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BLU
BLU
BLU - Blue Label Telecoms Limited - Unaudited interim results for the half year
ended 30 November 2011
Blue Label Telecoms Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/022679/06)
JSE Share code: BLU ISIN: ZAE000109088
("Blue Label" or "BLT" or "the company" or "the group")
UNAUDITED INTERIM RESULTS FOR THE HALF YEAR ENDED 30 NOVEMBER 2011
- 7% increase in revenue to R9,2 billion
- 14% increase in gross profit to R590 million
- 47% increase in EBITDA to R438 million*
- 41% increase in NPAT to R272 million*
- 44% increase in headline earnings per share to 36,74 cents*
- R795 million cash flows from operating activities
* includes once off income receipt of R79.4 million.
SUMMARISED GROUP STATEMENT OF FINANCIAL POSITION
30 November 30 November 31 May
2011 2010 2011
Unaudited Unaudited Audited
As at R`000 R`000 R`000
ASSETS
Non-current assets 998 127 720 932 851 665
Property, plant and equipment 130 741 163 111 139 747
Intangible assets and 528 074 424 130 433 513
goodwill
Investment in associates and 322 854 100 423 239 997
joint ventures
Starter pack assets 9 715 19 642 20 361
Deferred taxation assets 6 743 13 626 18 047
Current assets 4 725 338 4 709 810 4 216 942
Financial assets at fair 10 10 10
value through profit and loss
Inventories 667 099 1 259 446 1 012 594
Loans receivable 31 607 32 493 32 370
Starter pack assets 8 286 46 727 16 777
Trade and other receivables 1 316 823 1 603 558 914 164
Prepayments 391 402 - -
Current tax assets 4 210 5 516 14 330
Cash and cash equivalents 2 305 901 1 762 060 2 226 697
Assets of disposal group - - 20 481
classified as held-for-sale
Total assets 5 723 465 5 430 742 5 089 088
EQUITY AND LIABILITIES
Capital and reserves 3 119 701 2 745 762 2 955 363
Share capital, share premium 4 332 137 4 346 361 4 348 231
and treasury shares
Restructuring reserve (1 843 912) (1 843 912) (1 843 912)
Non-distributable reserve 7 819 (18 979) (13 601)
Share-based payment reserve 23 612 18 302 19 099
Transaction with non- (909 572) (914 867) (909 006)
controlling interests reserve
Retained earnings 1 505 177 1 101 507 1 340 318
Non-controlling interests 4 440 57 350 14 234
Non-current liabilities 109 048 48 546 38 093
Deferred taxation liabilities 25 977 30 809 22 196
Interest-bearing borrowings 12 018 17 737 15 897
Trade and other payables 71 053 - -
Current liabilities 2 494 716 2 636 434 2 081 760
Trade and other payables 2 484 878 2 303 394 2 046 773
Provisions 4 012 - 8 676
Current tax liabilities 1 577 29 247 22 326
Bank overdraft - - 527
Current portion of interest- 4 249 303 793 3 458
bearing borrowings
Liabilities of disposal group - - 13 872
classified as held-for-sale
Total equity and liabilities 5 723 465 5 430 742 5 089 088
SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Continuing operations
Revenue 9 249 177 8 643 554 18 064 572
Other income 89 787 6 769 7 197
Change in inventories of (8 659 445) (8 124 648) (16 996 939)
finished goods
Employee compensation and (146 339) (133 146) (263 360)
benefit expense
Depreciation, amortisation (45 953) (47 037) (145 985)
and impairment charges
Other expenses (94 910) (93 679) (213 738)
Operating profit 392 317 251 813 451 747
Finance expense (74 959) (36 806) (115 845)
Finance income 85 611 68 680 146 429
Share of (loss)/profit in (11 308) 1 968 (2 757)
associates and joint
ventures
Profit for the period 391 661 285 655 479 574
before taxation
Taxation (117 862) (95 197) (152 176)
Net profit from continuing 273 799 190 458 327 398
operations
Discontinued operations
Net (loss)/profit for the (12 064) 1 439 57 573
period from discontinued
operations
Net profit for the period 261 735 191 897 384 971
Other comprehensive
income/(loss):
Exchange profits/(losses) 9 038 (6 737) (4 926)
on translation of equity
loans
Exchange profits/(losses) 14 588 (4 779) (6 550)
on translation of foreign
operations
Foreign currency - - 4 219
translation reserve
reclassified to profit or
loss
Other comprehensive
income/(loss) for the
period,
net of tax 23 626 (11 516) (7 257)
Total comprehensive income 285 361 180 381 377 714
for the period
Net profit for the period
attributable to:
Equity holders of the 271 903 192 637 431 448
parent
- From continuing 275 005 192 100 337 547
operations
- From discontinued (3 102) 537 93 901
operations
Non-controlling interests (10 168) (740) (46 477)
- From continuing (1 206) (1 642) (10 149)
operations
- From discontinued (8 962) 902 (36 328)
operations
Total comprehensive income 285 361 180 381 377 714
for the period
attributable to:
Equity holders of the 293 323 185 511 430 538
parent
Non-controlling interests (7 962) (5 130) (52 824)
Earnings per share for
profit attributable to
equity holders (cents)
Basic earnings per share 36,02 25,45 57,04
- From continuing 36,43 25,38 44,63
operations
- From discontinued (0,41) 0,07 12,41
operations
Diluted earnings per 35,58 25,22 56,49
share**
- From continuing 35,99 25,15 44,08
operations
- From discontinued (0,41) 0,07 12,41
operations
Headline earnings per 36,74 25,45 46,20
share
- From continuing 37,15 25,38 50,12
operations
- From discontinued (0,41) 0,07 (3,92)
operations
Diluted headline earnings 36,29 25,22 45,75
per share**
Dividend per share 14,00 12,00 12,00
Weighted average number of 754 875 983 756 814 806 756 359 399
shares
Diluted weighted average 764 256 072 763 874 243 763 742 466
number of shares
Number of shares in issue 753 042 132 766 360 894 756 269 004
Reconciliation between net
profit and core net profit
for the period:
Net profit for the year 271 903 192 637 431 448
attributable to equity
holders of the parent
Amortisation on intangible 10 237 13 744 24 975
assets raised through
business combinations net
of tax and net of non-
controlling interest
Core net profit for the 282 140 206 381 456 423
period
Core net profit
attributable to:
Equity holders of the 282 140 206 381 456 423
parent
Non-controlling interests (10 294) (1 003) (47 000)
- Core earnings per share 37,38 27,27 60,34
(cents)*
*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(R): Business Combinations.
**Diluted earnings per share and diluted headline earnings per share are
calculated by adjusting the weighted average number of ordinary shares
outstanding for the number of shares that would be issued on vesting under the
employee forfeitable share plan.
SUMMARISED GROUP STATEMENT OF CASH FLOWS
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash flows from operating 794 644 (447 079) 427 663
activities
Cash flows from investing (204 684) (42 540) (147 438)
activities
Cash flows from financing (517 629) 203 363 (100 004)
activities
Increase/(decrease) in cash and 72 331 (286 256) 180 221
cash equivalents
Cash and cash equivalents at the 2 226 170 2 054 902 2 054 902
beginning of the year
Translation difference 7 400 (6 586) (8 953)
Cash and cash equivalents at the 2 305 901 1 762 060 2 226 170
end of the period
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
Share capital,
share premium
and treasury Retained Restructuring
shares earnings reserve
Unaudited Unaudited Unaudited
Six months ended R`000 R`000 R`000
Balance as at 1 June 2010 4 352 617 1 000 327 (1 843 912)
Net profit for the period - 192 637 -
Other comprehensive loss - - -
Total comprehensive - 192 637 -
income/(loss)
Dividends paid - (91 457) -
Treasury shares purchased (8 790) - -
Share-based payment - - -
movement
Forfeitable shares vested 2 534 - -
Equity-based compensation - - -
movements
Non-controlling interests - - -
disposed of during the
period
Share of equity movement in - - -
associates
Balance as at 30 November 4 346 361 1 101 507 (1 843 912)
2010
Balance as at 1 June 2011 4 348 231 1 340 318 (1 843 912)
Net profit for the period - 271 903 -
Other comprehensive income - - -
Total comprehensive - 271 903 -
income/(loss)
Dividends paid - (107 044) -
Treasury shares purchased (16 094) - -
Equity-based compensation - - -
movements
Transaction with non- - - -
controlling interest
movements
Balance as at 30 November 4 332 137 1 505 177 (1 843 912)
2011
Audited Audited Audited
Year ended R`000 R`000 R`000
Balance as at 1 June 2010 4 352 617 1 000 327 (1 843 912)
Net profit for the year - 431 448 -
Other comprehensive loss - - -
Total comprehensive - 431 448 -
income/(loss)
Dividends paid - (91 457) -
Treasury shares purchased (8 935) - -
Share-based payment - - -
movement
Forfeitable shares vested 4 549 - -
Equity-based compensation - - -
movements
Non-controlling interests - - -
disposed of during the year
Share of equity movement in - - -
associates
Balance as at 31 May 2011 4 348 231 1 340 318 (1 843 912)
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY (continued)
Transaction with
Non- non-controlling Share-based
distributable interests payment
reserve reserve reserve
Unaudited Unaudited Unaudited
Six months ended R`000 R`000 R`000
Balance as at 1 June 2010 (12 691) (914 867) 12 037
Net profit for the period - - -
Other comprehensive loss (7 126) - -
Total comprehensive (7 126) - -
income/(loss)
Dividends paid - - -
Treasury shares purchased - - -
Share-based payment - - (234)
movement
Forfeitable shares vested - - (2 323)
Equity-based compensation - - 8 822
movements
Non-controlling interests - - -
disposed of during the
period
Share of equity movement 838 - -
in associates
Balance as at 30 November (18 979) (914 867) 18 302
2010
Balance as at 1 June 2011 (13 601) (909 006) 19 099
Net profit for the period - - -
Other comprehensive 21 420 - -
income
Total comprehensive 21 420 - -
income/(loss)
Dividends paid - - -
Treasury shares purchased - - -
Equity-based compensation - - 4 513
movements
Transaction with non- - (566) -
controlling interest
movements
Balance as at 30 November 7 819 (909 572) 23 612
2011
Audited Audited Audited
Year ended R`000 R`000 R`000
Balance as at 1 June 2010 (12 691) (914 867) 12 037
Net profit for the year - - -
Other comprehensive loss (910) - -
Total comprehensive (910) - -
income/(loss)
Dividends paid - - -
Treasury shares purchased - - -
Share-based payment - - (234)
movement
Forfeitable shares vested - - (4 549)
Equity-based compensation - - 10 903
movements
Non-controlling interests - 5 861 -
disposed of during the
year
Share of equity movement - - 942
in associates
Balance as at 31 May 2011 (13 601) (909 006) 19 099
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY (continued)
Non-controlling Total
interests equity
Unaudited Unaudited
Six months ended R`000 R`000
Balance as at 1 June 2010 61 925 2 655 436
Net profit for the period (740) 191 897
Other comprehensive loss (4 390) (11 516)
Total comprehensive income/(loss) (5 130) 180 381
Dividends paid - (91 457)
Treasury shares purchased - (8 790)
Share-based payment movement 234 -
Forfeitable shares vested - 211
Equity-based compensation movements 288 9 110
Non-controlling interests disposed of 33 33
during the period
Share of equity movement in associates - 838
Balance as at 30 November 2010 57 350 2 745 762
Balance as at 1 June 2011 14 234 2 955 363
Net profit for the period (10 168) 261 735
Other comprehensive income 2 206 23 626
Total comprehensive income/(loss) (7 962) 285 361
Dividends paid (1 900) (108 944)
Treasury shares purchased - (16 094)
Equity-based compensation movements 68 4 581
Transaction with non-controlling interest - (566)
movements
Balance as at 30 November 2011 4 440 3 119 701
Audited Audited
Year ended R`000 R`000
Balance as at 1 June 2010 61 925 2 655 436
Net profit for the year (46 477) 384 971
Other comprehensive loss (6 347) (7 257)
Total comprehensive income/(loss) (52 824) 377 714
Dividends paid (950) (92 407)
Treasury shares purchased - (8 935)
Share-based payment movement 234 -
Forfeitable shares vested - -
Equity-based compensation movements 229 11 132
Non-controlling interests disposed of 5 620 11 481
during the year
Share of equity movement in associates - 942
Balance as at 31 May 2011 14 234 2 955 363
SEGMENTAL SUMMARY
South African International
Total distribution distribution
Unaudited Unaudited Unaudited
Six months ended R`000 R`000 R`000
30 November 2011
Total segment revenue 14 703 706 14 533 390 14 331
Internal revenue (5 454 529) (5 444 571) -
External revenue 9 249 177 9 088 819 14 331
Operating profit before 438 270 394 357 2 918
depreciation, amortisation
and impairment charges
Net profit for the period 273 799 301 534 (12 511)
Amortisation on 10 363 4 223 1 215
intangibles raised through
business combinations net
of tax
Core net profit for the 284 162 305 757 (11 296)
period
Core net profit for the
period attributable to:
Equity holders of the 285 242 304 362 (6 510)
parent
Non-controlling interests (1 080) 1 395 (4 786)
At 30 November 2011
Total assets 5 723 465 4 618 252 329 763
Net operating assets 2 230 622 1 771 651 27 939
Six months ended
30 November 2010
Total segment revenue 15 051 247 14 914 687 14 244
Internal revenue (6 407 693) (6 395 391) (767)
External revenue 8 643 554 8 519 296 13 477
Operating profit before 298 850 346 171 (4 069)
depreciation, amortisation
and impairment charges
Net profit for the period 190 458 281 990 (5 641)
Amortisation on 14 007 4 491 869
intangibles raised through
business combinations net
of tax
Core net profit for the 204 465 286 481 (4 772)
period
Core net profit for the
period attributable to:
Equity holders of the 205 843 286 650 (2 553)
parent
Non-controlling interests (1 378) (169) (2 219)
At 30 November 2010
Total assets 5 430 742 4 650 633 430 961
Net operating 2 073 376 1 873 317 188 449
assets/(liabilities)
Audited Audited Audited
Year ended R`000 R`000 R`000
31 May 2011
Total segment revenue 30 224 202 29 954 525 30 252
Internal revenue (12 159 630) (12 132 920) (998)
External revenue 18 064 572 17 821 605 29 254
Operating profit before 597 732 711 767 (8 683)
depreciation, amortisation
and impairment charges
Net profit for the year 327 398 562 048 (43 643)
Amortisation on 25 498 8 933 2 034
intangibles raised through
business combinations net
of tax
Core net profit for the 352 896 570 981 (41 609)
year
Core net profit for the
year attributable to:
Equity holders of the 362 522 571 471 (32 005)
parent
Non-controlling interests (9 626) (490) (9 604)
At 31 May 2011
Total assets 5 068 607 4 362 116 386 561
Net operating 2 135 182 2 004 900 125 291
assets/(liabilities)
SEGMENTAL SUMMARY (continued)
Technology Mobile Solutions Corporate
Unaudited Unaudited Unaudited Unaudited
Six months ended R`000 R`000 R`000 R`000
30 November 2011
Total segment revenue 13 292 46 978 95 715 -
Internal revenue (5 037) (2 253) (2 668) -
External revenue 8 255 44 725 93 047 -
Operating profit before (34 564) 89 946 24 186 (38 573)
depreciation,
amortisation and
impairment charges
Net profit for the period (45 204) 70 204 16 218 (56 442)
Amortisation on 316 4 577 32 -
intangibles raised
through business
combinations net of tax
Core net profit for the (44 888) 74 781 16 250 (56 442)
period
Core net profit for the
period attributable to:
Equity holders of the (44 645) 74 781 13 696 (56 442)
parent
Non-controlling interests (243) - 2 554 -
At 30 November 2011
Total assets 87 478 67 901 181 928 438 143
Net operating assets 2 733 15 951 52 258 360 090
Six months ended
30 November 2010
Total segment revenue 10 360 48 598 63 358 -
Internal revenue (2 683) (6 722) (2 130) -
External revenue 7 677 41 876 61 228 -
Operating profit before (27 939) 13 070 12 388 (40 771)
depreciation,
amortisation and
impairment charges
Net profit for the period (38 012) (692) 6 053 (53 240)
Amortisation on 316 5 966 2 365 -
intangibles raised
through business
combinations net of tax
Core net profit for the (37 696) 5 274 8 418 (53 240)
period
Core net profit for the
period attributable to:
Equity holders of the (37 737) 5 274 7 449 (53 240)
parent
Non-controlling interests 41 - 969 -
At 30 November 2010
Total assets 88 979 98 182 138 734 23 253
Net operating 16 114 11 684 22 151 (38 339)
assets/(liabilities)
Audited Audited Audited Audited
Year ended R`000 R`000 R`000 R`000
31 May 2011
Total segment revenue 22 902 94 121 122 402 -
Internal revenue (6 082) (15 505) (4 125) -
External revenue 16 820 78 616 118 277 -
Operating profit before (61 766) 19 347 18 731 (81 664)
depreciation,
amortisation and
impairment charges
Net profit for the year (85 944) (12 627) 5 881 (98 317)
Amortisation on 632 11 871 2 028 -
intangibles raised
through business
combinations net of tax
Core net profit for the (85 312) (756) 7 909 (98 317)
year
Core net profit for the
year attributable to:
Equity holders of the (84 932) (756) 7 061 (98 317)
parent
Non-controlling interests (380) - 848 -
At 31 May 2011
Total assets 89 876 80 899 138 403 10 752
Net operating 12 535 10 901 21 674 (40 119)
assets/(liabilities)
HEADLINE EARNINGS
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Profit attributable to equity 271 903 192 637 431 448
holders of the parent
Net loss/(profit) on disposal of 41 - (109)
property, plant and equipment
Net profit on disposal of - - (6 759)
subsidiaries
Gain on remeasuring retained - - (143
interest in Mexico due to loss of 365)
control
Impairment of intangible assets and 5 431 - 20 972
property, plant and equipment
Impairment of goodwill - - 27 985
Impairment of available-for-sale - - 15 056
financial asset
Foreign currency translation reserve - - 4 219
reclassified to profit or loss
Headline earnings 277 375 192 637 349 447
Headline earnings per share (cents) 36,74 25,45 46,20
- From continuing operations 37,15 25,38 50,12
- From discontinued operations (0,41) 0,07 (3,92)
COMMENTARY
FINANCIAL REVIEW
The financial results for the interim period ended 30 November 2011 reflected
growth in revenue of 7%, an increase in gross profit margins from 6,00% to 6,38%
and overhead growth limited to 6%.
Profitability was enhanced by a once off other income receipt of R79.4 million.
The disclosure of the source and circumstance of the payment are prohibited by a
confidentiality agreement.
EBITDA increased by 47% and net profit for the period increased by 41% to R272
million.
On the International front, the negative impact caused by the closure of the
Africa Prepaid Services Nigeria operation manifested itself in a turnaround of a
comparative profit contribution of R6,9 million to a negative contribution of
R3,1 million in the current period. Ukash contributed an effective increase in
profitability whilst Oxigen Services India ("Oxigen") and Blue Label Mexico
continued to incur losses. A strong foundation in Mexico has been developed for
an accelerated roll-out of point of sale devices through Grupo Bimbo`s
distribution capabilities. Financial inclusion services in India, are gaining
momentum as an additional offering to the vast footprint that has been
established by Oxigen.
Cash generated from operations amounted to R795 million. After the buy-back of
Microsoft`s 12% interest in the group for R391 million, a dividend payment of
R107 million and other finance and capital expenditure activities, cash
resources increased to R2,3 billion.
The statement of financial position reflecting accumulated equity of R3,1
billion, remains robust and liquid.
FINANCIAL OVERVIEW
- Revenues increased by 7% to R9,2 billion.
- Gross profit increased by R71 million to R590 million.
- Overheads were contained at 6% growth.
- EBITDA increased by 47% to R438 million which includes a once off income
receipt of R79.4 million.
- Net finance income declined by R21 million.
- Net profit after tax and non-controlling interests from continuing operations
increased by 43% to R275 million. Excluding the once off income receipt of R79.4
million, the increase was 7%.
- Headline earnings per share increased by 44% from 25,45 cents to 36,74 cents
per share. Excluding the once off income receipt of R79.4 million, the growth
was 8%.
- NAV per share increased from 388,90 cents per share to 413,69 cents per share.
BASIS OF PREPARATION
The condensed consolidated interim financial information has been prepared in
accordance with the requirements of Section 8.57 of the JSE Limited Listings
Requirements and the presentation and disclosure requirements of IAS 34 -
Interim Financial Reporting. The condensed consolidated interim financial
information has been prepared in accordance with International Financial
Reporting Standards ("IFRS") and the requirements of the Companies Act of South
Africa.
The condensed consolidated interim financial information is 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 applied in the annual financial statements for the year
ended 31 May 2011, with the exception of the standards that are effective for
the first time in the current period. These have been disclosed in note 1 to the
annual financial statements. These standards have not had a significant impact
on the interim financial information.
In addition, the group uses core net profit as a non-IFRS measure in evaluating
the group`s performance. This supplements the IFRS measures. Core net profit is
calculated by adjusting net profit for the year with the amortisation of
intangible assets that arise as a consequence of the purchase price allocations
completed in terms of IFRS 3(R): Business Combinations.
The results have not been reviewed or audited for the period ended 30 November
2011.
SEGMENTAL REPORT
SOUTH AFRICAN DISTRIBUTION SEGMENT
Unaudited Unaudited
2011 2010 Growth
R`000 R`000 R`000 Growth
Revenue 9 088 819 8 519 296 569 523 7%
Gross profit 503 402 442 619 60 783 14%
EBITDA 394 357 346 171 48 186 14%
Core net profit 304 362 286 650 17 712 6%
Gross profit margin 5,54% 5,20%
EBITDA margin 4,34% 4,06%
Revenue
Revenue comprised sales of physical and virtual prepaid airtime, commissions on
the distribution of prepaid electricity and compounded annuity revenue generated
from starter packs. The increase in revenue was predominantly volume driven in
all of these components.
Commissions earned on the distribution of prepaid electricity amounted to R41
million (2010: R30 million) for the period, equating to revenue of R2,7 billion
(2010: R1,5 billion) on behalf of the utilities.
Gross profit
Gross profit increased by R61 million (14%). The margin increase from 5,20% to
5,54% was after IFRS adjustment requirements. Excluding the effect of this
adjustment, margins decreased from 5,30% to 5,24% compared to 5,09% for the year
ended 31 May 2011.
The percentage margin contributions relating to prepaid electricity commissions,
included in revenue net of costs, were 0,34% and 0,43% for November 2010 and
November 2011 respectively and 0,34% for the year ended 31 May 2011.
EBITDA
The growth in EBITDA of 14% was inclusive of the effects of IFRS adjustments. On
exclusion of these adjustments in both the comparative and current period, a
more representative growth of R13 million is achieved, which would equate to a
3% growth.
INTERNATIONAL DISTRIBUTION SEGMENT
Unaudited Unaudited
2011 2010 Growth
R`000 R`000 R`000 Growth
Revenue 14 331 13 477 854 6%
Gross profit 3 488 3 964 (476) (12%)
EBITDA 2 918 (4 069) 6 987 172%
Discontinued operations* (3 102) 537 (3 639) (678%)
Africa Prepaid Services (3 102) 6 877 (9 979) (145%)
Nigeria
Blue Label Mexico - (6 340) 6 340 -
Share of (losses)/profits (11 008) 1 336 (12 344) (924%)
from associates and joint
ventures
Ukash 2 274 3 308 (1 034) (31%)
Oxigen Services India (4 399) (1 972) (2 427) (123%)
Blue Label Mexico (8 464) - (8 464) -
Other (419) - (419) -
Core net loss from (11 296) (4 772) (6 524) (137%)
continuing operations
- Equity holders of the (6 510) (2 553) (3 957) (155%)
parent
- Non-controlling interests (4 786) (2 219) (2 567) 116%
Core net loss from (12 064) 1 439 (13 503) (938%)
discontinued operations
- Equity holders of the (3 102) 537 (3 639) (678%)
parent
- Non-controlling interests (8 962) 902 (9 864) 1 094%
*Represents net profit after taxation and non-controlling interests.
Revenue, gross profit and EBITDA pertain mainly to Sharedphone International,
Africa Prepaid Services SA and Gold Label Investments. The positive turnaround
of R7 million at EBITDA level was mainly representative of foreign exchange
gains in Gold Label Investments.
Discontinued operations
The assets and liabilities of Africa Prepaid Services Nigeria were disposed of
in the current interim financial period, in line with the group`s commitment at
31 May 2011. IFRS requires treatment of its financial performance to be
reflected as a discontinued operation, with comparatives restated. The Multi-
links contract was cancelled in November 2010 with the result that the share of
losses incurred in the current period, were confined to expenditure relating to
the winding down of the operation.
The dilution from a 70% shareholding in Blue Label Mexico to a minority stake of
40% required the group`s share of losses of R6,3 million to be reflected as a
discontinued operation in the comparative period. The current share of losses of
R8,5 million is reflected as a joint venture which is equity accounted for. The
increased losses were attributable to expansionary expenditure in support of a
concerted drive in the roll-out of point of sale devices in conjunction with
Grupo Bimbo.
Share of (losses)/profits from associates and joint ventures
Oxigen Services India
BLT`s share of losses increased from R2 million to R4.4 million which were
exacerbated by its increase in shareholding from 37,22% to 55,83%.
Although revenue increased by 52% at consistent margins, increased overheads
relating to the implementation of a financial services offering onto the
existing footprint eroded its performance in the short term.
Ukash
Ukash continues to increase profitability exponentially, both through volume
growth and increases in average revenue per users. The prior period included the
recognition of a deferred tax asset, of which the group`s share amounted to R3,7
million. On a comparative basis, the current share of earnings of R2,3 million,
whilst reflecting a decline of R1 million, collates to a growth in share of
profit of R2,7 million on elimination of the extraneous credit pertaining to the
deferred tax asset.
MOBILE SEGMENT
Unaudited Unaudited
2011 2010 Growth
R`000 R`000 R`000 Growth
Revenue 44 725 41 876 2 849 7%
Gross profit 33 345 35 178 (1 833) (5%)
EBITDA 89 946 13 070 76 876 588%
Core net profit 74 781 5 274 69 507 1 318%
This segment comprises Cellfind, Blue Label One and Content Connect Africa.
Positive contributions by Cellfind`s location-based services and media revenue
generated by Blue Label One, were suppressed at gross profit level due to a
decline in Content Connect Africa.
EBITDA and core net profit was inclusive of the once off income receipt.
SOLUTIONS SEGMENT
Unaudited Unaudited
2011 2010 Growth
R`000 R`000 R`000 Growth
Revenue 93 047 61 228 31 819 52%
Gross profit 44 503 31 037 13 466 43%
EBITDA 24 186 12 388 11 798 95%
Core net profit 13 696 7 449 6 247 84%
The Solutions segment houses the Datacel group which operates call centres and
provides data and lead generation services. The improvements in the call centre
operations and the constant growth in data accumulation have clearly manifested
themselves in growth at all levels.
TECHNOLOGY SEGMENT
Unaudited Unaudited
2011 2010 Growth
R`000 R`000 R`000 Growth
Revenue 8 255 7 677 578 8%
Gross profit 4 994 6 108 (1 114) (18%)
EBITDA (34 564) (27 939) (6 625) (24%)
Core net loss (44 645) (37 737) (6 908) (18%)
Technology losses and the growth thereon represented the costs of development
and support of the group`s Information Technology infrastructure. Income
generation was limited to services to third parties.
CORPORATE SEGMENT
Unaudited Unaudited
2011 2010 Growth
R`000 R`000 R`000 Growth
EBITDA (38 573) (40 771) 2 198 5%
Core net loss (56 442) (53 240) (3 202) (6%)
Core net losses increased in spite of a decline in corporate expenditure by R2
million.
DEPRECIATION, AMORTISATION AND IMPAIRMENT
A hybrid of the expiration of the useful life and the non-amortisation on
historically impaired intangible assets, offset by impairments of R7,5 million
on point of sale devices.
NET FINANCE INCOME
Finance costs
Finance costs totalled R75 million, of which R3 million related to interest paid
on borrowed funds and R72 million to imputed IFRS interest adjustments on credit
received from suppliers. On a comparative basis the imputed IFRS interest
adjustment was R33 million and interest on borrowed funds R4 million.
Finance income
Finance income totalled R86 million of which R32 million was interest received
on cash resources and R54 million IFRS adjustments. These adjustments increased
by R13 million due to the affordance of additional credit to customers.
STATEMENT OF FINANCIAL POSITION
Total assets increased by R634 million to R5,7 billion during the six months
ended 30 November 2011. Material increases included the purchase of starter pack
bases for R121 million, additional funding of R74 million relating to the
increase in shareholding in Oxigen and a prepayment of R391 million for the
purchase of Microsoft`s 12% shareholding in the group.
During the current period, stock levels were reduced by R345 million equating to
an average inventory holding of 14 days. This stock turn was still in excess of
historical averages of 12 days, due to inventory being bolstered in November in
order to cater for the festive season.
Debtors collection period averaged 24 days and creditors payment terms averaged
49 days.
STATEMENT OF CASH FLOWS
Cash flow of R795 million generated from operating activities was applied to the
funding for the additional shareholding in Oxigen, the acquisition of starter
pack bases, the prepayment for Microsoft`s 12% shareholding in the group and a
dividend payment of R107 million.
The net increase in cash on hand of R72 million accumulated cash resources to
R2,3 billion at 30 November 2011.
FORFEITABLE SHARE SCHEME
Forfeitable shares totalling 4 836 611 (2010: 5 532 192) were issued to
qualifying employees. 910,093 (2010: 219,616) shares were forfeited during the
period and no shares vested during the current period (2010: 466 875).
PROSPECTS
Continued focus on the marketing and distribution of prepaid starter packs is
expected to compound existing annuity revenues.
Commissions generated from prepaid electricity sales on behalf of utilities are
expected to continue to increase both organically and through contracts with
additional electricity providers. Consumer awareness of this payment mechanism
is becoming more prevalent in this arena.
The mobile segment is expected to compound its advertising revenue on bulk
printed prepaid vouchers and point of sale receipt vouchers, following its sound
entry into this space during the reporting period.
The distribution capabilities of Grupo Bimbo, the largest bakery in the world
and a 40% shareholder in Blue Label Mexico, is expected to filter down to a
significant gain in the momentum of the roll-out of point of sale devices. Since
the commencement of this strategic alliance with them in March 2011, the roll-
out of point of sale devices has increased at an exponential rate.
Oxigen has developed a robust foundation and is poised to embark on an
aggressive foot print expansion which will incorporate banking services that
will service the vast unbanked population in India. This initiative will be
implemented through associations with several banks in India, including State
Bank of India, the largest bank in that country.
The strategic alliance established with Mobilitrix, is expected to accelerate
growth in loyalty and mobile couponing services in order to strengthen customer
retention and incentive capabilities. This will be supported by the best of
breed technology, providing an end-to-end mobile reward service to retailers,
manufactures and media companies.
SUBSEQUENT EVENTS
In January 2012, 100% of Multiserve (Pty) Ltd was purchased with the objective
of utilising their 169 stores located nationally as a platform for Blue Label`s
strategy of marketing its products and services on a retail basis.
Blue Label`s 50,1% shareholding in Sharedphone International (Pty) Ltd was
disposed of in January 2012. The decision to dispose of this interest was in
line with its decline in revenue as a result the demise of its competitive edge
that it historically had over community pay phones.
APPRECIATION
The board of Blue Label Telecoms would like to express its appreciation to its
suppliers, customers, business partners and staff for their ongoing support and
loyalty.
For and on behalf of the board
LM Nestadt
Chairman
BM Levy and MS Levy
Joint Chief Executive Officers
DB Rivkind*
Financial Director
21 February 2012
*Supervised preparation of the group financial statements.
Directors: LM Nestadt (Chairman)*, BM Levy, MS Levy, K Ellerine*,
GD Harlow*, NN Lazarus SC*, JS Mthimunye*, MV Pamensky, DB Rivkind,
J Vilakazi*
(*Non-executive)
Company Secretary: E Viljoen
Sponsor: Investec Bank Limited
www.bluelabeltelecoms.co.za
Date: 22/02/2012 07:30:01 Produced by the JSE SENS Department.
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