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Blue Financial Services provides update

Johannesburg - Blue Financial Services [JSE:BFS] advised shareholders on Thursday of the company's voluntary suspension of trading in Blue Securities.

Prior to December 2010 Blue had, under previous management, suffered a loss of over R1bn, which was caused by, among others, a failed operating model; an inadequate capital structure; significant corporate maleficence; and a significant amount of individual entity annual financial statements not having been completed.

The turnaround journey commenced in December 2010 with the conclusion of recapitalisation agreements, including the Mayibuye subscription agreement, which was conditional on the conclusion of a funders recapitalisation agreement.

The turnaround journey, with the conclusion of the recapitalisation agreements, focused on introducing a sustainable operating model; addressing the backlog of financial statements; and launching forensic investigations into the events leading up to the aforementioned need for recapitalisation.

Blue said it was successful in, among others, introducing a new operating model; and having completed a detailed forensic investigation, which was reported to all relevant regulators.

The JSE has formally approved during or about July 2016 that the company may provide shareholders with a combination of audited and unaudited financial information. The company has previously advised that it still intends to release financial information to shareholders as soon as all the remaining 2012 audits conducted by Deloitte have been completed.

At present, what remains of the Deloitte audited annual financial statements is almost all the South African based entities.

As a direct consequence of a failed recapitalisation, Mayibuye has called up the debts that the Blue Group has to it. A settlement agreement has been reached in terms whereof payment of liabilities will be effected from Blue's assets.

The forensic investigation into the events surrounding Leonox Investments (in liquidation) was completed and a final executive summary report has been provided to the company.

A decision had been taken to proceed with the liquidation and/or closure of the following investments of the company due to their lack of viability: Blue Kenya; Blue Financial Services Lesotho; Blue Financial Services Mauritius; Blue Financial Services Swaziland; Blue Employee Benefits Uganda; and Mobile U.

Whilst working to obtain regulatory approvals where relevant in respect of the related party liabilities, the company is also endeavouring to complete the remaining audits. The Company is also still involved in significant litigation which remains ongoing. It anticipates making a further announcement as to the way forward, once the regulatory approvals have been obtained.

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