Edward West
11 November 2009
Johannesburg — IN A move that may shock shareholders, the fast-growing pan- African micro financier Blue Financial Services said yesterday it was expecting a loss in the six months to August .
In Blue's financial year to February, it said its loan book had grown 200% to R482m and earnings rose 92% to R119m, although it did strike a note of caution, saying the liquidity of international funding markets was low and more difficult to access, and it would "exercise prudence in any other expansion opportunities ".
The share price fell 5,8% to 81c in early trade yesterday, but the price ended the day 1,1% higher at 87c. The price has fallen dramatically recently -- it was trading at 150c on October 6 -- following reports questioning the reasons for the late publication of the annual results, the appointment of three financial directors in succession, the changing of auditors and a loan in Nigeria. Blue's directors have denied claims of corporate governance failure.
At yesterday's price the company's share has slumped 80% this year.
Blue operates in 14 African countries, had a lending book of about R1,5bn and counted prestigious international funding agencies such as the International Finance Corporation, AIG and Overseas and Private Investment Corporation among its stakeholders. Absa has 22% shareholding.
Blue said the decline in profit was due to restricted levels of funding available in the market due to the global financial crisis, disproportionately high operating costs compared with revenue owing and the lower levels of funding and the weakening of many African currencies against the rand. Impairments had risen, particularly in SA.
Steps being taken to improve profitability were cost rationalisation and better efficiencies, strengthening treasury and "business optimisation functions", delaying expansion into new markets in the short term and engaging with funders to restructure or secure new funding lines.
Yesterday Blue announced the appointment of James French as a non executive member to its board, a nominee of the International Finance Corporation.
It brings to three the number of independent non executive directors and four executive directors.
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When they tell us they have a "Budget Deficit ", they are actually saying they don't have
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Christian & Natural Family -
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Weekly Prayer List
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