annual results presentation - blue label telecoms · pdf file•prepaid electricity, water...

RESULTSfor the year ended 31 May 2017

Group highlights for the year ended 31 May 2017

2

» Earnings continue to escalate:

• Revenue to R26.3 billion

• Gross Profit by 19% to R2.2 billion

• EBITDA by 7% to R1.3 billion

• Earnings per share by 14% to 117.92 cents

• Headline earnings per share by 18% to 117.98 cents

• Core headline earnings per share by 17% to 120.09 cents

• Dividend declared by 11% to 40 cents per share

» A new era dawns in developing a rich ecosystem - acquisitions

HIGHLIGHTS

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

20172016201520142013

Group Gross Profit

25 2731

3640

0

5

10

15

20

25

30

35

40

45

2013 2014 2015 2016 2017

Cen

ts

Dividends declared per share

South Africa DistributionBrett Levy – Joint CEO

South African Distribution Segment:

• Prepaid Airtime, Data and Starter/SIM packs

• Handsets and Tablets

• Market

• Retail Distribution Channel

• Prepaid Electricity, Water and Gas

• Ticketing

• Fintech and other Value Added Services

Acquisitions of 45% of Cell C and 100% of 3G Mobile

Shareholder Profile

SOUTH AFRICAN DISTRIBUTION

Financial and Operational Highlights

4

» Revenue consistent at R25.7 billion

» PINless top-up revenue increases by R2 billion to R6.1 billion,

when imputed to revenue effective growth is 7%

» Gross profit up 21% to R1.9 billion

» Gross profit margins expand from 6.15% to 7.43%

» Core net profit up 19% to R893 million

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Mil

lio

ns

Prepaid Airtime Revenue Growth

2017

2016

-

100

200

300

400

500

600

700

Mil

lio

ns

Direct Top Up - PINless Airtime Growth

2017

2016


Prepaid Airtime, Data, Starter/SIM packs

5

» Maintaining 700k to 1m new SIM connections per month:

• consumers improving understanding of market dynamics

• changing cell number rather than porting

• MNOs migrating 2G users to 3G devices and smartphone uptake

» Growth in sales:

• convergence of voice, data and content with network offerings

• benefits of utilising data analytics

• rolling-out new Android terminals

• airtime from corporate/banking channel

• data from independent and corporate channels

20%

60%

10%10%

Airtime

Corporate Sales

Independents

Formal Retail

Petroleum

35%

31%

24%

10%

Data

Corporate Sales

Independents

Formal Retail

Petroleum


Handsets and Tablets

6

» Existing Tier 3 hardware selling under Boost, Verssed and Blaupunkt brands:

• comprising handsets, phones, tablets, phablets and POS devices

• augmented with smart watches, fitness bands and educational robots

• Boost brand redesigned and features upgraded

» Existing Tier 4 bolt-on, Reware:

• sources, refurbishes and distributes pre-owned smartphones

• rapidly growing market

• outlets in Sandton and Braamfontein

» Acquisition of 3G Mobile brings new Tiers 1 and 2 constituting a complete

hardware business, housed under one roof


Market

7

» “Magnet for foot traffic”

» Main market/informal - 85% of revenue:

• achievements in direct distribution methods in rural areas

• truck & footsoldier/gig-rig reach

• retention and acquisition of quality merchants

• shifts in consumer buying patterns to prepaid

• ensuring our merchants do more our products and services

» Formal market - 15% of revenue:

• growth in food and pharmaceutical sectors

• Chat 4 Change sales up 30%

• growing distribution in retail channel

» Strengthening our management team


Retail Distribution

8

» Integration strategy of distributing hardware products in retail channels

» Route to market includes Edcon, Ideals, Choppies, Dischem and Take-a-lot

» Edcon customers utilise cash or group approved credit facilities

» Challenging and competitive retail landscape

» Blue Label Connect:

• merchandise includes post paid, hybrid, VAS - wholesale and retail

• mobile wallet and money transfer services

» Edgars Connect:

• “One stop connectivity destination store across the nation”

• Extensive range of mobile products and services, specialising in:

• mobile devices, tablets, wearables, accessories, gadgets, home automation & security, wifi routers and laptops

• Cell C post paid contracts

• airtime, data, prepaid electricity, bill payments

• ticketing, including sport, travel, events, expos, entertainment & lifestyle shows, and Hollywood bets

• rolling-out stand alone stores in rural areas, centres and malls, 64 stores currently open


Prepaid Electricity

9

» Market*: 10m prepaid meters installed in addressable market of 19m

» Commissions earned up 9% to R215 million

» Equates to R14 billion in sales revenue

» Growth drivers:

• Prepaid24 – enhancing retail online reach

• Utilities World - back-end integration into municipalities

• re-award of distribution contracts

• distribution on behalf of additional municipalities

• retail and corporate/banking channels

*Source: Eskom

32%

17%

36%

15%

Electricity

Corporate Sales

Independents

Formal Retail

Petroleum

-

200

400

600

800

1,000

1,200

1,400

Mil

lio

ns

Prepaid Electricity - Revenue

2017

2016

2015


Prepaid Electricity, Water and Gas

10

» UniPIN’s redeemed:

• value R825 million

• quantity (volume) 8.3 million vouchers

» 8 years of growth

» Prepaid Water and Gas:

• increasing interest from service providers

-

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

Jun

-09

Au

g-0

9

Oct-

09

Dec-0

9

Fe

b-1

0

Ap

r-10

Jun

-10

Au

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Oct-

10

Dec-1

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Fe

b-1

1

Ap

r-11

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-11

Au

g-1

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Oct-

11

Dec-1

1

Fe

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-12

Au

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2

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-13

Au

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3

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13

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3

Fe

b-1

4

Ap

r-14

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-14

Au

g-1

4

Oct-

14

Dec-1

4

Fe

b-1

5

Ap

r-15

Jun

-15

Au

g-1

5

Oct-

15

Dec-1

5

Fe

b-1

6

Ap

r-16

Jun

-16

Au

g-1

6

Oct-

16

Dec-1

6

Fe

b-1

7

Ap

r-17

R’

Prepaid Electricity – 8 year perpetual growth in revenue

-

100

200

300

400

500

600

700

800

900

-

10

20

30

40

50

60

70

80

90

100

Th

ou

san

ds

R’m

illions

UniPIN Redemptions

Quantity (thousands) Value (R millions)


Ticketing

11

» Ticketing solutions for events, sports and transport sectors

» Ticketpro strategy - market differentiation; brand awareness; market share

» Raising national presence:

• available in >1,000 stores

• entrenched in our merchant base and across retail channels

• ticketing and access management for ~600 events, such as:

• Premier soccer league, Telkom Knockouts, DSTV Delicious, Getaway Show, Joburg Day,

MTN Joyous Celebration 21, Miss SA 2017, FIA World Rallycross of South Africa, The

TOPS at Spar Wine Show, Whisky Live, Wedding Expo, Mama Magic Expo, Decorex

• Growth in transport ticketing sales - Putco:

• commuter bus service, available through >200 outlets in rural areas

• serving >250,000 passengers/month

» Launched Ticketpro consumer mobile app and Ticketpro Travel

» >2.3 million event tickets sold

» 74 different venues

» Revenue increasing


Fintech Products and other Value Added Services

12

» Bill Payments

• transaction volumes increasing ~200%

• striving to meet enhanced requirements of bill issuers

• constantly adding more issuers to bill payments engine

» Debit and Credit Card Acquiring

• white labelling for loyalty programmes

» Wallets and Money Transfers*

• money transfers launched across Edcon Group

• evolving into payment ecosystem:

• replacing debit and credit cards

• greater convenience and lower pricing for consumers

• tailwinds from low-cost smartphones

* Frost & Sullivan estimates 60% of adults in Africa are unbanked


Acquisition of 45% stake in Cell C

13

» Strategy for developing a rich ecosytem

» 45% stake in Cell C for R5.5 billion effective 2 August 2017

» Rationale for vertical integration with Cell C:

• creating value: ROI in medium term

• margin defence: existing trading relationship

• commercial synergies: multiple shared services

» Funding through hybrid of own cash and vendor placements

» ‘Business as usual’ in constructive relationships with other MNOs


Acquisition of 3G Mobile

14

» Announced 27 June and effective 2 August 2017

» Distributor of all major Tier 1 & 2 mobile device and handset manufacturers:

• Apple, Samsung, Huawei, ZTE and Nokia

» Also offers financing for the mobile handset element of post paid contracts

» Earnings accretive

» R1.9 billion acquisition structured in two stages:

• initial: 47.37% for R900 million (R250 million in BLU shares + R650 million in cash)

• subsequent: 52.63% for R1 billion

» 3G Mobile complements our existing new and refurbished hardware business

» Integrates our approach to distributing complete range of handsets and tablets

» Enhances our ecosystem


Shareholder Analysis as at 11 August 2017

15

Top Shareholders:

» Allan Gray – 18.31%

» Shotput – 11.43%

» B Levy – 7.25%

» M Levy – 6.41%

» 36One – 4.89%

» Sanlam – 3.41%

» Richmark – 3.14%

» Investec – 2.52%

» Alexander Forbes – 2.27%

Notes:

» Shareholders holding >2% of issued capital account

for ~60% of total issued share capital

» ADR programme through BNY Mellon

» Market capitalisation R14.5 billion

Beneficial Shareholders – 31 May 2017

South Africa 86% USA 9% UK 3% Rest of World 2%

Free Float – 31 May 2017

Free float 57%

Strategic holders 41%

Below threshold 2%

InternationalMark Levy – Joint CEO

International Distribution Segment:

• Oxigen Services India

• Blue Label Mexico

Mobile Segment

Solutions Segment

Big Data

Technology

Group Prospects

17

Oxigen Services India – Synopsis

» Government’s frequent introduction of new legislation and technology

» Government demonetises currency in November 2016

» Requires fintech sector to modify strategies

» Developing offline opportunities and scaling back on-line

» Revenue constant

» Product mix by contribution to revenue:

• financial services - 73%

• airtime & others - 17%

17

INTERNATIONAL

Airtime & DTH21%

Bill Payment3%

Travel & others0%

BC Banking Business

36%

OMTS35%

AEPS on Micro ATM3%

Oxigen Wallet (App)2%

Segmental (Revenue)

135 135 141 143 142 156

146

163 166 165 166 163

168 173 178 175 185

152

100

134 129

146

124 128

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

$m

Total Revenue (GTV)

FY 15-16 FY 16-17

Demonetisation

18

Oxigen Services India – Offline Airtime Recharge

» Traditional, POS, offline products

» Rolling out micro-ATM POS to access last mile:

• biometric scanner for Aardhaar authentication

• connected to NPCI enabling cash deposits and withdrawals

• expansion into retail fuel forecourts, rural fertilizer industry and dairy co-ops

18

INTERNATIONAL

Oxigen’s ecosystem:

- connects 170 banks

- reaches >200,000 retail outlets

- serves >150 million unique customers

19

Oxigen Services India – Offline Banking

» Services akin to a bank

» Comprehensive payments and financial services solutions

» Connects to NPCI centralised bill payments system (Bharat)

» 24/7 link to Immediate Payment System (IMPS)

» Business Correspondent banking – revenue increase 23%

» Money transfers and remittances:

• partnerships with State Bank of India and Ratnaker Bank Limited

• revenue under pressure due to demonetisation

• now connecting India and Nepal

19

INTERNATIONAL

32 32 34 36 37

44 40

49 55 53

45

56

63 65 64 63 70

50

18

39

46

56

48 50


Business Correspondent Banking

FY 15-16 FY 16-17

Demonetisation

61 62 63 66 64 67 65

70 70 64 66

55

61 62 64

68 73

60

41

54 49 51

32 29


Oxigen Money Transfer Services

FY 15-16 FY 16-17

20

Oxigen Services India – Online e-Wallets

» e-wallets landscape evolutionising:

• Government’s UPI simplifies transfers between merchants and consumers

• wallets must be linked to bank accounts

• competitive market requires deep marketing spend

• peers offering discounting/cash backs

» Oxigen adopting B2B2C approach

» Enterprise route of acquiring subscribers by white labelling platform

» Loyalty Service Platform with retailer Future Group

» >30 million customers

20

INTERNATIONAL

21

Blue Label Mexico - Highlights

» Mobile penetration ~69% in >122 million population

» Consistent growth strategy to build market share:

• expanding POS network

• distributing more products

» Revenue contracted but trend is rising

» Gross profit increase of R26.6 million (32%)

» Share of loss narrows from R63 million to R37 million

*source: IFTEL

21

INTERNATIONAL

Telcel Movistar AT&T OMV

Market Share * (Prepaid) Q 1 71,4% 21,9% 6,5% 0,2%


MX

P M

illi

on

s

Total Revenue

FY 15-16 FY 16-17


MX

P M

illi

on

s

Gross Profit

FY 15-16 FY 16-17

22

Blue Label Mexico – Active Devices

» 81,000 devices deployed

» 61,000 active POS devices*

» Our POS is a magnet for foot traffic with growth in sales/store:

• longer duration POS in market = lower churn

• data analytics

• cash collection for merchants

» Higher ARPU’s:

• bill payments, card payments and food vouchers

• merchant base offering more products and services

* active is defined as devices registering a transaction

during the past month

22

INTERNATIONAL

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000


ARPU

FY 15-16 FY 16-17

23

Blue Label Mexico – Airtime and SIM cards

» Airtime

• main revenue driver

• blended margin improving

• 70% of devices transact airtime top-ups

» SIM Cards

• revenue growth

• distribution on behalf of MNO’s and MVNO’s

• extensive route to market

• education and awareness training

• gaining traction whilst leading the way in maturing market

• business model includes income stream from:

sales of SIM cards

annuity earned on SIM cards

23

INTERNATIONAL

0

50

100

150

200

250

300

350

400

450

500


MX

P M

illi

on

s

Revenue Airtime

FY 15-16 FY 16-17

Revenue SIMS

2015-2017

24

Blue Label Mexico – Bill Payments

» Another year of growth

» Revenue up 59%

» Total transactions up 23%

» 30% of merchants transacting bill payments

» Marketing campaigns underline convenience of paying

bills at Red Qiubo stores

24

INTERNATIONAL


Revenue Services

FY 15-16 FY 16-17


Total Services Transactions

FY 15-16 FY 16-17

25

Blue Label Mexico – Financial Services

» Growth continues

» Incentivising merchants to increase terminal activity

» Credit and Debit Card Acceptance and Acquiring

» Partnership with Visa and CitiBanamex

» Revenue growth up 55%

» No. of transactions up 42%

» Food Vouchers

» Servicing Edenred, Si Vale, Sodexo and Inbursa customers

» Revenue growth up 77%

» No. of transactions almost doubled

25

INTERNATIONAL


Credit and Debit Transactions

FY 15-16 FY 16-17


Credit and Debit Revenue

FY 15-16 FY 16-17


Food Vouchers Revenue

FY 15-16 FY 16-17


Food Vouchers Transactions

FY15-16 FY16-17

26

Mobile Segment

» Core net profit contribution R56 million

» Via Media

Content, entertainment and information for mobile phones

through subscriptions:

• predominant contributor to net profit contribution

• B2C and B2B platforms

• extensive infotainment catalogues available in 8 African

countries and 10 languages

• cross-leveraging product suites with partners

» Size of A2P market:

26

MOBILE

Entertainment and information

content:

>R3 billion market size. 3G

subscribers in sub-Sahara driving

growth of new and rich media content.

Financial services:

Focus on airtime advance, handset

credit, remittances, statements,

mobile payments etc.

VAS (traditional LBS):

Includes customers of MNO’s,

Insurers, Medical Aids

Converged communications:

Total SMS market size contracts 20%

to 1.2 billion - 1.5 billion SMS’s /month

» Cellfind

Messaging, VAS and financial services for mobile phones:

• largest enabler in target market of sub-Sahara

• doubled sending capacity to >2,000 SMS’s/second

• 3.2 billion SMS’s sent FY17, up 23%

• founding member of WASPA

27

Solutions Segment

» Core net profit R19 million

» Blue Label Data Solutions – data scientists supplying analytical services

» Supplying recent, clean and accurate data

» 86 million consumer-base and expanding:

• generating ~1 million unique qualifying leads up >100%

• sending 329 million SMSs up 26%

» POPI & FAIS Acts and TCF principles

» Rebuild opt-in register every month

» Expanding database:

27

SOLUTIONS

86 million unique

cell numbers

42 million ID

numbers linked to

full contact details

2.5 million right

party contacts

2 million email

addresses linked

to ID’s

18 million on opt-

in register

28

Big Data

» Creating insight to customer profiles and preferences

» Upselling and cross selling various bouquets of products and services

» Intelligently understanding consumer behaviour

28

SOLUTIONS

29

Technology

» Proprietary platforms supporting growing neutral aggregation

» Enhanced Android devices roll-out

» Transaction Junction expanding banking solutions across merchant base

» Stable platforms

» Transactions peaking annually in December

29

TECHNOLOGY

6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5

2015 2016 2017

Transaction Volumes

AEON EFT BLM Total» Blue Label Ventures:

• Boutique business accelerator launched.

• Assists technical entrepreneurs in post revenue

scale-ups

• Nurtures from incubation phase into more mature

businesses

30

Group Prospects

» Blue Label is one of the primary distribution channels for Cell C’s products and services. The acquisition provides a compelling value

proposition to the Group, to Cell C and its customers through vertical integration that will afford both companies the opportunity to

realise synergies in product distribution. Cell C now has a sustainable capital structure to deliver its strategic objectives.

» 3G Mobile is one of Africa’s largest distributors and financiers of mobile devices and handsets to major retailers and cellular network

providers. It has distribution rights for all major tier 1 and tier 2 mobile devices and allied products from the manufacturers thereof.

Through its wholly owned subsidiary Comm Equipment Company, it provides the financing of the mobile handset component of post-

paid and hybrid contracts to Cell C, with the capability of extending such services to other networks and channels. These functions

supplement Blue Label's strategic objectives to provide value added services to both Cell C and its own customer base. 3G Mobile

provides the ideal platform to combine Blue Label's low cost and certified pre-owned mobile handset divisions into a consolidated

group. The acquisition thereof is both earnings accretive and provides a solid foundation for distribution into the burgeoning low cost

smartphone market.

» Blue Label Mexico is expected to provide a positive contribution to Group profitability, given its consistent growth in revenue

generation at sustainable improved gross profit margins and compounding annuity revenue generated from starter packs.

» “Big Data” creates the opportunity to upsell and cross sell various bouquets of products and services that Blue Label has to offer

through its distribution channels by intelligently understanding consumer behaviour.

» Value added services, including the provision of short term finance for products and services required by consumers, are initiatives

that are currently under consideration.

30

PROSPECTS

Financial ReviewDean Suntup – Financial Director

32

Highlights

32

FINANCIAL

Increase in

revenue to

R26.3 billion

Increase in

gross profit

of 19% to

R2.2 billion

Increase in

EBITDA of

7% to R1.3

billion

Increase in

headline

earnings per

share of 18% to

117.98 cents

Increase in

core headline

earnings per

share of 17%

to 120.09

cents

Increase in

dividend per

share of 11%

to 40 cents

Net asset

value per

share

amounted to

R7.32

Increase in

cash and cash

equivalents by

R762 million

to R1.35

billion

33

Income Statement

33

FINANCIAL

May 2017 May 2016 Growth Growth

R’000 R’000 R’000 %

Revenue 26,311,875 26,204,722 107,153 0%

Change in inventories of finished goods (24,139,293) (24,375,028) 235,735 1%

Gross profit 2,172,582 1,829,694 342,888 19%

Other income 16,814 126,294 (109,480) (87% )

Overheads (858,073) (715,429) (142,644) (20% )

EBITDA 1,331,323 1,240,559 90,764 7%

Depreciation, amortisation and impairment charges (112,851) (98,183) (14,668) (15% )

EBIT 1,218,472 1,142,376 76,096 7%

Net finance expense (60,833) (20,211) (40,622) (201% )

Net profit before taxation 1,157,639 1,122,165 35,474 3%

Taxation (332,037) (318,783) (13,254) 4%

Net profit after taxation 825,602 803,382 22,220 3%

Gain on associate measured at fair value 160,200 - 160,200

Share of loss from associates and joint ventures (164,941) (71,770) (93,171) (130% )

Minority interest (33,896) (40,022) 6,126 15%

Net profit attributable to equity holders of the parent 786,965 691,590 95,375 14%

34

-

4

8

12

16

20

24

28

2017 2016 2015 2014 2013

Revenue (R'billion)

Income Statement Highlights

34

FINANCIAL


R’000 R’000 R’000 %

Revenue 26,311,875 26,204,722 107,153 0%

Gross profit 2,172,582 1,829,694 342,888 19%

GP margins 8.26% 6.98% 1.27%

EBITDA 1,331,323 1,240,559 90,764 7%

Net profit 786,965 691,590 95,375 14%

35

South African Distribution

35

FINANCIAL


R’000 R’000 R’000 %

Revenue 25,786,396 25,722,540 63,856 0%

Gross profit 1,917,023 1,582,743 334,280 21%

GP margins 7.43% 6.15% 1.28%

EBITDA 1,388,296 1,133,433 254,863 22%

Core headline earnings 893,128 751,086 142,042 19%

Core headline

EBITDA

Gross Profit

Revenue

SA Distribution

Rest of the Group(excluding Corporate)

-

3

6

9

12

15

2017 2016 2015 2014 2013

R'b

illio

n

Electricity

-

2

4

6

2017 2016 2015 2014 2013

R'b

illio

n

Pinless

36

South African Distribution Revenue

36

FINANCIAL

-

8

16

24

32

40

48

2017 2016 2015 2014 2013

Gross Transaction Value (R'billion)

Electricity

Pinless

Reported Revenue

37

Associates and Joint Ventures

37

FINANCIAL


R’000 R’000 R’000 %

(164,941) (71,770) (93,171) (130%)

Oxigen India (119,831) (27,672) (92,159) (333%)

2DFine Mauritius (5,409) 19,734 (25,143) (127%)

Blue Label Mexico (36,978) (63,293) 26,315 42%

Other (2,723) (539) (2,184) (405%)

May 2017

R’000

Net profit after tax 825,602

Gain on associate measured at

fair value160,200

Share of losses from

associates and joint ventures(164,941)

Minority interest (33,896)

Net profit attributable to

equity holders of the parent786,965

38

Share Performance

38

FINANCIAL


R’000 R’000 R’000 %

Net profit attributable to equity holders of parent 786,965 691,590 95,375 14%

Headline earnings adjustment 362 -23,329 23,691 102%

Headline earnings attributable to equity holders of parent 787,327 668,261 119,066 18%

Core Headline Earnings

Headline earnings attributable to equity holders of parent 787,327 668,261 119,066 18%

Core adjustment 14,069 16,650 (2,581) (16%)

Core Headline Earnings 801,396 684,911 116,485 17%

Earnings per share (cents) 117.92 103.85 14%

Headline earnings per share (cents) 117.98 100.35 18%

Core headline earnings per share (cents) 120.09 102.85 17%

39

800

900

1,000

1,100

1,200

OpeningBalance

Acq &contr

NetLoans

granted

Fairvaluegain

Losses/forex

ClosingBalance

Investment in Associates & JVs (R'million)

Balance Sheet

39

FINANCIAL

Summarised Group Statement of Financial Position as at May 2017 May 2016

R’000 R’000

Non- current assets 2,198,757 2,275,161

Property, plant and equipment 111,599 100,434

Intangible assets and goodwill 1,115,754 1,201,773

Investment in associates and joint ventures 859,998 910,567

Other non-current assets 111,406 62,387

Current assets 6,491,513 5,030,790

Inventories 2,180,121 1,658,860

Trade and other receivables 2,758,997 2,679,023

Other current assets 201,729 103,880

Cash and cash equivalents 1,350,666 589,027

Total assets 8,690,270 7,305,951

Capital and reserves 5,004,442 4,519,567

Non-current liabilities 59,226 102,954

Current liabilities 3,626,602 2,683,430

Trade and other payables 3,517,673 2,601,807

Other current liabilities 108,929 81,623

Total equity and liabilities 8,690,270 7,305,951

40

Cash Flow

40

FINANCIAL

Summarised Group Statement of Cash Flows May 2017 May 2016

R’000 R’000

Cash generated by operations 1,753,991 744,185

Interest received 52,300 42,082

Interest paid (105,518) (48,207)

Taxation paid (338,814) (305,118)

Cash flows from operating activities 1,361,959 432,942

Cash flows from investing activities (320,476) (396,333)

Cash flows from financing activities (279,795) (236,150)

Increase/(decrease) in cash and cash equivalents 761,688 (199,541)

Cash and cash equivalents at the beginning of the year 589,027 788,411

Translation difference (49) 157

Cash and cash equivalents at the end of the period 1,350,666 589,027 -

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

OpeningBalance

Operating Investing Financing Translationdifference

Closingbalance

Cash Flow (R'million)

Thank YouQ& A

Strategy creating value

42

SUPPLEMENTARY

OPPORTUNITY» Prepaid provides certainty

» Prepaid is an alternative payment method

» Airtime builds railroad tracks

» Add products and services through integrated

approach

» Growing demand in SA: data, content,

electricity, water, gas, ticketing, fintech and

VAS

» Income based on 3 pillars: commodity, annuity

and interest earned

» Business model generates robust cash flows

» Growth in operations in India and Mexico -

regional springboards

VALUE ADDING

» >150,000 POPs in SA

» Organic growth, with vertical integrated

approach into ecosystem

» Bulk buying/early settlement discounts

» Surplus cash: Dividend yielding, share buy-

back, mergers and acquisitions

» Large, fast growing markets with low

penetration

» Equity, contractual and strategic partnerships

» Additional products and services at minimal

extra cost

» Entrepreneurial spirit

DELIVERY

» Robust, scalable, agnostic and proprietary

technology platform – AEON

» Postilion switch for financial services

» Disciplined and minimal capex

» Sustainable in formal (retail) and informal

sectors

» Measured and scaled approach to expansions

» Building network distribution and introducing

products and services

» Growing product lines and consumer bases

» Manage ‘the last mile’ in the distribution

channel

» Reach into retail channel

Charting our Growth

43

SUPPLEMENTARY

-

5

10

15

20

25

30

2013 2014 2015 2016 2017

R'b

illi

on

Revenue

-

500

1,000

1,500

2,000

2,500

2013 2014 2015 2016 2017

R'm

illi

on

Gross Profit

-

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

2013 2014 2015 2016 2017

Cen

ts

NAV per share

-

200

400

600

800

1,000

1,200

1,400

2013 2014 2015 2016 2017

R'm

illi

on

EBITDA

0

5

10

15

20

25

30

35

40

45

2013 2014 2015 2016 2017

Cen

ts

Dividends declared per share

*Includes gross electricity and PINless top ups

8.16

10 .56

13.12

16.18

20.13

-

5

10

15

20

25

2013 2014 2015 2016 2017

R’billion

Gross PINless Transactional Values*

Blue Label factsheet

44

» Founded in 2001

» Business model underpinned by long-term distribution contracts

» Products and services include

• airtime, starter packs, data and content

• electricity, water and gas

• ticketing

• financial, fintech and value adding services

» Listed as BLU on JSE in 2007

• Market capitalisation R14.75 billion

• free float ~57% with diverse institutional shareholder base

• ADRs launched in 2013

» Maiden dividend paid in September 2010

» CSI spend R3.8 million and training, development & bursaries R9.4 million

SUPPLEMENTARY

45

Group Operating structure as at 31 May 2017

45

SUPPLEMENTARY

Activi Deployment Services

Transaction Junction (60%)

100% unless otherwise stated

Blue Label

South Africa

The Prepaid Company

Ventury

Blue Label Distribution

Lornanox (40%)

Cigicell (74%)

Ticketpro

Blue Label Connect

Prepaid24 (50.1%)

Utilities World (25.1%)

Reware (50.4%)

Blue Label Mobile

SupaPesa Africa (50%)

Simigenix

Panacea

Cellfind

Via media (75%)

Supa Pesa South Africa (50%)

Blue Label One

Blue Label

International

Blue Label Mexico (47.56%)

Oxigen On-line Services

India (58.18%)

Gold Label Investments

Oxigen Services India

(58.88%)

Mpower

(21.6%)

Blue Label Solutions

CNS Call Centre

Blue Label Data Solutions (81%)

Datacision(50%)

Datacel

United Cell Centre Solutions (50%)

Corporate

Blue Label Accelerator

Technical Overview

46

SUPPLEMENTARY

Peer group

47

SUPPLEMENTARY

» B lu e L a b e l T e le c o m s

- J S E lis t e d

» B la c k h a w k N e t w o r k

N a s d a q lis t e d

» C y b e r p la t - R u s s ia n

b a s e

» E c k o h – A IM lis t e d

» E u r o n e t W o r ld w id e -

N a s d a q lis t e d

» N E T 1 – N a s d a q

lis t e d

» P a y p a l – N a s d a q

lis t e d

» P a y P o in t – L S E lis t e d

» Q iw i – N a s d a q lis t e d

» In C o m m – p r iv a t e ly

h e ld in U S A

» Cigicell / Blue Label Telecoms

» Conlog

» Contour

» Easypay

» ONTEC

» Landis & Gyr

» Syntell

» Red Qiubo / Blue Label Mexico

» ATM

» OXXO

» Sucursales bancarias

» Pemex

» WalMart

» Elektra - Banco Azteca

» Telecomms

» 7-Eleven

» Circulo K

» HSBC

» Famsa

* Descending in size

*

» Ticketpro / Blue Label

Telecoms

» Big Concerts / Computicket

» Computicket / Shoprite

» Itickets

» Nuticket

» Quicket

» Webticket / PicknPay

VERTICAL

PEERSHORIZONTAL PEERS

ELECTRICITY

HORIZONTAL PEERS

TICKETING

NETWORKS BY POS DEVICE

MEXICO*

Barriers to Entry

48

» Lag times in negotiating supplier and customer contracts can hinder integration

» Long term contracts – ensure there is no cheaper pricing in the market

» Lock-out periods for processing new and developing existing technologies. Roll-out of devices takes time

» Time: as customers prioritise systems’ integration for their own needs/objectives and/or products and services

(customer, forecourt, municipality, utility, bank, retailer)

» Technology platforms – AEON (proprietary, agnostic, neutral aggregator, plug ‘n play, proven, scalable, no fees to

others) and Postilion (banking and financial services grade)

» Expanding distribution channel: >150,000 POP’s in SA, ~200,000 POP’s in India, and >81,000 in Mexico

» Reputable local partners is key to business model

» Trust and relationships of over 15 years in business

» These are some of our greatest assets, achieved through long-term contracts with customers and suppliers, which fortify

our foundations

» Same barriers can hinder us entering new markets

SUPPLEMENTARY

For Merchants:

» Main/informal market comprises 1.5 million merchants and is

» Critical driver of economy contributing ~50% to GDP*

» Informal employment ~30,000 merchants, footsoldiers, BLU Agents

» Various entrepreneurial trading models – gazebos, umbrellas, tables,

stalls, bicycles, trucks

» Upskilling, education, mentoring, empowerment, entrepreneurialism and

development programmes and courses

* Statistics South Africa

Making a Difference in South Africa

49

For Consumers:

» Sophisticated proprietary technology

» Distributing innovative products and services

» Airtime, Starter packs, prepaid Electricity, Financial services and New

solutions - Data, Ticketing and prepaid Water

» Reaching un- and under-banked, especially rural communities

» Taking product to the people

» Enabling payment for merchandise in a convenient manner

» Enriching and uplifting lifestyles

» Facilitating household electrification

» Anchors of communities

SUPPLEMENTARY

CSI Spend:

» R3.8 million

» mainly on youth projects:

• CEO Sleepout

• Charity Golf Day

• Boys & Girls Club Protea Glen

Building corporate brand:

» Springbok Rugby

» Alexandra Cricket Project

annual results presentation - blue label telecoms · pdf file•prepaid electricity, water...

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