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BLUE LABEL TELECOMS LIMITED - Audited results for the year ended 31 May 2014

Release Date: 20/08/2014 07:05
Code(s): BLU     PDF:  
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Audited results for the year ended 31 May 2014

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”)
Audited results for the year ended 31 May 2014


- Increase in gross profit of R78 million to R1,35 billion
- Increase in gross profit margins from 6,70% to 6,96%
- Increase in EBITDA of 10% to R788 million
- Increase in headline earnings of 6% to R451 million
- Increase in headline earnings per share of 6% to 67,98 cents
- Increase in dividend per share of 8% to 27 cents
- Cash flows from operating activities R907 million


COMMENTARY
EBITDA increased by 10% to R788 million, emanating from revenue growth of 2% to R19,4 billion, an increase in gross
profit margins of 0,26% and limiting additional overheads to 3%. Headline earnings per share increased to 67,98 cents.

Revenue generated on “pinless top ups” increased from R997 million to R1,7 billion. As only the commission thereon is
accounted for, the effective growth in Group revenue equated to 6%.

The gross profit margin increase was mainly attributable to the application of cash resources to bulk inventory
purchases at favourable rebates and early supply settlement discounts. Further growth was attributable to increases in
commissions earned on the distribution of prepaid electricity, with turnover generated on behalf of the utilities, escalating
to R8,8 billion. 

The share of net losses of R57 million from associates and joint ventures was mainly attributable to Blue Label Mexico
(“BLM”), negatively impacting headline earnings by 9 cents per share. Expenditure incurred by Blue Label Mexico on the
roll out of point of sale devices on a national scale is in line with its strategy to enhance its product and service
offerings, the benefits of which are expected to materialise in the future.
 
In April 2014, the Group acquired Retail Mobile Credit Specialists Proprietary Limited, (“RMCS”), an enhanced service
provider of telecommunication products and services, content, data and allied activities, via physical and virtual
mediums. This acquisition will afford the Group access to new channels for the distribution of both RMCS and Blue Label
products and services.

Cash resources accumulated to R1,2 billion of which R907 million was generated from operating activities.

BASIS OF PREPARATION
The summarised Group annual financial statements have been derived from the Group annual financial statements and were
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 Group annual financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) and the requirements of the Companies Act, No. 71 of 2008. A copy of the Group annual financial
statements can be obtained from the Company’s registered office at no charge.

This financial information has 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 used in the comparative financial information for the year
ended 31 May 2013, with the exception of the standards that are effective for the first time in the current year. These
have been disclosed in note 1 to the Group annual financial statements for the year ended 31 May 2014. These standards
have not had a significant impact on the financial information.

In addition, the Group uses core net profit as a non-IFRS measure in evaluating its performance. This supplements the
IFRS measures disclosed. 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 summarised Group annual financial statements should be read in conjunction with the Group annual financial
statements which include details of all related party transactions.

SEGMENTAL REPORT
South African distribution
                             2014          2013      Growth    Growth   
                            R’000         R’000       R’000         %   
Revenue                19 103 652    18 712 080     391 572        2%   
Gross profit            1 180 376     1 121 747      58 629        5%   
EBITDA                    821 310       796 439      24 871        3%   
Core net profit           558 996       570 766     (11 770)      (2%)  
Gross profit margin         6,18%         5,99%                         
EBITDA margin               4,30%         4,26%                         


Although the South African distribution segment continues to dominate contribution to Group profitability, growth in
EBITDA was confined to 3% due to costs incurred for future growth in its distribution channel as well as margin
compression caused by competitive forces.

The increase in revenue of 2%, effectively equating to 6% on imputing the gross revenue generated from “pinless top
ups”, and gross profit margin increases, resulted in the growth in EBITDA by 3% to R821 million. These earnings were
inclusive of extraneous costs of R19 million that were incurred in the settlement of a contractual dispute and the early
termination of a profit share agreement. EBITDA margins increased from 4,26% to 4,30%.

Net commissions earned on the distribution of prepaid electricity increased by R20 million to R133 million (17%) on
revenue generated on behalf of the utilities that increased from R7,2 billion to R8,8 billion.

Core net profit declined by 2% primarily due to a reduction in net finance income of R15 million net of taxation. This
was congruent with the application of cash resources to bulk purchasing transactions, early settlement discounts and
the cost of funding acquisitions. 

International distribution
                                                          2014        2013     Growth    Growth   
                                                         R’000       R’000      R’000         %   
EBITDA                                                 (13 961)    (31 000)    17 039       55%   
Share of (losses)/profits from associates and          (56 249)    (49 036)    (7 213)     (15%)  
joint ventures                                                                                    
- Ukash                                                 14 089       7 291      6 798       93%   
- Oxigen Services India                                 (3 259)       (565)    (2 694)    (477%)  
- Blue Label Mexico                                    (60 844)    (51 124)    (9 720)     (19%)  
- Other                                                 (6 235)     (4 638)    (1 597)     (34%)  
Core net loss                                          (59 987)    (73 294)    13 307       18%   
- Equity holders of the parent                         (47 862)    (50 685)     2 823        6%   
- Non-controlling interests                            (12 125)    (22 609)    10 484       46%   
                                                                                                    

The positive movement in EBITDA was attributable to a decline in legal fees incurred by Africa Prepaid Services
Nigeria from R31 million to R20 million and foreign exchange movements of R6 million. 

The share of net losses from associates and joint ventures comprised the following:

Ukash
The Group’s share of profits in Ukash, after the amortisation of intangible assets, increased from R7,3 million to
R14,1 million. Of this growth, R2,1 million was attributable to foreign exchange gains and a consolidation adjustment of
R3,2 million. Organic growth resulted from increases in revenue of 14%, gross profit of 20% and EBITDA of 7%, all reported
in their local currency. 

Oxigen Services India
Although revenue increased by 27% at static margins, the Group’s share of losses increased by R2,7 million to R3,2 million. 

Expenditure increased in line with the strategy to focus on the growth of financial services transactions, facilitated
by its vast network of points of presence. Implementation of this strategy requires working capital, improvements in IT
infrastructure along with additional personnel and other resources.
 
Oxigen Services India aims to become India’s first non-banked mobile wallet that empowers the unbanked masses to
instantly transfer and receive cash across the entire country. 

Its money transfer services are currently transacting at USD2,3 million per day, increasing exponentially through its
connectivity with the National Payment Corporation of India. This provides instantaneous services to its retail network
in India.
 
Blue Label Mexico
In the comparative year, BLM incurred losses to the equivalent of R113 million of which the Group’s share equated to
R51 million after the amortisation of intangible assets. In the current year, BLM’s losses increased to an equivalent of
R131 million, of which the Group’s share equated to R61 million. Of this amount, R9 million was attributable to foreign
exchange movements.

Although revenue in local currency increased by 43%, increases in expenditure and depreciation, necessitated by an
aggressive roll out of point of sale devices and ancillary support required thereon, were the fundamental causes for the
increase in losses. 

At the end of the financial year, 91 409 point of sale devices had been installed.


Mobile
                      2014       2013     Growth    Growth   
                     R’000      R’000      R’000         %   
Revenue            152 618    151 420      1 198        1%   
Gross profit       109 756     95 134     14 622       15%   
EBITDA              34 273     37 055     (2 782)      (8%)  
Core net profit     24 904     24 787        117         -   


This segment comprises Cellfind, Panacea Mobile, Blue Label Engage, Simigenix and Blue Label One. Of the revenue
growth of R1,2 million, Panacea, Blue Label Engage and Cellfind contributed R18 million. This was off-set by a decline of R13
million in revenue generated by the projects and media divisions of Blue Label One. A further R4 million was
attributable to the disposal of Content Connect Africa during the comparative year. 

The negative performance of Blue Label One manifested itself in neutral growth in core net profit for this segment.
Positive growth contributions of R7 million to core net profit by the other companies within this segment were entirely
offset by movement in losses incurred by Blue Label One. As a result, the latter has been restructured in order to avoid
repetition of its negative performance.


Solutions
                      2014       2013    Growth    Growth   
                     R’000      R’000     R’000         %   
Revenue            145 396    120 710    24 686       20%   
Gross profit        59 402     54 364     5 038        9%   
EBITDA              29 257     24 703     4 554       18%   
Core net profit     12 547     13 190      (643)      (5%)  


The Solutions segment houses Blue Label Data Solutions (“BLDS”), Velociti, Forensic Intelligence Data Solutions,
Datacision, Blue Label Call Centre and CNS Call Centre. BLDS contributed R26 million to EBITDA translating to R13 million at
core net profit level.


Corporate
                     2014         2013    Growth    Growth   
                    R’000        R’000     R’000         %   
EBITDA            (82 886)    (113 575)   30 689       27%   
Core net loss     (87 983)    (120 542)   32 559       27%   


The decline in losses was directly attributable to the forfeiture of executive bonuses.

Depreciation, amortisation and impairment charges
Depreciation, amortisation and impairment charges declined by R2,8 million. 

The amortisation of intangible assets in terms of purchase price allocations declined by R2,5 million in line with the
expiration of useful tenure. Depreciation and impairment charges to the remainder of the Group’s assets decreased by
R0,3 million.
 
Net finance income
Finance costs
Finance costs totalled R167 million, of which R23 million related to interest paid on borrowed funds and R144 million
to imputed IFRS interest adjustments on credit received from suppliers. On a comparative basis, interest paid on
borrowed funds amounted to R24 million and the imputed IFRS interest adjustment equated to R143 million. Interest paid was
attributable to the cost of financing bulk inventory purchase transactions and early settlement payments attracting
discounts, for which facilities were utilised and repaid during the current year.
 
Finance income
Finance income totalled R156 million, of which R39 million was attributable to interest received on cash resources and
R117 million to IFRS interest adjustments on credit provided to customers. On a comparative basis, interest received on
cash resources amounted to R45 million and the imputed IFRS interest adjustment to R128 million. The decline in
interest received was attributable to the partial utilisation of funds on hand for bulk inventory purchase transactions, early
settlement discounts as well as for the funding of the acquisitions of RMCS and a distribution channel.

Statement of financial position
Total assets increased by R782 million to R6,5 billion, of which growth in non-current assets accounted for R458 million 
and current assets for R324 million.
 
The increase in non-current assets was mainly attributable to a net growth in intangible assets and goodwill of R300 million, 
capital expenditure net of depreciation of R9 million and to investment in associates and joint ventures of R74 million. 

The increase in intangible assets and goodwill was mainly attributable to the acquisition of RMCS, of which goodwill
equated to R206 million and intangibles R104 million. A further R84 million was incurred for the purchase of a
distribution channel. Amortisation of intangibles amounted to R95 million.

The increase in investment in associates and joint ventures was predominantly due to an additional R89 million capital
contribution to Blue Label Mexico, movement in loans of R11 million, unrealised foreign exchange gains of R16 million
and a positive impact of R26 million in foreign currency translation reserves, off-set by a dividend received from Ukash
of R11 million and share of net losses incurred of R57 million.

The net movement in current assets mainly comprised growth in cash resources of R243 million, an increase in accounts
receivable of R643 million, off-set by a decline in inventories of R552 million.

The debtors collection period extended from 38 days reported at the interim reporting date to 40 days.

In line with the decline in inventory, the stock turn improved from 33 days reported at the interim reporting date to
26 days.
 
The net profit attributable to equity holders of R450 million, less a dividend of R169 million, resulted in an
accumulation of retained earnings to R2,2 billion.

Trade and other payables increased by R476 million with credit terms averaging 55 days.

Statement of cash flows
Cash flows from operating activities totalling R907 million, the dividend received of R11 million from Ukash and loans
recovered of R29 million were applied to investing activities relating to the purchase of intangible assets to the
extent of R103 million, acquisitions of R273 million, additional funding of R86 million to Blue Label Mexico and capital
expenditure of R46 million. 
  
A further R197 million was applied to financing activities, of which R11 million was expended on the acquisition of 
treasury shares, dividends paid of R169 million and the acquisition of non-controlling interests totalling R16 million.
 
The net increase in cash and cash equivalents amounted to R243 million, resulting in cash resources accumulating to
R1,2 billion.

Forfeitable share scheme
Forfeitable shares totalling 2 782 541 (2013: 3 496 103) were issued to qualifying employees. During the year 
1 074 880 (2013: 1 285 962) shares were forfeited and 3 629 922 (2013: 2 700 513) shares vested.

Dividend No 5
The Group’s current dividend policy is to declare an annual dividend. On 19 August 2014, the board approved a gross
ordinary dividend (number 5) of 27 cents per ordinary share (22,95 cents per ordinary share net of dividend withholding
tax) for the year ended 31 May 2014. This dividend of R182 117 441, inclusive of withholding tax, equates to a 2,48 cover
on headline earnings. The dividend for the year ended 31 May 2014 has not been recognised in the financial statements as
it was declared after this date. 

The dividend has been declared from income reserves. The Company has no secondary tax on companies credits available.
The issued share capital at the declaration date was 674 509 042 ordinary shares. The Company’s income tax reference
number is 9062246179.

The salient dates are as follows:
Last date to trade cum dividend                Friday, 5 September 2014
Shares commence trading ex dividend            Monday, 8 September 2014
Record date                                   Friday, 12 September 2014
Payment of dividend                           Monday, 15 September 2014

Share certificates may not be dematerialised or rematerialised between Monday, 8 September 2014 and Friday, 12 September 2014, 
both days inclusive.

Before declaring the final dividend the board applied the solvency and liquidity test on the Company and reasonably
concluded that the Company will satisfy the solvency and liquidity test immediately after payment of the final divided.
The final dividend will be paid 26 days after the directors have performed the solvency and liquidity testing.

Dividend Tax is provided for at 15% of the amount of any dividend paid by Blue Label Telecoms, subject to certain
exemptions. The Dividend Tax is a tax borne by the beneficial owner of the dividend and will be withheld by either the
issuer of the dividend or by regulated intermediaries.

Prospects
The recent acquisitions of RMCS and Via Media Proprietary Limited will enhance Group profitability and will afford the
Group access to new channels of distribution.

The Group’s propensity to generate positive cash flows from operating activities will facilitate opportunities both on
an acquisitive and trading basis as well as the distribution of dividends to shareholders. 

The growth in prepaid electricity meter roll-outs, is likely to continue and improve future Group revenue. 

TicketPros, a ticketing provider and proud partner of premium sporting events in South Africa, continues to expand its
service offering to a myriad of events and activities. 

The Group’s distribution footprint is perfectly positioned to offer a money transfer solution that provides reach across 
all sectors of the South African economic landscape. Accessibility and convenience are the driving factors in our goal to 
fulfil the needs of consumers. 

Oxigen Services India’s mobile wallet, which facilitates instant money transfers, is expected to gain momentum, given
its monthly compounded growth that was evident towards the end of the financial year. Its historical investment in
infrastructure has created a solid foundation and credibility with banks, to enable it to provide high volume services of
this nature. 

Blue Label Mexico will continue with the objectives of expanding its footprint and increasing the range of its product
and service offerings.

Subsequent events
Subsequent to year end, dividend number 5 was declared and approved by the board.

In August 2014, Blue Label completed a transaction in which it acquired 75% of Via Media Proprietary Limited. The
purchase consideration is for an initial sum of R144,4 million plus additional amounts totalling up to R103,1 million if
warranted profits are achieved by Via Media during the forthcoming 36 months. If the warranted profits are not achieved,
the above additional payments will be abated on a pro rata basis. A further R112,5 million or part thereof will be payable
if stretched targets over and above the warranted accumulated profits over the next three years are achieved.

Litigation update
In December 2008 Africa Prepaid Services Proprietary Limited (“APS”), a subsidiary of Blue Label concluded a super
dealer agreement with Multi-Links Telecommunications Limited (“MLT”), a wholly owned subsidiary of Telkom, at the time, in
terms of which APS was appointed for a period of 10 years to market and distribute a range of products and services for
MLT in Nigeria (“the agreement”).

In 2009 APS ceded and assigned all its rights and obligations in terms of the agreement to Africa Prepaid Services
Nigeria Limited (“APSN”), a subsidiary of APS and Blue Label. On 26 November 2010 APSN cancelled the agreement on the basis
of MLT’s wrongful repudiation of the agreement.

In June 2011 APSN launched arbitration proceedings in South Africa against MLT (“the arbitration proceedings”). APSN
claims payment of USD457 million against MLT and MLT has counterclaimed for payment of the sum of USD123 million.

Telkom sold its shareholding in MLT to Hip Oils Topco Limited on 3 October 2011. In terms of an indemnity contained in
the sale and purchase agreement, Telkom is liable for all amounts in excess of USD10 million in respect of APSN’s claim
against MLT.

Telkom and MLT instituted an action in the High Court against Blue Label, APS, APSN and certain individuals, including
a former senior executive of Telkom in the High Court for payment of an aggregate amount of USD724 million (“the
action”).

The claim in the action is based, inter alia, on an alleged breach of the duty of care and alleged misrepresentations
made by Blue Label together with alleged breaches of fiduciary duties on the part of the former senior Telkom executive,
at the time the agreement was concluded, in respect of which it is alleged Blue Label was a party to.

On 6 September 2013 Telkom and MLT obtained an order from the High Court which had the effect of preventing the
arbitrators from determining whether the agreement is valid and enforceable. APSN decided not to appeal against the order and
submitted itself to the jurisdiction of the High Court for the purposes of defending the allegations made against it,
Blue Label and the other defendants and for the purpose of proceeding with its claim against MLT for payment of the sum of
USD457 million arising out of MLT’s wrongful repudiation of the agreement. 

At the same time and in the same action, APSN has advanced a claim against Telkom for payment of the sum of USD457
million arising out of Telkom’s wrongful interference with APSN’s contractual rights against MLT.  To the extent that APSN
is unable to recover its losses from MLT, APSN aims to recover such losses from its claim against Telkom.

Blue Label and the other defendants vehemently deny the allegations made against them by Telkom and MLT and maintain
that they are not liable. A trial date has not as yet been allocated.

Independent audit
PricewaterhouseCoopers Inc.’s unqualified audit reports on the Group annual financial statements and the summarised
Group annual financial statements for the year ended 31 May 2014 are available for inspection at the Company’s registered
office. Any reference to future financial performance in this announcement has not been audited or reported on by
PricewaterhouseCoopers Inc.

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            BM Levy and MS Levy                       DA Suntup* CA(SA)
Chairman              Joint Chief Executive Officers            Financial Director
19 August 2014
*Supervised the preparation and review of the Group’s audited year end results. 


SUMMARISED GROUP STATEMENT OF FINANCIAL POSITION
                                                                       2014                   2013   
As at 31 May                                                          R’000                  R’000   
ASSETS                                                                                               
Non-current assets                                                1 798 307              1 340 410   
Property, plant and equipment                                        97 200                 88 125   
Intangible assets and goodwill                                    1 005 934                706 018   
Investment in and loans to associates and joint ventures            598 109                524 162   
Loans receivable                                                     18 501                  1 000   
Starter pack assets                                                   2 307                  2 573   
Trade and other receivables                                          51 604                      -   
Deferred taxation assets                                             24 652                 18 532   
Current assets                                                    4 704 580              4 380 137   
Inventories                                                       1 306 206              1 858 511   
Loans receivable                                                     27 850                 36 431   
Starter pack assets                                                   1 010                  1 115   
Trade and other receivables                                       2 181 973              1 539 365   
Current tax assets                                                    3 410                  3 433   
Cash and cash equivalents                                         1 184 131                941 282                                                                                                     
Total assets                                                      6 502 887              5 720 547   
EQUITY AND LIABILITIES                                                                               
Capital and reserves                                              3 523 989              3 242 853   
Share capital, share premium and treasury shares                  3 945 832              3 939 891   
Restructuring reserve                                            (1 843 912)            (1 843 912)  
Other reserves                                                      138 798                113 139   
Share-based payment reserve                                          33 660                 39 496   
Transaction with non-controlling interest reserve                  (957 230)              (931 125)  
Retained earnings                                                 2 222 685              1 941 082   
Non-controlling interest                                            (15 844)               (15 718)  
Non-current liabilities                                              92 400                 11 942   
Deferred taxation liabilities                                        41 510                 11 942   
Trade and other payables                                             50 178                      -   
Provisions                                                              712                      -   
Current liabilities                                               2 886 498              2 465 752   
Trade and other payables                                          2 818 898              2 393 222   
Provisions                                                           23 777                 19 029   
Current tax liabilities                                              28 733                 39 504   
Current portion of interest-bearing borrowings                        2 653                  1 980   
Current portion of non-interest-bearing borrowings                   12 437                 12 017                                                                                                      
Total equity and liabilities                                      6 502 887              5 720 547   


SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME
                                                                                  2014                    2013   
For the year ended 31 May                                                        R’000                   R’000   
Revenue                                                                     19 401 666              18 984 210   
Other income                                                                    26 692                  16 137   
Change in inventories of finished goods                                    (18 052 132)            (17 712 965)  
Employee compensation and benefit expense                                     (332 542)               (332 901)  
Depreciation, amortisation and impairment charges                              (65 137)                (67 951)  
Other expenses                                                                (255 691)               (240 859)  
Operating profit                                                               722 856                 645 671   
Finance costs                                                                 (166 876)               (167 096)  
Finance income                                                                 156 250                 173 260   
Share of loss from associates and joint ventures                               (56 873)                (47 326)  
Net profit before taxation                                                     655 357                 604 509   
Taxation                                                                      (206 442)               (196 404)  
Net profit for the year                                                        448 915                 408 105   
Other comprehensive income:                                                                                      
Exchange profits on translation of foreign operations                           25 637                  87 888   
Other comprehensive profit for the year, net of tax                             25 637                  87 888   
Total comprehensive income for the year                                        474 552                 495 993   
Net profit for the year attributable to:                                       448 915                 408 105   
Equity holders of the parent                                                   450 230                 424 841   
Non-controlling interest                                                        (1 315)                (16 736)   
Total comprehensive income for the year attributable to:                       474 552                 495 993   
Equity holders of the parent                                                   475 889                 512 441   
Non-controlling interest                                                        (1 337)                (16 448)   
Earnings per share for profit attributable to equity holders (cents)                                             
Basic earnings per share (cents)                                                 67,88                   64,22   
Diluted earnings per share** (cents)                                             66,86                   63,19   
Dividend per share (cents)                                                       25,00                   23,00   
Weighted average number of shares                                          663 298 476             661 577 847   
Diluted weighted average number of shares                                  672 311 571             672 304 611   
Number of shares in issue                                                  674 509 042             674 509 042   
Headline earnings per share (cents)                                              67,98                   64,17   
Diluted headline earnings per share** (cents)                                    66,96                   63,14   
Reconciliation between net profit and core net profit for the year:                                              
Net profit for the year attributable to equity holders of the parent           450 230                 424 841   
Amortisation on intangible assets raised through business combinations 
net of tax and net of non-controlling interest                                  10 372                  12 675   
Core net profit for the year                                                   460 602                 437 516   
- Core earnings per share (cents)*                                               69,44                   66,13   
 * 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 CHANGES IN EQUITY
                                        Share capital,                                                                                                            
                                         share premium                                             Transaction with   Share-based            Non-                        
                                          and treasury     Retained   Restructuring       Other     non-controlling       payment     controlling         Total          
                                                shares     earnings         reserve    reserves*   interest reserve       reserve**      interest        equity   
                                                 R’000        R’000           R’000       R’000               R’000         R’000           R’000         R’000   
Balance as at 1 June 2012                    3 941 316    1 671 378      (1 843 912)     25 539            (909 572)       38 915          (9 278)    2 914 386   
Net profit for the year                              -      424 841               -           -                   -             -         (16 736)      408 105   
Other comprehensive profit                           -            -               -      87 600                   -             -             288        87 888                                                                                                                                                                                                             
Total comprehensive income                           -      424 841               -      87 600                   -             -         (16 448)      495 993   
Dividends paid                                       -     (155 137)              -           -                   -             -          (3 515)     (158 652)  
Treasury shares purchased                      (17 223)           -               -           -                   -             -               -       (17 223)   
Equity compensation benefit             
scheme shares vested                            15 798            -               -           -                   -       (15 559)           (239)            -   
Equity-based compensation movements                  -            -               -           -                   -        16 063             117        16 180   
Share of equity movement in associates               -            -               -           -                   -            77               -            77   
Transaction with non-controlling        
interest reserve movement                            -            -               -           -             (21 553)            -           7 553       (14 000)   
Non-controlling interest acquired       
during the year                                      -            -               -           -                   -             -           6 092         6 092   
Balance as at 1 June 2013                    3 939 891    1 941 082      (1 843 912)    113 139            (931 125)       39 496         (15 718)    3 242 853   
Net profit for the year                              -      450 230               -           -                   -             -          (1 315)      448 915   
Other comprehensive profit                           -            -               -      25 659                   -             -             (22)       25 637                                                                                                                                                                                                             
Total comprehensive income                           -      450 230               -      25 659                   -             -          (1 337)      474 552   
Dividends paid                                       -     (168 627)              -           -                   -             -          (1 805)     (170 432)   
Treasury shares purchased                      (11 120)           -               -           -                   -             -               -       (11 120)   
Equity compensation benefit             
scheme shares vested                            17 061            -               -           -                   -       (16 792)           (269)            -   
Equity-based compensation movements                  -            -               -           -                   -        10 792             277        11 069   
Share of equity movement in associates               -            -               -           -                   -           164               -           164   
Transaction with non-controlling        
interest reserve movement                            -            -               -           -             (26 105)            -           3 760       (22 345)   
Non-controlling interest movement                    -            -               -           -                   -             -            (752)         (752)   
Balance as at 31 May 2014                    3 945 832    2 222 685     (1 843 912)     138 798            (957 230)       33 660         (15 844)    3 523 989   
 * Included in other reserves is the foreign currency translation reserve and the non-distributable reserve.                                                                                                                                                
** Includes employee compensation benefit reserve.                                                                                                                                                        


SUMMARISED GROUP STATEMENT OF CASH FLOWS
                                                                   2014                   2013   
For the year ended 31 May                                         R’000                  R’000   
Cash flows from operating activities                            907 332               (439 794)  
Cash flows from investing activities                           (467 220)              (406 336)  
Cash flows from financing activities                           (196 892)              (188 066)  
Increase/(decrease) in cash and cash equivalents                243 220             (1 034 196)  
Cash and cash equivalents at the beginning of the year          941 282              1 975 242   
Translation difference                                             (371)                   236   
Cash and cash equivalents at the end of the year              1 184 131                941 282   


HEADLINE EARNINGS
                                                                            2014               2013   
For the year ended 31 May                                                  R’000              R’000   
Net profit attributable to equity holders of the parent                  450 230            424 841   
Net profit on disposal of property, plant and equipment                     (207)              (562)  
Profit on disposal of subsidiaries                                             -               (120)  
Profit on disposal of associates and joint ventures                            -             (2 107)  
Impairment of intangible assets and property, plant and equipment            866              2 454   
Headline earnings                                                        450 889            424 506   
Headline earnings per share (cents)                                        67,98              64,17   


Acquisition of subsidiaries
                                                                                 Effective date                        
Shares in the following subsidiaries were acquired during the year:              of acquisition           % acquired   
Subsidiaries                                                                                                           
Simigenix Proprietary Limited                                                    23 August 2013                  100   
Retail Mobile Credit Specialists Proprietary Limited                               7 April 2014                  100                                                                                                                                
Details of the total net assets acquired and the resulting goodwill 
as at the date of acquisition are as follows:                             
                                                                                                               Total   
                                                                                                               R’000   
Total purchase consideration                                                                                 313 818   
Fair value of net assets acquired                                                                            108 069   
Goodwill                                                                                                     205 749                                                                                                                                
The assets and liabilities acquired through acquisition are as follows:                                                
                                                                                                          Acquirer’s   
                                                                                                            carrying   
                                                                                  Fair value at            amount on   
                                                                               acquisition date     acquisition date   
                                                                                          R’000                R’000   
Cash and cash equivalents                                                                25 444               25 444   
Property, plant and equipment                                                               727                  727   
Intangible assets                                                                       104 177                3 004   
Goodwill                                                                                205 749                    -   
Loans receivable                                                                         18 632               18 632   
Receivables                                                                              24 272               24 272   
Deferred tax                                                                            (26 002)               2 327   
Current tax liability                                                                    (3 726)              (3 726)   
Payables                                                                                (35 455)             (35 455)   
                                                                                        313 818               35 225   
Total purchase consideration                                                                                 313 818   
Contingent consideration                                                                                     (15 132)  
Cash and cash equivalents in subsidiary acquired                                                             (25 444)  
Cash outflow from acquisitions                                                                               273 242   


SEGMENTAL SUMMARY                                                                                                                                                                                                                                                                                                                                                               
                                                                          South African    International                                              
                                                             Total         distribution     distribution         Mobile     Solutions     Corporate   
Year ended                                                   R’000                R’000            R’000          R’000         R’000         R’000   
31 May 2014                                                                                                                                           
Total segment revenue                                   25 354 475           24 837 763                -        350 783       165 929             -   
Internal revenue                                        (5 952 809)          (5 734 111)               -       (198 165)      (20 533)            -   
Revenue                                                 19 401 666           19 103 652                -        152 618       145 396             -   
Operating profit/(loss) before depreciation, 
amortisation and impairment charges                        787 993              821 310          (13 961)        34 273        29 257       (82 886)   
Net profit/(loss) for the year attributable 
to equity holders of the parent                            450 230              552 926          (51 176)        23 916        12 547       (87 983)   
Amortisation on intangibles raised through 
business combinations net of tax and 
non-controlling interest                                    10 372                6 070            3 314            988             -             -   
Core net profit for the year attributable to 
equity holders of the parent                               460 602              558 996          (47 862)        24 904        12 547       (87 983)   
At 31 May 2014                                                                                                                                        
Total assets                                             6 502 887            5 651 680          556 376         96 420       136 090        62 321   
Net operating assets/(liabilities)                       1 818 082            1 871 469          (16 065)       (20 543)       23 840       (40 619)                                                                                                                                                                                                              
Year ended                                                                                                                                            
31 May 2013                                                                                                                                           
Total segment revenue                                   24 720 865           24 363 215                -        220 393       137 257             -   
Internal revenue                                        (5 736 655)          (5 651 135)               -        (68 973)      (16 547)            -   
Revenue                                                 18 984 210           18 712 080                -        151 420       120 710             -   
Operating profit/(loss) before depreciation, 
amortisation and impairment charges                        713 622              796 439          (31 000)        37 055        24 703      (113 575)  
Net profit/(loss) for the year attributable 
to equity holders of the parent                            424 841              562 824          (54 861)        24 268        13 152      (120 542)  
Amortisation on intangibles raised through 
business combinations net of tax and 
non-controlling interest                                    12 675                7 942            4 176            519            38             -   
Core net profit for the year attributable to 
equity holders of the parent                               437 516              570 766          (50 685)        24 787        13 190      (120 542)                                                                                                                                                                                                              
At 31 May 2013                                                                                                                                        
Total assets                                             5 720 547            4 950 040          481 712         94 581       145 989        48 225   
Net operating assets/(liabilities)                       1 914 385            1 981 975          (15 567)         3 313        16 904       (72 240)  


Directors: LM Nestadt (Chairman)*, BM Levy, MS Levy, K Ellerine*, GD Harlow*, NN Lazarus SC*, 
JS Mthimunye*, MV Pamensky, DA Suntup, J Vilakazi*      (*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: The Bank of New York, 101 Barclay Street, New York NY. 10286, USA

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