| Wed 24 Feb 2016, 7:30 | | BLUE LABEL TELECOMS LIMITED - Unaudited results for the half year ended 30 November 2015 |
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BLU 201602240003A
Unaudited results for the half year ended 30 November 2015
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 results for the half year ended 30 November 2015
HIGHLIGHTS
- Increase in revenue of 25% to R12.9 billion
- Increase in gross profit of 17% to R919 million
- Increase in EBITDA of 20% to R620 million
- Increase in headline earnings per share of 25% to 53.26 cents
- Increase in headline earnings of 25% to R355 million
- Increase in cash and cash equivalents by R694 million to R1.5 billion
OVERVIEW
In spite of a challenging economic environment, the Group delivered an encouraging performance for the six
months ended 30 November 2015, resulting in growth in headline earnings per share of 25% to 53.26 cents.
These results were achieved through increases in revenue of 25%, gross profit of 17% and EBITDA of 20%. This
performance was attributable to organic growth, underpinned by an expanding distribution channel and in turn
a growth in market share.
On the international front, the Group’s share of losses in Blue Label Mexico (BLM) declined by 28%, albeit
equating to a share of losses of R32.5 million. This impacted negatively on headline earnings per share by
4.88 cents. Oxigen Services India has remained profitable from year-end, focusing on expanding a valuable mobile
wallet subscriber base.
The statement of financial position remains robust and liquid with accumulated equity increasing to R4.1 billion,
net of accumulated dividends paid to date totalling R913 million. Net asset value equated to R6.03 per share.
SEGMENTAL REPORT
South African Distribution
Unaudited Unaudited Audited
30 November 30 November 31 May
2015 2014 Growth 2015
R’000 R’000 R’000 Growth R’000
Revenue 12 634 322 10 157 038 2 477 284 24% 21 657 891
Gross profit 795 245 696 195 99 050 14% 1 444 730
EBITDA 577 586 507 718 69 868 14% 1 038 252
Core net profit 391 138 347 668 43 470 13% 684 756
Gross profit margin 6.29% 6.85% 6.67%
EBITDA margin 4.57% 5.00% 4.79%
Growth in revenue of 24% was organically achieved through increased sales by expanding distribution channels.
Revenue generated on “PINless top-ups” increased by R641 million from R1.2 billion to R1.8 billion, equating
to effective growth in South African Distribution revenue of 27%, in that only the commission earned thereon
is recognised.
Net commissions earned on the distribution of prepaid electricity continued to increase, escalating by
R16 million to R95 million (20%) on turnover of R6 billion generated on behalf of the utilities.
Although there was a contraction in gross profit margins, gross profit increased by R99 million (14%) to
R795 million. This was congruent with the growth in revenue generated.
The resultant growth in EBITDA of 14% to R578 million equated to an EBITDA margin of 4.57%.
Core net profit increased by R43 million to R391 million (13%).
International Distribution
Unaudited Unaudited Audited
30 November 30 November 31 May
2015 2014 Growth 2015
R’000 R’000 R’000 Growth R’000
EBITDA 23 595 (4 511) 28 106 623% 35 379
Share of (losses)/profits from
associates and joint ventures (33 659) (42 128) 8 469 20% (81 269)
- Ukash - 7 379 (7 379) (100%) 12 004
- Oxigen Services India 2 813 (666) 3 479 522% 2 619
- Blue Label Mexico (32 499) (45 194) 12 695 28% (88 508)
- Other (3 973) (3 647) (326) (9%) (7 384)
Core net loss (11 867) (44 013) 32 146 73% (54 646)
- Equity holders of the parent (11 825) (39 666) 27 841 70% (46 958)
- Non-controlling interests (42) (4 347) 4 305 99% (7 688)
Of the increase in EBITDA by R28 million, R9 million was attributable to the cessation of expenditure in Africa
Prepaid Services Nigeria and R19 million to foreign exchange gains on loans owing by foreign Group companies.
The share of net losses from associates and joint ventures comprised the following:
Ukash
The share of profits in Ukash ceased in March 2015 as the Group disposed of its interest therein.
Oxigen Services India
There was a turnaround from the Group’s share of losses of R0.7 million in the comparative period to a share of
profits of R2.8 million, after the amortisation of intangible assets.
The company is focused on increasing its wallet subscriber base, thereby creating value per subscriber
simultaneously with the generation of transaction fees emanating from a multitude of transactional offerings.
A continuous growth in the wallet subscriber base will in turn result in increased revenue from the various
initiatives that the company has developed in this regard. These include domestic and international remittances,
e-Commerce transactions, a loyalty wallet, chat applications and gift cards as well as augmenting its existing
bouquet of prepaid tokens of value.
Daily money transfer deposits have grown from USD2.7 million per day as at 30 November 2014 to USD3.6 million
per day as at 30 November 2015, increasing through its connectivity with the National Payment
Corporation of India.
Blue Label Mexico
BLM’s losses declined from R95 million to R67 million, of which the Group’s share was R32.5 million after the
amortisation of intangible assets.
The decline in losses was attributable to increases in revenue by 27% underpinned by higher gross profit margins.
This was as a result of the company becoming a multicarrier distributor as opposed to historically being confined
to one network. This has created a more competitive environment amongst the networks to the benefit of the company.
Focus on cost efficiencies resulted in a decline in operational expenditure by 5%.
The above initiatives, together with the introduction of starter packs that generate monthly compounded annuity
income, are expected to result in further declines in losses for the balance of the financial year.
Mobile
Unaudited Unaudited Audited
30 November 30 November 31 May
2015 2014 Growth 2015
R’000 R’000 R’000 Growth R’000
Revenue 137 730 95 248 42 482 45% 240 168
Gross profit 85 520 61 138 24 382 40% 136 773
EBITDA 39 441 20 241 19 200 95% 51 359
Core net profit 20 916 11 951 8 965 75% 28 559
Viamedia, a mobile content and value-added services provider, was the predominant contributor to growth in
revenue and profitability in this segment.
At core net profit level, positive contributions to growth by Viamedia of R7.8 million and Cellfind,
Panacea Mobile and Simigenix of R2.7 million were partially negated by no contribution to profitability
in the current period by Blue Label Engage as a result of its disposal in December 2014.
Solutions
Unaudited Unaudited Audited
30 November 30 November 31 May
2015 2014 Growth 2015
R’000 R’000 R’000 Growth R’000
Revenue 103 222 75 106 28 116 37% 146 163
Gross profit 37 872 30 451 7 421 24% 62 837
EBITDA 18 975 18 122 853 5% 40 831
Core net profit 6 808 7 770 (962) (12%) 23 975
In October 2015, Velociti was disposed of at a loss of R5.4 million. On exclusion of this capital loss, core
net profit increased from R7.8 million to R12.2 million (55%). This growth was entirely attributable to the
contribution by Blue Label Data Solutions which generated revenue of R71 million and a growth of 43% from
R14 million to R21 million at EBITDA level.
Corporate
Unaudited Unaudited Audited
30 November 30 November 31 May
2015 2014 Growth 2015
R’000 R’000 R’000 Growth R’000
EBITDA (39 360) (25 607) (13 753) (54%) (85 656)
Core net loss (48 899) (32 200) (16 699) (52%) (93 754)
In the comparative period EBITDA losses were confined to R26 million as a result of a once-off income
receipt. Corporate overheads increased by 8%.
DEPRECIATION, AMORTISATION AND IMPAIRMENT CHARGES
Depreciation and amortisation amounted to R47 million in line with the comparative period. Of this amount,
R10.4 million pertained to the amortisation of intangible assets resulting from purchase price allocations
from historical acquisitions.
NET FINANCE COSTS
Finance costs
Finance costs totalled R99 million, of which R12 million related to interest paid on borrowed funds and
R87 million to imputed IFRS interest adjustments on credit received from suppliers. On a comparative basis,
interest paid on borrowed funds amounted to R29 million and the imputed IFRS interest adjustment equated
to R71 million.
The decline of R17 million on interest paid on borrowed funds was congruent with an increase in cash generated
from trading operations. This decline was net of the perpetuation of applying excess funds to bulk inventory
purchase transactions and early settlement payments attracting favourable discounts. Finance facilities were
utilised from time to time for this purpose and repaid during the current period.
Finance income
Finance income totalled R96 million, of which R28 million was attributable to interest received on cash
resources and R68 million to imputed IFRS interest adjustments. On a comparative basis, interest received on
cash resources amounted to R15 million and the imputed IFRS interest adjustment to R76 million.
The increase in interest received from cash resources was directly attributable to growth in revenue, partially
offset by the utilisation of funds for financing and investing activities.
STATEMENT OF FINANCIAL POSITION
Total assets increased by R591 million to R7.6 billion, of which growth in non-current assets accounted for
R66 million and current assets for R525 million
The net movement in non-current assets included a net increase in investments in associate and joint venture
companies of R120 million and R8 million of capital expenditure net of depreciation. These increases were offset
by net declines of R15 million in intangible assets and goodwill, R27 million in loans receivable and R20 million
in other non-current assets.
The net increase in investment in associate and joint venture companies comprised a capital contribution to
Blue Label Mexico of R43 million, a positive impact on foreign currency translation reserves of R34 million,
a loan of R32 million granted to “Edgars Connect”, interest capitalised on loans of R9 million and unrealised
foreign exchange gains thereon of R37 million. These increases were partially offset by the Group’s share of
losses of R32 million in Blue Label Mexico.
The net decline in intangible assets and goodwill mainly pertained to the amortisation of intangibles by
R64 million, the decline in goodwill and intangible assets by R5 million relating to the disposal of Velociti,
offset by R54 million expended on the purchase of software, development costs, starter pack bases and the
expansion of distribution channels.
An increase in cash resources by R694 million and a reduction in inventories by R165 million resulted in a net
increase in current assets of R525 million.
The stock turn equated to 19 days compared to 26 days for the financial year ended 31 May 2015 in line with the
increase in cost of sales and the reduction in inventory.
The debtors' collection period declined to 39 days compared to 46 days for the financial year ended 31 May 2015,
thereby contributing to the growth in cash resources.
The net profit attributable to equity holders of R349 million, less a dividend of R209 million, resulted in
retained earnings accumulating to R2.8 billion.
Trade and other payables increased by R414 million in line with the growth in trading activities, with credit
terms averaging 52 days.
STATEMENT OF CASH FLOWS
Cash flows from operating activities amounted to R1.1 billion predominately attributable to increased trading
activity and a reduction in working capital requirements.
Cash flows applied to investing activities amounted to R156 million. Of this amount, R43 million related to the
additional investment in Blue Label Mexico, R32 million to a loan to the associated “Edgars Connect” stores,
R52 million to the purchase of intangible assets, R11 million to net loans granted and R33 million to capital
expenditure. The above outflows were partially offset by net proceeds received of R13 million from the disposal
of Velociti.
After applying R23 million to the acquisition of treasury shares and a dividend payment of R213 million to
shareholders and non-controlling interests, cash on hand accumulated to R1.5 billion.
FORFEITABLE SHARE SCHEME
Forfeitable shares totalling 2 583 819 (2014: 3 124 234) were issued to qualifying employees. During the period
530 375 (2014: 6 084) shares were forfeited and 2 915 266 (2014: 3 819 408) shares vested.
PROSPECTS
On 10 December 2015, BLT issued a SENS announcement with regard to the potential subscription of approximately
35% of the share capital of Cell C Proprietary Limited (Cell C), in terms of which Blue Label, in conjunction with
other investors, has offered to participate in the recapitalisation of Cell C. Should the proposed transaction be
concluded, Blue Label will contribute R4 billion for the above subscription.
Management are of the opinion that should the transaction be completed, it will be compelling both from an
investment and commercial perspective.
Oxigen Services India will continue to focus on enhancing its mobile wallet subscriber base. It is the intention of the
company to perpetuate its marketing of the benefits of prepaid wallets to the vast unbanked population of India.
Growth in the base will not only increase revenue via transactional fees but will simultaneously enhance the
underlying value of Oxigen in terms of market-related values per subscriber.
The decline in losses incurred by Blue Label Mexico is expected to continue in line with its roll-out of prepaid
starter packs, which is gaining momentum on a monthly basis. Furthermore, its decision last year to become a
multicarrier distributor has clearly manifested itself in an increase in melded gross profit margins. It has
the opportunity of widening its bouquet of product offerings to its escalating multitude of distribution points
of presence.
The strategy to enter into an initiative with the Edcon group relating to standalone “Edgars Connect” retail
stores is expected to gain momentum through the establishment of additional outlets. This initiative has created
an ideal platform for BLT to complement its strategy of the inclusion of marketing its products and services on
a retail basis.
Mobile Money Transfer development has progressed significantly and implementation will soon commence.
South African Distribution has enhanced its bouquet of products to include mobile handsets and tablets. Low cost smart
phones are expected to reach a wider spectrum of consumers which in turn will enhance the sale of prepaid tokens of
value.
SUBSEQUENT EVENTS
Blue Label advanced Oxigen Services India USD10.5 million by way of a rights issue in support of funding its
growth in wallet subscribers.
APPRECIATION
The Board of Blue Label Telecoms would once again 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
DA Suntup* CA(SA)
Financial Director
23 February 2016
* Supervised the preparation of the Group’s interim results.
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
30 November 30 November 31 May
2015 2014 2015
Unaudited Unaudited Audited
As at R’000 R’000 R’000
ASSETS
Non-current assets 2 105 946 2 129 839 2 040 214
Property, plant and equipment 115 077 109 943 106 684
Intangible assets and goodwill 1 239 597 1 329 638 1 254 893
Investment in and loans to associates and joint
ventures 668 754 619 505 548 572
Loans receivable 2 300 15 700 29 733
Starter pack assets 7 488 3 068 4 449
Trade and other receivables 52 324 31 993 65 085
Deferred taxation assets 20 406 19 992 30 798
Current assets 5 511 932 4 757 180 4 986 606
Inventories 1 268 300 1 835 020 1 433 104
Loans receivable 69 529 33 938 44 569
Starter pack assets 1 872 1 364 1 938
Trade and other receivables 2 684 170 2 494 016 2 712 165
Current tax assets 5 320 4 496 6 419
Cash and cash equivalents 1 482 741 388 346 788 411
Total assets 7 617 878 6 887 019 7 026 820
EQUITY AND LIABILITIES
Capital and reserves 4 095 105 3 648 620 3 917 981
Share capital, share premium and treasury shares 3 942 513 3 943 889 3 943 888
Restructuring reserve (1 843 912) (1 843 912) (1 843 912)
Other reserves 140 476 139 834 108 543
Share-based payment reserve 30 736 31 976 39 297
Transactions with non-controlling interest reserve (965 861) (957 230) (965 861)
Retained earnings 2 762 632 2 324 960 2 622 558
Non-controlling interest 28 521 9 103 13 468
Non-current liabilities 147 070 113 746 197 673
Deferred taxation liabilities 68 221 83 912 54 451
Trade and other payables 78 849 29 649 143 222
Provisions - 185 -
Current liabilities 3 375 703 3 124 653 2 911 166
Trade and other payables 3 309 049 3 059 540 2 831 000
Provisions 15 826 25 362 21 491
Current tax liabilities 33 112 13 944 42 588
Current portion of interest-bearing borrowings 1 629 2 805 -
Current portion of non-interest-bearing borrowings 16 087 23 002 16 087
Total equity and liabilities 7 617 878 6 887 019 7 026 820
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2015 2014 2015
Unaudited Unaudited Audited
R’000 R’000 R’000
Revenue 12 875 274 10 327 392 22 044 222
Other income 42 960 36 821 99 972
Change in inventories of finished goods (11 956 637) (9 539 608) (20 399 882)
Employee compensation and benefit expense (202 553) (187 677) (407 448)
Depreciation, amortisation and impairment charges (47 083) (46 479) (94 019)
Other expenses (138 807) (120 965) (256 699)
Operating profit 573 154 469 484 986 146
Finance costs (98 834) (99 666) (233 165)
Finance income 95 824 90 732 173 047
Share of loss from associates and joint ventures (33 713) (42 629) (79 338)
Profit for the period before taxation 536 431 417 921 846 690
Taxation (169 694) (133 457) (265 497)
Net profit for the period 366 737 284 464 581 193
Other comprehensive income:
Items reclassified to profit or loss
Foreign currency translation reserve reclassified to
profit or loss - - (18 467)
Items that may be subsequently reclassified to profit
or loss
Share of other comprehensive income/(loss) of associates
and joint ventures 33 513 (1 193) (10 497)
Foreign exchange (loss)/profit on translation of
foreign operations (54) 2 510 5 863
Other comprehensive income/(loss) for the period,
net of tax 33 459 1 317 (23 101)
Total comprehensive income for the period 400 196 285 781 558 092
Net profit for the period attributable to: 366 737 284 464 581 193
Equity holders of the parent 349 172 284 392 577 617
Non-controlling interest 17 565 72 3 576
Total comprehensive income for the period
attributable to: 400 196 285 781 558 092
Equity holders of the parent 381 105 285 428 549 691
Non-controlling interest 19 091 353 8 401
SHARE PERFORMANCE
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2015 2014 2015
Unaudited Unaudited Audited
Earnings per share for profit attributable to
equity holders (cents)
Basic earnings per share (cents) 52.46 42.79 86.86
Diluted earnings per share (cents)** 51.92 41.87 85.03
Weighted average number of shares 665 657 319 664 598 720 665 029 849
Diluted weighted average number of shares 672 569 839 670 493 760 672 702 231
Number of shares in issue 674 509 042 674 509 042 674 509 042
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2015 2014 2015
Unaudited Unaudited Audited
R’000 R’000 R’000
Share performance
Headline earnings per share (cents) 53.26 42.73 82.26
Diluted headline earnings per share (cents)** 52.71 41.82 80.49
Dividend per share (cents) 31.00 27.00 27.00
Reconciliation between net profit and core net
profit for the period:
Net profit for the period attributable to equity
holders of the parent 349 172 284 392 577 617
Amortisation on intangible assets raised through
business combinations net of tax and net of
non-controlling interest 8 966 11 131 18 961
Core net profit for the period 358 138 295 523 596 578
Core earnings per share (cents)* 53.80 44.47 89.71
* 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.
HEADLINE EARNINGS
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2015 2014 2015
Unaudited Unaudited Audited
R’000 R’000 R’000
Profit attributable to equity holders of
the parent 349 172 284 392 577 617
Net profit on disposal of property, plant
and equipment (136) (383) (1 225)
Loss/(profit) on disposal of subsidiary 5 454 - (3 962)
Profit on disposal of associate - - (28 643)
Impairment of intangible assets and
property, plant and equipment 10 - 3 264
Headline earnings 354 500 284 009 547 051
Headline earnings per share (cents) 53.26 42.73 82.26
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Share capital,
share premium
and treasury Retained Restructuring Other
shares earnings reserve reserves*
Unaudited Unaudited Unaudited Unaudited
Six months ended R’000 R’000 R’000 R’000
Balance as at 1 June 2015 3 943 888 2 622 558 (1 843 912) 108 543
Net profit for the period - 349 172 - -
Other comprehensive income - - - 31 933
Total comprehensive income - 349 172 - 31 933
Dividends paid - (209 098) - -
Treasury shares purchased (23 052) - - -
Equity compensation benefit scheme
shares vested 21 677 - - -
Equity compensation benefit movement - - - -
Balance as at 30 November 2015 3 942 513 2 762 632 (1 843 912) 140 476
Balance as at 1 June 2014 3 945 832 2 222 685 (1 843 912) 138 798
Net profit for the period - 284 392 - -
Other comprehensive income - - - 1 036
Total comprehensive income - 284 392 - 1 036
Dividends paid - (182 117) - -
Treasury shares purchased (19 130) - - -
Equity compensation benefit scheme
shares vested 17 187 - - -
Equity compensation benefit movement - - - -
Non-controlling interests acquired
during the period - - - -
Balance as at 30 November 2014 3 943 889 2 324 960 (1 843 912) 139 834
Audited Audited Audited Audited
Year ended R’000 R’000 R’000 R’000
Balance as at 1 June 2014 3 945 832 2 222 685 (1 843 912) 138 798
Net profit for the year - 577 617 - -
Other comprehensive income - - - (27 926)
Total comprehensive income - 577 617 - (27 926)
Dividends paid - (182 117) - -
Treasury shares purchased (19 131) - - -
Equity compensation benefit scheme
shares vested 17 187 - - -
Equity compensation benefit movement - - - -
Share of equity movement in associates - - - -
Associate disposed - 3 081 - (2 329)
Non-controlling interest movement - 1 292 - -
Balance as at 31 May 2015 3 943 888 2 622 558 (1 843 912) 108 543
* Included in other reserves is the foreign currency translation reserve and the non-distributable reserve.
** Includes employee compensation benefit reserve.
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY (continued)
Transactions with
non-controlling Share-based
interest payment Non-controlling
reserve reserve** interest Total equity
Unaudited Unaudited Unaudited Unaudited
Six months ended R’000 R’000 R’000 R’000
Balance as at 1 June 2015 (965 861) 39 297 13 468 3 917 981
Net profit for the period - - 17 565 366 737
Other comprehensive income - - 1 526 33 459
Total comprehensive income - - 19 091 400 196
Dividends paid - - (4 000) (213 098)
Treasury shares purchased - - - (23 052)
Equity compensation benefit scheme
shares vested - (21 639) (38) -
Equity compensation benefit movement - 13 078 - 13 078
Balance as at 30 November 2015 (965 861) 30 736 28 521 4 095 105
Balance as at 1 June 2014 (957 230) 33 660 (15 844) 3 523 989
Net profit for the period - - 72 284 464
Other comprehensive income - - 281 1 317
Total comprehensive income - - 353 285 781
Dividends paid - - (2 850) (184 967)
Treasury shares purchased - - - (19 130)
Equity compensation benefit scheme
shares vested - (16 947) (240) -
Equity compensation benefit movement - 15 263 273 15 536
Non-controlling interests acquired
during the period - - 27 411 27 411
Balance as at 30 November 2014 (957 230) 31 976 9 103 3 648 620
Audited Audited Audited Audited
Year ended R’000 R’000 R’000 R’000
Balance as at 1 June 2014 (957 230) 33 660 (15 844) 3 523 989
Net profit for the year - - 3 576 581 193
Other comprehensive income - - 4 825 (23 101)
Total comprehensive income - - 8 401 558 092
Dividends paid - - (4 874) (186 991)
Treasury shares purchased - - - (19 131)
Equity compensation benefit scheme
shares vested - (16 949) (238) -
Equity compensation benefit movement - 24 082 208 24 290
Share of equity movement in associates - 548 - 548
Associate disposed - (752) - -
Non-controlling interest movement (8 631) (1 292) 25 815 17 184
Balance as at 31 May 2015 (965 861) 39 297 13 468 3 917 981
* Included in other reserves is the foreign currency translation reserve and the non-distributable reserve.
** Includes employee compensation benefit reserve.
CONDENSED GROUP STATEMENT OF CASH FLOWS
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2015 2014 2015
Unaudited Unaudited Audited
R’000 R’000 R’000
Cash generated by operations 1 241 467 (132 478) 429 806
Interest received 17 460 6 637 15 995
Interest paid (11 716) (28 400) (67 811)
Taxation paid (157 779) (150 146) (245 495)
Net cash generated from/(utilised in) operating activities 1 089 432 (304 387) 132 495
Cash flows from investing activities
Acquisition of intangible assets and property,
plant and equipment (84 782) (90 599) (178 684)
Acquisition of subsidiaries net of cash acquired - (143 767) (157 460)
Disposal of subsidiary net of cash disposed 13 219 - -
Proceeds on disposal of associate - - 94 897
Loans advanced to Blue Label Mexico* (42 654) (48 979) (48 979)
Loans granted (11 390) (5 597) (10 315)
Loans granted to associates (32 000) (257) (14 353)
Other investing activities 1 143 2 307 (13 857)
Net cash utilised in investing activities (156 464) (286 892) (328 751)
Cash flows from financing activities
Acquisition of treasury shares (23 052) (19 131) (19 131)
Dividends paid to non-controlling interest (4 000) (2 850) (4 874)
Dividends paid (209 098) (182 117) (182 117)
Other financing activities - (449) 846
Net cash utilised in financing activities (236 150) (204 547) (205 276)
Net increase/(decrease) in cash and cash equivalents 696 818 (795 826) (401 532)
Cash and cash equivalents at the beginning of the year 788 411 1 184 131 1 184 131
Translation difference (2 488) 41 5 812
Cash and cash equivalents at the end of the year 1 482 741 388 346 788 411
* These loans were subsequently capitalised.
BASIS OF PREPARATION
The condensed consolidated interim financial statements have been prepared in accordance with the requirements
of section 8.57 of the JSE Limited Listings Requirements, the presentation and disclosure requirements of IAS 34 -
Interim Financial Reporting and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council. The condensed
consolidated interim financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) and the requirements of the Companies Act, No 71 of 2008.
These condensed consolidated interim financial statements have been prepared in accordance with the going concern
principle, under the historical cost convention, except for certain financial and equity investments which have
been measured at fair value. The accounting policies and methods of computation are consistent with those applied
in the annual financial statements for the year ended 31 May 2015 and with those applied in the previous condensed
consolidated interim financial statements, 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 Group annual financial statements for the
year ended 31 May 2015. These standards have not had a significant impact on the interim financial statements.
In addition to the standards that are issued but not yet effective that were disclosed in note 1 to the Group
annual financial statement for the year ended 31 May 2015, the following standard has been issued but is not
yet effective:
IFRS 16 - Leases
Lessees are required to recognise assets and liabilities arising from all leases (with limited exceptions) on the
balance sheet. Lessor accounting has not substantially changed in the new standard.
The model reflects that, at the start of a lease, the lessee obtains the right to use an asset for a period of time
and has an obligation to pay for that right. A lessee is not required to recognise assets and liabilities for
short-term leases (less than 12 months), and leases for which the underlying asset is of low value (such as laptops
and office furniture).
A lessee measures lease liabilities at the present value of future lease payments. A lessee measures lease assets,
initially at the same amount as lease liabilities, and also includes costs directly related to entering into the
lease. Lease assets are amortised in a similar way to other assets such as property, plant and equipment.
This standard is effective for periods beginning on or after 1 January 2019. The Group is currently considering
the impact on the consolidated financial statements.
We aim to provide stakeholders with the same additional information that management uses to evaluate the
performance of the Group’s operations.
In addition, the Group applies 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 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 2015.
SEGMENTAL SUMMARY
Inter-
South national
African Distri-
Total Distribution bution Mobile Solutions Corporate
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Six months ended 30 November 2015 R’000 R’000 R’000 R’000 R’000 R’000
Total segment revenue 16 004 672 15 749 428 - 146 220 109 024 -
Inter-segment revenue (3 129 398) (3 115 106) - (8 490) (5 802) -
Revenue 12 875 274 12 634 322 - 137 730 103 222 -
Operating profit/(loss) before depreciation,
amortisation and impairment charges 620 237 577 586 23 595 39 441 18 975 (39 360)
Net profit/(loss) for the period attributable
to equity holders of the parent 349 172 385 355 (13 685) 19 593 6 808 (48 899)
Amortisation on intangibles raised through
business combinations net of tax and
non-controlling interest 8 966 5 783 1 860 1 323 - -
Core net profit/(loss) for the year
attributable to equity holders of the parent 358 138 391 138 (11 825) 20 916 6 808 (48 899)
At 30 November 2015
Total assets 7 617 878 6 306 524 561 975 504 004 154 861 90 514
Net operating assets/(liabilities) 2 136 229 2 188 937 (9 234) 38 803 53 426 (135 703)
Six months ended 30 November 2014
Total segment revenue 13 294 271 12 999 702 - 208 304 86 265 -
Inter-segment revenue (2 966 879) (2 842 664) - (113 056) (11 159) -
Revenue 10 327 392 10 157 038 - 95 248 75 106 -
Operating profit/(loss) before depreciation,
amortisation and impairment charges 515 963 507 718 (4 511) 20 241 18 122 (25 607)
Net profit/(loss) for the period attributable
to equity holders of the parent 284 392 341 029 (41 534) 9 327 7 770 (32 200)
Amortisation on intangibles raised through
business combinations net of tax and
non-controlling interest 11 131 6 639 1 868 2 624 - -
Core net profit/(loss) for the year
attributable to equity holders of the parent 295 523 347 668 (39 666) 11 951 7 770 (32 200)
At 30 November 2014
Total assets 6 887 019 5 633 582 581 852 474 967 135 126 61 492
Net operating assets/(liabilities) 1 632 527 1 838 537 (10 648) (43 137) 26 528 (178 753)
Audited Audited Audited Audited Audited Audited
Year ended 31 May 2015 R’000 R’000 R’000 R’000 R’000 R’000
Total segment revenue 27 780 173 27 364 493 - 251 085 164 595 -
Inter-segment revenue (5 735 951) (5 706 602) - (10 917) (18 432) -
Revenue 22 044 222 21 657 891 - 240 168 146 163 -
Operating profit/(loss) before depreciation,
amortisation and impairment charges 1 080 165 1 038 252 35 379 51 359 40 831 (85 656)
Net profit/(loss) for the year attributable
to equity holders of the parent 577 617 671 619 (50 551) 26 328 23 975 (93 754)
Amortisation on intangibles raised through
business combinations net of tax and
non-controlling interest 18 961 13 137 3 593 2 231 - -
Core net profit/(loss) for the year
attributable to equity holders of the parent 596 578 684 756 (46 958) 28 559 23 975 (93 754)
At 31 May 2015
Total assets 7 026 820 5 890 188 477 953 449 306 151 541 57 832
Net operating assets/(liabilities) 2 075 440 2 135 980 (8 946) (19 583) 37 488 (69 499)
FINANCIAL INSTRUMENTS
Contingent consideration, included in trade and other payables, are level 3 financial liabilities.
Changes in level 3 instruments are as follows:
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2015 2014 2015
Unaudited Unaudited Audited
R’000 R’000 R’000
Contingent consideration
Opening balance 123 902 22 607 22 607
Acquisition of Viamedia Proprietary Limited - 131 027 84 783
Acquisition of Supa Pesa Africa (Mauritius) Limited - - 29 851
Acquisition of Supa Pesa South Africa Proprietary Limited - - 100
Settlements (1 631) (17 895) (19 515)
Gains and losses recognised in profit or loss 3 931 1 347 6 076
Closing balance 126 202 137 086 123 902
Total gains or losses for the period included in profit or
loss for liabilities held at the end of the reporting period, under:
Other income - (923) (923)
Interest paid 3 931 1 347 6 999
Change in unrealised gains or losses for the period included
in profit or loss for liabilities held at the end of the
reporting period 655 - 2 052
The fair value of the contingent consideration is estimated by applying the income approach. The fair value is based
on the discount rates applicable to the Group and management’s probability assumptions on certain warranties being
achieved. There have been no changes in management’s probability assumptions. The discount rate has been increased in
line with the increase in the prime lending rate. The resulting changes in the fair values are accounted for in finance
costs in the statement of comprehensive income.
The Group has not disclosed the fair values of all financial instruments measured at amortised cost, as their carrying
amounts closely approximate their fair values.
SIGNIFICANT RELATED PARTY TRANSACTIONS
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2015 2014 2015
Unaudited Unaudited Audited
R’000 R’000 R’000
Purchases from related parties
ZOK Cellular Proprietary Limited 34 941 34 955 69 946
Loans to related parties
2DFine Holdings Mauritius 203 865 141 823 163 634
Lornanox Proprietary Limited
trading as Edgars Connect 38 000 - 6 000
Oxigen Services India Private Limited 35 049 26 753 29 552
Directors: LM Nestadt (Chairman)*, BM Levy, MS Levy, K Ellerine**, GD Harlow*, Y Mahomed* (appointed 18 August 2015),
JS Mthimunye*, MV Pamensky (resigned effective 30 November 2015), DA Suntup, J Vilakazi*
(*Independent non-executive)(**Non-executive)
Company Secretary: J van Eden
Sponsor: Investec Bank Limited
Auditors: PricewaterhouseCoopers Inc.
American Depository Receipt (ADR) Programme:
Cusip No.: 095648101 Ticker name: BULBY ADR to ordinary share: 1:10
Depository: BNY Mellon, 101 Barclay Street, New York NY, 10286, USA
www.bluelabeltelecoms.co.za
Date: 24/02/2016 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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