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BLU
BLU
BLU - Blue Label Telecoms Limited - Audited final results for the year ended 31
May 2009
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")
Audited final results for the year ended 31 May 2009
UP 18% Revenue*
UP 31% Operating profit*
UP 16% Net profit after tax*
UP 16% Core earnings per share*
UP 19% Headline earnings per share*
R667 million Cash generated from operating activities
*when compared to core pro forma earnings
Summarised Group Balance Sheet
audited results as at 31 May 2009
31 May 31 May
2009 2008
audited audited
R`000 R`000
ASSETS
Non-current assets 736 634 712 759
Property, plant and equipment 105 011 69 484
Intangible assets and goodwill 460 325 489 786
Investment in associates and joint ventures 109 837 81 356
Financial assets at amortised cost 54 096 72 133
Deferred taxation assets 7 365 -
Current assets 3 143 109 2 509 470
Financial assets at fair value through profit
and loss 10 5 672
Financial assets at amortised cost 67 449 53 163
Inventories 384 361 484 501
Loans receivable 29 920 7 103
Trade and other receivables 898 571 630 687
Current tax assets 2 101 -
Cash and cash equivalents 1 760 697 1 328 344
Total assets 3 879 743 3 222 229
EQUITY AND LIABILITIES
Capital and reserves 2 244 120 1 917 944
Share capital, share premium and treasury shares 4 379 175 4 404 737
Restructuring reserve (1 843 912) (1 843 912)
Foreign currency translation reserve (13 399) 2 552
Transaction with minority reserve (914 399) (898 564)
Share-based payment reserve 10 602 -
Retained earnings 635 305 244 758
2 253 372 1 909 571
Minorities interest (9 252) 8 373
Non-current liabilities 69 664 58 056
Deferred taxation 49 544 55 111
Interest-bearing borrowings 20 120 2 945
Current liabilities 1 565 959 1 246 229
Trade and other payables 1 518 853 1 152 969
Non-interest-bearing borrowings - 9 041
Current tax liabilities 28 039 71 146
Bank overdraft 3 891 50
Current portion of interest-bearing borrowings 15 176 13 023
Total equity and liabilities 3 879 743 3 222 229
Summarised Group Income Statement
for the year ended 31 May 2009
2009 2008 2008
Actual Core pro forma Actual
audited unaudited audited
R`000 R`000 R`000
Revenue 15 281 449 12 930 609 12 545 471
Other income 22 368 68 142 69 545
Cost of inventories sold (14 215 840) (12 211 507) (11 875 606)
Employee compensation and
benefit expense (278 970) (195 629) (265 003)
Depreciation, amortisation
and impairment charges (93 220) (73 675) (58 670)
Other expenses (240 940) (155 686) (146 240)
Operating profit 474 847 362 254 269 497
Finance expense (112 699) (106 604) (147 704)
Finance income 205 046 239 470 193 281
Share of profits and
losses from associates
and joint ventures (27 445) (19 661) (17 441)
Net profit before taxation 539 749 475 459 297 633
Taxation (174 784) (138 929) (89 841)
Net profit for the year 364 965 336 530 207 792
Net profit for the period
attributable to:
Equity holders of the parent 390 547 336 023 180 891
Minority interest (25 582) 507 26 901
Earnings per share for
profit attributable to
equity holders (cents)
- Basic 51.13 43.85 30.65
- Headline 51.63 43.55 30.26
- Diluted basic 50.96 - -
- Diluted headline 51.46 - -
Weighted average number of
shares 763 833 909 766 360 894 590 263 513
Number of shares in issue 761 159 181 766 360 894 766 360 894
Diluted weighted average
number of shares** 766 360 894 - -
** Diluted earnings per share and diluted headline earnings per share is
calculated by adjusting the number of shares in issue by the number of shares
that would be issued on vesting under the forfeitable share plan. (There were
no dilutive instruments in 2008).
Unaudited reconciliation
between net profit and
core net profit for the year:
Net profit for the year 390 547 336 023 180 891
Once off employee
compensation and benefit
expense net of tax - - 57 600
Amortisation on intangibles
raised through
business combinations
net of tax 36 653 34 919 22 937
Cancellation of
onerous contract - - 9 000
Core net profit for the year 427 200 370 942 270 428
Core net profit for the
year attributable to: 403 782 373 093 301 409
Equity holders of parent 427 200 370 942 270 428
Minorities interest (23 418) 2 151 30 981
- Core earnings per
share (cents) * 55.93 48.40 45.81
* Core earnings per share is calculated after adding back the amortisation of
intangible assets as a consequence of the purchase price allocations completed
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 the year ended 31 May
2009:
Effective date of acquisition % acquired
Celebia Holdings Limited** 1 July 2008 100%
Blue Label Mexico S.A. de C.V.** 18 July 2008 70%
Answers Direct (Proprietary) Limited 1 August 2008 80%
Blue Label Data Solutions
(Proprietary) Limited** 1 August 2008 81%
Blue Label Australasia
(Proprietary) Limited 19 August 2008 50.5%
Africa Prepaid Services
Nigeria Limited** 1 December 2008 51%
Blue Label Telecoms USA Inc** 2 December 2008 100%
Blue Label USA, LLC** 2 December 2008 50.01%
**Start up operations.
Details of the total net assets acquired and the resulting goodwill and
reserves at acquisition are as follows:
Total
R`000
Total purchase consideration 29 646
Fair value of net assets acquired 21 966
7 680
Goodwill 1 689
Transaction with minority reserve 5 991
The assets and liabilities acquired through the
acquisitions are as follows:
Acquirer`s carrying
amount and
fair value
at acquisition
date
R`000
Cash and cash equivalents 31 663
Property, plant and equipment 161
Intangible assets 21 820
Goodwill 800
Inventories 54
Receivables 1 748
Borrowings (23 167)
Payables (1 302)
Fair value of subsidiaries acquired 31 777
Minority interests (9 811)
Fair value of net assets acquired 21 966
Cash and cash equivalents in subsidiaries acquired 31 663
Total purchase consideration (29 646)
Subsequent capital contribution (49 630)
Less purchase consideration still due 415
Cash outflow on acquisition (47 198)
Had these acquisitions of subsidiaries been made at the beginning of the
financial year they would have contributed R7.037 million to revenue and
(R5.036) million loss to net profit after tax. The actual contribution to
revenue and net profit after tax for the year was R7.037 million and (R3.177)
million loss. (This excludes the effect of start up operations).
Summarised Group Statement of Changes in Equity
audited results as at 31 May 2009
Share capital,
share premium and Retained
treasury shares earnings
audited audited
R`000 R`000
Balance as at 31 May 2007 2 079 533 63 867
Shares issued during the year 2 364 928 -
Share issue costs (39 724) -
Net profit for the year - 180 891
Dividends - -
Minorities disposed of during the year - -
Exchange losses on translation of
foreign operations - -
Reserves acquired under common control
Balance as at 31 May 2008 4 404 737 244 758
Net profit for the year - 390 547
Treasury shares purchased (25 562) -
Asset acquired for shares - -
Equity based compensation movements - -
Minorities acquired/(disposed of)
during the year - -
Exchange losses on translation of
equity loans - -
Exchange losses on translation of
foreign operations - -
Balance as at 31 May 2009 4 379 175 635 305
Foreign currency
Restructuring translation
reserve reserve
audited audited
R`000 R`000
Balance as at 31 May 2007 (1 843 912) 4 188
Shares issued during the year - -
Share issue costs - -
Net profit for the year - -
Dividends - -
Minorities disposed of during the year - -
Exchange losses on translation of
foreign operations - (1 636)
Reserves acquired under common control
Balance as at 31 May 2008 (1 843 912) 2 552
Net profit for the year - -
Treasury shares purchased - -
Asset acquired for shares - -
Equity based compensation movements - -
Minorities acquired/(disposed of)
during the year - -
Exchange losses on translation of
equity loans - (15 107)
Exchange losses on translation of
foreign operations - (844)
Balance as at 31 May 2009 (1 843 912) (13 399)
Share-
Transaction with based
minority payment
reserve reserve
audited audited
R`000 R`000
Balance as at 31 May 2007 (14 893) -
Shares issued during the year - -
Share issue costs - -
Net profit for the year - -
Dividends - -
Minorities disposed of during the year (883 671) -
Exchange losses on translation of
foreign operations - -
Reserves acquired under common control
Balance as at 31 May 2008 (898 564) -
Net profit for the year - -
Treasury shares purchased - -
Asset acquired for shares - 1 231
Equity based compensation movements - 9 371
Minorities acquired/(disposed of)
during the year (15 835) -
Exchange losses on translation of
equity loans - -
Exchange losses on translation of
foreign operations - -
Balance as at 31 May 2009 (914 399) 10 602
Minority Total
interest equity
audited audited
R`000 R`000
Balance as at 31 May 2007 129 238 418 021
Shares issued during the year - 2 364 928
Share issue costs - (39 724)
Net profit for the year 26 901 207 792
Dividends (998) (998)
Minorities disposed of during the year (146 294) (1 029 965)
Exchange losses on translation of
foreign operations (474) (2 110)
Reserves acquired under common control
Balance as at 31 May 2008 8 373 1 917 944
Net profit for the year (25 582) 364 965
Treasury shares purchased - (25 562)
Asset acquired for shares - 1 231
Equity based compensation movements 195 9 566
Minorities acquired/(disposed of)
during the year 3 458 (12 377)
Exchange losses on translation of
equity loans - (15 107)
Exchange losses on translation of
foreign operations 4 304 3 460
Balance as at 31 May 2009 (9 252) 2 244 120
Segmental Summary
31 May 2008
Actual (1) Restructuring (2)
audited unaudited
R`000 R`000
Revenue
South African distribution* 11 961 570 233 245
International distribution* 383 405 116 863
Technology* 27 881 (31)
Value added services* 172 615 35 061
Corporate* - -
Total 12 545 471 385 138
EBITDA
South African distribution 339 352 6 893
International distribution 17 968 3 905
Technology (9 796) (133)
Value added services 42 247 4 619
Corporate (61 604) 3 478
Total 328 167 18 762
Net profit for the period
attributable to equity holders
South African distribution 244 690 29 779
International distribution (14 262) 775
Technology (11 134) (604)
Value added services 22 553 (7 979)
Corporate (60 956) 2 527
Total 180 891 24 498
Core
Cash effects (4) 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 64 034 68 817
International distribution - 4 427
Technology - 399
Value added services - 18 876
Corporate - 9 000
Total 64 034 101 519
31 May 2008
Core) 31 May 2009
pro forma (5) Actual
unaudited audited
R`000 R`000
Revenue
South African distribution* 12 194 815 14 199 031
International distribution* 500 268 724 163
Technology* 27 850 22 512
Value added services* 207 676 335 743
Corporate* - -
Total 12 930 609 15 281 449
EBITDA
South African distribution 426 245 624 346
International distribution 21 873 6 144
Technology (9 929) (48 502)
Value added services 46 866 75 239
Corporate (49 126) (89 160)
Total 435 929 568 067
Net profit for the period
attributable to equity holders
South African distribution 407 320 527 371
International distribution (9 060) (16 759)
Technology (11 339) (55 992)
Value added services 33 450 29 842
Corporate (49 429) (93 915)
Total 370 942 390 547
Core 31 May 2009
adjustments (6) Core
unaudited unaudited
R`000 R`000
Revenue
South African distribution* - 14 199 031
International distribution* - 724 163
Technology* - 22 512
Value added services* - 335 743
Corporate* - -
Total - 15 281 449
EBITDA
South African distribution - 624 346
International distribution - 6 144
Technology - (48 502)
Value added services - 75 239
Corporate - (89 160)
Total - 568 067
Net profit for the period
attributable to
equity holders
South African distribution 10 444 537 815
International distribution 5 812 (10 947)
Technology 742 (55 250)
Value added services 19 655 49 497
Corporate - (93 915)
Total 36 653 427 200
31 May 2008 31 May 2009
Actual Actual
audited audited
R`000 R`000
Net operating assets/(liabilities)
South African distribution 1 295 784 1 552 917
International distribution 19 259 82 860
Technology (739) (20 503)
Value added services 4 098 18 984
Corporate (55 161) (57 108)
Total 1 263 241 1 577 150
*Although segment names have changed, the composition of the underlying
segments have remained the same.
Notes:
1. Extracted from the audited group income statement of Blue Label Telecoms 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.
(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 on 1 June 2007.
4. Represents the adding back of the amortisation of intangible assets as a
consequence of the purchase price allocations completed 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 Blue Label
Telecoms 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 exercised in terms of IFRS 3:
Business Combinations.
7. All adjustments are expected to have a continuing effect on Blue Label
Telecoms.
Disposal of Subsidiaries
Shares in the following subsidiaries were disposed of during the year ended 31
May 2009:
Effective date of % held and
disposal disposed of
iVeri Payment Technologies (Proprietary)
Limited 31 October 2008 51%
E-Voucha (Proprietary) Limited 30 November 2008 51%
Polsa Holdings Limited 31 March 2009 50%
Details of the total net assets disposed and the resulting loss on disposal are
as follows:
Total
R`000
Total proceeds 5 581
Fair value of net assets disposed of 10 162
Loss on disposal (4 581)
The assets and liabilities disposed of are as follows:
Fair value at disposal date
R`000
Cash and cash equivalents 14 157
Property, plant and equipment 5 781
Intangible assets 2 949
Goodwill 2 500
Investments 305
Inventories 12 118
Receivables 25 163
Deferred tax 452
Bank overdraft (205)
Borrowings (22 451)
Current tax liabilities (619)
Payables (31 374)
Fair value of subsidiaries disposed of 8 776
Minority interests (4 348)
Goodwill 5 734
Fair value of net assets disposed of 10 162
Proceeds on disposal of subsidiaries 5 581
Cash and cash equivalents of subsidiaries
disposed of (13 952)
Less proceeds still due (1 152)
Cash outflow on acquisition (9 523)
Summarised Group Cash Flow Statement
for the year ended 31 May 2009
2009 2008
audited audited
R`000 R`000
Cash flows from operating activities 666 994 (19 796)
Cash flows from investing activities (206 731) (405 157)
Cash flows from financing activities (10 624) 661 782
Increase in cash and cash equivalents 449 639 236 829
Cash and cash equivalents at the beginning of the
period 1 328 294 1 090 044
Translation difference (21 127) 1 421
Cash and cash equivalents at the end of the period 1 756 806 1 328 294
Headline Earnings
31 May 31 May
2009 2008
audited audited
R`000 R`000
Profit attributable to equity holders of parent 390 547 180 891
Loss on disposal of property, plant and equipment 456 304
Net loss on sale of disposal of subsidiaries 3 344 -
Negative goodwill - (2 585)
Headline earnings 394 347 178 610
Headline earnings per share (cents) 51.63 30.26
Core pro forma Reconciliation - 31 May 2008
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 and is the responsibility of the directors.
Restructuring
and
Actual (1) acquisitions (2) Cash effects (3)
audited unaudited unaudited
R`000 R`000 R`000
Revenue 12 545 471 385 138 -
Other income 69 545 (1 403) -
Cost of
inventories sold (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 expense (147 704) (1 433) 42 533
Finance income 193 281 (215) 46 404
Share of losses from
associates (17 441) (2 220) -
Profit for the period
before taxation 297 633 (111) 88 937
Taxation (89 841) (1 785) (24 903)
Net profit 207 792 (1 896) 64 034
Net profit
attributable to: 207 792 (1 896) 64 034
Equity holders of parent 180 891 24 498 64 034
Minority interest 26 901 (26 394) -
Reconciliation
between net profit for
the period and core net
profit for the period:
Net profit for
the period 180 891 24 498 64 034
Amortisation on
intangibles raised
through business
combinations net of tax 22 937 11 982 -
Management bonus
settlement 57 600 - -
Cancellation of
onerous contract 9 000 - -
Core net profit for
the period 270 428 36 480 64 034
Core net profit for
the period
attributable to: 301 409 7 650 64 034
Equity holders of parent 270 428 36 480 64 034
Minority interest 30 981 (28 830) -
Core Core
adjustments (4) Pro forma (5)
unaudited unaudited
R`000 R`000
Revenue - 12 930 609
Other income - 68 142
Cost of inventories sold - (12 211 507)
Employee compensation and benefit expense 80 000 (195 629)
Depreciation, amortisation and impairment charges - (73 675)
Other expenses 9 000 (155 686)
Operating profit 89 000 362 254
Finance expense - (106 604)
Finance income - 239 470
Share of losses from associates - (19 661)
Profit for the period before taxation 89 000 475 459
Taxation (22 400) (138 929)
Net profit 66 600 336 530
Net profit attributable to: 66 600 336 530
Equity holders of parent 66 600 336 023
Minority interest - 507
Reconciliation between net
profit for the period and
core net profit for the period:
Net profit for the period 66 600 336 023
Amortisation on intangibles raised through
business combinations net of tax - 34 919
Management bonus settlement (57 600) -
Cancellation of onerous contract (9 000) -
Core net profit for the period - 370 942
Core net profit for the
period attributable to: - 373 093
Equity holders of parent - 370 942
Minority interest - 2 151
Notes:
1. Extracted from the audited group income statement of Blue Label Telecoms 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
- 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
- 100% Datacel
- 100% House of Business Solutions
3. Represents the positive impact on finance income and expense assuming cash
raised on listing was received on 1 June 2007.
4. Represents the adding back of 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 Blue Label
Telecoms 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 Blue Label
Telecoms.
SEE PRESS RELEASE FOR GRAPHS
FINANCIAL REVIEW
The company`s performance for the year ended 31 May 2009 demonstrated continued
growth in spite of the world economic downturn. Secure prepaid electronic
tokens of value have demonstrated their resilience. The growth achieved by the
group was predominantly organic.
Basis of preparation
The condensed consolidated financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) IAS 34 - Interim Financial
Reporting, the listing requirements of the JSE Limited and the South African
Companies Act 61 of 1973, as amended.
The condensed 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 2008.
Overview
Although net attributable earnings of R391 million exceeded the earnings for
the 2008 relative period by R210 million, equating to a growth in basic
earnings per share from 30.65c to 51.13c (66.82%), the board of directors
believe it to be more prudent to compare actual earnings to historical core pro
forma earnings in order to evaluate the real growth of the group.
Core pro forma earnings are adjusted for non recurring and non operational
items that applied during the comparative period and assume that the listing
and restructuring of the group took place on 1 June 2007.
The financial highlights and the underlying financial review reflect these
comparisons:
Revenues of R15.3 billion increased by R2.4 billion (18%).
GP percentage increased from 5.56% to 6.97%.
EBITDA of R568 million increased by R132 million (30%).
EBITDA margin increased from 3.37% to 3.72%.
Attributable net profit after tax of R391 million increased by R55 million.
Core net profit after tax of R427 million increased by R56 million.
Core earnings per share increased from 48.40c to 55.93c (16%).
Headline earnings per share increased from 43.55c to 51.63c (19%).
Segmental report
The following are the divisional segments that embody the group profile:
South African distribution
Distribution of secure 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,
currently in operation in Mexico, Australia, Mozambique, Democratic Republic of
the Congo, Nigeria, Europe, United Kingdom and India.
Value added services
Telemarketing of cellular and financial services products, inbound customer
care and technical support via four call centres.
Marketing of the location based products of "Look 4 me" and "Look 4 help"
(Vodacom) "Where are U" and "2 my aid" (MTN), "miTRAFFIC" and "Look 4 music".
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
2009 2008
audited unaudited
South African distribution 14 199 031 12 194 815
International distribution 724 163 500 268
Value added services 335 743 207 676
Technology 22 512 27 850
Total 15 281 449 12 930 609
% of total %
2009 2008 growth
South African distribution 92.9% 94.3% 16.4%
International distribution 4.8% 3.9% 44.8%
Value added services 2.2% 1.6% 61.7%
Technology 0.1% 0.2% (19.2%)
Total 100% 100% 18.2%
South African distribution
The growth of 16.4% was entirely volume related. The South African distribution
continues to be the major contributor to group revenue.
International distribution
The revenue reflected is in respect of subsidiaries only and does not include
turnover from associate companies, namely, Ukash (United Kingdom and Europe)
and Oxigen Services India.
A hybrid of organic growth and contributions by start up operations resulted
in an increase in revenue of R224 million (44.8%).
Value added services
Total growth in this segment was R128 million (61.7%) of which acquisitive
growth accounted for R48 million (23.2%) and organic growth R80 million
(38.5%).
Technology
The focus on in-house technological support and product development and
enhancement has resulted in a conscious decision to reduce ser vice and
support to third parties. This explains the decline in revenue from
third parties by R5 million.
EBITDA
Segment R`000
2009 2008 %
audited unaudited growth
South African distribution 624 346 426 245 46.5%
International distribution 6 144 21 873 (71.9%)
Value added services 75 239 46 866 60.5%
Total trading operations 705 729 494 984 42.6%
Technology (48 502) (9 929)
Corporate (89 160) (49 126)
Total support (137 662) (59 055)
Net total 568 067 435 929 30.3%
South African distribution
The growth in EBITDA of R198 million (46.5%), largely due to the increase in
revenue, gross profit percentage margins and containment of expenditure,
equated to an increase in EBITDA margin from 3.50% to 4.40%.
International distribution
There was a decline in EBITDA of R19 million comprising R4 million from Polsa
Holdings, which was disposed of in March 2009, the loss on disposal thereof of
R4 million and R11 million from start up operations in the USA, Mexico and
Australia.
The above decline was set-off by a growth in EBITDA of R5 million from R16
million to R21 million (25%) by the remaining companies encompassing this
segment.
Value added services
The growth in EBITDA of R28 million (60.5%) resulted from a hybrid of
acquisitive contributions of R9 million (19.2%) and organic growth of R19
million (41.3%).
The marginal decline in EBITDA percentage to revenue from 22.6% to 22.4% was in
line with the decision to incur additional expenditure on infrastructure costs
in order to enhance the platform for growth support in the future.
Technology and corporate
The growth in EBITDA generated by the trading operations from R495 million to
R705 million (42.6%) could not have been achieved without skilled
technological, administrative and managerial support.
The increase in negative earnings by these segments of R79 million is in line
with the need to invest in skills and product development in order to
strengthen the foundation for future expansion both locally and
internationally. The very nature of international expansion requires extensive
overseas travel and professional support delivered by both the technology and
corporate divisions of the group.
Net finance income
Finance income
Finance income of R205 million was earned by the group. Of this amount R47
million related to imputed interest receivable on debtor balances in terms of
IFRS requirements and R158 million yielded from liquid working capital.
Finance income earned in the comparative pro forma period amounted to R239
million of which R16 million applied to imputed interest receivable on debtor
balances in terms of IFRS requirements.
The above equated to a net decline of R65 million in finance income earned on
cash resources mainly due to the application of an element of cash in order to
gain early settlement discounts, the investment of R134 million on acquisitions
and the gradual decline in interest rates accumulating to 3.5%.
Finance expense
Of the finance expense of R113 million, R108 million related to imputed
interest payable on creditor balances in terms of IFRS requirements.
Share of losses from associates and joint ventures
Associates and joint ventures R`000
% 2009 2008 %
holding audited unaudited growth
Oxigen Services India Pvt Ltd 37.22% (25 940) (19 661) (31.9%)
Smart Voucher Limited (Ukash) 16.90% (2 286) - -
Other 781 - -
Total (27 445) (19 661) (39.6%)
Oxigen Services India
Although, as anticipated, Oxigen Services India continued to incur losses, an
improvement in the company`s performance in the last quarter of the financial
year was apparent.
Revenue for the year ended 31 March 2009 (year-end pertaining to Oxigen
Services India (Pvt) Ltd) increased from R1.02 billion to R1.34 billion
(30.83%) in line with the continued roll out of point of sale devices over a
widespread area.
Smart Voucher Limited t/a Ukash
The minority stake that was acquired in October 2008 was primarily for
strategic reasons. Ukash`s technology offering of electronic pins, enabling the
redemption of online products and services, is in line with the group`s
objective to increase its bouquet of value added services across its global
footprint.
Core net profit
Segments R`000
2009 2008 Growth
unaudited unaudited R`000
South African distribution 537 815 407 320 130 495
International distribution (10 947) (9 060) (1 887)
Value added services 49 497 33 450 16 047
Total operations 576 365 431 710 144 655
Technology (55 250) (11 339) (43 911)
Corporate (93 915) (49 429) (44 486)
Total support (149 165) (60 768) (88 397)
Core earnings 427 200 370 942 56 258
Core earnings per share 55.93c 48.40c 7.53c
The growth in core earnings of operational companies was 34%. The growth in
core earnings per share was 16%.
Dividends
In line with the group`s current dividend policy, no dividends have been
declared.
Balance sheet
Assets
Total assets increased by R658 million (20.4%) to R3.9 billion primarily as a
result of an increase in current assets, of which R432 million related to a
growth in cash resources.
Non-current assets
The net increase in non current assets was R24 million.
This was attributable to the following:
Capital expenditure net of disposals and depreciation on property, plant and
equipment of R42 million, mainly as a result of expenditure on point of sale
devices required in both the South African and International distribution
segments.
Disposal of property, plant and equipment of subsidiaries previously owned
totaling R6 million.
A decrease in intangible assets, comprising goodwill and intangibles of R29
million, net of acquisitions, disposals and amortisation.
Investments in associates of R28 million comprising acquisitions of R55
million less share of losses of R27 million.
A net decrease in unactivated starter packs of R18 million. Financial assets
at amortised cost relate to starter packs which have been sold but not yet
activated.
Current assets
Current assets increased by R634 million. The increase was mainly attributable
to the growth in cash and cash equivalents of R432 million, trade and other
receivables of R268 million and a reduction in inventories of R100 million.
The stock turn averaged 3 times per month and debtors collections were 21 days.
Capital and reserves
The share capital and share premium declined by R26 million attributable to the
purchase of shares in terms of the group`s staff share incentive scheme.
Goodwill arising on transactions with minorities of R914 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 R331 million, the material items being an
increase in minority shareholders loans to subsidiaries of R28 million and an
increase in trade creditors of R366 million. These amounts are set off against
a reduction in tax liabilities of R43 million.
The trade creditor payment terms equated to 40 days.
Cash flow
Growth in profitability and the benefits of stringent working capital
management have manifested in the positive cash generated from trading
operations of R746 million.
Net interest received of R154 million compounded this cash generation to R900
million. Of these funds generated R233 million was applied to taxation paid,
resulting in net cash flows from operating activities of R667 million.
Total cash on hand at the end of the financial year accumulated to R1.76
billion.
Prospects
South African distribution
The revenue growth of 16.4% in this segment translated into a growth of its
divisional EBITDA of 46.5%.
It is anticipated that revenue will continue to grow organically, not only
through the existing product offering, but also through additional products
that have been developed in-house that are expected to be rolled out into the
group`s multi points of presence during the forthcoming year. These
initiatives include:
- A technical arrangement with Gidani, the licensed operators of Lotto in South
Africa.
- Prepaid electricity distribution contracts with additional municipalities.
- The introduction of off line prepaid top ups of electricity that will
compliment the current on line prepaid top up facility that is currently being
offered.
- Prepaid bus ticketing.
- Money remittances throughout the group`s touch points.
International distribution
Africa Prepaid Services is expected to contribute significant growth to the
international segment primarily through its strategic 51% shareholding in
Africa Prepaid Services Nigeria. This company has been granted a ser vice
provider licence by Multilinks, a wholly owned subsidiary of Telkom. The
current penetration of 45% in the cellular market in Nigeria augurs well for
potential future growth, considering that most established markets have
penetrations in excess of 100%.
Blue Label Mexico is steadily increasing its points of presence with the aim
being to replicate the South African distribution business model.
Subsequent to year end, BLT USA terminated its equity investment in VPN by
mutual consent and entered into a technology license arrangement with the KAP
Holdings group. VPN repaid the US$5 million capital invested in the business to
BLT USA.
The license agreement allows Blue Label to pursue its efforts to grow a
distribution footprint in the USA.
Value added services
The predominantly outbound call centres are constantly procuring additional
product offerings to the databases that they communicate with, utilising the
existing infrastructure of call centre seats to achieve additional revenue.
The additional location based services that were introduced in the latter
part of the financial year end 2009 is expected to gain momentum over a full
year cycle.
Technology
The technology segment will complete projects in progress and will continue to
innovate the bouquet of products to be rolled out to the group`s points of
presence. The company will continue to invest in resources to achieve these
objectives.
The recent launch of Microsoft`s OneAppTM application in a joint initiative
with BLT will enable MibliTM to offer its subscribers access to a myriad of
content irrespective of mobile device type or network utilised. MibliTM is
supported by technology developed inhouse which enables the rollout of these
services.
Start up operations
Expanding the footprint of the start up operations that were initiated in the
past financial year, will be the primary focus, aimed at replicating the South
African distribution methodology into a wider international base.
Audit opinion
The results for the financial year ended 31 May 2009 have been audited by the
company`s auditors, PricewaterhouseCoopers Inc. and the unqualified audit
report is available for inspection at the Company`s registered office.
Annual general meeting
The annual general meeting will be held in Johannesburg on 12th November 2009.
Further details will be included in BLT`s annual report.
Appreciation
The board of BLT is grateful to its staff, suppliers, customers and business
partners for their ongoing support and loyalty.
Sidney Ellerine, who passed away in July 2009, will be sorely missed as a
colleague, friend and significant contributor to the success of the Blue Label
Telecoms group.
For and on behalf 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 GD Harlow* RJ Huntley* NN Lazarus*
JS Mthimunye* MV Pamensky DB Rivkind
HC Theledi* LM Tyalimpi* P Mansour*#
( #American)
(*Non-executive)
Company Secretary: E Viljoen Sponsor: Investec Bank Limited
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")
www.bluelabeltelecoms.com
Date: 26/08/2009 08:00:03 Produced by the JSE SENS Department.
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