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BLU
BLU
BLU - Blue Label Telecoms - Reviewed interim results for the half year ended
30 November 2008
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")
Reviewed interim results for the half year ended 30 November 2008
Financial highlights:
- Revenue* up 23%
- Operating profit* up 27%
- Net profit after tax* up 20%
- Core earnings per share* up 20%
- Cash flows from operating activities R421 million
* when compared to core pro forma earnings
Summarised Group Balance Sheet
as at 30 November 2008
30 November 31 May
2008 2008
Actual Actual
Reviewed Audited
R`000 R`000
ASSETS
Non-current assets 773 425 712 759
Property, plant and equipment 96 102 69 484
Intangible assets 474 807 489 786
Investment in associates and joint ventures 142 705 81 356
Financial assets at amortised cost 59 811 72 133
Current assets 2 858 880 2 509 420
Financial assest at fair value through profit
and loss 305 5 672
Inventories 388 259 484 501
Loans receivable 21 621 7 103
Financial assets at amortised cost 61 085 53 163
Trade and other receivables 711 361 630 687
Cash and cash equivalents 1 676 249 1 328 294
Total assets 3 632 305 3 222 179
EQUITY AND LIABILITIES
Capital and reserves 2 103 865 1 917 944
Share capital, share premium and treasury shares 4 380 606 4 404 737
Restructuring reserve (1 843 912) (1 843 912)
Foreign currency translation reserve 4 405 2 552
Transaction with minority reserve (898 564) (898 564)
Retained earnings 442 916 244 758
2 085 451 1 909 571
Minorities` interest 18 414 8 373
Non-current liabilities 67 651 58 056
Deferred taxation 51 887 55 111
Interest-bearing borrowings 15 764 2 945
Current liabilities 1 460 789 1 246 179
Trade and other payables 1 363 311 1 152 969
Non-interest-bearing borrowings 20 389 9 041
Current tax liabilities 74 883 71 146
Current portion of interest-bearing borrowings 2 206 13 023
Total equity and liabilities 3 632 305 3 222 179
Summarised Group Income Statement
as at 30 November 2008
Six months ended
30 November 30 November 30 November
2008 2007 2007
Actual Actual Core pro forma
Reviewed Reviewed Unaudited
R`000 R`000 R`000
Revenue 7 573 458 5 797 260 6 174 559
Other income 25 226 15 451 22 268
Cost of inventories sold (7 049 489) (5 471 583) (5 807 484)
Employee compensation and
benefit expense (125 639) (166 420) (84 693)
Depreciation, amortisation
and
impairment charges (45 377) (18 928) (33 934)
Other expenses (127 960) (64 281) (74 109)
Operating profit 250 219 91 499 196 607
Finance income 103 858 72 576 104 623
Finance expense (50 119) (92 451) (52 142)
Share of loss of associates (14 082) (4 353) (6 573)
Profit for the period before
taxation 289 876 67 271 242 515
Taxation (90 186) (26 568) (76 461)
Net profit for the period 199 690 40 703 166 054
Net profit for the period
attributable to: 199 690 40 703 166 054
Equity holders of parent 198 158 14 379 164 872
Minority interest 1 532 26 324 1 182
Earnings per share for
profit attributable
to equity holders (cents)
- Basic 25.86 3.47 21.51
- Headline 26.06 3.79 21.68
Weighted average number of
shares 766 231 733 414 166 131 766 360 894
Number of shares in issue 766 360 894 766 360 894 766 360 894
Unaudited reconciliation
between net
profit and core net profit
for the period:
Net profit for the period 199 690 40 703 166 054
Once off employee
compensation and benefit
expense net of tax - 56 800 -
Amortisation on intangibles
raised
through business
combinations net of tax 18 857 6 887 16 800
Cancellation of onerous
contract - 9 000 -
Core net profit for the
period 218 547 113 390 182 854
Core net profit for the
period attributable to: 218 547 113 390 182 854
Equity holders of parent 215 926 85 095 180 707
Minority interest 2 621 28 295 2 147
- Core earnings per share
(cents) * 28.18 20.55 23.58
* Core earnings per share is calculated after adding back the amortisation of
intangible assets as a consequence of the purchase price allocations exercise
in terms of IFRS 3: Business Combinations, the prior year 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.
Summarised Group Statement of Changes in Equity
for the six months ended 30 November 2008
Share capital, share premium Retained
and treasury shares earnings
Reviewed Reviewed
R`000 R`000
Balance as at 1 June 2007 2 079 533 65 685
Shares issued during the period 2 364 929 -
Net profit for the period - 14 379
Listing costs (39 846) -
Dividends declared - (999)
Minorities acquired during the
period - -
Exchange losses on translation of
foreign
operations - -
Balance as at 30 November 2007 4 404 616 79 065
Balance as at 1 June 2008 4 404 737 244 758
Net profit for the period - 198 158
Treasury shares (24 131) -
Minorities acquired during the
period - -
Exchange (losses)/gains on
translation of
foreign operations - -
Balance as at 30 November 2008 4 380 606 442 916
Restructuring Foreign currency
reserve translation reserve
Reviewed Reviewed
R`000 R`000
Balance as at 1 June 2007 (1 843 912) 4 187
Shares issued during the period - -
Net profit for the period - -
Listing costs - -
Dividends declared - -
Minorities acquired during the period - -
Exchange losses on translation of
foreign
operations - (561)
Balance as at 30 November 2007 (1 843 912) 3 626
Balance as at 1 June 2008 (1 843 912) 2 552
Net profit for the period - -
Treasury shares - -
Minorities acquired during the period - -
Exchange (losses)/gains on
translation of
foreign operations - 1 853
Balance as at 30 November 2008 (1 843 912) 4 405
Transaction with Minority Total
minority reserve interest equity
Reviewed Reviewed Reviewed
R`000 R`000 R`000
Balance as at 1 June 2007 (14 893) 129 440 420 040
Shares issued during the
period - - 2 364 929
Net profit for the period - 26 324 40 703
Listing costs - - (39 846)
Dividends declared - - (999)
Minorities acquired during
the period (884 402) (136 748) (1 021 150)
Exchange losses on
translation of foreign
operations - (93) (654)
Balance as at 30 November
2007 (899 295) 18 923 1 763 023
Balance as at 1 June 2008 (898 564) 8 373 1 917 944
Net profit for the period - 1 532 199 690
Treasury shares - - (24 131)
Minorities acquired during
the period - 9 063 9 063
Exchange (losses)/gains on
translation of
foreign operations - (554) 1 299
Balance as at 30 November
2008 (898 564) 18 414 2 103 865
Summarised Cash Flow Statement
for the six months ended 30 November 2008
Six months ended
30 November 30 November
2008 2007
Actual Actual
Reviewed Reviewed
R`000 R`000
Cash flows from operating activities 421 142 141 867
Cash flows from investing activities (110 577) (186 451)
Cash flows from financing activities 7 554 677 672
Increase in cash and cash equivalents 318 119 633 088
Cash and cash equivalents at the beginning of
the period 1 328 294 1 090 044
Cash and cash equivalents acquired in
subsidiaries 29 733 5 211
Translation difference 103 -
Cash and cash equivalents at the end of the
period 1 676 249 1 728 343
Segmental Summary
for the six months ended 30 November 2008
30 November
2007
Actual(1) Restructuring(2)
Reviewed Unaudited
R`000 R`000
Revenue
South African distribution* 5 623 868 232 789
International distribution* 103 364 109 023
Technology* 14 542 424
Value added services* 55 486 35 063
Corporate* - -
Total 5 797 260 377 299
EBITDA
South African distribution 115 376 14 199
International distribution 8 752 3 597
Technology (3 961) 4 305
Value added services 13 301 10 133
Corporate (23 041) (1 120)
Total 110 427 31 114
Net profit for the period attributable to
equity holders
South African distribution 34 079 32 714
International distribution (2 767) (1 206)
Technology (6 097) 4 690
Value added services 9 429 (2 290)
Corporate (20 265) (1 757)
Total 14 379 32 151
Cash Core
effects(3) Adjustments(4)
Unaudited Unaudited
R`000 R`000
Revenue
South African distribution* - -
International distribution* - -
Technology* - -
Value added services* - -
Corporate* - -
Total - -
EBITDA
South African distribution - 80 000
International distribution - -
Technology - -
Value added services - -
Corporate - 9 000
Total - 89 000
Net profit for the period attributable to
equity holders
South African distribution 52 542 61 406
International distribution - 2 198
Technology - -
Value added services - 9 031
Corporate - 9 000
Total 52 542 81 635
30 November 30 November
2007 2008
Core pro forma(5) Actual
Unaudited Reviewed
R`000 R`000
Revenue
South African distribution* 5 856 657 7 088 140
International distribution* 212 387 282 944
Technology* 14 966 10 300
Value added services* 90 549 192 074
Corporate* - -
Total 6 174 559 7 573 458
EBITDA
South African distribution 209 575 296 965
International distribution 12 349 18 823
Technology 344 (22 114)
Value added services 23 434 47 176
Corporate (15 161) (45 254)
Total 230 541 295 596
Net profit for the period attributable to
equity holders
South African distribution 180 741 255 856
International distribution (1 775) (8 341)
Technology (1 407) (24 407)
Value added services 16 170 21 967
Corporate (13 022) (46 917)
Total 180 707 198 158
30 November
Core 2008
Adjustments(6) Core
Unaudited Unaudited
R`000 R`000
Revenue
South African distribution* - 7 088 140
International distribution* - 282 944
Technology* - 10 300
Value added services* - 192 074
Corporate* - -
Total - 7 573 458
EBITDA
South African distribution - 296 965
International distribution - 18 823
Technology - (22 114)
Value added services - 47 176
Corporate - (45 254)
Total - 295 596
Net profit for the period attributable to
equity holders
South African distribution 5 002 260 858
International distribution 2 575 (5 766)
Technology 371 (24 036)
Value added services 9 820 31 787
Corporate - (46 917)
Total 17 768 215 926
30 November 2008 31 May 2008
Actual Actual
Reviewed Audited
R`000 R`000
Net operating assets/(liabilities)
South African distribution 1 364 683 1 292 236
International distribution 50 506 22 807
Technology (6 831) (739)
Value added services 25 990 4 098
Corporate (36 257) (55 161)
Total 1 398 091 1 263 241
* Although segment names have changed, the composition of the underlying
segments have remained the same.
Notes:
1. Extracted from the reviewed group income statement of BLT for the half year
ended 30 November 2007.
2. Represents the effects of the group restructure based on the assumption that
minority acquisitions occurred on 1 June 2007.
(See pro forma reconciliation for details of companies part of the
restructure).
3. Represents the positive impact on finance income and expense assuming cash
raised on listing was received 1 June 2007.
4. Represents the adding back of the amortisation of intangible assets as a
consequence of the purchase price allocations exercise 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.
5. Represents the core pro forma unaudited group income statement of BLT on the
assumption that the restructuring, listing and minority acquisitions were
effective 1 June 2007.
6. Represents the adding back of the amortisation of intangible assets as a
consequence of the purchase price allocations exercise in terms of IFRS 3:
Business Combinations.
7. All adjustments are expected to have a continuing effect on BLT.
Headline Earnings
30 November 30 November
2008 2007
Actual Actual
Reviewed Reviewed
R`000 R`000
Profit attributable to equity holders of parent 198 158 14 379
Loss on disposal of property, plant and
equipment - 1 312
Loss on sale of group companies 255 -
Loan impairment 1 261 -
Headline earnings 199 674 15 691
Headline earnings per share (cents) 26,06 3,79
Acquisition of Subsidiaries
Shares in the following subsidiaries were acquired in the six month period
ended 30 November 2008:
Effective date of acquisition % acquired
Blue Label Mexico S.A. de C.V. 18 July 2008 70
Content Connect Australia
(Proprietary) Limited 19 August 2008 50,5
Answers Direct Marketing
(Proprietary) Limited 1 August 2008 80
Datacel Data Services
(Proprietary) Limited* 1 August 2008 81
Celebia Holdings Limited 23 June 2008 100
* Fair valuation of assets is still to be finalised
Details of the total net assets acquired and the resulting goodwill as at
acquisition are as follows:
Total
R`000
Total purchase consideration 30 464
Fair value of net assets acquired 21 672
Goodwill 8 792
The assets and liabilities acquired through the acquisitions are as follows:
Acquirer`s
Provisional provisional
fair value carrying
at amount on
acquistion acquistion
date date
R`000 R`000
Cash and cash equivalents 31 513 31 513
Property, plant and equipment 161 161
Intangible assets 1 964 1 964
Goodwill 800 800
Receivables 25 25
Borrowings (3 311) (3 311)
Payables (68) (68)
Provisional fair value of subsidiaries acquired 31 084 31 084
Minority interests (9 412)
Provisional fair value of net assets acquired 21 672
Cash and cash equivalents in subsidiaries
acquired 31 513
Total purchase consideration (30 464)
Less purchase consideration still due 1 735
Cash inflow on acquisition 2 784
Disposal of Subsidiaries
Shares in the following subsidiaries were disposed of in the six month period
ended 30 November 2008:
Effective date of disposal % held % disposed
eVoucha (Proprietary)
Limited 30 November 2008 51 51
iVeri Payment
Solutions
(Proprietary) Limited 31 October 2008 51 51
Details of the total net assets disposed and the resulting loss on disposal are
as follows:
Total
R`000
Total proceeds 5 500
Fair value of net assets disposed 5 755
Loss on disposal (255)
The assets and liabilities disposed are as follows:
Fair value at disposal date
R`000
Cash and cash equivalents 1 575
Property, plant and equipment 1 170
Intangible assets 1 190
Goodwill 7 834
Inventories 83
Receivables 13 278
Deferred tax 452
Borrowings (2 223)
Current tax liabilities (42)
Payables (17 213)
Fair value of subsidiaries disposed 6 104
Minority interests (349)
Fair value of net assets disposed of 5 755
Proceeds on disposal of subsidiaries 5 500
Cash and cash equivalents in subsidiaries
disposed of (1 575)
Cash inflow on disposal 3 925
Pro forma reconciliation
The table below sets out the unaudited pro forma information of BLT. The
unaudited pro forma statement has been prepared for illustrative purposes only.
Six months ended
30 November
2007 Restructuring
Actual(1) and Cash
Reviewed acquisitions(2) effects(3)
R`000 R`000 R`000
Revenue 5 797 260 377 299 -
Other income 15 451 6 817 -
Cost of inventories sold (5 471 583) (335 901) -
Employee compensation and
benefit expense (166 420) 1 727 -
Depreciation, amortisation
and
impairment charges (18 928) (15 006) -
Other expenses (64 281) (18 828) -
Operating profit 91 499 16 108 -
Finance income 72 576 577 31 470
Finance expense (92 451) (2 224) 42 533
Share of profit/(loss) of
associates (4 353) (2 220) -
Profit for the period before
taxation 67 271 12 241 74 003
Taxation (26 568) (5 232) (21 461)
Net profit for the period 40 703 7 009 52 542
Net profit for the period
attributable to: 40 703 7 009 52 542
Equity holders of parent 14 379 32 151 52 542
Minority interest 26 324 (25 142) -
Unaudited reconciliation
between
net profit for the period
and core
net profit for the period:
Net profit for the period 40 703 7 009 52 542
Management bonus settlement
net of tax 56 800 - -
Amortisation on intangibles
raised
through business combinations
net of tax 6 887 9 913 -
Cancellation of onerous
contract 9 000 - -
Core net profit for the
period 113 390 16 922 52 542
Core net profit for the
period
attributable to: 113 390 16 922 52 542
Equity holders of parent 85 095 43 070 52 542
Minority interest 28 295 (26 148) -
30 November
2007
Core Core
adjust- pro forma (5)
ments(4) Unaudited
R`000 R`000
Revenue - 6 174 559
Other income - 22 268
Cost of inventories sold - (5 807 484)
Employee compensation and
benefit expense 80 000 (84 693)
Depreciation, amortisation and
impairment charges - (33 934)
Other expenses 9 000 (74 109)
Operating profit 89 000 196 607
Finance income - 104 623
Finance expense - (52 142)
Share of profit/(loss) of associates - (6 573)
Profit for the period before taxation 89 000 242 515
Taxation (23 200) (76 461)
Net profit for the period 65 800 166 054
Net profit for the period
attributable to: 65 800 166 054
Equity holders of parent 65 800 164 872
Minority interest - 1 182
Unaudited reconciliation between
net profit for the period and core
net profit for the period:
Net profit for the period 65 800 166 054
Management bonus settlement
net of tax (56 800) -
Amortisation on intangibles raised
through business combinations
net of tax - 16 800
Cancellation of onerous contract (9 000) -
Core net profit for the period - 182 854
Core net profit for the period
attributable to: - 182 854
Equity holders of parent - 180 707
Minority interest - 2 147
Notes:
1. Extracted from the reviewed group income statement of BLT for the half year
ended 30 November 2007.
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 six months:
- The Prepaid Company
- Kwikpay
- Matragon
- Blue Label One
Similarly, the following associates are consolidated as subsidiaries for the
full six months:
- 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 adding back of the amortisation of intangible assets as a
consequence of the purchase price allocations exercise 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.
5. Represents the core pro forma unaudited group income statement of BLT on the
assumption that the restructuring, listing and minority acquisitions were
effective 1 June 2007.
6. All adjustments are expected to have a continuing effect on BLT.
Basis of preparation
The condensed interim financial statements have been prepared in accordance
with International Accounting Standards (IAS) 34 Interim Financial Reporting.
The accounting policies and methods of computation are consistent with those
used in the comparative financial information for the six months ended 30
November 2007, (which were prepared in accordance with International Financial
Reporting Standards (IFRS) and the South African Companies Act).
Overview
The company`s performance for the six month period ended 30 November 2008 was
sound. This was predominantly attributable to organic growth.
Although net attributable earnings of R198 million exceeded the earnings for
the 2007 relative period by R184 million, equating to a growth in earnings per
share from 3.47c to 25.86c (645%), the board of directors believes it is more
appropriate to compare actual earnings to historical core pro forma earnings to
evaluate the growth of the group.
Core pro forma earnings exclude non recurring and non operational items that
applied during the comparative period, and in addition assume that the listing
and restructuring of the group took place on 1 June 2007.
The financial highlights and the underlying financial review reflect the
comparisons accordingly.
Revenues increased by R1.4 billion (23%) to R7.6 billion.
EBITDA increased by R65 million (28%) to R296 million.
EBITDA margin increased from 3.73% to 3.9%.
Net profit after tax increased by R33 million (20%) to R198 million.
Core net profit after tax increased by R35 million (20%) to R216 million.
GP percentage increased from 5.94% to 6.92%
Core earnings per share increased from 23.58c to 28.18c
The underlying report has been prepared on a segmental basis to provide
shareholders with an enhanced perspective of contributions to profitability by
the various operational divisions.
The segmental split is as follows:
South African distribution
? Distribution of electronic tokens of value encompassing prepaid air time and
starter packs, bill payments, prepaid electricity, prepaid insurance and
redeemable prepaid vouchers for online products and services.
International distribution
Replication of the South African distribution model internationally.
Value added services
Telemarketing of cellular and financial services products, inbound customer
care and technical support via four call centres.
Marketing of location based products "Look 4 me" and "Look 4 help" (Vodacom)
as well as "Where are U "and "2 my aid" (MTN).
Aggregation of localised content for mobile operators and third party
clients.
Technology
Development, integration and management of the group`s IT systems and
technologies.
Revenue
Segment R`000
2008 2007
Actual Pro forma
Reviewed Unaudited
South African distribution 7 088 140 5 856 657
International distribution 282 944 212 387
Value added services 192 074 90 549
Technology 10 300 14 966
Total 7 573 458 6 174 559
Segment % of total %
2008 2007 Growth
South African distribution 93.6 94.8 21.0
International distribution 3.7 3.5 33.2
Value added services 2.6 1.5 112.1
Technology 0.1 0.2 (31.2)
Total 100 100 22.7
South African distribution
This segment contributed most of the revenue. Prepaid virtual air time sales
comprised 75%, prepaid physical air time 22% and prepaid electricity 3% of the
revenue.
Revenue from prepaid electricity grew by an encouraging 200%.
International distribution
Revenue from this segment increased by R70 million (33%), of which R50 million
(24%) was as a result of foreign exchange translations and R20 million (9%) as
a result of organic growth in the trading divisions abroad.
Value added services
Total growth of this segment was R102 million (112%) of which acquisitive
growth accounted for R35 million (38%) and organic growth R67 million (74%).
Technology
The focus on in-house technological support and product development and
enhancement has resulted in a conscious decision to reduce services and
support to third parties. This accounts for the decline in revenue from
third parties by R4.6 million.
EBITDA
Segment R`000
2008 2007
Actual Pro forma
Reviewed Unaudited
South African distribution 296 965 209 575
International distribution 18 823 12 349
Value added services 47 176 23 434
Total trading operations 362 964 245 358
Technology (22 114) 344
Corporate (45 254) (15 161)
Total support (67 368) (14 817)
Net total 295 596 230 541
Segment
% 2008 2007
Growth EBITDA EBITDA
Margin % Margin %
South African distribution 42 4.19 3.58
International distribution 52 6.65 5.81
Value added services 101 24.56 25.87
Total trading operations 48 4.80 3.99
Technology
Corporate
Total support
Net total 28 3.90 3.73
South African distribution
EBITDA margin of 4.19% represented an increase of 0.61% from 3.58%. This was as
a result of increased revenue at higher gross profit margins exceeding the
increase in overheads.
International distribution
The growth in EBITDA of R6.5 million was predominantly due to foreign exchange
movements.
Value added services
The growth in EBITDA from R23 million to R47 million (101%) resulted from a
combination of acquisitive growth (R8 million) and organic growth (R15 million)
(65%).
The EBITDA margin declined from 25.87% to 24.56% in line with the necessity to
enhance and expand existing infrastructure in order to support sustained
growth in revenue.
Technology and corporate
There was growth in expenditure on technology and corporate of R45 million
representative of the costs of enhanced infrastructure and administrative
support systems and skills required to strengthen the platform for current and
future expansion both locally and internationally.
The growth in EBITDA generated by the trading operations from R245 million to
R363 million (48%) could not have been achieved without the necessary
technical, entrepreneurial and administrative support aligned thereto.
Net finance income
Finance income
Finance income of R104 million was earned by the South African distribution
division. Of this amount R14 million relates to imputed interest receivable on
debtor balances in terms of IFRS with R90 million earned on liquid working
capital.
Pro forma finance income earned in the comparative period amounted to R104.6
million of which R6 million applied to imputed interest receivable on debtor
balances in terms of IFRS.
There was therefore a decline in finance income of R9.6 million net of the
above IFRS adjustments. This was due to the application of R293 million to
piecemeal investments from January 2008 to October 2008.
Finance expense
Of the finance expense of R50 million, R48 million relates to imputed interest
payable on creditor balances in terms of IFRS.
Share of losses from associates and joint ventures
Associates and joint ventures % R`000 %
Holding 2008 2007 Growth
Pro
Actual forma
Reviewed Reviewed
Oxigen Services India Pvt Ltd 38.85 (14 285) (6 573) (117)
Smart Voucher Limited (Ukash) 17.25 (195) - -
Other 50 398 - -
Total (14 082) (6 573) (114)
Oxigen Services India Pvt (Ltd)
Oxigen Ser vices India Pvt (Ltd) continues to incur losses, as anticipated in
line with the cost of rolling out point of sale devices over a widespread area.
Management remain confident in the prospects of this operation.
Smart Voucher Limited trading as Ukash
A minority stake in this United Kingdom based company was purchased in October
2008. The company has developed and distributes proprietary electronic pins
which enable the electronic redemption of online products and services. This
technology is of strategic value to the group. The Ukash application is an
added value product which will be distributed through the group`s global
footprint.
Core net profit attributable to equity holders
Segment R`000 R`000
2008 2007 Growth
Actual Pro forma
Unaudited Unaudited
South African distribution 260 858 180 741 80 117
International distribution (5 766) (1 775) (3 991)
Value added services 31 787 16 170 15 617
Total operations 286 879 195 136 91 743
Technology (24 036) (1 407) (22 629)
Corporate (46 917) (13 022) (33 895)
Total support (70 953) (14 429) (56 524)
Total 215 926 180 707 35 219
Core Earnings per share 28.18c 23.58c 4.60c
The growth in contribution to core earnings of R92 million (47%) from
operations results from continued investment in technology and support service.
Corporate expenditure has increased in line with the costs of an expanding
professional executive team and by the expenses aligned to acquisitive growth
exploration and implementation.
The core earnings of R216 million, equating to a growth of R35 million (20%) on
pro forma earnings, was calculated after adding back the amortisation of
intangibles of R18 million to the net profit after tax of R198 million.
Dividends
The group will only consider paying dividends from the financial year
commencing June 2010.
Assets
Total assets increased by R410 million (12.73%) to R3.6 billion from R3.2
billion at May 2008.
Non current assets
The net increase in non current assets was R60.7 million.
This was attributable to the following:
Increase in property, plant and equipment of R26.7 million, mainly as a
result of the purchase of point of sale devices required in both the South
African and International distribution segments.
A net decrease in intangible assets of R15 million due to amortisation.
Increase in investments in associates of R61.3 million.
A net decrease in unactivated starter packs of R12.3 million. Financial
assets at amortised cost relate to starter packs which have been sold but not
yet activated.
Current assets
Current assets increased by R349.4 million. The increase was largely
attributable to the growth in cash and cash equivalents achieved as a result of
profit generation and stringent working capital management.
Capital and reserves
The share capital and share premium declined by R24 million attributable to the
purchase of treasury shares in terms of the group`s staff share incentive
scheme.
The restructuring reserve of R1.84 billion arose in the prior year 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.
Goodwill arising on transactions with minorities of R899 million is recognised
against reserves on the balance sheet, as minority shareholders are treated as
equity participants. This is in accordance with the economic entity method
which was adopted by the group in the prior year.
Liabilities
Total liabilities increased by R224 million mainly due to the growth in trade
and other payables, in line with the organic growth of the group.
Cash flow
Operating profit growth and the constant focus on stringent working capital
management resulted in healthy cash flows from operating activities of R421
million. This manifests itself in the current ratio of 2 to 1 and the quick
ratio of 1.7 to 1. Of this cash generated, R110 million was applied to
investing activities.
Prospects
In spite of the global economic meltdown, the products and services provided by
the group remain resilient. The group will continue to pursue the growth of its
global transactional footprint as the foundation for the roll out of its
expanding range of secure electronic tokens of value and allied services.
The group`s transactional point of sale ("POS") and mobile systems and products
and services are currently being integrated into Microsoft`s mobile and
advertising service platforms. During the course of 2009, these capabilities
and services will be rolled out into emerging and developing markets through
Microsoft UPG (Unlimited Potential Group) and BLT`s global partners, utilising
POS and mobile channels. This in future will translate into the monetisation of
mobile and POS advertising in these markets.
The group has successfully grown its community based channels for the
distribution of its products, including starter packs. The intention is to
capitalise on this distribution base both organically and through the
introduction of new channels.
A strategic relationship has been established with First Data Corporation, a
leading global transactional switching ser vice provider, in which cross
pollination of relative networks is being explored.
Subsequent to the period under review, Africa Prepaid Services, a subsidiary of
BLT, concluded an agreement with Multilinks Telecommunications Ltd, a
subsidiary of Telkom in Nigeria, in terms of which Africa Prepaid Services has
been granted a service provider licence in Nigeria.
BLT has also acquired an effective 50.1% stake in Virtual Prepaid Network LLC
("VPN") through its newly formed wholly owned subsidiary BLT USA Inc. VPN is
based in New York and is focused on virtual distribution of prepaid
international calling cards servicing mainly ethnic and emerging markets.
Review opinion
The results for the period ended 30 November 2008 have been reviewed by the
company`s auditors, PricewaterhouseCoopers Inc. and the unmodified review
report is available for inspection at the company`s registered office.
Appreciation
The board of BLT remains continuously grateful to its staff, suppliers,
customers and business partners for their ongoing support and loyalty to the
group.
For and on behalf of the Board
L M Nestadt B M Levy and M S Levy D B Rivkind
Chairman Joint Chief Executive Officers Chief Financial Officer
Directors:
L M Nestadt (Chairman)*, B M Levy, M S Levy, S Ellerine*, G D Harlow*,
R J Huntley*, N N Lazarus*, J S Mthimunye*, M V Pamensky, D B Rivkind,
H C Theledi*, L M Tyalimpi*, P Mansour *#
(*Non Executive) (#American)
Company Secretary: E Viljoen
Sponsor: Investec
24 February 2009
Date: 25/02/2009 08:00:05 Produced by the JSE SENS Department.
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