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Blue Label Telecoms Results Presentation for the year ended 31 May 2010

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Page 1: Blue Label Telecoms · banking ATM and Mobile Bankingbanking, ATM and Mobile Banking ... POSTILION BLUE LABEL DISTRIBUTION POS Terminal Vending Machine Touch Screen Bulk Voucher

Blue Label TelecomsResults Presentation

for the year ended 31 May 2010y y

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AGENDA

• Highlights

• International Distribution

• Technologygy

• Value Added Services

• Financial OverviewFinancial Overview

• South African Distribution

• Conclusion• Conclusion

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Group Structure

Blue Label Mobile

Blue Label South Africa

Blue Label International

Blue Label Technology

Blue Label Solutions

Cellfind

Content Connect Africa

The Prepaid Company

Blue Label Distribution African Prepaid Services (72%)

APS Nigeria (51%)

gy

Activi Technology Services

Activi

Datacel

VelocitiAfrica

Mobile Services Company

Company

Crown Cellular

Bela Phone Company (51%)

Gold Label

(51%)

Oxigen Services India (37 22%)

TransactionJunction (60%)

Blue Label Data Solutions (81%)

CNS Call Centre

Ventury

The Postpaid Company (75%)

Company (51%)

SharedphoneInternational (50 1%)

India (37.22%)

Ukash(15.79%)

Blue Label Procurement (50%)

Solutions (81%)

Company (75%) International (50.1%)

Blue Label Mexico(70%)

100% unless otherwise stated

3

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BLU approved

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Global footprint

Two strategies for international expansion: Bricks and Mortar & Technology Offerings

Technology offeringAustria

BelgiumBenin

CanadaChina

Czech RepublicDenmark

DRCEstoniaFinlandFranceGreece

Guinea BissauHaiti

HungaryIreland

ItalyLatvia

LesothoLiberia

MozambiqueNetherlands

NorwayPoland

PortugalRussia

RwandaSerra Leone

SloveniaSpain

SwedenTanzania

UgandaUkraine

United Kingdom

Bricks and Mortar

IndiaMexicoNigeria

5

UruguayYemen

Zimbabwe

NigeriaSouth AfricaUnited Kingdom

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I t ti lInternationalDistribution

Mark LevyMark LevyJoint CEO

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International Distribution - Overview

• Strategy is to pursue growth by rolling out prepaid products d iand services

• Replicating the South African distribution model

• Continuing focus on expanding footprint in India, Mexico and Nigeria

• India: get well plan bears fruit achieving sustainable EBITDA

• Mexico: rollout programme steadily progresses with over 3 500 POS3,500 POS

• Nigeria: extended offering to other networks and dealer relationship strengthenedrelationship strengthened

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India

India

Total connections (March 2010) 578 million

% Growth in total connections p.a. 49.8%

Prepaid as % of total 87 1%pconnections 87.1%

Market penetration 49.7%

8

Prepaid ARPU (USD/month) 2.70Source: Wireless Intelligence

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Oxigen India - Overview

• Over 75 000 POP’s today, accelerating as GPRS-enabled are deployed

• Challenging competitive environment

• Launched cell phone vending

• Developing non-traditional markets and corporate clients

• Technical integrations with State Bank of India (SBI), g ( )ICICI and Corporation Banks

• Accessing over 100 million banking and internet customers

• Launched Oxicash card and wallet

• Joint launch with SBI of kiosk banking targeting about 20 000 Oxigen merchants initially in Delhi andabout 20 000 Oxigen merchants, initially in Delhi and Mumbai

• SBI approved introduction of Mobile Wallet platform

9 9

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Oxigen India – Get Well Plan

• Improved revenue, higher margins, consolidation and get well plan contributed to turning EBITDA positive

• Share of losses reduced from R26 million to R6 million

• Get well plan:

- technical availability and other operational improvements tec ca a a ab ty a d ot e ope at o a p o e e ts

- changes to distribution structure and margins

introduction of new products and services from non telco sectors and- introduction of new products and services from non-telco sectors and introduction of direct top-up (PINless recharge)

- facilitating more profitable bill payments systemfacilitating more profitable bill payments system

- cost reductions and operating expenditure contained.

10

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Mexico

Mexico

Total connections (March 2010) 84.1 million

% Growth in total connections p.a. 5.9%

Prepaid as % of total connections 88.62%Prepaid as % of total connections 88.62%

Market penetration 74.9%

P id ARPU (USD/ th) 11 40*

11

Prepaid ARPU (USD/month) 11.40**blended ARPU Source: Wireless Intelligence

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Blue Label Mexico - Overview

• About 3 000 active POS’s at year end, increasing by a net few hundred per month, to 3 500 presentlyp , p y

• Consolidation phase with hiring and refining processes and procedures for expanding channels and broadening offeringsbroadening offerings

• Strategic agreement with WOCCU reaches millions of members of its affiliated credit unions and member

i fi itmicro-finance sites• Technical integrations into Atio and Alianza• Rolling out cellphone and PC based vending solutionsRolling out cellphone and PC based vending solutions • Introducing bill payments system • Certification obtained to print Pronosticos Lotto

vouchers• Springboard into US and Latin American markets

12 12

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Nigeria

Nigeria

Total connections 2010 forecast 88,267 million

% Growth in total connections p.a. 20.68%

Prepaid as % of total 98% lpconnections 98% plus

Market penetration 57.3%

13

Prepaid ARPU (USD/month) 8 to 14Source: BMI

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Africa Prepaid Services - Nigeria

• Strengthening dealer and super-dealer relationshipsrelationships

• Sole distributor of Multi-Links products nationwide entrenchednationwide entrenched

• Multi-Links long-term contract under i ith T lk SAreview with Telkom SA

• Network distribution agreements with ZAIN GLOBACOM ETISALATZAIN, GLOBACOM, ETISALAT, STARCOMMS for direct recharge purchasepurchase

• Preparing to offer single POS device and bulk printingbulk printing

14 14

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United Kingdom

United Kingdom

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Ukash

• Ukash vouchers now available in 400 000 locations, 30 countries and on 6 continents, principally UK, Europe,countries and on 6 continents, principally UK, Europe, Australia, North and South America and China

• Maintained expansion of issuing sites in new markets, p g ,including South Africa

• Redemption value growth up 70% annualised as p g popportunities extended into VOIP and gaming

• Acceptance in transient communitiesp

• ‘Re-load’ and ‘re-Power’ strategic agreement concluded with MasterCard

• Virtual prepaid card, NEO positively impacted revenue

I d ffi i i i t t i t’• Improved efficiencies ensuring cost containment’

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T h lTechnologyand

Value AddedServicesServices

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Technology highlights

• Consolidating and integrating group systems and l tfplatforms

• Focus on robustness, scalability and skills development on core technologydevelopment on core technology

• In SA delivered further network integrations, facilitating real time top up of airtime novel electricityfacilitating real time top-up of airtime, novel electricity top-up and transport ticketing

• EFT transactional volumes increased three-fold• EFT transactional volumes increased three-fold

• FNB Lotto integration and delivery through internet banking ATM and Mobile Bankingbanking, ATM and Mobile Banking

• Pick ‘n Pay Lotto integration and delivery through the till pointstill points

18

EFT up 3x

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Blue Label Mobile

• Consolidation of three divisions- Cellfind- Cellfind- The Mobile Services Company- Content Connect Africa

Foc s• Focus- All mobile strategy for the group- All business-to-consumer marketing for group (only South Africa)- All mobile technology for group- All media sales for group- Focus on business-to-business and business-to-business-to-consumer

solutions• Benefits

- Cost savings in removal of duplicate positionsg p p- Cost savings in staff reductions- Reduction in offices from four to two- Integrated solution offeringIntegrated solution offering

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mobiWallet, mobiMerchant and mobiSecure

• mobiWallet launchedF ll f t d bil ll t- Full-featured mobile wallet

- Primarily for B2B market- Multiple top-up and payment

methodsmethods- Multiple products and services- Money transfer and banking

capabilitiescapabilities- Multi-channel access (Java, WAP,

USSD, www)• mobiMerchant launchedmobiMerchant launched

- Mobile-based merchant solutions• mobiSecure launched

E d t d it f- End-to-end security for mobiWallet and mobiMerchant

• All services driven off Blue Label Mobile’s integrated servicesMobile s integrated services platform

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Location Services, WASP and CCA

• Continues to deliver annuity income through Vodacom and MTN LBS and WASP aggregation businesses

• Good performance in spite of tough trading conditions

• MI-International Look4Me license extended to cover North America, Asia, Middle East and Argentina

• JV with Symantec – mobile antivirus protection service –a world first for Symantec

• Newer traffic and music services showing steady increases in consumption

• Expansion of B2B relationships with corporate customers

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Datacel

• Call Centres in Bloemfontein, Kimberley and Cape Town closed down due to operational inefficiencies and ongoing losses as a result of economic downturn

• Impairment of R12 million taken at the half year• Impairment of R12 million taken at the half year

• Remaining Call Centre business consolidated in Velociti and continues with 700 seat capacity in Durbanp y

• Focus on in- and out-bound campaigns for internal and external clients, as well as cellular contract telemarketing, but challenging

• Blue Label Data Services performed satisfactorily and earned Centre of Excellence Accreditation from the Direct Marketing Association of South AfricaAssociation of South Africa

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Technical overview

PRODUCTS / SERVICESBlue Label or Third Party

AirtimeUtilities

(electricity / OTHERInsuranceGift voucher, Loyalty card

Bill payments /

Airline tickets busAirtime (electricity /

water)OTHERInsurance Loyalty card,

etcpayments /

EFTtickets, bus

tickets

Mobile Devices

BLUE LABEL TECHNOLOGY PLATFORM(AEON)

POSTILION

BLUE LABEL DISTRIBUTION

POSTILION

POS Terminal Vending Machine Touch Screen

Bulk Voucher

Integrated GatewayKiosk

M i I d d Fi i l

23

Wholesale MainRetailers

Independent Retail Kiosks Informal Retail

Financial Institutions

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Fi i lFinancial Overview

David RivkindDavid RivkindFinancial Director

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Financial highlights

Growth

Revenue R17.03bn

Gross profit R1.17bn

11%

10%p

EBITDA R689m

Operating profit R569m

%

21%

20%Operating profit R569m

NPAT R365m

20%

(7%)

Core earnings R397m

Headline earnings per share 48,27 cents

(7%)

(7%)

Core earnings per share 52,34 cents

Cash generated from operations R516m

(6%)

25

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FINANCIAL OVERVIEW

Segmental profile

• South African distributionSouth African distribution

• International distribution

• Value added services

• Technology

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Income statement

31 May 2010 31 May 2009 GrowthR’000 R’000 %R 000 R 000 %

Revenue 17 027 696 15 281 449 11%Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%Gross profit % 6.90% 6.97% (1%)Other income 41 969 22 368 Overheads (526 949) (519 910)EBITDA 689 244 568 067 21%EBITDA % 4.05% 3.72% 9%EBITDA % 4.05% 3.72% 9%Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20%Net finance income 37 460 92 347Finance income 161 774 205 046Finance expense (124 314) (112 699)Finance expense (124 314) (112 699)Net profit before taxation 606 919 567 194Taxation (166 756) (174 784)Net profit after taxation 440 163 392 410 12%Share of loss of associates and joint ventures (14 982) (27 445)

(60 1 9) 2 82Minorities interest (60 159) 25 582Net profit after taxation and minorities interest 365 022 390 547 (7%)Amortisation on intangibles raised through business combinations net of tax 31 623 36 653Core net profit after taxation 396 645 427 200 (7%)Earnings per share for profit attributable to equity holders (cents)

27

- Basic 48.17 51.13 (7%)- Headline 48.27 51.63 (7%)

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Income statement

31 May 2010 31 May 2009 GrowthR’000 R’000 %

Revenue 17 027 696 15 281 449 11%Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Segmental revenueGross profit % 6.90% 6.97% (1%)Other income 41 969 22 368 Overheads (526 949) (519 910)EBITDA 689 244 568 067 21%EBITDA % 4.05% 3.72% 9%

Segmental revenue

South African distribution 15 543 337 14 199 031 9%International distribution 1 247 732 724 163 72%Value added services 216 538 335 743 (36%)T h l 20 089 22 512 (11%)EBITDA % 4.05% 3.72% 9%Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20%Net finance income 37 460 92 347Finance income 161 774 205 046Finance expense (124 314) (112 699)

Technology 20 089 22 512 (11%)Total 17 027 696 15 281 449 11%

% ContributionFinance expense (124 314) (112 699)Net profit before taxation 606 919 567 194Taxation (166 756) (174 784)Net profit after taxation 440 163 392 410 12%Share of loss of associates and joint ventures (14 982) (27 445)

(60 1 9) 2 82

South African distribution 91.3 92.9International distribution 7.3 4.8Value added services 1.3 2.2Technology 0.1 0.1T t l 100 100Minorities interest (60 159) 25 582Net profit after taxation and minorities interest 365 022 390 547 (7%)Amortisation on intangibles raised through business combinations net of tax 31 623 36 653Core net profit after taxation 396 645 427 200 (7%)Earnings per share for profit attributable to equity holders (cents)

Total 100 100

- Basic 48.17 51.13 (7%)- Headline 48.27 51.63 (7%)

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Income statement

31 May 2010 31 May 2009 GrowthR’000 R’000 %

Revenue 17 027 696 15 281 449 11%Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Gross profit % 6.90% 6.97%Other income 41 969 22 368 Overheads (526 949) (519 910)EBITDA 689 244 568 067 21%EBITDA % 4.05% 3.72% 9%

Segmental gross profit

South African distribution 867 230 813 589EBITDA % 4.05% 3.72% 9%Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20%Net finance income 37 460 92 347Finance income 161 774 205 046Finance expense (124 314) (112 699)

South African distribution 867 230 813 589International distribution 188 020 75 488Value added services 115 319 160 903Technology 3 655 15 629Total 1 174 224 1 065 609Finance expense (124 314) (112 699)Net profit before taxation 606 919 567 194Taxation (166 756) (174 784)Net profit after taxation 440 163 392 410 12%Share of loss of associates and joint ventures (14 982) (27 445)

(60 1 9) 2 82

Gross profit %

South African distribution 5.58 5.73International distribution 15.07 10.42Minorities interest (60 159) 25 582Net profit after taxation and minorities interest 365 022 390 547 (7%)Amortisation on intangibles raised through business combinations net of tax 31 623 36 653Core net profit after taxation 396 645 427 200 (7%)Earnings per share for profit attributable to equity holders (cents)

Value added services 53.26 47.92Technology 18.19 69.43Total 6.90 6.97

- Basic 48.17 51.13 (7%)- Headline 48.27 51.63 (7%)

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Income statement

31 May 2010 31 May 2009 GrowthR’000 R’000 %R 000 R 000 %

Revenue 17 027 696 15 281 449 11%Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

Segmental EBITDA margins EBITDA margin %South African distribution 4.41 4.40International distribution 10 98 0 85Gross profit % 6.90% 6.97% (1%)Other income 41 969 22 368 Overheads (526 949) (519 910)EBITDA 689 244 568 067 21%EBITDA % 4.05% 3.72%

International distribution 10.98 0.85Value added services 11.65 22.40Total trading operations 4.99 4.63

EBITDA % 4.05% 3.72%Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20%Net finance income 37 460 92 347Finance income 161 774 205 046Finance expense (124 314) (112 699)

Segmental EBITDA

South African distribution 685 686 624 346 10%Finance expense (124 314) (112 699)Net profit before taxation 606 919 567 194Taxation (166 756) (174 784)Net profit after taxation 440 163 392 410 12%Share of loss of associates and joint ventures (14 982) (27 445)

(60 1 9) 2 82

International distribution 137 035 6 144 2130%Value added services 25 230 75 239 (66%)Total trading operations 847 951 705 729 20%Technology (76 230) (48 502)Minorities interest (60 159) 25 582Net profit after taxation and minorities interest 365 022 390 547 (7%)Amortisation on intangibles raised through business combinations net of tax 31 623 36 653Core net profit after taxation 396 645 427 200 (7%)Earnings per share for profit attributable to equity holders (cents)

Corporate (82 477) (89 160)Total support (158 707) (137 662) 15%Total 689 244 568 067 21%

30

- Basic 48.17 51.13 (7%)- Headline 48.27 51.63 (7%)

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Income statement

31 May 2010 31 May 2009 GrowthR’000 R’000 %

Revenue 17 027 696 15 281 449 11%Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Gross profit % 6.90% 6.97% (1%)Other income 41 969 22 368 Overheads (526 949) (519 910)EBITDA 689 244 568 067 21%EBITDA % 4.05% 3.72% 9%EBITDA % 4.05% 3.72% 9%Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20%Net finance income 37 460 92 347Finance income 161 774 205 046Finance expense (124 314) (112 699)Finance income 161 774 205 046Finance expense (124 314) (112 699)Net profit before taxation 606 919 567 194Taxation (166 756) (174 784)Net profit after taxation 440 163 392 410 12%Share of loss of associates and joint ventures (14 982) (27 445)

(60 1 9) 2 82

• The group earned finance income of R162m • Imputed interest receivable on debtors balances – R78m (R47m in prior period)• Interest on liquid working capital – R84m

D li i fi i t f IFRS dj t t R74 i l d t 550 b i i t d li i i t t tMinorities interest (60 159) 25 582Net profit after taxation and minorities interest 365 022 390 547 (7%)Amortisation on intangibles raised through business combinations net of tax 31 623 36 653Core net profit after taxation 396 645 427 200 (7%)Earnings per share for profit attributable to equity holders (cents)

• Decline in finance income, net of IFRS adjustments, was R74m, mainly due to 550 basis points decline in interest rates

- Basic 48.17 51.13 (7%)- Headline 48.27 51.63 (7%)

31

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Income statement

31 May 2010 31 May 2009 GrowthR’000 R’000 %

Revenue 17 027 696 15 281 449 11%Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Gross profit % 6.90% 6.97% (1%)Other income 41 969 22 368 Overheads (526 949) (519 910)EBITDA 689 244 568 067 21%EBITDA % 4.05% 3.72% 9%EBITDA % 4.05% 3.72% 9%Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20%Net finance income 37 460 92 347Finance income 161 774 205 046Finance expense (124 314) (112 699)

Net finance income 37 460 92 347Finance income 161 774 205 046Finance expense (124 314) (112 699)Finance expense (124 314) (112 699)Net profit before taxation 606 919 567 194Taxation (166 756) (174 784)Net profit after taxation 440 163 392 410 12%Share of loss of associates and joint ventures (14 982) (27 445)

(60 1 9) 2 82

Finance expense (124 314) (112 699)

• R119m relates to imputed interest payable on creditors’ balances in terms of IFRS (R108m in prior period)

Minorities interest (60 159) 25 582Net profit after taxation and minorities interest 365 022 390 547 (7%)Amortisation on intangibles raised through business combinations net of tax 31 623 36 653Core net profit after taxation 396 645 427 200 (7%)Earnings per share for profit attributable to equity holders (cents)- Basic 48.17 51.13 (7%)- Headline 48.27 51.63 (7%)

32

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Income statement

31 May 2010 31 May 2009 GrowthR’000 R’000 %

Revenue 17 027 696 15 281 449 11%Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Gross profit % 6.90% 6.97% (1%)Other income 41 969 22 368 Overheads (526 949) (519 910)EBITDA 689 244 568 067 21%EBITDA % 4.05% 3.72% 9%

• Oxigen Services India• Reduction in losses of 73% due to:

• growth in revenue by R109m (25%); and EBITDA % 4.05% 3.72% 9%Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20%Net finance income 37 460 92 347Finance income 161 774 205 046Finance expense (124 314) (112 699)

• reduction in overheads of 40%

• Ukash• Comparatives related to eight months only as Ukash was acquired in October 2008Finance expense (124 314) (112 699)Net profit before taxation 606 919 567 194Taxation (166 756) (174 784)Net profit after taxation 440 163 392 410 12%Share of loss of associates and joint ventures (14 982) (27 445)

(60 1 9) 2 82

• The reversal of a deferred tax asset of R3.7m further impacted on their negative contribution

Minorities interest (60 159) 25 582Net profit after taxation and minorities interest 365 022 390 547 (7%)Amortisation on intangibles raised through business combinations net of tax 31 623 36 653Core net profit after taxation 396 645 427 200 (7%)Earnings per share for profit attributable to equity holders (cents)

Oxigen Services India Pvt Ltd (7 098) (25 940)Ukash (8 079) (2 286)Other 195 781Total (14 982) (27 445) 45%- Basic 48.17 51.13 (7%)- Headline 48.27 51.63 (7%)

33

Total (14 982) (27 445) 45%

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Income statement

31 May 2010 31 May 2009 GrowthR’000 R’000 %R 000 R 000 %

Revenue 17 027 696 15 281 449 11%Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

Core net profit

South African distribution 555 161 537 815 3%Gross profit % 6.90% 6.97% (1%)Other income 41 969 22 368 Overheads (526 949) (519 910)EBITDA 689 244 568 067 21%EBITDA % 4.05% 3.72% 9%

South African distribution 555 161 537 815 3%International distribution 33 767 16 279 108%International distribution associates (13 670) (27 226) 49%Value added services (1 567) 49 497 (103%)Total operations 573 691 576 365EBITDA % 4.05% 3.72% 9%Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20%Net finance income 37 460 92 347Finance income 161 774 205 046Finance expense (124 314) (112 699)

Total operations 573 691 576 365 -

Technology (93 265) (55 250) (69%)Corporate (83 781) (93 915) 11%T t l t (177 046) (149 165) (19%)Finance expense (124 314) (112 699)Net profit before taxation 606 919 567 194Taxation (166 756) (174 784)Net profit after taxation 440 163 392 410 12%Share of loss of associates and joint ventures (14 982) (27 445)

(60 1 9) 2 82

Total 396 645 427 200 (7%)Core earnings per share 52.34c 55.93c (6%)

Total support (177 046) (149 165) (19%)

Minorities interest (60 159) 25 582Net profit after taxation and minorities interest 365 022 390 547 (7%)Amortisation on intangibles raised through business combinations net of tax 31 623 36 653Core net profit after taxation 396 645 427 200 (7%)Earnings per share for profit attributable to equity holders (cents)

34

- Basic 48.17 51.13 (7%)- Headline 48.27 51.63 (7%)

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Balance sheet35

31 May 2010 31 May 2009R’000 R’000

ASSETSNon-current assets 717 581 736 634

R 000 R 000

1. Property, plant and equipment

• Increase in PPE of R52m, mainly due to capex on POS

Property, plant and equipment (1) 156 888 105 011

Intangible assets and goodwill (2) 436 824 460 325

Other non-current assets (3) 123 869 171 298

mainly due to capex on POS devices

2. Intangible assets and goodwill

• Starter pack base acquired –R59m

Current assets (4) 3 730 721 3 143 109Inventories 560 846 384 361

Trade and other receivables 987 279 898 571

R59m

• Additional capex on software and development – R31m

• Offset by disposals (R27m), impairments (R23m) andTrade and other receivables 987 279 898 571

Cash and cash equivalents 2 057 077 1 760 697

Other current assets 125 519 99 480

Total assets 4 448 302 3 879 743

impairments (R23m) and amortisation (R64m)

3. Other non-current assets

• Investment in associates reduced due to losses Total assets 4 448 302 3 879 743

• Decline in unactivated starter packs

4. Current assets

• Stock turn -13 daysStock turn 13 days

• Debtors collection – 21 days

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Balance sheet36

31 May 2010 31 May 2009R’000 R’000

EQUITY AND LIABILITIES

R 000 R 000

Capital and reserves (1) 2 655 436 2 244 120

Non-current liabilities 47 696 69 664

1. Reserves

• Declined due to purchase of treasury shares (R26m) for the group’s share incentive

Current liabilities 1 745 170 1 565 959

Trade and other payables (2) 1 718 907 1 518 853

scheme

2. Trade and other payables

Other current liabilities 26 263 47 106

Total equity and liabilities 4 448 302 3 879 743

• Increased in line with volume growth

• Creditor terms – 40 days

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Cash flow37

31 May 2010R’000

Operating profit 569 459Adjusted for non-cash items 53 367

1. Cash flows from operating activities

R 000

Changes in working capital 166 Increase in inventories (187 017)

Increase in trade and other receivables (190 294)

I i t d d th bl 354 427

• R123 million less than prior year due to early settlement discounts at lower rates than the discounts earned.

Increase in trade and other payables 354 427

Decrease in starter pack assets 23 048

Cash generated by operations 622 992Net interest received 78 999

2. Cash flows from investing activities

• Capex on PPE - R104m.

C i t ibl tNet interest received 78 999

Taxation paid (186 081)

Cash flows from operating activities (1) 515 910Cash flows from investing activities (2) (187 912)

• Capex on intangible assets -R91m

3. Cash flows from financing activities

Cash flows from financing activities (3) (23 283)Increase in cash and cash equivalents 304 715

Cash and cash equivalents at the beginning of the period 1 756 806

T l ti diff (6 619)

• Treasury shares acquired –R26m

Translation difference (6 619)

Cash and cash equivalents at end of period(2) 2 054 902

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Financial overview

Dividends

M id di id d f 12 hMaiden dividend of 12c per share

38

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S th Af iSouth AfricanDistribution

Brett LevyBrett LevyJoint CEO

39

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Blue Label Distribution

CEO

Commercial /operationalSales Technical

Crown Cellular

p

TPC CIGICELL BLD Technical Blue Label Mobile

•Finance•Sales

•Finance•Sales & CRM•Operations

•Treasury•Procurement

•Finance•Sales & CRM•Operations

•Finance•Sales & CRM•Operations•Merchant support•Field support

•Cellfind•CCA•MSC

Administration

40

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New Products

• Prepaid Electricity

• Money transfers

• M-PESA

• Mid-tier bank products

• EFTEFT

• Lotto

• Bill Payments• Bill Payments

• PINless

• Symantec

• Blu approved

41

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Existing Products

• RICA

• Prepaid Airtime

• Kiosks

• Ukash

• Starter packsp

• Bus tickets

• Cover2Go

42

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Prepaid Electricity – monthly revenue growth

R 250,000,000

R 150,000,000

R 200,000,000

R 100,000,000

R 0

R 50,000,000

43

* The group does not account for revenue on face value on electricity but only the commission received

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Money transfers - nationwide penetration at low cost

• Existing B2B distribution and POS device footprint as well as mobiMerchantb t i i ll i t lbase extension, especially into rural areas

Retailers Channel• cash interface• promotions / offers• national chain stores

ll h t• smaller merchants

B2B / H2HPOS networkPOS network

mobiMerchants

“Ambassadors” Channel• cash interface• awareness, training, support• up-sell & customer development• Street vendor enablement

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Bill payments

Transaction VolumeRetailer Transaction Volume12 months Market Share

Retailer 1 8 500 000 49 2%Retailer 1 8 500 000 49.2%

Retailer 2 7 300 000 42.3%

Retailer 3 780 000 4.5%

Retailer 4 696 000 4%Retailer 4 696 000 4%

Total 17 276 000 100%

45

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New Products

• Symantec

• Lotto

• PINless

46

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Prepaid Airtime - revenue

R1,800,000,000

R1,400,000,000

R1,600,000,000

R1,000,000,000

R1,200,000,000

R400 000 000

R600,000,000

R800,000,000

R-

R200,000,000

R400,000,000

2010 2009

R0

47

R-R0

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Prepaid revenue split per network

Cell C Cell C6%

MTN

8%

MTN30%

Vodacom

2009 MTN31%

Vodacom57%

2010

Telkom6%

Vodacom58%

Telkom4%

57%

48

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Shareholder Profile

2%1%

Beneficial Shareholders2.3%

Free Float %

16%

6%36.9%

16%

73% 60.8%

South Africa USA UKLuxembourg Australia Channel IslandsIreland Germany BermudaBVI Netherlands Norway

Strategic Holders Free Float Below Threshold

49

yJapan Canada South KoreaSwitzerland

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Conclusion

• Over 130 000 POS across South Africa

• Over 120 000 starter pack connections per month in South Africa

• Call Centres facing challenges under evaluation• Call Centres facing challenges under evaluation

• Growth in products and services outside South Africa with Multi-Links under reviewLinks under review

• Normalisation employment costs and general expenses

• New branding ‘BLU approved’ being introduced

• Growth in products and services outside Telco sectorp

• Footprint in India and Mexico growing steadily

M id di id d f 12 h d• Maiden dividend of 12c per share approved

50

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Prospects

• Mobile Merchant Solutions extends POS footprint securely

• Reseller agreement with Symantec to provide antivirus protection for SmartphonesSmartphones

• Expanding distribution agreements with multiple networks in Nigeria

• Advertising revenue from ‘real estate’ on vouchers

• Oxigen India and State Bank of India collaboration on kiosks and wallets

51

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Thank you

Questions & Answers

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Supplementary – mobile trends

Top 5 mobile commerce trends for 2010*:• Bargain hunting• Mobile ticketing (>$100bn worldwide by 2012)

Banking (13 2bn people accessed banking accounts from mobile• Banking (13.2bn people accessed banking accounts from mobile phones in April 2010, up 70% on April 2009)

• Purchase tangible goods• Marketing and on-line retailing.

B 2015 $119b h d d i b h d b• +By 2015: $119bn worth goods and services to be purchased by mobile phones

• USA: mobile shopping rose from $39bn in 2008 to $1.2bn in 2009 pp g $ $and is forecast at $2.2bn in 2010

* Stephanie Marcus on Mashable Jul 2010 Stephanie Marcus on Mashable, Jul 2010+ ABI Research, Feb 2010

53

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Supplementary - Why mobile?

2008 Next 5-10 years• 4-5 billion connections

• $72 billion worth of mobile-i iti t d t ti ( l )

• 50 billion connections

• $800 billion worth of mobile-i iti t d t ti ( l )initiated transactions (value)

• 22 billion mobile-initiated transactions (volume)

initiated transactions (value)

• 300 billion mobile-initiated t ti ( l )transactions (volume)

• 67 million mobile banking users

transactions (volume)

• 1 billion mobile banking users

• $1-billion worth of global money transfers

• $200-billion worth of global money transfers

Fastest growing channel to reach customers in lower LSM segments and rural areas

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Supplementary - mobile subscribers by geography

5,000 Mobile subscribers

4,000

4,500

3,000

3,500

s The Americas

2,000

2,500

Mill

ions Europe

CIS

Asia & Pacific

Arab States

1,000

1,500 Africa

-

500

2005 2006 2007 2008 2009

55

2005 2006 2007 2008 2009

Year

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Supplementary – mobile subscribers in Africa

5 000

Mobile subscribers

4 000

4,500

5,000

3,000

3,500

4,000

2,000

2,500

Mill

ions

Africa

World

1,000

1,500

-

500

2005 2006 2007 2008 2009

56

2005 2006 2007 2008 2009

Year

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Supplementary – projects/core capabilities

EFT Switching Platform

Core IT Infrastructur

e & Operational

EVD/VAS

GroupMIS Platform

(and Accounting /

pSupport

Platform

Card

Accounting / Financial

Management)

Management Platform

(Gift Cards/ Loyalty)

Device D l t

Factory

Deployment & Support

57

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Supplementary - Where Mobile fits

Estimated 35

140,000 touch points

Estimated 35 million mobile phone users in South Africa

POSPOS IntegratedIntegrated VendingVending Mobile

South Africa

Blue Label Switch (AEON)

Existing & New Products

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Supplementary - Shareholder Profile

Fund Managers By Geography Foreign Fund Managers

Luxembourg

Australia2.2%

Ireland1.2%

Australia4 4%

Ireland2.3%

Bermuda1.2%

South Africa49.7%USA

12 7%

g9.1%

UK46.4%Luxembourg

18 1%

4.4%

12.7% 18.1%

UK23.3%

USA25 3%

South Africa UK USA Luxembourg Australia Ireland Bermuda

25.3%

59

Norway Japan South Korea Canada Belgium Switzerland

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The end