QUARTERLY UPDATE. a. five South African subsidiaries; b. twelve African subsidiaries; c. three Mauritian subsidiaries.

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Mitchell Perry
5 years ago
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1 BLUE FINANCIAL SERVICES LIMITED Incorporated in the Republic of South Africa Registration Number: 1996/006595/06 JSE Code: BFS ISIN: ZAE ( 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 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 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 - the audits are now complete and the 2012 financial statements are with the board of directors for adoption; b. Services Mauritius 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 29 th of April 2016; c. Services Malawi - both the February 2011 and February 2012 financials are still outstanding and await completion by Deloitte; d. Services Namibia - the February 2012 financials are still outstanding and await completion by Deloitte; e. Services (South Africa) (Pty) - the February 2012 financials are still outstanding and await completion by Deloitte; and f. BFS Shared Management Services (Pty) - the February 2012 financials are still outstanding and await completion by Deloitte;

2 g. Services Swaziland - in respect of which the company is awaiting sign-off by 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) (Blue Lesotho) for the 2012 financial year was signed off in March 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 Services Ghana UHY Voscon Completed by the due date in the 2014 calendar year. UHY Voscon Completed in the 2015 Company February 2013 February 2014 February 2015 Services Mauritius Preliminary procedures performed. Auditors awaiting Deloitte sign off of 2012 and resignation prior to commencement. Audit not yet Audit not yet Blue Kenya Audit of 2012 and Audit of 2012 and Audit of 2012 and Company February 2013 February 2014 December 2014 Services Zambia

3 Blue Employee Benefits Botswana (Pty) Blue Employee Benefits Uganda Services Malawi Services Namibia (Pty) awaiting Deloitte sign off of 2012 and awaiting Deloitte sign off of 2012 and awaiting Deloitte sign off of 2012 and Services Swaziland (Pty) Services Lesotho Waiting for auditors to list outstanding issues, if any. Waiting for auditors to list outstanding issues, if any. Not applicable. Next financial year end is February Audit has Mobile U (Pty) Services (South Africa) (Pty) Audit is currently pended. is currently pended.

4 BFS Shared Management Services (Pty) 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 The Company was provided with the assurance, however, that the audit would be completed by the end of September 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 Deloitte anticipated that a further four to five weeks would be required to finalise the consolidated audit, projecting completion by the end of March 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 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.

5 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) in the amount of ZAR 6,630, (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 Services 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 10 th of May 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

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