| Tue 26 Aug 2008, 8:00 | | BLU - Blue Label Telecoms Limited - Audited results for the year ended 31 May |
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BLU
BLU
BLU - Blue Label Telecoms Limited - Audited results for the year ended 31 May
2008
Blue Label Telecoms Limited
(Incorporated in the Republic of South Africa)
Registration number: 2006/022679/06
JSE Code: BLU
ISIN Code: ZAE000109088
Audited results for the year ended 31 May 2008
Key Highlights
* Successful listing, capital raising of R1.3 billion
* Microsoft Corporation`s acquisition of a 12% equity stake in the group and
the conclusion of a strategic collaboration agreement
* Microsoft Corporation`s acquisition of a 38.85% equity stake in Oxigen
Services India
* Pro forma revenue increased by 16.4% to R12.93 billion
(R11.1 billion in PLS)
* Actual revenue increased by 15.1% to R12.55 billion (R10.9 billion in PLS)
* Pro forma core net profit increased by 9.1% to R371 million
(R340 million in PLS)
* Actual net profit increased by 25.5% to R181 million (R144 million in PLS)
* Pro forma core basic earnings per share increased by 5.7% to 48.40 cents
(45.81 cents in PLS)
* Actual basic earnings per share increased by 16.5% to 30.65 cents (26.30 cents
in PLS)
Summarised Group Balance Sheet
as at 31 May 2008 31 May
31 May 2007
2008 Predecessor
Actual value
R`000 R`000
Assets
Non-current assets 712 759 276 238
Property, plant and equipment 69 484 43 516
Intangible assets 489 786 119 020
Investment in associates and joint ventures 81 356 61 804
Financial asset at amortised cost 72 133 51 898
Current assets 2 509 470 1 685 835
Financial assets at fair value through profit
and loss 5 672 16 183
Financial assets at amortised cost 53 163 32 485
Inventories 484 501 263 631
Loans receivable 7 103 4 751
Trade and other receivables 630 687 278 741
Cash and cash equivalents 1 328 344 1 090 044
Total assets 3 222 229 1 962 073
Equity and liabilities
Capital and reserves 1 917 944 418 021
Share capital and share premium 4 404 737 2 079 533
Restructuring reserve (1 843 912) (1 843 912)
Foreign currency translation reserve 2 552 4 188
Transaction with minority reserve (898 564) (14 893)
Retained earnings 244 758 63 867
1 909 571 288 783
Minorities interest 8 373 129 238
Non-current liabilities 58 056 38 815
Deferred taxation 55 111 21 085
Borrowings 2 945 17 730
Current liabilities 1 246 229 1 505 237
Trade and other payables 1 152 969 888 011
Current tax liabilities 71 146 31 617
Bank overdraft 50 -
Borrowings 22 064 585 609
Total equity and liabilities 3 222 229 1 962 073
Summarised Group Income Statement
for the year ended 31 May 2008 2007
2008 2008 Predecessor
Pro forma Actual value
unaudited audited audited
R`000 R`000 R`000
Revenue 12 930 609 12 545 471 8 895 044
Other income 68 142 69 545 34 585
Changes in inventories of
finished goods (12 211 507) (11 875 606) (8 469 965)
Employee compensation and
benefit expense (275 629) (265 003) (142 320)
Depreciation, amortisation
and impairment
charges (73 675) (58 670) (26 682)
Other expenses (164 686) (146 240) (88 208)
Operating profit 273 254 269 497 202 454
Net finance income/(cost) 132 866 45 577 (38 251)
Share of losses from
associates (19 661) (17 441) (956)
Net profit before taxation 386 459 297 633 163 247
Taxation (116 529) (89 841) (53 420)
Net profit for the year 269 930 207 792 109 827
Attributable to:
Equity holders of parent 269 423 180 891 63 867
Minority interest 507 26 901 45 960
Earnings per share for profit
attributable to equity
holders (cents)
- Basic 35.16 30.65 16.89
- Headline 34.86 30.26 15.29
Weighted average number of
ordinary shares
in issue 766 360 894 590 263 513 378 097 993
Unaudited reconciliation
between net profit and
core net profit for the year:
Net profit for the year 269 423 180 891 63 867
Management bonus settlement
net of tax 57 600 57 600 -
Amortisation on intangibles
raised through business
combinations net of tax and
minority interest 34 919 22 937 3 916
Cancellation of onerous
contract 9 000 9 000 -
Core net profit for the year 370 942 270 428 67 783
Core net profit for the year
attributable to: 373 093 301 409 120 333
Equity holders of parent 370 942 270 428 67 783
Minority interest 2 151 30 981 52 550
- Core earnings per share
(cents)* 48.40 45.81 17.93
* Core earnings per share is calculated after adding back the amortisation of
intangible assets as a consequence of the purchase price allocations exercised
in terms of IFRS 3: Business Combinations, the costs incurred in terms of the
Management Bonus Settlement Agreement and the termination of the Otter Mist
Trading CC consulting agreement, as explained in the pre-listing statement.
Acquisition of subsidiaries
Shares in the following subsidiaries were acquired during 2008 post listing:
Effective date of
acquisition % acquired
Subsidiary
CNS Call Centre 1 January 2008 80%
Content Connect Africa 23 January 2008 100%
Little River 181 1 March 2008 100%
POS Control Services 1 March 2008 52%
Details of the total net assets acquired and the resulting goodwill as at
acquisition are as follows:
Total
R`000
Total purchase consideration 131,355
Fair value of net assets acquired 42,124
Goodwill 89,231
The assets and liabilities acquired through the acquisitions are as follows:
Acquirer`s
Fair value carrying
at amount on
acquisition acquisition
date date
R`000 R`000
Cash and cash equivalents 6,145 6,145
Property, plant and equipment 1,385 1,385
Intangible assets 46,291 248
Goodwill 5,488 5,488
Receivables 2,984 2,984
Deferred tax (12,891) -
Borrowings (37) (37)
Payables (5,817) (5,817)
Fair value of subsidiaries acquired 43,548 10,396
Minority interests (1,424)
Fair value of net assets acquired 42,124
Cash and cash equivalents in subsidiary acquired 6,145
Purchase consideration (131,355)
Net cash flow on acquisition (125,210)
Summarised Group Statement of Changes in Equity
for the year ended 31 May 2008
Share
capital and Foreign
share Retained Restructuring translation
premium earnings reserve reserve
R`000 R`000 R`000 R`000
Balance as at 1
June 2006
(Predecessor
value) 2 079 533 - (1 998 328) -
Net profit for
the period - 63 867 - -
Dividends - - - -
Minorities
acquired during
the period - - 150 998 -
Associates
acquired during
the period - - 3 418 -
Exchange gains
on translation
of foreign
operations - - - 4 188
Balance as at
31 May 2007
(Predecessor
value) 2 079 533 63 867 (1 843 912) 4 188
Shares issued
during the year 2 364 928 - - -
Share issue costs (39 724) - - -
Net profit for
the period - 180 891 - -
Dividends - - - -
Minorities
disposed of
during the year - - - -
Exchange losses
on translation
of foreign
operations - - - (1 636)
Balance as at
31 May 2008
(Actual) 4 404 737 244 758 (1 843 912) 2 552
Transaction
with
minority Minority Total
reserve interest equity
R`000 R`000 R`000
Balance as at 1 June 2006
(Predecessor value) - - 81 205
Net profit for the period - 45 960 109 827
Dividends - (348) (348)
Minorities acquired during the
period (14 893) 83 631 219 736
Associates acquired during the
period - - 3 418
Exchange gains on translation of
foreign operations - (5) 4 183
Balance as at 31 May 2007
(Predecessor value) (14 893) 129 238 418 021
Shares issued during the year - - 2 364 928
Share issue costs - - (39 724)
Net profit for the period - 26 901 207 792
Dividends - (998) (998)
Minorities disposed of during the
year (883 671) (146 294) (1 029 965)
Exchange losses on translation of
foreign
operations - (474) (2 110)
Balance as at 31 May 2008 (Actual) (898 564) 8 373 1 917 944
Summarised Segmental Summary
for the year ended 31 May 2008
Revenue
31 May
31 May 2007
2008 Predecessor
Actual value
R`000 R`000
Telecommunication distribution 11 961 569 8 810 603
International distribution 383 406 50 461
Technology platforms 27 881 1 705
Related services 172 615 32 275
Corporate - -
Total 12 545 471 8 895 044
EBITDA
31 May
31 May 2007
2008 Predecessor
Actual value
R`000 R`000
Telecommunication distribution 339 352 259 616
International distribution 17 968 3 954
Technology platforms (9 796) (3 935)
Related services 42 247 (1 557)
Corporate (61 604) (28 942)
Total 328 167 229 136
Net profit/(loss) after tax
31 May
31 May 2007
2008 Predecessor
Actual value
R`000 R`000
Telecommunication distribution 244 690 100 059
International distribution (14 262) (9 054)
Technology platforms (11 134) (3 519)
Related services 22 553 4 628
Corporate (60 956) (28 247)
Total 180 891 63 867
Net operating assets/
(liabilities)
31 May
31 May 2007
2008 Predecessor
Actual value
R`000 R`000
Telecommunication distribution 1 295 784 221 015
International distribution 19 259 (17 956)
Technology platforms (739) (7 495)
Related services 4 098 (4 420)
Corporate (55 161) (10 546)
Total 1 263 241 180 598
Pro forma Reconciliation
Unaudited reconciliation between group net profit and group pro forma net
profit:
The table below sets out the unaudited pro forma information of BLT. The
unaudited group pro forma income statement has been prepared for illustrative
purposes only.
Restructuring
31 May 2008 and
Actual(1) acquisitions(2)
audited unaudited
R`000 R`000
Revenue 12 545 471 385 138
Other income 69 545 (1 403)
Changes in inventories of
finished goods (11 875 606) (335 901)
Employee compensation and
benefit expense (265 003) (10 626)
Depreciation, amortisation
and impairment charges (58 670) (15 005)
Other expenses (146 240) (18 446)
Operating profit 269 497 3 757
Finance income 193 281** (215)
Finance expense (147 704)** (1 433)
Share of loss from associates (17 441) (2 220)
Profit for the year before
taxation 297 633 (111)
Taxation (89 841) (1 785)
Net profit 207 792 (1 896)
Net profit attributable to: 207 792 (1 896)
Equity holders of parent 180 891 24 498
Minority interest 26 901 (26 394)
Unaudited reconciliation between net
profit and core net profit for
the year:
Net profit 180 891 24 498
Management bonus settlement
net of tax 57 600 -
Amortisation on intangibles raised
through business combinations
net of tax and minority interest 22 937 11 982
Cancellation of onerous contract 9 000 -
Core net profit 270 428 36 480
Core net profit attributable to: 301 409 7 650
Equity holders of parent 270 428 36 480
Minority interest 30 981 (28 830)
Cash 31 May 2008
effects(3) Pro forma (4)
unaudited unaudited
R`000 R`000
Revenue - 12 930 609
Other income - 68 142
Changes in inventories of
finished goods - (12 211 507)
Employee compensation and
benefit expense - (275 629)
Depreciation, amortisation
and impairment charges - (73 675)
Other expenses - (164 686)
Operating profit - 273 254
Finance income 46 404 239 470
Finance expense 42 533 (106 604)
Share of loss from associates - (19 661)
Profit for the year before
taxation 88 937 386 459
Taxation (24 903) (116 529)
Net profit 64 034 269 930
Net profit attributable to: 64 034 269 930
Equity holders of parent 64 034 269 423
Minority interest - 507
Unaudited reconciliation between net
profit and core net profit for
the year:
Net profit 64 034 269 423
Management bonus settlement
net of tax - 57 600
Amortisation on intangibles raised
through business combinations
net of tax and minority interest - 34 919
Cancellation of onerous contract - 9 000
Core net profit 64 034 370 942
Core net profit attributable to: 64 034 373 093
Equity holders of parent 64 034 370 942
Minority interest - 2 151
** Included in finance expense is an amount of R101 million that relates to the
imputed interest on creditor`s balances. Similarly, R16 million is included in
the finance income for the imputed interest on debitor`s balances.
Notes
1. Extracted from the audited group income statement of BLT for the year ended
31 May 2008.
2. Represents the effects of the group restructure based on the assumption that
minority acquisitions occurred on 1 June 2007.
The following subsidiaries are therefore consolidated as wholly owned for the
full year:
- The Prepaid Company
- Kwikpay SA
- Matragon
- Blue Label One
Similarly, the following associates are consolidated as subsidiaries for the
full year:
- 72% Africa Prepaid Services
- 100% Virtual Voucher
- 100% Cellfind SA
- 100% Datacel
- 100% House of Business Solutions
3. Represents the positive impact on finance income and expense assuming cash
raised on listing was received 1 June 2007.
4. Represents the pro forma unaudited group income statement of BLT on the
assumption that the restructuring, listing and minority acquisitions were
effective 1 June 2007.
5. All adjustments are expected to have a continuing effect on BLT.
Summarised Group Cash Flow Statement
for the year ended 31 May 2008 31 May
31 May 2007
2008 Predecessor
Actual value
R`000 R`000
Net cash flows from operating activities (19 796) 168 970
Net cash flows from investing activities (405 156) 684 383
Net cash flows from financing activities 661 782 236 691
Increase in cash and cash equivalents 236 830 1 090 044
Cash and cash equivalents at the beginning of the
year 1 090 044 -
Translation difference 1 420 -
Cash and cash equivalents at the end of the year 1 328 294 1 090 044
Headline earnings per share
Headline earnings are calculated applying the principles contained in SAICA
circular 8/2007. The weighted average number of shares used is as per the
income statement.
Profit before
tax and
minorities Tax Minorities
R`000 R`000 R`000
Profit attributable to equity
holders of
the company 297 633 (89 841) (26 901)
Loss/(profit) on disposal of
property, plant
and equipment 422 (118) -
Profit on sale of group company - - -
Profit on sale of investment - - -
Negative goodwill (2 585) - -
Headline earnings - - -
2008 2007
Predecessor
Actual value
Headline Headline
earnings earnings
R`000 R`000
Profit attributable to equity holders of
the company 180 891 63 867
Loss/(profit) on disposal of property, plant
and equipment 304 (152)
Profit on sale of group company - (4 933)
Profit on sale of investment - (482)
Negative goodwill (2 585) (481)
Headline earnings 178 610 57 819
Commentary
INTRODUCTION
The Board of Blue Label Telecoms Limited (BLT) is pleased to present the pro
forma results and audited results for the financial year ended 31 May 2008. The
results surpass the unaudited pro forma and forecast financial information
contained in the pre listing statement (PLS).
NATURE OF BUSINESS
BLT and its subsidiary and associate companies (the group) produce and
distribute a wide variety of prepaid secure electronic tokens of value and
transactional services. The group`s prepaid products and service offerings
include prepaid airtime, prepaid electricity, bill payments, electronic funds
transfers, loyalty programs, stored value cards, location based services and
other physical and virtual prepaid electronic tokens of value. The group
processes in excess of 500 million monthly transactions through several
hundred thousand mobile and fixed points of presence.
In South Africa BLT has in excess of 120 000 points of presence through which
it distributes its products and services. Beyond South Africa, BLT has
introduced and is in the process of introducing mirror images of its proven
business model in a number of emerging markets, including India, Mexico and
countries in Africa.
In developing economies the supply of products and services through prepaid
channels has become a significant mode of distribution. Logistical impediments
to the physical distribution of products are surmounted through virtual
delivery technology platforms. As the unbanked market does not have access to
credit, prepaid electronic tokens of value have become the access point to
previously unavailable first world products and services.
THE MICROSOFT RELATIONSHIP
BLT and the Microsoft Corporation (Microsoft) signed a strategic collaboration
agreement in November 2007 to provide each other with mutual assistance in
exploring new business opportunities and preferred partnership initiatives
across the world`s emerging and developing economies. The agreement provides
for an advertising revenue share model which is anticipated to begin generating
revenue in the next eighteen months.
During the year, Microsoft nominated Mr. Peter Mansour, a key member of
Microsoft`s Unlimited Potential Group Inc., as its non-executive director on
the Board of BLT. This appointment took effect on 22 May 2008.
STRATEGIC INITIATIVES POST YEAR END
Gold Label Investment (Proprietary) Limited (Gold Label), a wholly owned
subsidiary of BLT, acquired an additional 3.85% of the shares in Oxigen
Services India Private Limited (Oxigen). Gold Label now holds 38.85% of the
shares in Oxigen with Microsoft holding 38.85% and the management of Oxigen
holding the balance.
Oxigen has recently launched OxiCash, a stored value "virtual wallet" that
enables consumers to purchase prepaid products and services online or through
Oxigen`s network which has in excess of 60 000 points of presence across India.
OxiCash is an important step in the evolution of a full scale "virtual wallet"
and money transfer offering that will be distributed via the mobile phone and
accessed across any of BLT`s global footprint of touch points.
Gold Label has acquired a 17.25% interest in a United Kingdom based company
called Smart Voucher Limited (trading under the name of Ukash). Gold Label also
has an option to purchase an additional 32.75% in the company in the next three
years. This company has developed valuable proprietary technology which enables
the purchase of a prepaid voucher that may be redeemed for online products and
services, and will be integral to BLT`s mobile strategy in the future. The
company has a footprint in Western Europe and intends to expand into developing
markets which have populations that are technologically sophisticated but are
often unbanked.
BLT has jointly established Blue Label Mexico, with Nadhari S.A. de C.V., a
Mexican company that has expertise in the strategic and operational development
of products and services within emerging markets. The establishment of a
business presence in Mexico is an important step in the group`s goal of
creating a transaction based distribution network in the emerging markets of
Latin America.
BLT has launched an innovative mobile service, known as mibli, based on a
technology platform which creates a customer-focused mobile eco-system. An
on-phone experience has been created that accommodates many different services
(for example instant messaging, ticket and content purchasing, airtime top-ups,
etc.) through a single application. The platform also allows retailers and
service providers to bring their products and services to market through
integration with a virtual wallet which is powered by Windows Live. By being
Microsoft Windows Live enabled, mobile users access their virtual wallet,
their mobile services and all online and transactional services through a
single identity.
PREPARATION OF PRO FORMA RESULTS
In compliance with JSE Listing Requirements, the group has provided a
reconciliation between the actual audited financial results for the financial
year ended 31 May 2008 and the pro forma unaudited financial results for the
same period.
The pro forma financial results have been prepared to illustrate the impact of
the group`s financial results as if the listing, restructuring and acquisition
of minorities occurred on 1 June 2007.
In addition, the pro forma results assume that the capital raised on listing
was received on 1 June 2007, thereby impacting significantly on the group`s net
finance income.
PRELISTING STATEMENT
The pre listing statement included the group`s unaudited forecasts of basic and
headline earnings of R144 million, core earnings of R234 million, pro forma
earnings of R250 million and core pro forma earnings of R340 million.
These forecasts equated to basic and headline earnings per share of 26.30
cents, core earnings per share of 42.68 cents, pro forma earnings per share of
33.61 cents and core pro forma earnings per share of 45.81 cents.
TRADING STATEMENT
On 14 July 2008 the group issued a trading statement announcing that it
expected to exceed both the forecasts presented in the prelisting statement
pertaining to basic and headline earnings at a range of between 20% and 30% and
the pro forma forecasted basic and headline earnings at a range of between 7%
and 12%.
The final audited results equated to an increase of 25.5% in earnings and an
increase of 7.9% in pro forma earnings.
The actual core earnings of R270 million and the pro forma core earnings of
R371 million equate to increases over forecast of 15.5% and 9.0% respectively.
The pro forma core earnings are the true measure of the group`s sustainable
operating performance.
The pro forma core earnings per share of 48.40 cents compared to the relative
forecast of 45.81 cents represents an increase of 5.7% over forecast.
BASIS OF PREPARATION
The group financial statements are prepared in accordance with and comply with
International Financial Reporting Standards (IFRS), the Listing requirements of
the JSE Limited and the South African Companies Act 61 of 1973, as amended.
The consolidated financial statements are prepared in accordance with the going
concern principle under the historical cost basis as modified by the
revaluation of certain assets and liabilities where required or elected in
terms of IFRS. The accounting policies and methods of computation are
consistent with those used in the comparative financial information for the
year ended 31 May 2007.
As a result of the group`s restructuring, its comparatives have been restated
using predecessor accounting principles, a complex accounting treatment.
The accounting principles applied result in an extensive restatement of
comparatives. Shareholders are therefore advised to exercise caution and should
read the final results as reported in conjunction with the pre listing
statement, when attempting to make year on year comparisons.
FINANCIAL REVIEW
Income statement
The group`s reported results for the year ended 31 May 2008 reflects actual
group revenue of R12.55 billion (pro forma - R12.93 billion), EBITDA of R328
million (pro forma - R347 million), net profit after tax of R181 million (pro
forma - R269 million) and core net profit after tax of R270 million (pro forma
- R371 million).
In order to accurately reflect core and pro forma core earnings for the full
year, the group has added back previously disclosed non-recurring and
non-operational items of R57.6 million relating to a management bonus
settlement, R9 million relating to the termination of a commission agreement
and R22.9 million (pro forma - R34.9 million) relating to the amortisation of
intangible assets that arose as a consequence of purchase price allocations
calculated in terms of IFRS 3: Business Combinations.
Revenue
Comparing the actual results with the predecessor value audited 2007 results,
revenue of the group increased by R3.65 billion (41%) mainly due to strong
organic growth and continued escalation in consumer demand for prepaid airtime.
Gross profit margin
The group`s trading environment is characterised by high volumes and relatively
low margins, resulting in a gross profit margin of 5.34% for the period under
review. This compares to 4.78% achieved in the previous year.
NET FINANCE INCOME
The company earned net finance income of R46 million compared to a net finance
expense of R38 million in the prior year.
Assuming the group had listed on 1 June 2007, net finance income would have
increased by a further R87 million.
Finance Income
The group`s finance income for the year was R193 million earned from the
residue of funds raised on listing. R16 million of this amount relates to
imputed interest receivable on debtors balances in terms of IFRS.
Assuming the group had listed on 1 June 2007, finance income would have been an
additional R46 million.
Finance expense
The group`s finance expense for the year was R148 million. R101 million
included in the amount relates to imputed interest on creditor balances in
terms of IFRS.
Assuming the group had listed on 1 June 2007, its finance expense would have
been reduced by R43 million as the group would have settled its interest
bearing debt at that date.
Net interest paid of R17 million, originally budgeted for, did not materialise
due to predecessor accounting principles. In terms of these principles the
shareholders` loans and non-core receivables assets are assumed to have been
settled on 1 June 2006.
Share of loss from associate
A loss amounting to R19.7 million is attributable to Oxigen Services India.
Other associated companies prior to listing generated positive contributions of
R 2.3 million.
Effective tax rate
As a result of certain non-deductible expenses, the group`s overall effective
tax rate for the full year was 30%.
Dividends
As per the group`s previously disclosed dividend policy, BLT will only consider
paying a dividend from the financial year commencing 1 June 2010.
Balance sheet
The group`s strong balance sheet is attributable to good trading results and
stringent asset and treasury management.
The group is highly liquid and well positioned to support the funding of
potential acquisitions without impairing its working capital requirements.
ASSETS
Intangible assets
Intangible assets are made up of a goodwill and intangibles relating
to acquisitions as well as non-tangible assets acquired during the normal
course of business.
The group is highly liquid and well positioned to support the funding of
potential acquisitions without impairing its working capital requirements.
ASSETS
Intangible assets
Intangible assets are made up of a hybrid of goodwill and intangibles relating
to acquisitions as well as non-tangible assets acquired during the normal
course of business.
In terms of IFRS 3 pertaining to business combinations, the intangible elements
comprising goodwill and intangibles in respect of acquisitions have to be
determined and allocated. The group`s carrying value of these acquisitive
intangible assets as at 31 May 2008 was R193 million.
The majority of these acquisitions emanated from the conversion of investments
in previous associate companies to wholly owned subsidiaries as a result of the
restructure of the group immediately prior to listing. The useful life of the
majority of these assets (excluding goodwill) is five years, which will be
amortised accordingly.
The goodwill element of intangibles was R266 million, relating to the
acquisition of subsidiaries in respect of which the group was not transacting
with minorities.
BLT has changed its accounting policy with regard to accounting for
transactions with minorities. This differs from the group`s disclosure in its
PLS. BLT has adopted the Economic Entity method, which is consistent with the
requirements of IFRS 3 Revised (Business Combinations), and IAS 27 Revised
(Consolidated and Separate Financial Statements). Under this policy, goodwill
of R899 million, arising on transactions with minorities is recognised against
reserves on the balance sheet, as minority shareholders are treated as equity
participants.
Investments in associates
The group`s investments in associates of R81 million represents the carrying
value of its investment in Oxigen India. As at 31 May 2008, BLT held 35% of
Oxigen which is included in the carrying value.
Restructuring reserve
The group`s restructuring reserve of R1.84 billion arose as a result of the
restatement of group comparatives as required in terms of the principles of
predecessor accounting. This reserve represents the difference between the fair
value of the entities under the group`s control and their respective net asset
values as at the assumed restructure date of 1 June 2006.
Cash flows
The negative cash flow generated from operating activities of R20 million is
after applying funds to increase net working capital by R280 million to support
of the continued growth of the group.
Cash flows from investing activities of R405 million relate to the acquisition
of minorities on listing of an amount of R209 million, acquisitions post
listing amounting to R140 million and the net movement in loans to associate
companies amounting to R57 million.
Cash flows from financing activities of R662 million is due to the group`s
successful listing resulting in the raising of cash totaling R1.3 billion.
Of this sum approximately R600 million was utilised to repay the majority of
the group`s interest bearing debt and R39 million for the payment of listing
costs.
The group remained cash positive throughout the year with R1.3 billion on hand
at year end.
Audit Opinion
The results for the financial year ended 31 May 2008 have been audited by the
Company`s auditors, PricewaterhouseCoopers Incorporated, and the unqualified
audit report is available for inspection at the company`s registered office.
Prospects
The group is financially sound. It is well positioned to grow its global
transactional footprint and to roll-out its proven business model in emerging
markets through both organic growth and strategic acquisitions. The group
intends to diversify its product offerings and income streams, through, for
example, the inclusion of revenues from advertising and money transfers.
The group will continue to grow the markets in which it operates with the
introduction of innovative and varied prepaid and transactional products and
services as well as lifestyle oriented products that promote convenience and
accessibility. Key strategies aimed at enhancing the group`s share of total
local prepaid average revenue`s per user have been identified.
The group`s proprietary technologies are constantly being improved and
developed to ensure that the group has the competency and capacity to expand
its transactional footprint and to roll-out its product offerings and services
in emerging markets.
Corporate Governance
The Board and senior management of BLT subscribe to the governance principles
of King II and are developing governance structures based on the
recommendations and underlying principles of the King II Code of Corporate
Practices and Conduct. The directors recognise the need to conduct the group`s
business with integrity and according to sound corporate governance principles.
During the first months of being a publicly listed entity certain of the key
recommendations of King II have been implemented however the company continues
to strive to be fully compliant with King II.
Annual General Meeting
BLT`s first annual general meeting (AGM) will be held in Johannesburg on
Wednesday, 12 November 2008. Further details on BLT`s AGM will be included in
BLT`s annual report to be posted to shareholders on/or about 13 October
2008.
Appreciation
The Board of BLT would like to thank BLT`s staff for their commitment and hard
work over the period under review. The Board would also like to thank BLT`s
many suppliers, customers, business partners, advisors and shareholders for
their ongoing support during the year.
By order of the Board
LM Nestadt BM Levy and MS Levy DB Rivkind
Chairman Joint Chief Executive Officers Chief Financial Officer
Directors:
LM Nestadt (Chairman)*, BM Levy, MS Levy, S Ellerine*, GD Harlow*, RJ Huntley*,
NN Lazarus*, JS Mthimunye*, MV Pamensky, DB Rivkind, HC Theledi*, LM Tyalimpi*,
P Mansour*#
(*Non-Executive) (#American)
Company Secretary: E Viljoen
Blue Label Telecoms Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/022679/06)
JSE Share code: BLU ISIN: ZAE000109088
("BLT" or "the company")
Date: 26/08/2008 08:00:05 Produced by the JSE SENS Department.
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