Saturday, May 21, 2022

Blue in a turnaround strategy

Blue, the pan African micro financier, said it wants to put its house in order as it moves out of the worst performance coupled by an economic crunch that took away consumers’ disposable income.

The BSE and JSE quoted company revealed in its annual report for 2010 that apart from the recession, it is also to blame for making itself less attractive to funders and massive loses.

“There is no dispute that this has been a challenging year for many in the industry. The world economic crisis, which commenced in 2008, has limited available funding resources and increased the financial stress on clients,” Sipho Twala, Board Chairman, said.

“The difficulties, which Blue faced in this year, however, were not only environmental. It also has itself to blame for making the Group less attractive to funders and for the losses incurred,” he said.

Twala said the performance was also affected by lack of proper reporting mechanism inferring that the company performed well while it did not.

The company, with operations in more than 14 African markets, including Botswana, made a loss of R1.03 billion in the 2010 financial year and all indications are that it will continue operating at a loss, which will run into 2011.

The micro financier listed in 2006 and pursued expansion across Africa although it faced difficulties on the road. For example, Blue lost a license in Rwanda because of discovery of possible fiscal fraud, including under declaring.

From 2005 to February 2009, it expanded into 14 countries in Africa and increased staff from 101 to 2,702 (1,133 permanent and 1,569 agents). Loan advances increased from R45.7 million on listing to R1.3 billion in 2009.

Twala said the board has improved accounting and internal controls and improved corporate governance.

In a bid to make the company competitive, it has convinced Mayibuye Group to subscribe in the end yielding a capital injection of R163 million and create access to further capital of R300 million.
“This agreement has been subject to a number of conditions, which have, with considerable effort by the company and Mayibuye, been fulfilled. The key outstanding condition is the approval of shareholders at the meeting called for this purpose,” revealed Twala.

The view by the group is that Mayibuye is well placed to turn around the struggling Blue.

“It is particularly strong at credit vetting and collections, it has success in turnarounds, it understands the risks in the micro-finance industry and has powerful shareholders and funders,” Twala added.

Already, the board has authorised Johan Meiring, the CEO of Mayibuye, to implement an immediate turnaround strategy at Blue.

Some of the countries that operate include Botswana, Cameroon, Kenya, Lesotho, Malawi, Mauritius, Namibia, Nigeria, Rwanda, South Africa, Swaziland Tanzania, Uganda and Zambia.

Blue’s shares are currently trading on the BSE under a disclaimer.

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