Slide 1: Results for the year ended May 2016
SEUEseebias TELECOMS I RESULTS FOR _ THE YEAR ENDED \ MAY 2016 / — _ ~ ~ ~ ~ ew.
Slide 2: Group highlights for the year ended 31 May 2016
HIGHLIGHTS Group highlights for the year ended 31 May 2016 • Compounded earnings continue to escalate: Gross Profit Contribution - Headline earnings per share by 22% to 100.35 cents, in spite of negative Airtime, Starter Packs and Data 89% contribution of International Segment equating to 13.85 cent
Slide 3: Brett Levy – Joint CEO
South African Distribution Segment: - Prepaid Airtime, Data and Starter packs - Retail Distribution Channel - Prepaid Electricity and Prepaid Water - Ticketing by ticketpro - Financial and other Value Added Services Acquisition of stake in Cell C Making a difference in South Africa Shareholder Profi
Slide 4: SA Distribution: Financial and operational highlights
SA DISTRIBUTION Financial and operational highlights Prepaid Airtime Revenue Growth • Revenue up 19% to R25.7 billion through organic growth 3 500 • PINless top-up revenue up 52% to R4.1 billion Millions 3 000 - when imputed to revenue effective growth is 23% 2 500 2 000 • Gross profit up 10% to R1.
Slide 5: SA Distribution: Prepaid Airtime, Data and Starter packs
SA DISTRIBUTION Prepaid Airtime, Data and Starter packs Airtime Contribution by channel • New connections ~700,000 SIM’s per month • Increasing sales across expanding distribution channels driven by: 11% 10% 14% Corporate Sales - differentiating merchants into 3 tiers, with matching service levels I
Slide 6: SA Distribution: Retail Distribution
SA DISTRIBUTION Retail Distribution • Forward integration plan • Hardware products include POS devices, tablets, phablets, handsets and phones • Boost, Blaupunkt and Verssed brands • Route-to-market through most major chain stores • Customers utilise cash or Edcon group approved credit facilities •
Slide 7: SA Distribution: Prepaid Electricity
SA DISTRIBUTION Prepaid Electricity • Commissions earned up 20% to R197 million Prepaid Electricity - Revenue R 1 200 Millions • Equates to R12.1 billion in sales, up 15% (ave. R1 billion/month) R 1 000 R 800 • Margin improvement in consolidating market and through direct contracts: R 600 2014 - acq
Slide 8: Prepaid Electricity and Prepaid Water
SA DISTRIBUTION Prepaid Electricity and Prepaid Water • Prepaid Electricity: UniPIN Redemptions 100 1 000 Millions Thousands - ongoing growth in UniPIN’s redeemed - value up 13% to R825.6 million 50 500 - quantity (volume) up 10% to 8.7 million vouchers - - • Prepaid Water: Aug-14 Dec-14 Aug-15 Dec-
Slide 9: SA Market Trends
SA MARKET TRENDS Airtime, Data and Starter packs: • Total mobile market 90 million subscribers, with 160% penetration (Research and Markets) • Data traffic growing ~50% p.a. (Cisco) • Informal market size R46 billion to R120 billion, with >134,000 informal shops (GIBS) • IoT market growing 4-fold p.
Slide 10: Ticketpro - ticketing on another level
SA DISTRIBUTION Ticketpro - ‘ticketing on another level’ • Ticketing solutions for events, sports and transport sectors • Three pillar strategy to profitability: - market differentiation: from technology to rewards - raising brand awareness/recognition amongst consumers and promoters - growing marke
Slide 11: Financial and other Value Added Services
SA DISTRIBUTION Financial and other Value Added Services • Bill Payments - revenue growth of 11% - transaction volumes increasing - especially in independent and low cost channels - hold ~7% market share - now available in Edcon and Edgars Connect stores • Debit and Credit Card Acquiring - retrofitt
Slide 12: Acquisition of stake in Cell C
ACQUISITION OF STAKE IN CELL C • Proposed acquisition of stake in Cell C announced 10 Dec 2015 • Process is progressing positively • Rationale for vertical integration plan: - valuation: ROI in medium term - defensive: existing trading relationship - synergies: BLU becomes VSP to Cell C across multi
Slide 13: Making a difference in South Africa
MAKING A DIFFERENCE IN SOUTH AFRICA For Consumers: For Merchants: • Sophisticated proprietary technology • Informal employment ~30,000 merchants, • Distributing innovative products and services footsoldiers, BLU Agents • Airtime, Starter packs, prepaid Electricity, Financial services • Building soli
Slide 14: Shareholder profile at 31 May 2016
SHAREHOLDER PROFILE AT 31 MAY 2016 Top Shareholders: Notes: • Allan Gray and clients – 23.5% • Shareholders holding >2% of issued capital account for ~70% of • Shotput Investments – 14.8% total issued share capital • B M Levy – 12.5% • ADR programme through BNY Mellon • M S Levy – 11.4% • Market cap
Slide 15: Mark Levy – Joint CEO
International Distribution Segment: - Oxigen Services India (58.18%) - Blue Label Mexico (47.56%) Mobile Segment Solutions Segment Technology Marketing Group Prospects Mark Levy – Joint CEO 15
Slide 16: Oxigen Services India – Synopsis
INTERNATIONAL DISTRIBUTION Oxigen Services India – Synopsis • Expansion of India’s fintech economy continues apace Unique Transacting Customers in embracing financial inclusion 130 150* • E-commerce doubled from $9.5 billion (2012) to $21.3 billion (2015)# 96 112 81 Evolutionising business to commer
Slide 17: Oxigen Services India – Business Evolution
INTERNATIONAL DISTRIBUTION Oxigen Services India – Business Evolution 2016-17+ 2013 Credit at retail and $ 150 Bn 2010 Telcos $ 50 Bn consumer Banking $ 25 Bn Micro insurance Money Transfer $ 45 Bn $ 25 Bn and pension 2004 Cash Out $ 20 Bn Retail Assisted Commerce $ 30 Bn Microfinance cash $ 5 Bn Te
Slide 18: Oxigen Services India cont.
INTERNATIONAL DISTRIBUTION Oxigen Services India cont. • Product mix by % contribution to revenue --> Product mix by % Revenue - financial services vs airtime & others Online Airtime & • Demerged online wallet business into ‘Oxigen Online Services’ Oxigen Wallet DTH 23% 2% • Online wallets require d
Slide 19: Oxigen – Airtime recharge, Money Transfer and Bill Payments
INTERNATIONAL DISTRIBUTION Oxigen Services India – Airtime recharge, Oxigen Money Transfer Services and Bill Payments • Traditional, POS, offline products Airtime & DTH TV • Distribution network of retail outlets supporting 200,000 devices 42 40 • Target market includes customers using feature phone
Slide 20: Oxigen Services India – Banking
INTERNATIONAL DISTRIBUTION Oxigen Services India – Banking • Comprehensive payments and financial services solutions: - services similar to a bank • Includes business correspondent, off- and online wallets • New business opportunities • Connects to NPCI centralised bill payments system (Bharat) • Aa
Slide 21: Oxigen Services India - Remittances
INTERNATIONAL DISTRIBUTION Oxigen Services India - Remittances • Off- and online wallet transactions Daily Domestic Money Transfers • Currently transacting $4 million per day in money transfers $4m • Connectivity with National Payments Corporation of India $3,7m • 0.3% net margin earned on cash-in o
Slide 22: Oxigen Services India
INTERNATIONAL DISTRIBUTION Oxigen Services India • How to digitise the cash economy? • Only 20 million credit and 600 million debit cards* Growth in Oxigen's Online Wallets • Wallets, a new growth platform: - 22.6 million wallet subscribers 22.6m - number of transactions up 66% - revenue up 83% 5.4m
Slide 23: Oxigen Services India – Wallets
INTERNATIONAL DISTRIBUTION Oxigen Services India – Wallets • Launch of virtual Visa Card Virtual Visa Card • Interoperability of ~75,000 virtual Visa Cards Economics Service offered in partnership with on our wallet platform RBL and Visa • Oxigen wallet is preferred name with gift cards: Payment
Slide 24: Blue Label Mexico
INTERNATIONAL DISTRIBUTION Blue Label Mexico • Mexico’s GDP is world’s 11th highest, maintaining 2.5% growth p.a* • Mobile penetration 67% Gross Profit • Structural reforms leading to competitive market • Revenue increased 14% • Gross profit increased by R67 million • Share of loss narrows by 28% fr
Slide 25: Blue Label Mexico – Active Devices and Total Transactions
INTERNATIONAL DISTRIBUTION Blue Label Mexico – Active Devices and Total Transactions • 75,000 devices installed Terminals Transacting • 64,000 active* POS devices • ~40,000 more POS ready to roll-out 70 000 65 000 • No. of total transactions for all products: 60 000 - top ups under pressure 55 000 J
Slide 26: Blue Label Mexico – Airtime
INTERNATIONAL DISTRIBUTION Blue Label Mexico – Airtime • MNO downward pricing pressure – declining transactions • But ARPU’s now increasing after promotions: Top-ups - Revenue - competitive pricing - diverse solutions (cell phones, internet, tablets, POS) Millions Pesos - aggregation of full set of
Slide 27: Blue Label Mexico – Bill Payments
INTERNATIONAL DISTRIBUTION Blue Label Mexico – Bill Payments • Another year of constant growth Bill Payments - Revenue • Revenue up 55% • Total transactions up 39% • No. of transactions of bill payments increase to 39% of total • Opportunity to increase transactions without further investment • Mark
Slide 28: Blue Label Mexico – Card Acquiring
INTERNATIONAL DISTRIBUTION Blue Label Mexico – Card Acquiring • Partnership with Visa and Banamex Cards - Revenue • Another year of growth • Revenue up 71% and transactions up 68% • Growth driven by maturing and acceptance of users • 22% of merchants utilise card acquiring • Initiatives to increase
Slide 29: Blue Label Mexico – Food Vouchers
INTERNATIONAL DISTRIBUTION Blue Label Mexico – Food Vouchers • Consistent growth Food Vouchers - Revenue • Revenue up 89% • No. of transactions more than doubled • Number of merchants transacting up 40% • Number of terminals transacting increased to 15% of total • Keen uptake from consumers • Servic
Slide 30: Blue Label Mexico – SIM cards
INTERNATIONAL DISTRIBUTION Blue Label Mexico – SIM cards • Newest product line acceptance progressing steadily • Agreements with AT&T/Unefon and Telefonica/Movistar • Sales of SIM cards increased 80% • Awareness campaigning – benefits of delinking & unblocking of SIMs & phones • Model includes incom
Slide 31: Blue Label Mexico – New products and initiatives
INTERNATIONAL DISTRIBUTION Blue Label Mexico – New products and initiatives • Domestic and international remittances • Prepaid and postpaid electricity • Financial inclusion initiatives • 2D Mobile Payments • Cloud based HUB 31
Slide 32: Mobile Segment
MOBILE SEGMENT • Core net profit contribution R64 million • Comprising mainly Blue Label One, Panacea, Simigenix, as well as: • Cellfind • Via Media Messaging, VAS and financial services for mobile phones: Content, entertainment and information for mobile phones targets sub-Sahara market, already it
Slide 33: Solutions Segment
SOLUTIONS SEGMENT • Sale of Velociti call centre • Core net profit R18 million • Blue Label Data Solutions – data intelligence & analytical services • Supplying recent, clean and accurate data: - from ‘cold calling’ to ‘hot lead generation’ - from ‘telemarketer’ to ‘data scientist’ - the richer the
Slide 34: Technology
TECHNOLOGY • Proprietary platforms support neutral aggregation Transaction Volumes • Transaction Junction for banking: - largest independent card processor in South Africa - 90 million online card and VAS transactions per month - transaction volumes growing: 2006-2011: up 1,500% 2011-2013: up 340% (
Slide 35: Group Prospects
GROUP PROSPECTS • Participation in the recapitalisation of Cell C by way of subscription of shares is progressing positively. Management is of the opinion that the transaction is compelling both from an investment and commercial perspective • The Group is well positioned to meet increasing demand fo
Slide 36: Financial Overview – Dean Suntup
Financial Overview Dean Suntup - Financial Director 36
Slide 37: Financial Highlights
FINANCIAL Highlights Increase in Increase in Increase in Increase in revenue of gross profit EBITDA of headline earnings 19% to of 11% to 15% to per share of 22% R26.2 billion R1.8 billion R1.2 billion to 100.35 cents Increase in core Increase in Increase in Increase in net headline earnings capital
Slide 38: Income Statement
FINANCIAL Income Statement May 2016 May 2015 Growth % R’000 R’000 R’000 Growth Revenue 26,204,722 22,044,222 4,160,500 19% Gross profit 1,829,694 1,644,340 185,354 11% GP margins 6.98% 7.46% (0.48%) Other income 126,294 99,972 26,322 26% Overheads (715,429) (664,147) (51,282) (8%) EBITDA 1,240,559 1
Slide 39: South African Distribution
FINANCIAL South African Distribution May 2016 May 2016 May 2015 Growth % R’000 R’000 R’000 R’000 Growth Total group SA Distribution SA Distribution SA Distribution Revenue 26,204,722 25,722,540 21,657,891 4,064,649 19% Gross profit 1,829,694 1,582,743 1,444,730 138,013 10% Gross profit % 6.98% 6.15%
Slide 40: Income Statement
FINANCIAL Income Statement May 2016 May 2015 Growth % R’000 R’000 R’000 Growth Revenue 26,204,722 22,044,222 4,160,500 19% Gross profit 1,829,694 1,644,340 185,354 11% GP margins 6.98% 7.46% (0.48%) Other income 126,294 99,972 26,322 26% Overheads (715,429) (664,147) (51,282) (8%) EBITDA 1,240,559 1
Slide 41: Associates
FINANCIAL Associates May 2016 May 2015 Growth % R’000 R’000 R’000 Growth Share of (losses)/profits from associates (31,279) 12,497 (43,776) (350%) - Ukash - 12,004 (12,004) (100%) - Oxigen Services India (27,672) 2,621 (30,293) (1,156%) - Other (3,607) (2,128) (1,479) (70%) • Ukash – BLT disposed of
Slide 42: Income Statement
FINANCIAL Income Statement May 2016 May 2015 Growth % R’000 R’000 R’000 Growth Revenue 26,204,722 22,044,222 4,160,500 19% Gross profit 1,829,694 1,644,340 185,354 11% GP margins 6.98% 7.46% (0.48%) Other income 126,294 99,972 26,322 26% Overheads (715,429) (664,147) (51,282) (8%) EBITDA 1,240,559 1
Slide 43: Joint Ventures
FINANCIAL Joint Ventures May 2016 May 2015 Growth % R’000 R’000 R’000 Growth Share of losses from joint ventures (40,491) (91,835) 51,344 (56%) - Blue Label Mexico (63,293) (88,508) 25,215 28% - 2DFine Mauritius 19,734 (7,574) 27,308 361% - Other 3,068 4,247 (1,179) (28%) • Blue Label Mexico – Reven
Slide 44: Income Statement
FINANCIAL Income Statement May 2016 May 2015 Growth % R’000 R’000 R’000 Growth Revenue 26,204,722 22,044,222 4,160,500 19% Gross profit 1,829,694 1,644,340 185,354 11% GP margins 6.98% 7.46% (0.48%) Other income 126,294 99,972 26,322 26% Overheads (715,429) (664,147) (51,282) (8%) EBITDA 1,240,559 1
Slide 45: Income Statement: Headline and Core Headline Earnings
FINANCIAL Income Statement May 2016 May 2015 Growth % R’000 R’000 R’000 Growth Net profit attributable to equity holders of parent 691,590 577,617 113,973 20% Headline earnings adjustment (23,329) (30,566) 7,237 24% Headline earnings attributable to equity holders of parent 668,261 547,051 121,210 2
Slide 46: Balance Sheet
FINANCIAL Balance Sheet Summarised Group Statement of Financial Position as at May 2016 May 2015 R’000 R’000 Non- current assets 2,275,161 2,040,214 Property, plant and equipment 100,434 106,684 Intangible assets and goodwill 1,201,773 1,254,893 • R168m investment in Oxigen Investment in associates
Slide 47: Cash Flow
FINANCIAL Cash Flow Summarised Group Statement of Financial Position as at May 2016 May 2015 R’000 R’000 Cash generated by operations 744,185 429 806 Interest received 42,082 15,995 Interest paid (48,207) (67,811) Taxation paid (305,118) (245,495) Cash flows from operating activities 432,942 132,495
Slide 48: Dividend of 36 cents per share declared
FINANCIAL Dividend of 36 cents per share declared Cover of 2.73 times 48
Slide 49: Thank You Q&A
Thank You Q&A <a> Slul lAabee TELECOMS 49
Slide 50: Supplementary Information
Supplementary Information - Strategy creating value - Charting our growth - Blue Label factsheet - Group operating structure - Technical overview - Oxigen Services India - Cellfind - Marketing - Peer group - Barriers to entry August 2016 50
Slide 51: Strategy creating value
SUPPLEMENTARY Strategy creating value OPPORTUNITY DELIVERY VALUE ADDING • Prepaid provides certainty • Robust, scalable, agnostic and proprietary • >150,000 POPs in SA technology platform - AEON • Prepaid is an alternative • Organic growth payment method • Postilion switch for financial services • B
Slide 52: Charting our Growth
SUPPLEMENTARY Charting our Growth Revenue Group Gross Profit 30 2 000 25 1 500 20 R'billion 1 000 1.830 15 GP (R000's) 1.644 26 1.350 1.271 22 1.208 10 19 19 19 500 5 - 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 NAV per share EBITDA Dividends declared per share 700 1 400 40 600 1 200 35 500
Slide 53: Blue Label factsheet
SUPPLEMENTARY Blue Label factsheet • Founded in 2001 • 1,844 employees Groupwide • Business model underpinned by long-term distribution contracts • Products and services include - airtime, starter packs and data - electricity and water - ticketing - financial and value adding services • Listed as BL
Slide 54: Group Operating structure as at May 2016
SUPPLEMENTARY Group Operating structure as at 31 May 2016 Blue Label Blue Label Blue Label Mobile Blue Label Solutions South Africa International African Prepaid Services Blue Label Distribution Cellfind Datacel (90%) The Prepaid Company Gold Label Investments Simigenix CNS Call Centre Oxigen Servic
Slide 55: Technical Overview
SUPPLEMENTARY Technical Overview 55
Slide 56: Oxigen Online Services
SUPPLEMENTARY Oxigen Online Services 56
Slide 57: Oxigen Services India
SUPPLEMENTARY Oxigen Services India 57
Slide 58: Cellfind restructured into three business units
SUPPLEMENTARY Cellfind restructured into three business units Converged Communication Services Value Added Services Mobile Financial Services Mobile Messaging Provides Emergency Assist, Serves financial institutions across Secure and reliable, high-volume geolocation and information the continent wi
Slide 59: Marketing
SUPPLEMENTARY Marketing • Strengthened business unit in 2014 • ‘delivering what merchants and consumers want’ • Research and perception studies help identify opportunities • Route to market – formal retail, independent, petroleum forecourts, corporate and low- cost device channels • Tailor service o
Slide 60: Peer group
SUPPLEMENTARY Peer group * • Blue Label Telecoms • Cigicell / Blue Label • Ticketpro / Blue Label • Oxigen Wallet / • Red Qiubo / Blue Label - JSE listed Telecoms Telecoms Mexico Oxigen Services • Blackhawk Network • Big Concerts / • Conlog India • OXXO - Nasdaq listed Computicket • Citrus Pay • Sis
Slide 61: Barriers to Entry
SUPPLEMENTARY Barriers to Entry • 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
Slide 62: Slul lAabee
<a> Slul lAabee TELECOMS 65