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BLUE LABEL INTEGRATED ANNUAL REPORT 2015
FINANCIAL DIRECTOR’S REPORT
CONTINUED
REVENUE
Revenue increased by R2.6 billion to R22 billion, a
growth of 14%. This growth was predominantly
achieved through access to additional channels of
distribution. This revenue does not include the
turnover of international operations, as these
associate and joint venture companies are equity
accounted for only.
The vending of “PINless top-ups” continues to gain
momentum. Only the gross profit earned thereon is
accounted for in Group revenue as opposed to the
gross sales generated from transactions of this
nature. The gross sales increased by R966 million
from R1.7 billion to R2.7 billion, equating to an
effective increase of 17% as opposed to the 14%
revenue growth reported.
GROSS PROFIT
Gross profit increased by R295 million (22%),
congruent with the increase in revenue and
margin increases.
The increase in gross profit margins from 6.96%
to 7.46% was primarily achieved through the
application of cash resources to bulk inventory
purchases at favourable discounts, early settlement
discounts, growth in the gross profit earned on
“PINless top-ups”, compounding annuity income
and an increase in commissions earned on the
distribution of prepaid electricity.
OVERHEADS
Overheads comprising employee costs and operating
expenses amounted to R664 million, equating to an
increase of R76 million (13%). This increase was
entirely attributable to employee costs, mainly due
to a hybrid of the forfeiture of executive bonuses in
the prior year, payroll attributable to the acquisitions
of RMCS and Viamedia and annual increases.
EBITDA
EBITDA increased by R292 million to R1.08 billion,
equating to a growth of 37%. Included in this
growth was an amount of R37 million relating to
the disposal of the Group’s interest in Ukash.
DEPRECIATION, AMORTISATION AND
IMPAIRMENT CHARGES
Depreciation, amortisation and impairment charges
increased by R29 million of which R16 million
emanated from the acquisitions of RMCS and
Viamedia. Of this amount, R13 million pertained
to the purchase price allocation amortisation
of intangibles.
FINANCE COSTS
Finance costs totalled R233 million, of which
R68 million related to interest paid on borrowed
funds and R165 million to imputed IFRS interest
adjustments on credit received from suppliers. On a
comparative basis, interest paid on borrowed funds
amounted to R23 million and the imputed IFRS
interest adjustment equated to R144 million. Interest
paid on borrowed funds was attributable to the cost
of financing bulk inventory purchase transactions
and early settlement payments attracting discounts,
for which facilities were utilised and repaid during
the current year.
FINANCE INCOME
Finance income totalled R173 million, of which
R31 million was attributable to interest received on
cash resources and R142 million to imputed IFRS
interest adjustments. On a comparative basis,
interest received on cash resources amounted to
R39 million and the imputed IFRS interest
adjustment to R117 million. The decline in interest
received on cash resources was attributable to the
utilisation of funds on hand for the payment of
dividends, acquisitions, bulk inventory purchase
transactions and early settlement discounts.
SHARE OF PROFITS FROM
ASSOCIATES
The predominant contributors to a net share of
profits of R12.5 million were Ukash and Oxigen
Services India.
SHARE OF LOSSES FROM JOINT
VENTURE
The Group’s share of losses was mainly attributable
to the losses incurred in Blue Label Mexico.