxation 24,201 19,570 24 Intangible assets 19,963 25,190 (21) Goodwill 426,620 422,093 1 Total Assets 1,426,643 1,331,002 7 Equity and Liabilities Equity Share capital and premium 1,366,034 1,366,034 - Share based payment reserve 5,512 2,732 102 Other (deficit)/reserves (76,459) (64,743) (40) Accumulated loss (1,210,658) (1,257,460) (4) Equity attributable to equity holders of parent 84,429 46,563 63

Non-controlling interest (5,971) 11,563 (152) Total Equity 78,458 58,126 35 Liabilities Bank overdraft 15,600 23,254 (33) Derivative financial liabilities 13,148 19,807 (34) Trade and other payables 253,725 230,767 10 Taxation payable 96,565 116,621 (17) Finance lease obligations 4,752 14,002 (66) Long-term liabilities 958,038 862,571 11 Operating lease liabilities 2,434 1,836 32 Deferred taxation 3,922 4,018 (2) Total Liabilities 1,348,184 1,272,876 6 Total Equity and Liabilities 1,426,643 1,331,002 6 3. Condensed Consolidated Statement of Changes in Equity for the year ended 29 February 2012 Share Capital and Premium Share based payment reserve Other Reserves / (Deficit) (Accumulated Loss)/ Retained Earnings R'000 R'000 R'000 R'000 Balance at 28 February 2010 928,250 - 445 (948,107) Total comprehensive loss for the 2011 year - (57,244) (275,559) Share-based payment to employees - 2,732 - - Issue of ordinary shares due to recapitalisation 163,000 - - - Issue of ordinary shares on first debt conversion 271,828 - - - Shortfall on convertible redeemable preference shares conversion 2,956 - - (2,956) Convertible instrument reserve - - (4,822) 4,822 Contingency reserve - - (390) 390 Business combinations - - - (38,782) Balance at 28 February 2011 1,366,034 2,732 (62,011) (1,260,192) Total comprehensive income for the 2012 year - - (14,448) 49,534 Share-based payment to

employees - 2,780 - - Balance at 29 February 2012 1,366,034 5,512 (76,459) (1,210,658) Total attributable to equity holders of the parent Non- controlling interest Total Equity R'000 R'000 R'000 Balance at 28 February 2010 (19,412) 16,529 (2,883) Total comprehensive loss for the 2011 year (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 first debt conversion 271,828 - 271,828 Business Combinations (38,782) (2,977) (41,759) Balance at 28 February 2011 46,563 11,563 58,126 Total comprehensive income for the 2012 year 35,086 (17,534) 17,553 Share-based payment to employees 2,780 - 2,780 Balance at 29 February 2012 84,430 (5,971) 78,459 4. Condensed Consolidated Statement of Cash Flows for the year ended 29 February 2012 Reviewed year end 2012 Audited year end 2011 % change R'000 R'000 Cash flows from operating activities Cash generated from operations 196,829 225,577 (13) Interest expense (95,344) (145,609 ) (35) Net loan (advances to)/collections from customers (248,167) 157,986 <100

Taxation paid 6,027 (3,642) <100 Net cash (utilised in) / generated from operating activities (140,655) 76,326 <100 Cash flows from investing activities Purchase of property, plant and equipment (5,477) (7,789) (30) Proceeds from disposal of property, plant and equipment 1,591 3,937 (60) Other investing activities 935 7,326 <100) Net cash (utilised in) / generated from investing activities (2,952) 161,460 <100 Cash flows from financing activities Proceeds on share issue - 150,000 (100) Net proceeds from long-term liabilities 50,000 9,708 >100 Net capital repayment on long- term liabilities (36,446) - >100 Net finance lease repayments (9,178) (4,122) (95) Net cash generated from financing activities 4,376 155,586 <100 Total cash movement for the year (139,231) 235,386 <100% Cash at the beginning of the year 209,045 (22,167) >100 Effect of exchange rates (5,078) (4,174) <100 Total cash at the end of the year 74,892 209,045 (64) Segment report Reviewed year ended 29 Feb 2012 South Zambia Uganda

Africa Botswana R'000 R'000 R'000 R'000 Interest income 252,527 47,617 60,330 13,456 - External customers 172,061 36,036 59,669 13,456 - Inter-segment 80,466 11,581 660 - Interest expense (88,947) (25,365) (4,371) 894 Net interest income 163,580 22,253 55,959 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 235,438 42,795 77,886 18,745 Net impairment of loan advances (31,087) (25,848) (11,880 ) (7,723) Operating expenses (173,165 ) (24,121) (44,800 ) (10,730 ) Forex gain / (loss) (14,604) (543) (2,465) 3,823 Management operating (loss)/profit 16,582 (7,717) 18,741 4,114 Segment result : (Loss) / profit before taxation 16,582 (7,717) 18,741 4,114 Taxation 26,760 7,792 (9,468) 266 (Loss) / profit after taxation 43,342 75 9,272 4,381 Net investment in foreign operation adjustment - (5,304) (5,885) (3,654) Management (loss) / profit after taxation 43,342 (5,229) 3,387 727 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 - External customers 1,537,66 7 77,314 152,909 25,243 - Inter-segment (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 29,352 27,980 (54,686) 8,454 Net impairment of loan advances (13,853) (10,954) - (7,292) Operating expenses (13,857) (16,449) (529) (20,956) Forex gain / (loss) (1,404) 261 (5,424) 1,996 Management operating (loss) / profit 237 837 (60,638) (17,798) Segment result :(Loss) / profit before taxation 237 837 (60,638) (17,798) Taxation 1,133 4,791 12,068 (208) (Loss) / profit after taxation 1,370 5,629 (48,571) (18,006) Net investment in foreign operation adjustment (2,974) (3,765) - - Management (loss) / profit after taxation (1,605) 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 - - - - Segment assets 36,834 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 54,975 14,247 (82,305) 430,394 - External customers 54,975 14,247 17,045 430,394 - Inter-segment - - (99,350) - Interest expense (4,160) (2,804) 99,256 (94,896) Net interest income 50,815 11,443 16,951 335,498 Administration and commission income 24,051 7,698 (38,056) 94,621 - External customers 24,051 7,698 117 94,621 - Inter-segment - - (38,173) - Other operating income 1,573 98 (2,351) 28,067 Operating income 76,439 19,239 (23,456) 458,186 Net impairment of loan advances 14,720 (6,243) 12,825 (87,336) Operating expenses (30,242) (17,906 ) (5,211) (357,967) Forex gain / (loss) - (6,248) 4,306 (20,303) Management operating (loss) / profit 60,916 (11,158 ) (11,536) (7,420) Segment result :(Loss) / profit before taxation 60,916 (11,158 ) (11,536) (7,420) Taxation 3,373 1,133 2,056 49,696 (Loss) / profit after taxation 64,289 (10,025 ) (9,480) 42,276 Net investment in foreign operation adjustment (9,506) (4,820) 35,909 - Management (loss) / profit after taxation 54,783 (14,845 ) 26,429 42,276 Other material non-cash items included in segment profit / (loss) Depreciation on property, plant and equipment 705 852 - 23,575

Amortisation of intangible assets 75 163 5,208 5,446 Segment assets 193,326 84,222 (1,468,538) 1,426,620 Segment liabilities (56,965 ) (11,725 ) (23,154) (1,348,184) Audited year ended 28 Feb 2011 South Africa Botswana Zambia Uganda R‘000 R‘000 R‘000 R‘000 Interest income 150,751 70,124 35,700 14,475 - External customers 90,812 39,139 35,617 14,475 - Inter – segment 59,939 30,985 83 - Interest expense (108,629) (27,437)(18,240) (17,072) Net interest income 42,122 42,687 17,460 (2,597) Administration and commission income 57,976 5,945 17,161 7,283 - External customers 23,065 5,945 17,161 7,283 - Inter – segment 34,911 - - - Other operating income 74,284 15,897 (5,493) (32,681) Operating income 174,382 64,529 29,128 (27,995) Net impairment of loan advances (21,835) (6,788) 9,154 2,020 Operating expenses (354,025) (38,209)(42,578) (14,713) Goodwill impairment - - (3,187) - Management operating (loss)/profit (201,478) 19,532 (7,483) (40,688) Segment result: (Loss)/profit before taxation (201,478) 19,532 (7,483) (40,688) Taxation (8,653) (6,605) (5,176) (19) (Loss)/profit after taxation (210,131) 12,927(12,659) (40,707) Net investment in foreign operation adjustment - - 378 (28,840) Management (loss)/profit after taxation (210,131) 12,927(12,281) (69,547) Other material non-cash items included in segment profit/(loss): Depreciation on property, plant and equipment 20,990 812 1,166 387 Amortisation of intangible assets 12,833 853 333 60 Segment assets 1,171,018 321,384 130,245 52,450 Segment liabilities (967,078) (209,391)(68,366)(112,344) Non-current assets other than financial instruments and deferred taxation 718,135 69,899 118,362 27,232 Tanzania Malawi Mauritius Nigeria

R‘000 R‘000 R‘000 R‘000 Interest income 32,898 18,681 53,519 15,368 - External customers 32,898 18,681 - 15,368 - Inter – segment - - 53,519 - Interest expense (14,754) (15,038) (62,819) (4,834) Net interest income 18,144 3,643 (9,300) 10,534 Administration and commission income 1,685 3,592 - 2,374 - External customers 1,685 3,592 - 2,374 - Inter – segment - - - - Other operating income (22,727) (8,201) 8,522 (4,214) Operating income (2,898) (966) (778) 8,694 Net impairment of loan advances 3,152 12,781 -(21,226) Operating expenses (15,819) (21,121) 3,735(21,164) Goodwill impairment - - - - Management operating (loss)/profit (15,565) (9,306) 2,957(33,696) Segment result: (Loss)/profit before taxation (15,565) (9,306) 2,957(33,696) Taxation (20) (305) (9,900) (91) (Loss)/profit after taxation (15,585) (9,611) (6,943)(33,787) Net investment in foreign operation adjustment (20,660) (9,580) - (3,824) Management (loss)/profit after taxation (36,245) (19,191) (6,943)(37,611) Other material non-cash items included in segment profit/(loss): Depreciation on property, plant and equipment 625 963 - 2,127 Amortisation of intangible assets 57 - - - Segment assets 63,051 81,641 459,439 39,996 Segment liabilities (102,440)(116,005)(866,347)(51,530) Non-current assets other than financial instruments and deferred taxation 14,222 2,336 361,189 4,407 CMA Other EliminationConsolidated R‘000 R‘000 R‘000 R‘000 Interest income 53,154 8,890 (144,526) 309,034 - External customers 53,154 8,890 - 309,034 - Inter – segment - - (144,526) - Interest expense (9,348) (10,699) 143,261 (145,609) Net interest income 43,806 (1,809) (1,265) 163,425 Administration and commission income 22,490 3,497 (34,911) 87,092 - External customers 22,490 3,497 - 87,092 - Inter – segment - - (34,911) - Other operating income 2,642 (15,363) 40,324 52,990 Operating income 68,938 (13,675) 4,148 303,507

Net impairment of loan advances (6,118) 1,420 0 (27,440) Operating expenses (28,906) (17,361) 28,077 (522,084) Goodwill impairment - - - (3,187) Management operating (loss)/profit 33,914 (29,616) 32,225 (249,204) Segment result: (Loss)/profit before taxation 33,914 (29,616) 32,225 (249,204) Taxation (13,016) 9 8,076 (35,700) (Loss)/profit after taxation 20,898 (29,607) 40,301 (284,904) Net investment in foreign operation adjustment - (13,684) 76,210 - Management (loss)/profit after taxation 20,898 (43,291) 116,511 (284,904) Other material non-cash items included in segment profit/(loss): Depreciation on property, plant and equipment 1,664 1,027 - 29,761 Amortisation of intangible assets 176 214 - 14,526 Segment assets 118,525 43,671(1,150,418) 1,331,002 Segment liabilities (77,722)(104,043) 1,402,390 (1,272,876) Non-current assets other than financial instruments and deferred taxation 18,303 12,472 (832,734) 513,823 The Group’s reportable segments are geographical business units that offer comparable business products and solutions, which are managed and measured regionally. The Group has nine reportable segments: South Africa, Botswana, Zambia, Uganda, Tanzania, Malawi, Mauritius, Nigeria and CMA. The segments offer a variety of products and services as well as equipment sales. “CMA” comprises the aggregated segment results and financial position of the ‘Common Monetary Area’ countries outside South Africa, namely Lesotho, Namibia and Swaziland. “Other” comprises the aggregated segment information for the remainder of operations based in Kenya, Cameroon, Rwanda and Ghana. 5. BASIS OF PREPARATION The reviewed provisional condensed consolidated financial results for the year ended 29 February 2012, comprise the reviewed provisional condensed consolidated results of the company and its subsidiaries as prepared by DA Bekker CA(SA). These reviewed provisional condensed consolidated results have been prepared in accordance with the recognition and measurement criteria

of IFRS, the AC 500 standards as issued by the Accounting Practices Board or its successor, interpretations issued by the IFRS Interpretations Committee (IFRIC), and the information requirements of International Accounting Standard: Interim Financial Reporting (IAS34) and the JSE Listings Requirements and South African Companies Act. In the preparation of these 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 year. 6. Debt rescheduling agreement The Group concluded a debt rescheduling agreement (“DRA”) with its existing lenders as part of the recapitalisation of the Group during December 2010. Group lenders comprising circa R974 million of Group debt became party to the DRA at that date. The DRA further remedied all covenants that had previously been breached by the Group to these lenders. It was originally anticipated that the turnaround process will take up to 3 (three) years to complete. As such the key objective of the DRA was to allow the Group a period of 3(three) years, during which the participating lenders have granted the Group a stay on principal payments on their facilities, and pursuant to its turnaround objectives, to work on closing the gap between the DRA assets and liabilities that existed on that date. If a gap still remains at the end date of the DRA, being 1 January 2014, this will be converted into equity in the Group. The Group had always anticipated that a gap may remain at the end date of the DRA and that a conversion of some of these liabilities into equity would in all probability take place. The effect of such an issuance of shares created uncertainty with a quantum of the potential issue of shares in the Group to funders, and the further issue of Anti-dilution shares to the Mayibuye Group in order to maintain their shareholding at 51%. In terms of IFRS the Group’s balance sheet could not reflect the positive impact of the expected future conversion of debt into equity until this conversion takes place. During February 2011, the Group concluded a conversion of debt into equity comprising circa R274 million of Group debt as an initial step in moving the Groups balance sheet to a solvent position and recording a portion of the anticipated gap between the DRA assets and liabilities as equity. The Group is now seeking to convert the projected possible remaining portion of the expected gap between the DRA assets and liabilities through a further conversion of debt into equity under the DRA of up to a maximum of R452 million. This proposed conversion will be

tabled for approval at the upcoming shareholders’ meeting to be held on 29 June 2012. 7. Commitments and contingencies Contingencies 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 therefore not exceed R3 million (2011: R3.5 million) in aggregate. Taxation As part of its ongoing restructure, the Group has identified various amendments required to its historic tax returns submitted to the South African Revenue Services ("SARS") as a result of the initial findings of the forensic investigation, coupled with its review of historic tax calculations and submissions made. It should be noted that SARS has not yet completed its assessment in this regard. The revised tax returns have the impact of reducing the Group’s overall tax obligations by R32.28 million. The Group is seeking to engage the various taxation authorities across all affected entities to address the outstanding tax obligations of the Group. 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 breach 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, from the Group's perspective, by its Board consisting of only directors of the Group 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 aforegoing 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 Group’s financial statements. 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. A notification of warranty claims has been received from Mayibuye on 9 and 10 March 2011. The following items, raised in the claim letters and subject to confirmation as described above, are based on the underlying amount of the claim event recorded in the financial statements at the reporting date: - Pinebridge Global Emerging Markets Partners II, L.P. (Pinebridge) Agreement dated 27 October 2010(R44 million) As result of a directive issued by the Central Bank of Nigeria, Pinebridge was required to transfer all of the shares acquired by it in the share capital of Blue Intercontinental Micro Finance Bank in Nigeria from the Group, back to the Group at the purchase price originally paid being US$ 5 million plus interest thereon accruing at a rate of 8.5% per annum from the date the original sale agreement was concluded until the date of recapitalisation on 10 December 2010. As a result of the restatement of the annual financial statements of the Group in respect of the financial year ended 28 February 2009, the number of shares allotted and issued to Pinebridge pursuant to the conversion of the Class C Preference Shares held by it was incorrect and consequently required the allotment and issue of an additional 22,731,279 Blue ordinary shares. Pinebridge converted both these amounts into ordinary shares as part of the Groups early debt to equity conversion concluded on 25 February 2011. - Taxation The Group identified and recorded additional potential taxation obligations in the finalisation of its 2011 financial statements relating to charges levied on Group subsidiaries for shared services costs. (R20 million) The Group further continued to accrue for interest and penalties on all overdue taxes in its financial results. (R17.5 million) The Group is currently in discussions with various taxation authorities regarding the settlement of the Group taxation obligations. - Lesotho Interest Rates (R15.2 million)

Following a High Court ruling in Lesotho, the Group may be required to retrospectively reduce the interest rate charged to customers on loan advances. - Other (R23.3 million) The assessment of the veracity of these claims is expected to commence following the release of the Group’s results for 29 February 2012. 8. Going concern The Group earned a net profit after taxation of R42.27 million (2011: net loss after taxation of R284.9 million) for the year ended 29 February 2012, representing a key milestone in returning the Group to profitability from the losses recorded in the prior year. The recapitalisation of the Group by Mayibuye in December 2010, the impact of the DRA, coupled with the debt: equity conversion in February 2011, and the commencement of the key phases to the turnaround strategy, have to date yielded positive and sustainable improvements in financial results and overall business fundamentals. The Group’s assets now exceed its liabilities by R78.5 million (2011: R58.1 million) and has, at the reporting date, access to the remaining R200 million of the original R300 million facility through the claims purchase agreement with Leonox (Proprietary) Limited for loan advances. As described in note 6 above, the Group has received irrevocable undertakings from shareholders representing 76% of the Group’s issued share capital to conclude a further debt: equity conversion of DRA debt of up to a maximum of R452 million. The shareholders meeting where this conversion will be considered is set for 29 June 2012. Following this conversion, the Group will improve its net equity position by up to a maximum of R452 million and realise further savings in funder interest costs, whilst representing another important step in moving the Group closer to meeting all of its turnaround objectives. The conversion will also ensure that the Group has a positive tangible net asset value. As described in note 10 below, the turnaround strategy is well underway and the business is now on a solid platform to enable it to change its focus to driving growth in all its operations. Key to this is the planned debt: equity conversion and further initiatives being explored to drive the on-going strengthening of the Group’s balance sheet which will form the basis for further debt raising to enable growth.

The Group in this regard has been re-engaged by financial institutions to explore the extension of new funding lines to support the growth objectives of the Group. These discussions are seen as a further positive indication of the increase in investor and funder confidence in the Group. The Group is maintaining its focus on managing operating cost levels, growing loan advances, while managing short term cash requirements to settle pre-existing liabilities. The Group will further strive to enhance all its business processes, internal controls and operational efficiencies on an ongoing basis. Included in the results above are non-recurring charges and gains and the Group furthermore 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. The consolidated results have therefore been prepared on a going concern basis. 9. Subsequent events Blue Intercontinental Microfinance Bank Limited in Nigeria In terms of the original shareholders agreement on the establishment of Blue Intercontinental Micro Finance Bank Limited in Nigeria, the Group had an obligation to subscribe for US$7 million in equity capital. In accordance with this commitment the Group had to date subscribed for US$1 million in cash. The Group reported in the prior year that it had reached agreement with its fellow shareholder subsequent to the financial year-end, which subject to Regulatory approval, would inter alia have resulted in the remaining capital requirement for the Group being reduced to US$1 million. This fellow shareholder was however acquired by another Nigerian financial institution during the 2012 financial year resulting in this agreement not being consummated. The Group, in collaboration with its holding company (Mayibuye Group (Pty) Ltd ("Mayibuye")), is advanced in negotiations with the new fellow shareholder regarding the future shareholding of the Nigerian Micro Finance bank. Debt: Equity Conversion As described in note 6 and 8 above, the Group has received irrevocable undertakings from shareholders representing 76% of the Group’s issued share capital to conclude a further debt: equity conversion of DRA debt of up to R452 million. The shareholders meeting where this conversion will be considered is set for 29 June 2012. Zimbabwe and the Congo

The Group, further to its turnaround initiatives and investigations, identified the existence of entities previously established in Zimbabwe and the Congo. The entities have not actively traded and the Group is in process of finalising revised shareholders agreements, which are still subject to inter alia regulatory approvals, prior to the finalising its plans for operations in these countries. Other than the matters noted above, no subsequent events were identified. 10. Commentary on the results The Group generated a net profit after taxation of R42.27 million for the year ended 29 February 2012 compared to a net loss after taxation of R284.9 million in the 2011 financial year. This translates into the conversion of a loss per share of 29.6 cents for 2011, to earnings per share of 0.7 cents for 2012. Headline loss per share improved in a similar manner with headline earnings per share for 2012 of 0.7 cents (2011: headline loss per share of 27.8 cents). The Group reported a net profit of R21.6 million for the 6 months ended 31 August 2011. The net profit for the full financial year is an improvement over that reported for the first 6 months. The 2012 financial results represent a significant improvement from those reported in 2010, a year which signalled severe financial difficulties in the Group and which brought into question its ability to continue operating as a going concern. Loan advances have increased by 40% from R544.6 million in 2011 to R770.5 million at 29 February 2012. The Group focused on enhancing the control environment and driving its turnaround strategy together with the increase in lending activities to customers. The impact of a prudent approach to new lending has already realised benefits, and is expected to be more evident in subsequent financial periods. The net impairment charge on loan advances and receivables has reduced following the focused collection efforts on the non-performing loans. Overall credit impairment on gross loans and advances is 49% (2011: 51.5%) after taking into account the reinstatement of loans previously written-off. The Group is currently focusing on government payroll deduction loans in all countries outside of South Africa where the current credit impairments history is below 5%. The Group is engaging with taxation authorities across all affected entities to address the outstanding tax obligations of the Group. As reported in the Group’s 2011 financial results, the board had launched a forensic investigation, which includes a review of the underlying reasons and causes of the restatements to its financial results in prior years. The initial forensic report has been provided to the relevant regulatory authorities, and the Group remains committed to providing its full co-operation to all relevant authorities regarding the findings contained therein.

Recapitalisation of Group Subsidiaries As part of its turnaround plan, the Group has completed its assessment of the solvency and capital requirements of all its subsidiaries. Where required Group companies were recapitalised through inter alia the capitalisation of portions of the inter-group loan accounts between the various Group companies as well as injection of capital where so required. FORWARD LOOKING STATEMENT The recapitalisation of the Group by Mayibuye in December 2010, coupled with the first debt: equity conversion in February 2011, and the commencement of the key phases to its turnaround strategy, have to date yielded positive and sustainable improvements in financial results and overall business fundamental. The turnaround strategy was formulated in a structured manner with an initial focus on restoring the Group to solvency, implementing much needed and on-going improvements in operational, governance and controls, and returning the Group to profitability. With the Group’s turnaround strategy now well advanced and a solid foundation in place, focus has shifted to further strengthening the Group’s balance sheet. A strong and well-capitalised balance sheet is paramount in securing new funding and investors, which is a key catalyst in driving future growth in loan advances and with that sustainable profitability of the Group going forward. 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 but with minimal investment required. Core focus areas for financial products will be growth in the provision of financing for 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. CHANGES TO THE BOARD OF DIRECTORS The following changes to the Blue board took place during the year ended 29 February 2012: Resigned – M G Meehan on 31 December 2011 Resigned – A Couloubis on 15 December 2011 Resigned – T L Till on 15 December 2011 Appointed – G Whitcher on 9 January 2012 Resigned – G Whitcher on 6 February 2012 Appointed – D Bekker on 6 February 2012

DIVIDENDS No dividend has been declared for the period under review. AUDITORS REVIEW CONCLUSION The Group’s independent auditors, Deloitte & Touche, have reviewed the accompanying financial information and a copy of their unmodified review conclusion on this condensed consolidated financial information is available for inspection at the Group's registered office. The Group`s independent auditors, Deloitte & Touche conducted their review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. Forward looking statement This announcement contains certain forward-looking statements with respect to the financial condition and results of operations of Blue Financial Services Limited and its subsidiary 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. NO CHANGE STATEMENT, POSTING OF ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING Respective announcements will be made in due course advising shareholders of inter alia, the following: - the date of when the consolidated annual financial statements are approved by the Board, accompanied by a “No Change Statement”; and - to be followed by the date of the posting of the annual report and the details of the notice of the annual general meeting. For and on behalf of the Board J Meiring D Bekker Chief Executive Officer Chief Financial Officer 21 June 2012 S Twala *^(Chairman); R Emslie *^(Deputy Chairman); J Meiring (CEO); D Bekker(CFO); A Ber*^; RM Mashishi*; L Fine*^; J French*^# and S Strydom *non-executive ^independent # United States of America Registered Office: Mayibuye Place 355 Kent Avenue Randburg

PO Box 2731, Randburg, 2125 Auditors: Deloitte & Touche Designated Advisor: Grindrod Bank Limited Registration number 1994/007994/06 Transfer Secretaries: Link Market Services South Africa (Pty) Ltd, 13th floor Rennie House, 19 Ameshoff Street Braamfontein. (PO Box 4844, Johannesburg, 2000) Company Secretary: E Waldeck, Mayibuye Place 355 Kent Avenue, Randburg elisew@blue.co.za Tel: +27 (0) 11 504 6200 Group head office: Tel: +27 (0) 11 504 6200 Fax: +27 (0) 504 6207 E-mail: blue@blue.co.za www.blue.co.za

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