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Johannesburg - AltX-listed microlender Blue Financial Services [JSE:BFS] reported an annual loss of R1.03bn on Monday - almost three weeks overdue.
The results for the year to end-February were supposed to be out no later than May 31. The JSE warned Blue on Thursday that the company faces suspension unless it posts results before the end of the month. Blue reported a R26m profit in the year to end-February 2009.
"The extent of this loss is so severe that total group consolidated liabilities now exceed the consolidated assets by R2.9m," the group said in commentary accompanying the results.
According to Blue's balance sheet, its assets amount to R1.533bn and liabilities to R1.536bn. The assets figure includes goodwill of R448m.
The company also advised shareholders that it was in "breach of a number of loan covenants as a result of the deterioration of its financial condition".
Group CEO Dave van Niekerk highlighted a number of reasons for the decline including rising costs, volatile African currencies relative to the South African rand, the "ill-timed" acquisition of competitor Credit U and an overall decline in the quality of Blue's loan book.
Perhaps the figure which best depicts the problem Blue faces is the comparison between interest income and expense for this year versus last year.
For the year ended February 2009, Blue saw net interest income of R541m and total interest expense of R137m. For the following financial year, these figures had risen to R173m in interest expense for just R454m in income.
White knight
It was recently announced that investment group Mayibuye Holdings would be able to recapitalise Blue with R163m, as well as a R300m loan facility.
However, with Blue already running an overdraft facility of R110m for the year and negative operating cash flow of R212m, shareholders will be questioning how effective this recapitalisation will be.
Mayibuye, however, is upbeat about its ability to turn Blue around, with CEO Johan Meiring pointing to its success in bringing homeloan lender Integer back into the black from an R80m loss.
"As the credit market is fairly mature in South Africa, the local potential lies in stabilising the business and increasing product offering," said Meiring.
Shares in Blue were up 1c (6.7%) to 16c in Monday trade following the release of the results.
- Fin24.com
The results for the year to end-February were supposed to be out no later than May 31. The JSE warned Blue on Thursday that the company faces suspension unless it posts results before the end of the month. Blue reported a R26m profit in the year to end-February 2009.
"The extent of this loss is so severe that total group consolidated liabilities now exceed the consolidated assets by R2.9m," the group said in commentary accompanying the results.
According to Blue's balance sheet, its assets amount to R1.533bn and liabilities to R1.536bn. The assets figure includes goodwill of R448m.
The company also advised shareholders that it was in "breach of a number of loan covenants as a result of the deterioration of its financial condition".
Group CEO Dave van Niekerk highlighted a number of reasons for the decline including rising costs, volatile African currencies relative to the South African rand, the "ill-timed" acquisition of competitor Credit U and an overall decline in the quality of Blue's loan book.
Perhaps the figure which best depicts the problem Blue faces is the comparison between interest income and expense for this year versus last year.
For the year ended February 2009, Blue saw net interest income of R541m and total interest expense of R137m. For the following financial year, these figures had risen to R173m in interest expense for just R454m in income.
White knight
It was recently announced that investment group Mayibuye Holdings would be able to recapitalise Blue with R163m, as well as a R300m loan facility.
However, with Blue already running an overdraft facility of R110m for the year and negative operating cash flow of R212m, shareholders will be questioning how effective this recapitalisation will be.
Mayibuye, however, is upbeat about its ability to turn Blue around, with CEO Johan Meiring pointing to its success in bringing homeloan lender Integer back into the black from an R80m loss.
"As the credit market is fairly mature in South Africa, the local potential lies in stabilising the business and increasing product offering," said Meiring.
Shares in Blue were up 1c (6.7%) to 16c in Monday trade following the release of the results.
- Fin24.com
