AUDITED ITED RES ESULTS ULTS For the full year ended 31 May 2018 - - PowerPoint PPT Presentation

AUDITED ITED RES ESULTS ULTS

For the full year ended 31 May 2018

 Revenue increased 1% to R26.8 billion  Including PINless revenue grew 9%  GP increased 7% to R2.28 billion  EBITDA increase 4% to R1.34 billion  Core EPS increased 4% to 120.61c  HEPS increased 1% to 115.42c  Share buy back programme approved

Highlights for the year ended 31 May 2018 - Strong growth relative to telco industry

• 5

10 15 20 25 30 2013 2014 2015 2016 2017 2018 R'billion

Revenue

• 200.00

400.00 600.00 800.00 1 000.00 1 200.00 2013 2014 2015 2016 2017 2018 Cents

NAV per share

• 200

400 600 800 1 000 1 200 1 400 1 600 2013 2014 2015 2016 2017 2018 R'million

EBITDA

• 500

1 000 1 500 2 000 2 500 2013 2014 2015 2016 2017 2018 R'million

Gross Profit

5 10 15 20 25 30 2013 2014 2015 2016 2017 2018 R'billions

Gross PINless Transactional Values

3

 FY18 - concluding acquisitions and designing integration  Extension of distribution reach – organic & acquisitively  Expanded product portfolio  Investing in human capital – distribution specialists  Streamlining operational processes – focused customer targeting, speed to market & performance culture  Investing in technology

Strategic imperatives – Built resilient business, deliberate focus on organic & acquisitive growth

The RITE Strategy

» Blue Label Ventures:

• Boutique Tech business accelerator
• iCrypto acquired – disruptive authentication and identity solution
• Security solution establishing true identity through multifactor identification

4

Technology – Future proofing the organisation

 Continued investing in technology platforms & skills  Adopting Global best practices – Strategic benefit, reducing the cost of transactions, increasing speed  Smarter technology creates smarter interaction with customers  Constantly evolving to provide better service & greater access  Technology differentiates us from competitors  Direct correlation in technology, foot traffic and sales  Developing Artificial Intelligence & Machine Learning capabilities  Agility

2013 2014 2015 2015 2016 2016 2017 2018

Transaction Volumes

Total

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SA & Africa Distribution – built strong base, optimizing for further organic growth

 Revenue grew 1% to R26.2 billion  GP increased 8% to R2.0 billion  EBITDA remained at R1.3 billion  EBITDA margins decreased from 5.18% to 5.12%  Core net profit up 56% to R1.4 billion  Data management optimized for targeted growth  National Coverage, across all channels  Hub and spoke strategy developed for increased reach  Business processes streamlined for speed to market  Performance management processes geared up  Strategic partnership focus SA & Africa Distribution 2016 R’000 2017 R’000 2018 R’000 Revenue 25 722 540 25 944 102 26 245 206 EBITDA 1 133 433 1 344 714 1 344 824 Core NPAT 750 951 893 106 1 385 494

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Product Portfolio - Key to competitive positioning and preventing disintermediation

 Revenue growth across all product categories  Online continues to grow robustly  Further strides made in electricity  Bill Payments - new products added – DSTV  Ticketing provides differentiation  Other products – early days with strong growth  Growing product portfolio provides new revenue streams and discourages disintermediation  Blue Label provides a one-stop shop for retailers:

• Blu Approved kiosks increased revenue for retailers
• A magnet for foot traffic

15755000 4870703 7567679 7754295 2543530 29402 316 38520925 18909000 7241124 7746414 10551793 3241641 146859 25278 47862109 19087000 10373515 8123579 13588234 4101704 366186 282736 55922954 10000000 20000000 30000000 40000000 50000000 60000000 Wholesale Topups

• nline

Topups

• ffline

Electricity Bill Payments Ticketing Other Total

SA & Africa Distribution Revenue Rm’s

2016 2017 2018

* Bill payments not included in gross transactional value

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Product Penetration – Focused product growth

 All products achieved increased penetration in channels  Management information & reporting strengthened  Allows intelligent growth of portfolio through:

• Promotion
• Incentives
• Targeted placements

 Ensuring quality subscriber growth for the networks  Intelligent credit extension to merchants  Bad debt controlled  Strive to increase products and services available to customers  Focus on driving additional product sales per channel

89.9% 88.7% 88.3% 89.3% 89.6% 90.2% 91.9% 92.7% 93.6% 94.3% 94.6% 94.9% 43.4% 46.8% 51.6% 54.0% 57.9% 61.7% 66.1% 69.3% 72.4% 74.9% 76.7% 76.5% 53.2% 54.8% 58.5% 59.5% 61.8% 63.9% 65.3% 66.6% 68.1% 68.2% 68.9% 69.2% 1.0% 0.9% 0.9% 0.9% 0.9% 2.3% 4.8% 13.7% 17.6% 21.0% 23.9% 33.4% 5.6% 7.0% 9.3% 13.4% 13.2% 17.7% 19.2% 23.0% 24.5% 27.1% 29.5% 31.1% 0.5% 0.5% 0.5% 0.6% 0.6% 1.4% 2.1% 2.9% 4.8% 5.2% 5.4% 5.1% F16 Q1 F16 Q2 F16 Q3 F16 Q4 F17 Q1 F17 Q2 F17 Q3 F17 Q4 F18 Q1 F18 Q2 F18 Q3 F18 Q4

Product Penetration

Airtime Data Electricity Other Financial Services Ticketing

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Channel Performance – Wider, deeper reach, superb speed to market & excellent customer service

 Corporate and formal retail drive majority of gains  Formal retail delivered 21% growth in face value revenue & 13% in sales revenue  Corporate has delivered 50% growth in face value revenue & 33% in sales revenue  Banks looking to deal with one-stop shop and decrease admin costs  Independent market represents major growth platform – hub & spoke strategy  Improved data collection & reporting – know where to concentrate expansion drive through customer insights

20% 59% 3% 28% 0% 1% 49% 9% 21% 4% 22689 40062 32008

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Hub & Spoke Strategy - Formal retail provides strong base, growth from independent market

81%

31 million people earn less than R6000 per month Although 70% of people have bank accounts they are only used as a means to access cash. Consumers are shopping closer to home and finding value in doing so. Financial inclusion depends on access to virtual products and services 4500 spokes and 100 hubs delivered in three months - more signed up daily

10

Blue Label Mobile – new products, new geographies

 Operates in 4 verticals – integrated comms, value added services, financial services, marketing  Highly competitive, mature market  Regulatory and MNO restrictions impacting growth  Focusing on B2B vs. B2C  Strategic drive to bundle service offerings & focus on growth segments across the group  Expand geographically – only at marginal cost and specific fit with MNOs  Deploy complementary MNO grade technology platforms Mobile 2016 R’000 2017 R’000 2018 R’000 Revenue 291 856 347 858 359 970 EBITDA 111 142 99 101 101 883 Core NPAT 65 333 56 327 59 553

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Airvantage – new products, new geographies

 Acquired Airvantage:

• Extensive experience in nano score card analysis and consumer behaviours
• Guarantees the highest possible service revenue, ensures low levels of bad

debt and churn

• Over 1 million advances per day and over 1 billion USD to date
• Expand top-up offerings over BLU’s product range
• Expansion into Brazil & Africa
• Offer clients a fully managed end to end solution
• Take over non-performing network product & manage on MNO’s behalf
• Evolving/morphing the platform to other business units within BLT

Jan – May 2018 Airvantage SA R’000 Airvantage Brazil R’000 Revenue 36 929

• EBITDA

20 649 (12 049) NPAT 8 267 (5 640)

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Blue Label Data Solutions – targeted analytics

 POPI & CPA compliant  Robust growth continues in competitive market  Opt-In register of 21.1 million entries

• Rebuilt monthly

 Focus on lead generation  Blue Nova

• Data analytics drives future business
• Driving understanding of customer behaviour

 AI / Data Lakes / Machine Learning

Solutions 2016 R’000 2017 R’000 2018 R’000 Revenue 190 326 177 621 195 089 EBITDA 35 889 34 020 42 838 Core NPAT 16 116 18 956 29 836

13

3G – product range extension: full suite of tier 1 – 4 mobiles; African Focus

 Despite the tough economic conditions in SA – 3G growing in a depressed retail environment  Excellent growth (50%) in African operations – Namibia, Botswana, Mauritius  Biggest distributor of handsets outside of SA Operators  The only distributor in Africa that has Tier 1 – 4 handsets  Only 4PL mobile provider in Africa – full supply chain logistics provider  Further growth into financing hardware infrastructure into government entities and decoders 3G Mobile Aug 2017– May 2018 R’000 Revenue 2 552 225 EBITDA 286 592 NPAT 196 204

14

Blue Label International – Mexico showing good potential

Mexico:  Mexican economy remains sluggish  Inflation rate expected to decrease from 6.77% to 4.0%  Revenue increased 30% to R4 billion  GP increased 39% to R43 million  EBITDA increased by 98% to almost break-even  EBITDA in positive territory from end-February 2018  NPAT improved 42% to -R43 million  Expecting NPAT profits for BLTS financial year ending 2019 Mexico 2016 R’000 2017 R’000 2018 R’000

Revenue

4 016 614 3 075 053 4 010 909

EBITDA

(70 042) (27 358) (485)

NPAT

(130 024) (74 395) (42 790)

56.0 57.0 58.0 59.0 60.0 61.0 62.0 63.0 64.0 65.0 66.0 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18

Active Point of Sale devices

000, UNTs

Blue Label Share of losses is R21.9m in 2018

 Cell C Interim Results

CELL C

Brett Levy

Highlights – H1 2018 Key performance indicators

+5%

YOY Revenue R7.8 Billion

+16%

YOY EBITDA R2.4 Billion

13%

• f revenue

Capital Expenditure R1 Billion

+11%

YOY Service Revenue R6.9 Billion

+31%

EBITDA Margin YOY 3%

• 33%

YOY Net Loss After Tax R0.6 Billion

Cell C – Strategy & Vision

• 1. DATA
• Data revenue increased by 20% whilst data traffic has increased

by 62% YOY

• Data revenue now makes up 52% of mobile revenue compared to

46% a year ago; and

• The effective price of data per MB has decreased by more than

28% YOY

• 4. FTTH
• Competitive products and pricing
• Exceptional organic growth aided by acquisitions going forward;

and

• The customer base grew from 3 733 in H1 2017 to 16 425 in H1

2018.

• 3. WHOLESALE
• Wholesale revenue increased by R164 million (or 51%) to R486

million YOY driven by the growth in the customer base; and

• Customer data usage in this area generated the bulk of the

revenue growth

• 2. VOICE
• Voice revenue decreased by 6% YOY in line with a decrease in

voice traffic by 10% YOY

• Effective price of outgoing voice per minute increasing by 3%

YOY; and

• Voice traffic carried by other means such as WhatsApp Calling

and other VoIP services.

• 5. MTN ROAMING AGREEMENT
• Vastly improved customer experience
• Fixed cost nature results in improved margin as volumes increase
• 4G coverage currently 30% after implementation 80%

Positive results

Summary of reported financial information

R’m H1 2018 H1 2017 % Change Service revenue 6 861 6 196 11 Non-service revenue 914 1 189

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Total revenue 7 775 7 385 5 Gross margin 4 311 3 854 12 Gross margin % 55% 52% 3 EBITDA 2 378 2 048 16 EBITDA margin % 31% 28% 3 Net profit/(loss) after tax (645) (968) 33

Unpacking our subscribers

Million H1 2018 H1 2017 % Change Total active subscribers 16.3 15.7 4 MVNO subscriber base 1.7 1.3 31 Total active data subscribers 12.1 12.6 4 Data revenue (R’m) 2 961 2 473 20 Capital expenditure (R’m) 1 016 494 >100 Increase in smartphone users YOY 11 Smartphones on our network (million) 9.0 8.1 Rand H1 2018 H1 2017 % Change Total ARPU 72 70 3 Prepaid 56 56

• Contract

227 209 9

13.0 0.4 0.7 0.4 1.7

H1 2018 Subscriber Base Composition

12.4 0.5 0.9 0.6 1.3

H1 2017 Subscriber Base Composition

Prepaid Postpaid Hybrid Broadband Wholesale

Other key performance indicators

Revenue by subscriber type

Segment (R mln) H1 2018 H1 2017 % change Prepaid 3 657 3 363 9 Postpaid 906 882 3 Hybrid 721 774 7 Broadband 384 302 27 Mobile revenue 5 668 5 321 7 Other 183 162 13 Wholesale 486 322 51 Incoming 524 391 34 Service revenue 6 861 6 196 11

50.60% 32% 4.80% 12.60%

Service revenue market share

Vodacom MTN Telkom Cell C 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% H1 2016 H1 2017 H1 2018

Service revenue growth

Cell C Market

Revenue segmented

Segment (R mln) H1 2018 H1 2017 % change Voice 2 243 2 389 6 Data 2 961 2 473 20 Other 465 458 2 Mobile revenue 5 668 5 321 7 Wholesale, FTTH and other 669 485 38 Incoming 524 391 34 Service revenue 6 861 6 196 11 Equipment revenue 914 1 189 23 Total revenue 7 775 7 385 5

Available facilities

Facility Estimated value Status New ZAR facility R1.4 billion Approved post June 2018 Vendor financing R1.4 billion In progress Shareholder support R1 billion In progress

Analysis of debt and finance cost

Period 2018 2017 1 January 12.39 13.73 30 June 13.72 13.09

Analysis of forex rates

R mln 2018 2017 2018 2017 2018 2017 2018 2017 Long term debt 6 418 17 914 427 591 145 32 17.8% 7.0% Short term debt 1 528 417 111 28 14.5% 13.4% Leases 5 465 5 081 447 451 16.4% 17.8% Other finance 80 81 218 30

• n.r.

n.r. Cash / interest income 674

• 159
• 33
• 23
• n.r.

n.r. Net debt excl. leases 7 272 18 172 505 677 363 2 17.2% 7.1% Net debt inc. leases 12 737 23 253 952 1 128 363 2 16.9% 9.4% HSF / CEC 1 795 1 959 185 207 18.3% 18.5% BLT 2 700 309 22.9% Debt Interest F-X Indicative interest rate

Leases include operating leases recognised as a finance lease, under IFRS 16, to the value of R3 946 at June 2018 and R3 098 at June 2017.

24

The Way Forward – integration into the Blue Label Machine

Built exceptionally strong base Original Blue Label business geared for strong

• rganic growth

Acquisitions adding to Blue Label ecosystem Integration will generate efficiencies, new growth

• pportunities and shareholder returns

Financia nancial l Highligh lights ts

Dean Suntup

26

Highlights

Increase in revenue to R26.8 billion Increase in gross profit of 7% to R2.28 billion Increase in EBITDA of 4% to R1.34 billion Increase in core headline earnings of 30% to R1.03 billion Increase in core headline earnings per share of 4% to 120.61 cents Increase in cash generated from operating cash flows to R3.2 billion

27

Income Statement

May 2018 May 2017 Growth Growth R’000 R’000 R’000 % Revenue 26,800,265 26,469,581 330,684 1% Change in inventories of finished goods (24,518,173) (24,340,581) (177,592) (1%) Gross profit 2,282,092 2,129,000 153,092 7% Other income 81,704 16,814 64,890 386% Overheads (1,023,643) (858,073) (165,570) (19%) EBITDA 1,340,153 1,287,741 52,412 4% Depreciation, amortisation and impairment charges (242,604) (112,851) (129,753) (115%) EBIT 1,097,549 1,174,890 (77,341) (7%) Net finance expense (111,338) (25,183) (86,155) (342%) Net profit before taxation 986,211 1,149,707 (163,496) (14%) Taxation (331,069) (329,816) (1,253) 0% Net profit after taxation 655,142 819,891 (164,749) (20%) (Loss)/gain on associate measured at fair value (173,645) 160,200 (333,845) Share of gains/(losses) from associates and joint ventures 565,812 (164,941) 730,753 443% Minority interest (53,685) (33,896) (19,789) (58%) Net profit attributable to equity holders of the parent 993,624 781,254 212,370 27%

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Adjusted core headline earnings

May 2018 R'000 May 2017 R'000 Growth R'000 Growth % Core headline earnings 1,032,016 795,684 236,332 30% Core HEPS (cents) 120.61 116.24 4.36 4% Core headline earnings adjusted for: Share of losses, fair value loss and loan impairments from Oxigen 256,941 (35,484) Share of profits from Cell C (569,475)

• Share of profits from 3G Mobile

(156,722)

• Share of profits from Airvantage

(2,627)

• Fair value gain on derivatives

(3,688)

• Transaction interest and costs relating to 3G Mobile acquisition

28,128

• IFRS interest expense relating to 3G Mobile/Airvantage

64,525

• Cessation of settlement discounts and interest forfeiture

216,604

• Once-off winding up cost of Africa Prepaid Services Group

20,737

• Adjusted core headline earnings

886,439 760,200 126,239 17% Adjusted core HEPS (cents) 132.56 113.91 18.65 16%

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Cell C results

R'million Cell C's losses for 5 months (1 Aug 2017 - 31 Dec 2017) (260) Cell C's losses for 5 months (1 Jan 2018 - 31 May 2018) (522) Cell C's losses for the 6 month period Jan 2018 -June 2018 (645) Less June's reported loss 124 Cell C's loss before tax for 10 months (782) Recognition of deferred tax asset 1,922 Cell C's net profit for 10 months 1,140 BLT's share of profit for 10 months at 45% 512 Adjustments: 59 IFRS 15 and 16 adjustments (6) Share scheme adjustment 65 BLT's share of core earnings for 10 months at 45% 571 Headline adjustment (2) BLT's share of core headline earnings for 10 months at 45% 569

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3G Mobile results

Aug - Nov 2017 Dec - May 2018 10 Months Equity Accounted Consolidated to May 2018 R’000 R’000 R’000 Revenue 1,165,196 1,387,029 2,552,225 Change in inventories of finished goods (1,025,718) (1,160,845) (2,186,563) Gross profit 139,478 226,184 365,662 Other income 959 1,657 2,616 Overheads (34,504) (47,182) (81,686) EBITDA 105,933 180,659 286,592 Depreciation, amortisation and impairment charges (1,749) (2,144) (3,893) EBIT 104,184 178,515 282,699 Net finance expense 2,341 2,381 4,722 Net profit before taxation 106,525 180,896 287,421 Taxation (31,505) (59,712) (91,217) Net profit after taxation 75,020 121,184 196,204

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Cash flow

May 2018 May 2017 R’000 R’000 Cash generated by operations 3,588,780 1,753,991 Interest received 154,952 52,300 Interest paid (187,489) (105,518) Taxation paid (368,099) (338,814) Cash flows from operating activities 3,188,144 1,361,959 Cash flows from investing activities (7,758,379) (320,476) Cash flows from financing activities 4,166,560 (279,795) Increase/(decrease) in cash and cash equivalents (403,675) 761,688 Cash and cash equivalents at the beginning of the year 1,350,666 589,027 Translation difference 897 (49) Cash and cash equivalents at the end of the period 947,888 1,350,666

• 5

10 Opening Balance Operating Financing Investing Closing balance R' billion

THANK NK YOU

Q & A