UNAUDITED INTERIM RESULTS For the half year ended 30 November 2017 - - PowerPoint PPT Presentation

UNAUDITED INTERIM RESULTS

For the half year ended 30 November 2017

 Increase in revenue to R13.5 billion*  Increase in PINless GTV by 27% to R12.4 billion  Increase in EBITDA of 9% to R778 million  Increase in earnings per share of 110% to 167.43 cents  Increase HEPS of 109% to 166.68 cents  Increase in core headline earnings per share of 108% to 168.42 cents  Increase in cash generated from operating activities to R3.1 billion  Acquisitions - Cell C and 3G Mobile  Acquisition – Airvantage after period end

* On including PINless top-ups, revenue increased by 10%

G r o u p h ig h lig h t s f o r t h e h a lf y e a r e n d e d

3 0 N o v e m b e r 2 0 1 7

2

• 100,000

200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 Nov 2013 Nov 2014 Nov 2015 Nov 2016 Nov 2017 R'000

EBITDA

• 2

4 6 8 10 12 14 Nov 13 Nov 14 Nov 15 Nov 16 Nov 17 R'billion

Gross PINless transactional values**

**includes gross electricity and PINless top-ups

SOUTH AFRICAN DISTRIBUTION

BRETT LEVY – JOINT CEO  ‘Going for Growth’  Prepaid airtime, data and starter packs  Handsets and Tablets  Prepaid electricity and water  Ticketing  Financial and other Value Added Services  Cell C

 Revenue up 2% to R13.3 billion  PINless top-up revenue increase by R1.2 billion to R4 billion:

• when imputed to revenue effective growth is 10%

 Gross profit margin declined slightly to 7.68%:

• early settlement discounts forfeited to conserve cash
• partly offset by marketing rebates received

 Growth plan

O p e r a t io n a l a n d F in a n c ia l H ig h lig h t s

4

• 500

1,000 1,500 2,000 2,500 3,000 3,500 Millions

Prepaid Airtime Revenue Growth

2017 2016

• 100

200 300 400 500 600 700 800 Millions

Direct Top Up - PINless Airtime Growth

2017 2016

 Management team of experienced distribution professionals:

• systematic and clinical review of all business aspects
• “Going for growth” initiative

 Ensuring customer centric approach  Identifying and focusing on growth pillars  Main/informal market:

• hub and spoke model
• small retail outlets

 Relaunched brand identity - Blu Approved

‘G o in g f o r g r o w t h ’

5

 Maintaining up to 800,000 new SIM connections/month:

• reinforcing market strengths of stability, trust and payment convenience

 Campaigning by truck & footsoldier/gig-rigs  Exceptional growth in corporate channel’s banking sector  Maintaining constructive relationships with all networks  Competitive pricing from networks through bundled offerings  Current market:

• competitive pricing through bundled offering
• demand for data –> convergence of voice, data and content
• consumers migrating to smartphones driving data consumption

P r e p a id A ir t im e , D a t a a n d S t a r t e r p a c k s

6

 Distributing a complete range of handsets and tablets from tier 1 to tier 4:  3G Mobile (tiers 1 and 2):

• distributing top-end smartphones and tablets - Apple, Samsung, Huawei, ZTE and Nokia; and
• financing for handset element of post paid and hybrid contracts – by CEC
• 47.37% acquired 2 Aug 2017– R900 million; 52.63% acquired 6 Dec 2017– R1 billion
• funding of remaining tranche on track
• tough market conditions

 Existing handset and tablet business (tier 3):

• handsets, phones, tablets, POS devices, smart watches, fitness bands - Boost, Verssed,

Blaupunkt, Go, Vibe and Pulse

• online radio app Touch HD loaded onto hardware

 Reware (tier 4):

• capitalising on market shifting from feature phones to inexpensive smartphones
• sources, refurbishes, certifies, repackages and distributes pre-owned smartphones

H a n d s e t s a n d T a b le t s

7

 Distributing hardware ‘in the last mile’:

• mobile devices, tablets, wearables, accessories, gadgets, smart home

concepts & automation, wifi routers and laptops  Edgars Connect:  Stand alone store with unique proposition connecting to a mix of customer needs, across a range of products:

• BLU Approved products and services
• Specialist services and expert advice
• 64 stores open, with 3 more launches shortly

R e t a il D is t r ib u t io n

8

 Growth continues:

• commissions earned up 21% to R124 million
• equates to R8.4 billion in sales, up 20%

 Growth drivers:

• Securing additional prepaid electricity contracts:
• Buffalo City and NW405 Municipalities
• Bill Payments services:
• Ekurhuleni and Cape Town Municipalities

P r e p a id E le c t r ic it y a n d W a t e r

9

• 200

400 600 800 1,000 1,200 1,400 1,600 Millions

Prepaid Electricity - Revenue

2017 2016 2015

 Ticketing for events, sports and transport sectors  Growing market share at 28%  Long-term ticketing arrangements:

• Spar, FMCG chain
• Putco, commuter bus service:
• transporting 250,000 passengers/month
• Ticketpro at >200 merchant outlets on key routes

 2.9m tickets sold  82 different venues served  Revenue up by 79%

T ic k e t in g

10

 Rapid growth in digital capabilities across banking sector:

• e.g. 71% of all transactions through self-help devices at Capitec

 Bill Payments:

• processing ~535,000 transactions/month for 187 bill issuers
• revenue up by 25%
• number of transactions increased by 32%

F in a n c ia l a n d o t h e r V a lu e A d d e d S e r v ic e s

11

>100%

C e ll C – A t u r n a r o u n d s t o r y u n d e r p in n e d b y s u s t a in a b le g r o w t h

12

Service Revenue

R’bn

EBITDA

R’bn

8.8 10.2 10.8 11.8 13.1

2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7

63.2% >100% 5.9% 9.3% RECAPITALISATION PROCESS 12%

0.8 0.4 1.9 3.1 7.8

2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 R e p o r t e d

>100% 15.9% 2017 Innovation-driven revenue growth Price-driven revenue growth 2012-13 2015-16

Recapitalisation:

• New shareholders - equity R7.5 billion
• Debt for equity conversion - R9 billion
• Restructured debt - R6 billion

2018 & beyond

• Innovation
• Service
• Quality
• People

3.7

• 0.7

C e ll C – H ig h lig h t s : F Y 2 0 1 7 K e y p e r f o r m a n c e in d ic a t o r s

13

+12% YOY

Service Revenue R13.2 billion

+151% YOY

EBITDA R7.8 billion

+660%

Net profit after tax R4.1 billion

+7% YOY

Revenue R15.7 billion

+29% YOY

EBITDA Margin 50%

8% of revenue

Capital Expenditure R1.2 billion

Summary of reported financial information

C e ll C - P o s it iv e r e s u lt s F Y 2 0 1 7

14

R’m 2017 2016 % Change Service revenue 13 147 11 752 12 Non-service revenue 2 568 2 894 11 Total revenue 15 715 14 646 7 Gross margin 8 170 7 454 10 Gross margin % 52% 51% 1 EBITDA 7 793 3 106 >100 EBITDA margin % 50% 21% 29 Net profit after tax 4 114 541 >100

NORMALISED FINANCIAL KEY PERFORMANCE INDICATORS

C e ll C – F Y 2 0 1 7 R e s u lt s

15

R’m 7 months 2017 Pre-recap 5 months 2017 Post-recap Total 2017 Dec 2016 Dec % Change Total revenue 9 013 6 702 15 715 14 646 7 Normalised EBITDA 1 960 1 694 3 654 2 892 26 Normalised EBIT 792 796 1 588 1 121 42 Net finance costs

• 2 661
• 1 064
• 3 724
• 801

>100 Normalised net (loss)/profit before tax

• 1 869
• 267
• 2 136

320 >100 Tax

• 2 111

2 111

• Normalised net (loss)/profit
• 1 869

1 844

• 25

320 >100

INTERNATIONAL DISTRIBUTION

MARK LEVY – JOINT CEO  Technology  Oxigen Services India  Blue Label Mexico  Mobile Segment  Solutions Segment  Group Prospects

T e c h n o lo g y in o u r e c o s y s t e m

 Capabilities and offerings advance, strengthened by acquisitions  AEON platform expanding by incremental layering offering more solutions  Positive inflection - technology stack re-energising business models  Customers gaining access to our products and services  Ecosystem is de-commoditised with VAS driving customer experience  Direct correlation in technology, foot traffic and sales  AEON links suppliers and partners  Technology stack extends reach and opportunities

• 1.5 billion transactions/month

17

Large Store Revenue growth with increased BLT Category Penetration Medium Store Revenue growth with increased BLT Category Penetration

O x ig e n S e r v ic e s In d ia - S y n o p s is

 Core businesses provides financial services and a universal payments platform:

• offline: POP devices in retail outlets
• online: e-wallet platform for subscribers

 Government’s digitisation of cash economy  Guidelines and legislation for Fintech sector  Oxigen pursuing offline opportunities  Demonetisation impacting revenue and profitability

18

Jun July Aug Sep Oct Nov

Total Revenue (GTV)

H1 16-17 H1 17-18

O x ig e n S e r v ic e s In d ia – O f f lin e A ir t im e R e c h a r g e a n d B a n k in g

 Serving >200,000 retail merchants nationwide  Expanding digital footprint by rolling out micro-ATM’s  Aligns with Government’s financial inclusion agenda  Requires capital investment  With ICICI Bank in tier 2 and 3 cities:

• enabling cash deposits, withdrawals, bill payments, travel ticketing
• act as service delivery and payment points

 Business Correspondent Banking services:

• revenue growth 14%:
• Adarsh Credit Co-operative Society with 809 branches
• Goa State Co-operative Bank with 67 branches

19

Jun July Aug Sep Oct Nov

Business Correspondent Banking

H1 16-17 H1 17-18

O x ig e n S e r v ic e s In d ia – O n lin e W a lle t s

 Online e-wallet platform for subscribers  B2B2C approach of acquiring subscribers by white labelling:

• loyalty service platform with retailer Future Group with >30m customers
• Amazon gift cards, Fast Tag recharge and bus booking & ticketing

20

B lu e L a b e l M e x ic o - H ig h lig h t s

 Share of loss continues to narrow from R22.1 million to R10.5 million  Revenue improve 27% to R1.9 billion  Gross Profit increase 73% by R35 million  Increasing transactional throughput by continuous process improvements  92,000 devices installed

21

$350 $360 $370 $380 $390 $400 $410 $420 $430 $440 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 MXP Millions

Revenue

Revenue $- $5 $10 $15 $20 $25 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 MXP Millions

Gross Profit

Gross Profit 76,000 78,000 80,000 82,000 84,000 86,000 88,000 90,000 92,000 94,000 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Thousands

Deployed Terminals

Deployed Terminals

B lu e L a b e l M e x ic o – A ir t im e t o p -u p a n d S IM c a r d s

Airtime  Revenue growth  Higher ARPU’s  Merchants benefiting from enhanced platform SIM cards  Distribution gaining traction  Market maturing gradually  Focus on driving commercial opportunities, risk mitigation, improving customer experience  Sims offer competitive advantage  Combining our experience with Grupo Bimbo’s distribution network

22

Jun Jul Aug Sep Oct Nov

SIMS Revenue

2016 2017 Jun Jul Aug Sep Oct Nov

ARPU

2016 2017 Jun Jul Aug Sep Oct Nov

Airtime Revenue

2016 2017

B lu e L a b e l M e x ic o – B ill P a y m e n t s a n d F in a n c ia l S e r v ic e s

Bill Payments  Growth continues steadily  Revenue increasing 34%  Total transactions up >30%  >41% of devices transact in bill payments Financial Services  Transacting across 26% of terminal base  Total number of transactions increased by 32%  Revenue increased by 68% through compounding growth in:

• credit and debit card acquiring
• food voucher distribution

23

Jun Jul Aug Sep Oct Nov

Revenue Bill Payments

2016 2017 Jun Jul Aug Sep Oct Nov

Revenue Financial Services

2016 2017

M o b ile S e g m e n t

 Complete ecosystem of services for mobile phone users  Encompasses Integrated communications, VAS infotainment & entertainment; Financial services, Marketing  Core net profit up by 8% to R27.5 million  Via Media:

• extensive catalogue of content, products and services:
• lifestyle, sport, news, weather, religion, dating
• to mobile phone users across B2B and B2C platforms
• across 9 African countries and in 10 languages
• derives annuity income

 Cellfind:

• comprises converged communications, mobile financial services and value added services, such as LBS:
• bulk SMS distribution increasing to ~260 million per month
• focus on local and international SMS traffic

24

A ir v a n t a g e

 Expanding mobile financial services  Initial 60% acquired wef 2 Jan 2018 for R151 million  Customers acquire airtime in a different manner  Airvantage bears 100% risk  Algorithmic systems create behavioural scores -> present most appropriate offer to subscriber  >100 million transactions monthly, sales >$1 billion to date across 12 emerging markets  Recent launch with TIM Brazil, covering 93% of urban area

25

S o lu t io n s S e g m e n t

 Data scientists supplying analytical services  Core net profit increase by 21% to R13.7 million  Growth driven by:

• sending 717m SMS’s, and
• generating 2.3m unique leads

 Ensuring database of >37 million opt-in entries:

• relevant
• compliant
• POPI and FAIS Acts

 JV with United Financial Group:

• United Call Centre Solutions – 330 agents
• marketing Value Added Services

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G r o u p P r o s p e c t s

 ‘Going for growth’. In line with the Group’s strategy to continue expanding distribution footprint and product offerings, focus will be

• n further penetration of the informal market, through the provision of POS devices to the multitude of independent traders who do

not have the tools to market and sell Blue Label’s products and services.  Blue Label is one of the primary distribution channels for Cell C products and services. Our investment in Cell C provides a compelling value proposition to the Group, to Cell C and its customers, through vertical integration that will afford both companies the opportunity to realise synergies in product distribution. Cell C now has a sustainable capital structure to deliver on its strategic

• bjectives.

 3G Mobile is one of Africa’s largest distributors and financiers of mobile devices and handsets to major retailers and cellular network providers. It has distribution rights for all major tier one and tier two mobile devices and allied products from the manufacturers thereof. Through its wholly owned subsidiary, Comm Equipment Company, it provides the financing of the mobile handset component of postpaid and hybrid contracts to Cell C, with the capability of extending such services to other networks and

• channels. These functions supplement Blue Label’s strategic objectives to provide value added services to both Cell C and its own

customer base. 3G Mobile provides the ideal platform to combine Blue Label’s low cost and certified pre-owned mobile handset divisions into a consolidated group. The acquisition thereof is both earnings accretive and provides a solid foundation for distribution into the burgeoning low cost smartphone market.

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G r o u p P r o s p e c t s - 2

 The proprietary software developed by Airvantage will afford Blue Label the opportunity to apply such intellectual capital within the Group, thereby enabling it to broaden its customer base. It is the intention of Airvantage to emulate its robust business model internationally in the near future.  Through Blue Label’s entrenched relationship with numerous municipalities on whose behalf prepaid electricity is sold and the proceeds thereof collected, it is the intention to supplement these services with a full turn-key revenue management system, credit control services, audits, meter replacements and new installations.  Following Blue Label Mexico’s continuous improvement in operations, it is expected to provide a positive contribution to Group profitability, given its consistent growth in revenue generation at sustainable improved gross profit margins and compounding annuity revenue generated from starter packs.  “Big Data” creates the opportunity to upsell and cross sell the various bouquets of products and services that Blue Label has to offer, through its distribution channels, by intelligently understanding consumer behaviour.

28

FINANCIAL OVERVIEW

DEAN SUNTUP – FINANCIAL DIRECTOR

F in a n c ia l - H ig h lig h t s

30

INCREASE IN REVENUE TO INCREASE IN HEADLINE EARNINGS PER SHARE

R13.5 billion* 166.68 cents

INCREASE IN EBITDA TO INCREASE IN CORE HEADLINE EARNINGS PER SHARE

R778 million 168.42 cents

INCREASE IN EARNINGS PER SHARE TO INCREASE IN CASH GENERATED FROM OPERATING ACTIVITIES TO

167.43 cents R3.1 billion

*On inclusion of the gross amount generated on "PINless top-ups", the effective increase equated to 10%

F in a n c ia l – A d ju s t e d C o r e H e a d lin e E a r n in g s

31

Nov 2017 Nov 2016 Growth Growth R’000 R’000 R’000 % Core headline earnings 1,356,780 552,425 804,355 146% Weighted average number of shares 805,590,826 683,824,520 Core HEPS (cents) 168.42 80.78 87.64 108% Core headline earnings adjusted for: Share of profits from Cell C excluding amortisation on intangible assets (927,643)

• Share of profits from 3G Mobile excluding amortisation on intangible assets

(35,824)

• IFRS interest expense relating to 3G Mobile acquisition

21,194

• Cessation of settlement discounts and interest forfeiture

91,414

• Share of losses from India and fair value gain

(556) (135,577) Adjusted core headline earnings 505,365 416,848 88,517 21% Adjusted weighted average number of shares 668,535,753 666,664,546 Adjusted core HEPS (cents) 75.59 62.53 13.06 21%

• Acquisition of Cell C R5.5bn
• CAPEX loan to Cell C R740m
• Acquisition of PPE and

intangibles R46m

• Bond notes R79m
• Contingent considerations

R28m

• Share issue R2.75bn
• Dividends R371m
• Treasury shares R29m

F in a n c ia l – C a s h F lo w

32

Nov 2017 Nov 2016 R’000 R’000 Cash generated by operations 3,297,462 945,583 Interest received 43,702 25,693 Interest paid (40,642) (65,819) Taxation paid (184,522) (196,074) Cash flows from operating activities 3,116,000 709,383 Cash flows from investing activities (6,345,713) (206,902) Cash flows from financing activities 2,350,250 (259,607) (Decrease)/increase in cash and cash equivalents (879,463) 242,874 Cash and cash equivalents at the beginning of the period 1,350,666 589,027 Translation difference

• (36)

Cash and cash equivalents at the end of the period 471,203 831,865

F in a n c ia l – M a t e r ia l c a s h o u t f lo w s

33

R’000 Cell C acquisition (5,500,000) Placement of shares 2,750,000 Cell C capital expenditure loan (740,000) Dividend paid in September 2017 (349,804) Treasury shares purchased for employee share scheme (28,846) $6m bond notes (79,050) Contingent consideration settlements (27,868) Material cash outflows to November 2017 (3,975,568) Viamedia final acquisition payment (26,415) Capital contribution to Oxigen India (36,200) Airvantage acquisition (150,732) Material cash outflows post November 2017 to February 2018 (213,347) Total material cash outflows to February 2018 (4,188,915)

THANK YOU

Q & A

SUPPLEMENTARY INFORMATION

S u p p le m e n t a r y – B lu e L a b e l f a c t s h e e t

 Founded in 2001  Business model underpinned by long-term distribution contracts  Products and services include

• airtime, starter packs, data and content
• handsets and tablets
• electricity and water
• ticketing
• financial and value added services

 45% held in mobile network operator Cell C  Other investments in India and Mexico  Maiden dividend paid in September 2010  CSI spend R8.5 million and training, development & bursaries R9.4 million (FY17)

36

S u p p le m e n t a r y – C h a r t in g o u r g r o w t h

37

• 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 Nov 2013 Nov 2014 Nov 2015 Nov 2016 Nov 2017 R'million

Revenue

0.00 200.00 400.00 600.00 800.00 1,000.00 1,200.00 Nov 2013 Nov 2014 Nov 2015 Nov 2016 Nov 2017 Cents

NAV per share

• 100,000

200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 Nov 2013 Nov 2014 Nov 2015 Nov 2016 Nov 2017 R'000

EBITDA

• 2

4 6 8 10 12 14 Nov 13 Nov 14 Nov 15 Nov 16 Nov 17 R'billion Gross PINless transactional values*

*includes gross electricity and PINless

G r o u p O p e r a t in g s t r u c t u r e a s a t 3 0 N o v e m b e r 2 0 1 7

38 Transaction Junction (60%)

100% unless otherwise stated * Post period end ** 52.63% acquired post period end Blue Label South Africa

The Prepaid Company Ventury Blue Label Distribution Edgars Connect (40%) Cigicell (74%) Ticketpro Blue Label Connect Prepaid24 (50.1%) Utilities World (25.1%) Reware (50.4%)

Blue Label Mobile

SupaPesa Africa (50%) Simigenix (51%) Panacea (51%) Cellfind Viamedia (75%) Supa Pesa South Africa (50%) Blue Label One

Blue Label International

Blue Label Mexico (47.56%)

Oxigen Online Services India (58.18%)

Gold Label Investments

Oxigen Services India (58.88%) Mpower (21.6%)

Blue Label Solutions

CNS Call Centre Blue Label Data Solutions (81%) Datacision (50%) Datacel United Cell Centre Solutions (50%)

Corporate

Blue Label Accelerator 3G Mobile ** Cell C (45%) Airvantage (60%) *

S u p p le m e n t a r y – B a r r ie r s t o e n t r y

 Lag times in negotiating supplier and customer contracts can hinder integration  Long term contracts – ensure there is no cheaper pricing in the market  Lock-out periods for processing new and developing existing technologies. Roll-out of devices takes time  Time: as customers prioritise systems’ integration for their own needs/objectives and/or products and services (customer, forecourt, municipality, utility, bank, retailer)  Technology platforms – AEON (proprietary, agnostic, neutral aggregator, plug ‘n play, proven, scalable, no fees to others) and Postilion (banking and financial services grade)  Expanding distribution channel: >150,000 POP’s in SA, ~200,000 POP’s in India, and >92,000 POP’s in Mexico  Reputable local partners is key to business model  Trust and relationships of over 15 years in business  These are some of our greatest assets, achieved through long-term contracts with customers and suppliers, which fortify our foundations  These same barriers can hinder us entering new markets

39

S u p p le m e n t a r y – P e e r g r o u p

40

» B lu e L a b e l T e le c o m s

• J S E lis t e d

» B la c k h a w k N e t w o r k N a s d a q lis t e d » C y b e r p la t - R u s s ia n b a s e » E c k o h – A IM lis t e d » E u r o n e t W o r ld w id e - N a s d a q lis t e d » N E T 1 – N a s d a q lis t e d » P a y p a l – N a s d a q lis t e d » P a y P o in t – L S E lis t e d » Q iw i – N a s d a q lis t e d » In C o m m – p r iv a t e ly h e ld in U S A » Cigicell / Blue Label Telecoms » Conlog » Contour » Easypay » ONTEC » Landis & Gyr » Syntell » Red Qiubo / Blue Label Mexico » ATM » OXXO » Sucursales bancarias » Pemex » WalMart » Elektra - Banco Azteca » Telecomms » 7-Eleven » Circulo K » HSBC » Famsa * Descending in size

*

» Ticketpro / Blue Label Telecoms » Big Concerts / Computicket » Computicket / Shoprite » Itickets » Nuticket » Quicket » Webticket / PicknPay VERTICAL PEERS HORIZONTAL PEERS ELECTRICITY HORIZONTAL PEERS TICKETING NETWORKS BY POS DEVICE MEXICO*

S u p p le m e n t a r y – S h a r e h o ld e r P r o f ile a t 3 1 J a n u a r y 2 0 1 8

41

Top Shareholders:

• Allan Gray clients – 15.9%
• Shotput – 11.4%
• B Levy – 7.29%
• M Levy – 6.4%
• Old Mutual – 5.3%
• Investec AM – 3.1%
• PIC – 3.1%
• Sanlam – 2.9%
• All Weather – 2.1%
• Standard Bank – 2%

Notes:

• Shareholders holding >2% of issued capital account for 52% of total

issued share capital

• ADR programme through BNY Mellon
• Market capitalisation R10.6 billion (at R12/share)
• Ranked 23rd in Sunday Times Top 100 Companies over 5 years (Nov 2017)

Beneficial Shareholders - 31 Jan 2018

South Africa 83% USA 8% UK 3% Rest of World 6%

Free Float - 31 Jan 2018

Free float 66% Strategic holders 32% Below threshold 2%

THANK YOU