[PPT] - Blue Label Telecoms Results Presentation for the year ended 31 May PowerPoint Presentation

SLIDE 1

Blue Label Telecoms

Results Presentation

for the year ended 31 May 2010 y y

SLIDE 2

AGENDA

Highlights
International Distribution
Technology

gy

Value Added Services
Financial Overview

Financial Overview

South African Distribution
Conclusion
Conclusion

2

SLIDE 3

Group Structure

Blue Label Mobile Blue Label South Africa Blue Label International Blue Label Technology Blue Label Solutions

Cellfind Content Connect Africa The Prepaid Company Blue Label Distribution African Prepaid Services (72%) APS Nigeria (51%)

gy

Activi Technology Services Activi Datacel Velociti Africa Mobile Services Company Company Crown Cellular Bela Phone Company (51%) Gold Label (51%) Oxigen Services India (37 22%) Transaction Junction (60%) Blue Label Data Solutions (81%) CNS Call Centre Ventury The Postpaid Company (75%) Company (51%) Sharedphone International (50 1%) India (37.22%) Ukash (15.79%) Blue Label Procurement (50%) Solutions (81%) Company (75%) International (50.1%) Blue Label Mexico (70%)

100% unless otherwise stated

3

SLIDE 4

BLU approved

4

SLIDE 5

Global footprint

Two strategies for international expansion: Bricks and Mortar & Technology Offerings

Technology offering

Austria Belgium Benin Canada China Czech Republic Denmark DRC Estonia Finland France Greece Guinea Bissau Haiti Hungary Ireland Italy Latvia Lesotho Liberia Mozambique Netherlands Norway Poland Portugal Russia Rwanda Serra Leone Slovenia Spain Sweden Tanzania Uganda Ukraine United Kingdom

Bricks and Mortar

India Mexico Nigeria

5

Uruguay Yemen Zimbabwe Nigeria South Africa United Kingdom

SLIDE 6

I t ti l International Distribution

Mark Levy Mark Levy Joint CEO

6

SLIDE 7

International Distribution - Overview

Strategy is to pursue growth by rolling out prepaid products

d i and services

Replicating the South African distribution model
Continuing focus on expanding footprint in India, Mexico

and Nigeria

India: get well plan bears fruit achieving sustainable EBITDA
Mexico: rollout programme steadily progresses with over

3 500 POS 3,500 POS

Nigeria: extended offering to other networks and dealer

relationship strengthened relationship strengthened

7

SLIDE 8

India India

Total connections (March 2010) 578 million % Growth in total connections p.a. 49.8% Prepaid as % of total 87 1% p connections 87.1% Market penetration 49.7%

8

Prepaid ARPU (USD/month) 2.70

Source: Wireless Intelligence

SLIDE 9

Oxigen India - Overview

Over 75 000 POP’s today, accelerating as GPRS-

enabled are deployed

Challenging competitive environment
Launched cell phone vending
Developing non-traditional markets and corporate

clients

Technical integrations with State Bank of India (SBI),

g ( ) ICICI and Corporation Banks

Accessing over 100 million banking and internet

customers

Launched Oxicash card and wallet
Joint launch with SBI of kiosk banking targeting

about 20 000 Oxigen merchants initially in Delhi and about 20 000 Oxigen merchants, initially in Delhi and Mumbai

SBI approved introduction of Mobile Wallet platform

9 9

SLIDE 10

Oxigen India – Get Well Plan

Improved revenue, higher margins, consolidation and get well plan

contributed to turning EBITDA positive

Share of losses reduced from R26 million to R6 million
Get well plan:
technical availability and other operational improvements

tec ca a a ab ty a d ot e ope at o a p o e e ts

changes to distribution structure and margins

introduction of new products and services from non telco sectors and

introduction of new products and services from non-telco sectors and

introduction of direct top-up (PINless recharge)

facilitating more profitable bill payments system

facilitating more profitable bill payments system

cost reductions and operating expenditure contained.

10

SLIDE 11

Mexico Mexico

Total connections (March 2010) 84.1 million % Growth in total connections p.a. 5.9% Prepaid as % of total connections 88.62% Prepaid as % of total connections 88.62% Market penetration 74.9% P id ARPU (USD/ th) 11 40*

11

Prepaid ARPU (USD/month) 11.40*

*blended ARPU Source: Wireless Intelligence

SLIDE 12

Blue Label Mexico - Overview

About 3 000 active POS’s at year end, increasing by a

net few hundred per month, to 3 500 presently p , p y

Consolidation phase with hiring and refining processes

and procedures for expanding channels and broadening offerings broadening offerings

Strategic agreement with WOCCU reaches millions of

members of its affiliated credit unions and member i fi it micro-finance sites

Technical integrations into Atio and Alianza
Rolling out cellphone and PC based vending solutions

Rolling out cellphone and PC based vending solutions

Introducing bill payments system
Certification obtained to print Pronosticos Lotto

vouchers

Springboard into US and Latin American markets

12 12

SLIDE 13

Nigeria Nigeria

Total connections 2010 forecast 88,267 million % Growth in total connections p.a. 20.68% Prepaid as % of total 98% l p connections 98% plus Market penetration 57.3%

13

Prepaid ARPU (USD/month) 8 to 14

Source: BMI

SLIDE 14

Africa Prepaid Services - Nigeria

Strengthening dealer and super-dealer

relationships relationships

Sole distributor of Multi-Links products

nationwide entrenched nationwide entrenched

Multi-Links long-term contract under

i ith T lk SA review with Telkom SA

Network distribution agreements with

ZAIN GLOBACOM ETISALAT ZAIN, GLOBACOM, ETISALAT, STARCOMMS for direct recharge purchase purchase

Preparing to offer single POS device and

bulk printing bulk printing

14 14

SLIDE 15

United Kingdom United Kingdom

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SLIDE 16

Ukash

Ukash vouchers now available in 400 000 locations, 30

countries and on 6 continents, principally UK, Europe, countries and on 6 continents, principally UK, Europe, Australia, North and South America and China

Maintained expansion of issuing sites in new markets,

p g , including South Africa

Redemption value growth up 70% annualised as

p g p

pportunities extended into VOIP and gaming
Acceptance in transient communities

p

‘Re-load’ and ‘re-Power’ strategic agreement concluded

with MasterCard

Virtual prepaid card, NEO positively impacted revenue

I d ffi i i i t t i t’

Improved efficiencies ensuring cost containment’

16 16

SLIDE 17

T h l Technology and Value Added Services Services

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SLIDE 18

Technology highlights

Consolidating and integrating group systems and

l tf platforms

Focus on robustness, scalability and skills

development on core technology development on core technology

In SA delivered further network integrations,

facilitating real time top up of airtime novel electricity facilitating real time top-up of airtime, novel electricity top-up and transport ticketing

EFT transactional volumes increased three-fold
EFT transactional volumes increased three-fold
FNB Lotto integration and delivery through internet

banking ATM and Mobile Banking banking, ATM and Mobile Banking

Pick ‘n Pay Lotto integration and delivery through the

till points till points

18

EFT up 3x

SLIDE 19

Blue Label Mobile

Consolidation of three divisions
Cellfind
Cellfind
The Mobile Services Company
Content Connect Africa

Foc s

Focus
All mobile strategy for the group
All business-to-consumer marketing for group (only South Africa)
All mobile technology for group
All media sales for group
Focus on business-to-business and business-to-business-to-consumer

solutions

Benefits
Cost savings in removal of duplicate positions

g p p

Cost savings in staff reductions
Reduction in offices from four to two
Integrated solution offering

Integrated solution offering

19

SLIDE 20

mobiWallet, mobiMerchant and mobiSecure

mobiWallet launched

F ll f t d bil ll t

Full-featured mobile wallet
Primarily for B2B market
Multiple top-up and payment

methods methods

Multiple products and services
Money transfer and banking

capabilities capabilities

Multi-channel access (Java, WAP,

USSD, www)

mobiMerchant launched

mobiMerchant launched

Mobile-based merchant solutions
mobiSecure launched

E d t d it f

End-to-end security for

mobiWallet and mobiMerchant

All services driven off Blue Label

Mobile’s integrated services Mobile s integrated services platform

20

SLIDE 21

Location Services, WASP and CCA

Continues to deliver annuity income through Vodacom

and MTN LBS and WASP aggregation businesses

Good performance in spite of tough trading conditions
MI-International Look4Me license extended to cover

North America, Asia, Middle East and Argentina

JV with Symantec – mobile antivirus protection service –

a world first for Symantec

Newer traffic and music services showing steady

increases in consumption

Expansion of B2B relationships with corporate

customers

21

SLIDE 22

Datacel

Call Centres in Bloemfontein, Kimberley and Cape Town closed

down due to operational inefficiencies and ongoing losses as a result of economic downturn

Impairment of R12 million taken at the half year
Impairment of R12 million taken at the half year
Remaining Call Centre business consolidated in Velociti and

continues with 700 seat capacity in Durban p y

Focus on in- and out-bound campaigns for internal and external

clients, as well as cellular contract telemarketing, but challenging

Blue Label Data Services performed satisfactorily and earned

Centre of Excellence Accreditation from the Direct Marketing Association of South Africa Association of South Africa

22

SLIDE 23

Technical overview

PRODUCTS / SERVICES Blue Label or Third Party

Airtime Utilities (electricity / OTHER Insurance Gift voucher, Loyalty card Bill payments / Airline tickets bus Airtime (electricity / water) OTHER Insurance Loyalty card, etc payments / EFT tickets, bus tickets

Mobile Devices

BLUE LABEL TECHNOLOGY PLATFORM (AEON)

POSTILION

BLUE LABEL DISTRIBUTION

POSTILION

POS Terminal Vending Machine Touch Screen Bulk Voucher Integrated Gateway Kiosk

M i I d d Fi i l

23

Wholesale Main Retailers Independent Retail Kiosks Informal Retail Financial Institutions

SLIDE 24

Fi i l Financial Overview

David Rivkind David Rivkind Financial Director

24

SLIDE 25

Financial highlights

Growth

Revenue R17.03bn Gross profit R1.17bn 11% 10% p EBITDA R689m Operating profit R569m % 21% 20% Operating profit R569m NPAT R365m 20% (7%) Core earnings R397m Headline earnings per share 48,27 cents (7%) (7%) Core earnings per share 52,34 cents Cash generated from operations R516m (6%)

25

SLIDE 26

FINANCIAL OVERVIEW

Segmental profile

South African distribution

South African distribution

International distribution
Value added services
Technology

26

SLIDE 27

Income statement

31 May 2010 31 May 2009 Growth R’000 R’000 % R 000 R 000 %

Revenue 17 027 696 15 281 449 11% Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10% Gross profit % 6.90% 6.97% (1%) Other income 41 969 22 368 Overheads (526 949) (519 910) EBITDA 689 244 568 067 21% EBITDA % 4.05% 3.72% 9% EBITDA % 4.05% 3.72% 9% Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20% Net finance income 37 460 92 347 Finance income 161 774 205 046 Finance expense (124 314) (112 699) Finance expense (124 314) (112 699) Net profit before taxation 606 919 567 194 Taxation (166 756) (174 784) Net profit after taxation 440 163 392 410 12% Share of loss of associates and joint ventures (14 982) (27 445) (60 1 9) 2 82 Minorities interest (60 159) 25 582 Net profit after taxation and minorities interest 365 022 390 547 (7%) Amortisation on intangibles raised through business combinations net of tax 31 623 36 653 Core net profit after taxation 396 645 427 200 (7%) Earnings per share for profit attributable to equity holders (cents)

27

Basic

48.17 51.13 (7%)

Headline

48.27 51.63 (7%)

SLIDE 28

Income statement

31 May 2010 31 May 2009 Growth R’000 R’000 %

Revenue 17 027 696 15 281 449 11% Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Segmental revenue Gross profit % 6.90% 6.97% (1%) Other income 41 969 22 368 Overheads (526 949) (519 910) EBITDA 689 244 568 067 21% EBITDA % 4.05% 3.72% 9% Segmental revenue South African distribution 15 543 337 14 199 031 9% International distribution 1 247 732 724 163 72% Value added services 216 538 335 743 (36%) T h l 20 089 22 512 (11%) EBITDA % 4.05% 3.72% 9% Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20% Net finance income 37 460 92 347 Finance income 161 774 205 046 Finance expense (124 314) (112 699) Technology 20 089 22 512 (11%) Total 17 027 696 15 281 449 11% % Contribution Finance expense (124 314) (112 699) Net profit before taxation 606 919 567 194 Taxation (166 756) (174 784) Net profit after taxation 440 163 392 410 12% Share of loss of associates and joint ventures (14 982) (27 445) (60 1 9) 2 82 South African distribution 91.3 92.9 International distribution 7.3 4.8 Value added services 1.3 2.2 Technology 0.1 0.1 T t l 100 100 Minorities interest (60 159) 25 582 Net profit after taxation and minorities interest 365 022 390 547 (7%) Amortisation on intangibles raised through business combinations net of tax 31 623 36 653 Core net profit after taxation 396 645 427 200 (7%) Earnings per share for profit attributable to equity holders (cents) Total 100 100

Basic

48.17 51.13 (7%)

Headline

48.27 51.63 (7%)

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SLIDE 29

Income statement

31 May 2010 31 May 2009 Growth R’000 R’000 %

Revenue 17 027 696 15 281 449 11% Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Gross profit % 6.90% 6.97% Other income 41 969 22 368 Overheads (526 949) (519 910) EBITDA 689 244 568 067 21% EBITDA % 4.05% 3.72% 9% Segmental gross profit South African distribution 867 230 813 589 EBITDA % 4.05% 3.72% 9% Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20% Net finance income 37 460 92 347 Finance income 161 774 205 046 Finance expense (124 314) (112 699) South African distribution 867 230 813 589 International distribution 188 020 75 488 Value added services 115 319 160 903 Technology 3 655 15 629 Total 1 174 224 1 065 609 Finance expense (124 314) (112 699) Net profit before taxation 606 919 567 194 Taxation (166 756) (174 784) Net profit after taxation 440 163 392 410 12% Share of loss of associates and joint ventures (14 982) (27 445) (60 1 9) 2 82 Gross profit % South African distribution 5.58 5.73 International distribution 15.07 10.42 Minorities interest (60 159) 25 582 Net profit after taxation and minorities interest 365 022 390 547 (7%) Amortisation on intangibles raised through business combinations net of tax 31 623 36 653 Core net profit after taxation 396 645 427 200 (7%) Earnings per share for profit attributable to equity holders (cents) Value added services 53.26 47.92 Technology 18.19 69.43 Total 6.90 6.97

Basic

48.17 51.13 (7%)

Headline

48.27 51.63 (7%)

29

SLIDE 30

Income statement

31 May 2010 31 May 2009 Growth R’000 R’000 % R 000 R 000 %

Revenue 17 027 696 15 281 449 11% Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10% Segmental EBITDA margins EBITDA margin % South African distribution 4.41 4.40 International distribution 10 98 0 85 Gross profit % 6.90% 6.97% (1%) Other income 41 969 22 368 Overheads (526 949) (519 910) EBITDA 689 244 568 067 21% EBITDA % 4.05% 3.72% International distribution 10.98 0.85 Value added services 11.65 22.40 Total trading operations 4.99 4.63 EBITDA % 4.05% 3.72% Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20% Net finance income 37 460 92 347 Finance income 161 774 205 046 Finance expense (124 314) (112 699) Segmental EBITDA South African distribution 685 686 624 346 10% Finance expense (124 314) (112 699) Net profit before taxation 606 919 567 194 Taxation (166 756) (174 784) Net profit after taxation 440 163 392 410 12% Share of loss of associates and joint ventures (14 982) (27 445) (60 1 9) 2 82 International distribution 137 035 6 144 2130% Value added services 25 230 75 239 (66%) Total trading operations 847 951 705 729 20% Technology (76 230) (48 502) Minorities interest (60 159) 25 582 Net profit after taxation and minorities interest 365 022 390 547 (7%) Amortisation on intangibles raised through business combinations net of tax 31 623 36 653 Core net profit after taxation 396 645 427 200 (7%) Earnings per share for profit attributable to equity holders (cents) Corporate (82 477) (89 160) Total support (158 707) (137 662) 15% Total 689 244 568 067 21%

30

Basic

48.17 51.13 (7%)

Headline

48.27 51.63 (7%)

SLIDE 31

Income statement

31 May 2010 31 May 2009 Growth R’000 R’000 %

Revenue 17 027 696 15 281 449 11% Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Gross profit % 6.90% 6.97% (1%) Other income 41 969 22 368 Overheads (526 949) (519 910) EBITDA 689 244 568 067 21% EBITDA % 4.05% 3.72% 9% EBITDA % 4.05% 3.72% 9% Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20% Net finance income 37 460 92 347 Finance income 161 774 205 046 Finance expense (124 314) (112 699) Finance income 161 774 205 046 Finance expense (124 314) (112 699) Net profit before taxation 606 919 567 194 Taxation (166 756) (174 784) Net profit after taxation 440 163 392 410 12% Share of loss of associates and joint ventures (14 982) (27 445) (60 1 9) 2 82

The group earned finance income of R162m
Imputed interest receivable on debtors balances – R78m (R47m in prior period)
Interest on liquid working capital – R84m

D li i fi i t f IFRS dj t t R74 i l d t 550 b i i t d li i i t t t Minorities interest (60 159) 25 582 Net profit after taxation and minorities interest 365 022 390 547 (7%) Amortisation on intangibles raised through business combinations net of tax 31 623 36 653 Core net profit after taxation 396 645 427 200 (7%) Earnings per share for profit attributable to equity holders (cents)

Decline in finance income, net of IFRS adjustments, was R74m, mainly due to 550 basis points decline in interest rates
Basic

48.17 51.13 (7%)

Headline

48.27 51.63 (7%)

31

SLIDE 32

Income statement

31 May 2010 31 May 2009 Growth R’000 R’000 %

Revenue 17 027 696 15 281 449 11% Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Gross profit % 6.90% 6.97% (1%) Other income 41 969 22 368 Overheads (526 949) (519 910) EBITDA 689 244 568 067 21% EBITDA % 4.05% 3.72% 9% EBITDA % 4.05% 3.72% 9% Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20% Net finance income 37 460 92 347 Finance income 161 774 205 046 Finance expense (124 314) (112 699) Net finance income 37 460 92 347 Finance income 161 774 205 046 Finance expense (124 314) (112 699) Finance expense (124 314) (112 699) Net profit before taxation 606 919 567 194 Taxation (166 756) (174 784) Net profit after taxation 440 163 392 410 12% Share of loss of associates and joint ventures (14 982) (27 445) (60 1 9) 2 82 Finance expense (124 314) (112 699)

R119m relates to imputed interest payable on creditors’ balances in terms of IFRS (R108m in prior period)

Minorities interest (60 159) 25 582 Net profit after taxation and minorities interest 365 022 390 547 (7%) Amortisation on intangibles raised through business combinations net of tax 31 623 36 653 Core net profit after taxation 396 645 427 200 (7%) Earnings per share for profit attributable to equity holders (cents)

Basic

48.17 51.13 (7%)

Headline

48.27 51.63 (7%)

32

SLIDE 33

Income statement

31 May 2010 31 May 2009 Growth R’000 R’000 %

Revenue 17 027 696 15 281 449 11% Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10%

R 000 R 000 %

Gross profit % 6.90% 6.97% (1%) Other income 41 969 22 368 Overheads (526 949) (519 910) EBITDA 689 244 568 067 21% EBITDA % 4.05% 3.72% 9%

Oxigen Services India
Reduction in losses of 73% due to:
growth in revenue by R109m (25%); and

EBITDA % 4.05% 3.72% 9% Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20% Net finance income 37 460 92 347 Finance income 161 774 205 046 Finance expense (124 314) (112 699)

reduction in overheads of 40%
Ukash
Comparatives related to eight months only as Ukash was acquired in October 2008

Finance expense (124 314) (112 699) Net profit before taxation 606 919 567 194 Taxation (166 756) (174 784) Net profit after taxation 440 163 392 410 12% Share of loss of associates and joint ventures (14 982) (27 445) (60 1 9) 2 82

The reversal of a deferred tax asset of R3.7m further impacted on their negative contribution

Minorities interest (60 159) 25 582 Net profit after taxation and minorities interest 365 022 390 547 (7%) Amortisation on intangibles raised through business combinations net of tax 31 623 36 653 Core net profit after taxation 396 645 427 200 (7%) Earnings per share for profit attributable to equity holders (cents) Oxigen Services India Pvt Ltd (7 098) (25 940) Ukash (8 079) (2 286) Other 195 781 Total (14 982) (27 445) 45%

Basic

48.17 51.13 (7%)

Headline

48.27 51.63 (7%)

33

Total (14 982) (27 445) 45%

SLIDE 34

Income statement

31 May 2010 31 May 2009 Growth R’000 R’000 % R 000 R 000 %

Revenue 17 027 696 15 281 449 11% Cost of inventories sold (15 853 472) (14 215 840) Gross profit 1 174 224 1 065 609 10% Core net profit South African distribution 555 161 537 815 3% Gross profit % 6.90% 6.97% (1%) Other income 41 969 22 368 Overheads (526 949) (519 910) EBITDA 689 244 568 067 21% EBITDA % 4.05% 3.72% 9% South African distribution 555 161 537 815 3% International distribution 33 767 16 279 108% International distribution associates (13 670) (27 226) 49% Value added services (1 567) 49 497 (103%) Total operations 573 691 576 365 EBITDA % 4.05% 3.72% 9% Depreciation, amortisation and impairment charges (119 785) (93 220) Operating profit 569 459 474 847 20% Net finance income 37 460 92 347 Finance income 161 774 205 046 Finance expense (124 314) (112 699) Total operations 573 691 576 365

Technology

(93 265) (55 250) (69%) Corporate (83 781) (93 915) 11% T t l t (177 046) (149 165) (19%) Finance expense (124 314) (112 699) Net profit before taxation 606 919 567 194 Taxation (166 756) (174 784) Net profit after taxation 440 163 392 410 12% Share of loss of associates and joint ventures (14 982) (27 445) (60 1 9) 2 82 Total 396 645 427 200 (7%) Core earnings per share 52.34c 55.93c (6%) Total support (177 046) (149 165) (19%) Minorities interest (60 159) 25 582 Net profit after taxation and minorities interest 365 022 390 547 (7%) Amortisation on intangibles raised through business combinations net of tax 31 623 36 653 Core net profit after taxation 396 645 427 200 (7%) Earnings per share for profit attributable to equity holders (cents)

34

Basic

48.17 51.13 (7%)

Headline

48.27 51.63 (7%)

SLIDE 35

Balance sheet

35

31 May 2010 31 May 2009 R’000 R’000

ASSETS Non-current assets 717 581 736 634

R 000 R 000

1. Property, plant and equipment

Increase in PPE of R52m,

mainly due to capex on POS

Property, plant and equipment (1) 156 888 105 011 Intangible assets and goodwill (2) 436 824 460 325 Other non-current assets (3) 123 869 171 298

mainly due to capex on POS devices 2. Intangible assets and goodwill

Starter pack base acquired –

R59m

Current assets (4) 3 730 721 3 143 109 Inventories 560 846 384 361 Trade and other receivables 987 279 898 571

R59m

Additional capex on software

and development – R31m

Offset by disposals (R27m),

impairments (R23m) and

Trade and other receivables 987 279 898 571 Cash and cash equivalents 2 057 077 1 760 697 Other current assets 125 519 99 480 Total assets 4 448 302 3 879 743

impairments (R23m) and amortisation (R64m) 3. Other non-current assets

Investment in associates

reduced due to losses

Total assets 4 448 302 3 879 743

Decline in unactivated starter

packs 4. Current assets

Stock turn -13 days

Stock turn 13 days

Debtors collection – 21 days

SLIDE 36

Balance sheet

36

31 May 2010 31 May 2009 R’000 R’000

EQUITY AND LIABILITIES

R 000 R 000

Capital and reserves (1) 2 655 436 2 244 120 Non-current liabilities 47 696 69 664

1. Reserves

Declined due to purchase of

treasury shares (R26m) for the group’s share incentive

Current liabilities 1 745 170 1 565 959 Trade and other payables (2) 1 718 907 1 518 853

scheme 2. Trade and other payables

Other current liabilities 26 263 47 106 Total equity and liabilities 4 448 302 3 879 743

Increased in line with volume

growth

Creditor terms – 40 days

SLIDE 37

Cash flow

37

31 May 2010 R’000 Operating profit 569 459 Adjusted for non-cash items 53 367

1. Cash flows from operating activities

R 000 Changes in working capital 166 Increase in inventories (187 017) Increase in trade and other receivables (190 294) I i t d d th bl 354 427

R123 million less than prior

year due to early settlement discounts at lower rates than the discounts earned.

Increase in trade and other payables 354 427 Decrease in starter pack assets 23 048 Cash generated by operations 622 992 Net interest received 78 999

2. Cash flows from investing activities

Capex on PPE - R104m.

C i t ibl t

Net interest received 78 999 Taxation paid (186 081) Cash flows from operating activities (1) 515 910 Cash flows from investing activities (2) (187 912)

Capex on intangible assets -

R91m 3. Cash flows from financing activities

Cash flows from financing activities (3) (23 283) Increase in cash and cash equivalents 304 715 Cash and cash equivalents at the beginning of the period 1 756 806 T l ti diff (6 619)

Treasury shares acquired –

R26m

Translation difference (6 619) Cash and cash equivalents at end of period(2) 2 054 902

SLIDE 38

Financial overview

Dividends

M id di id d f 12 h Maiden dividend of 12c per share

38

SLIDE 39

S th Af i South African Distribution

Brett Levy Brett Levy Joint CEO

39

SLIDE 40

Blue Label Distribution

CEO Commercial /operational Sales Technical

Crown Cellular

p

TPC CIGICELL BLD Technical Blue Label Mobile

Finance
Sales
Finance
Sales & CRM
Operations
Treasury
Procurement
Finance
Sales & CRM
Operations
Finance
Sales & CRM
Operations
Merchant support
Field support
Cellfind
CCA
MSC

Administration

40

SLIDE 41

New Products

Prepaid Electricity
Money transfers
M-PESA
Mid-tier bank products
EFT

EFT

Lotto
Bill Payments
Bill Payments
PINless
Symantec
Blu approved

41

SLIDE 42

Existing Products

RICA
Prepaid Airtime
Kiosks
Ukash
Starter packs

p

Bus tickets
Cover2Go

42

SLIDE 43

Prepaid Electricity – monthly revenue growth

R 250,000,000 R 150,000,000 R 200,000,000 R 100,000,000 R 0 R 50,000,000 43

* The group does not account for revenue on face value on electricity but only the commission received

SLIDE 44

Money transfers - nationwide penetration at low cost

Existing B2B distribution and POS device footprint as well as mobiMerchant

b t i i ll i t l base extension, especially into rural areas Retailers Channel

cash interface
promotions / offers
national chain stores

ll h t

smaller merchants

B2B / H2H POS network POS network mobiMerchants “Ambassadors” Channel

cash interface
awareness, training, support
up-sell & customer development
Street vendor enablement

SLIDE 45

Bill payments

Transaction Volume Retailer Transaction Volume 12 months Market Share

Retailer 1 8 500 000 49 2% Retailer 1 8 500 000 49.2% Retailer 2 7 300 000 42.3% Retailer 3 780 000 4.5% Retailer 4 696 000 4% Retailer 4 696 000 4% Total 17 276 000 100%

45

SLIDE 46

New Products

Symantec
Lotto
PINless

46

SLIDE 47

Prepaid Airtime - revenue

R1,800,000,000 R1,400,000,000 R1,600,000,000 R1,000,000,000 R1,200,000,000 R400 000 000 R600,000,000 R800,000,000 R- R200,000,000 R400,000,000 2010 2009 R0 47 R- R0

SLIDE 48

Prepaid revenue split per network

Cell C Cell C 6% MTN 8% MTN 30% Vodacom

2009

MTN 31% Vodacom 57%

2010

Telkom 6% Vodacom 58% Telkom 4% 57% 48

SLIDE 49

Shareholder Profile

2%1%

Beneficial Shareholders

2.3%

Free Float %

16% 6% 36.9% 16% 73% 60.8% South Africa USA UK Luxembourg Australia Channel Islands Ireland Germany Bermuda BVI Netherlands Norway Strategic Holders Free Float Below Threshold

49

y Japan Canada South Korea Switzerland

SLIDE 50

Conclusion

Over 130 000 POS across South Africa
Over 120 000 starter pack connections per month in South Africa
Call Centres facing challenges under evaluation
Call Centres facing challenges under evaluation
Growth in products and services outside South Africa with Multi-

Links under review Links under review

Normalisation employment costs and general expenses
New branding ‘BLU approved’ being introduced
Growth in products and services outside Telco sector

p

Footprint in India and Mexico growing steadily

M id di id d f 12 h d

Maiden dividend of 12c per share approved

50

SLIDE 51

Prospects

Mobile Merchant Solutions extends POS footprint securely
Reseller agreement with Symantec to provide antivirus protection for

Smartphones Smartphones

Expanding distribution agreements with multiple networks in Nigeria
Advertising revenue from ‘real estate’ on vouchers
Oxigen India and State Bank of India collaboration on kiosks and

wallets

51

SLIDE 52

Thank you

Questions & Answers

SLIDE 53

Supplementary – mobile trends

Top 5 mobile commerce trends for 2010*:

Bargain hunting
Mobile ticketing (>$100bn worldwide by 2012)

Banking (13 2bn people accessed banking accounts from mobile

Banking (13.2bn people accessed banking accounts from mobile

phones in April 2010, up 70% on April 2009)

Purchase tangible goods
Marketing and on-line retailing.

B 2015 $119b h d d i b h d b

+By 2015: $119bn worth goods and services to be purchased by

mobile phones

USA: mobile shopping rose from $39bn in 2008 to $1.2bn in 2009

pp g $ $ and is forecast at $2.2bn in 2010

* Stephanie Marcus on Mashable Jul 2010 Stephanie Marcus on Mashable, Jul 2010 + ABI Research, Feb 2010

53

SLIDE 54

Supplementary - Why mobile? 2008 Next 5-10 years

4-5 billion connections
$72 billion worth of mobile-

i iti t d t ti ( l )

50 billion connections
$800 billion worth of mobile-

i iti t d t ti ( l ) initiated transactions (value)

22 billion mobile-initiated

transactions (volume) initiated transactions (value)

300 billion mobile-initiated

t ti ( l ) transactions (volume)

67 million mobile banking users

transactions (volume)

1 billion mobile banking users
$1-billion worth of global money

transfers

$200-billion worth of global

money transfers Fastest growing channel to reach customers in lower LSM segments and rural areas

SLIDE 55

Supplementary - mobile subscribers by geography

5,000

Mobile subscribers

4,000 4,500 3,000 3,500 s The Americas 2,000 2,500 Millions Europe CIS Asia & Pacific Arab States 1,000 1,500 Africa

500

2005 2006 2007 2008 2009 55 2005 2006 2007 2008 2009 Year

SLIDE 56

Supplementary – mobile subscribers in Africa

5 000

Mobile subscribers

4 000 4,500 5,000 3,000 3,500 4,000 2,000 2,500 Millions Africa World 1,000 1,500

500

2005 2006 2007 2008 2009 56 2005 2006 2007 2008 2009 Year

SLIDE 57

Supplementary – projects/core capabilities

EFT Switching Platform Core IT Infrastructur e & Operational EVD/VAS Group MIS Platform (and Accounting / p Support Platform Card Accounting / Financial Management) Managemen t Platform (Gift Cards/ Loyalty) Device D l t Factory Deployment & Support

57

SLIDE 58

Supplementary - Where Mobile fits

Estimated 35 140,000 touch points Estimated 35 million mobile phone users in South Africa

POS POS Integrated Integrated Vending Vending

Mobile

South Africa

Blue Label Switch (AEON) Existing & New Products

SLIDE 59

Supplementary - Shareholder Profile

Fund Managers By Geography Foreign Fund Managers

Luxembourg Australia 2.2% Ireland 1.2% Australia 4 4% Ireland 2.3% Bermuda 1.2% South Africa 49.7% USA 12 7% g 9.1% UK 46.4% Luxembourg 18 1% 4.4% 12.7% 18.1% UK 23.3% USA 25 3%

South Africa UK USA Luxembourg Australia Ireland Bermuda

25.3% 59

Norway Japan South Korea Canada Belgium Switzerland

SLIDE 60