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BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
21
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Organic growth primarily contributed
to core headline earnings in the
South African Distribution Segment
increasing by 19% to R893 million.
The Group’s share of losses in Blue
Label Mexico narrowed 42% to
R37 million, as distribution of
additional products and services
continued to gain traction.
In recognising fundamental changes
to India’s fintech sector during the
year, the Board has reviewed its
strategy regarding our stake in Oxigen
Services India. As a result thereof, the
investment therein is accounted for
as a venture capital investment.
Group headline earnings per share
increased by 18% to 117.98 cents,
predominantly achieved through
increases in revenue to R26.3 billion,
gross profit by 19% to R2.2 billion
and EBITDA by 7% to R1.3 billion.
Earnings per share increased by
14% to 117.92 cents.
Capital and reserves accumulated
to R5 billion, net of accumulated
dividends paid totalling R1.16 billion.
The net asset value per share
increased by 11% to R7.32.
In August 2017, the Board declared
a dividend of 40 cents per share,
equating to a 2.25 times cover on
headline earnings.
The Group’s flagship CSI project, Boys
& Girls Club of South Africa at Protea
Glen, enhanced its after-school and
extramural offerings. Over 500 pupils
attend the club on a daily basis and
future plans include the roll out of a
further eight clubs in disadvantaged
areas over the next three years. The
Social, Ethics and Transformation
Committee supported CSI expenditure
of R8.5 million during the year for
projects focusing on youth
development through education,
sport and entrepreneurship.
Looking ahead:
f
As Blue Label is one of the primary
distribution channels for Cell C’s
products and services, its acquisition
therein provides a compelling value
proposition to realise synergies in
product distribution. Blue Label will
benefit from improving operational
and financial performance from the
combined platform. In turn, Cell C’s
new sustainable capital structure
enables it to deliver on its strategic
objectives to improve financial
returns from increased network
utilisation, the upgrading of network
infrastructure and the expansion of
LTE coverage.
f
3G Mobile is one of Africa’s largest
suppliers, distributors and financiers
of tier 1 and tier 2 mobile handsets
to major retailers and cellular
network providers. Its wholly owned
subsidiary, Comm Equipment
Company, provides financing to
Cell C for the mobile handset
component of postpaid and hybrid
contracts, with the capability of
extending such services to other
networks and channels. 3G Mobile
provides the ideal platform for
combining Blue Label’s low cost and
certified pre-owned mobile handset
divisions into a consolidated group,
well positioned for distribution to
the burgeoning low cost
smartphone market.
f
Blue Label Mexico is expected to
provide a positive contribution
to
Group profitability, given its
consistent growth at sustainable
improved gross profit margins and
compounding annuity revenue
generated from starter pack sales.
f
“Big Data” consolidates and
aggregates transactions across the
divisions within the Group, which
creates the opportunity to up-sell
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.
f
Value-added services, including the
provision of short-term finance for
emergency airtime recharge required
by consumers, are current initiatives
with high growth possibilities.
The Blue Label entrepreneurial culture
came to the fore this year in
completing two significant acquisitions
with a combined price tag of
R7.4 billion, as well as a sound
financial performance in a difficult
trading environment.
I acknowledge and thank my fellow
Directors, the management team led
by Brett Levy and Mark Levy, the senior
management team, all employees
and other stakeholders for their
considerable efforts over the past year,
contributing to the success of the
Group.
In achieving another milestone, Blue
Label marked its 10th anniversary
of listing on the JSE on 14 November
2017.
Larry Nestadt
Chairman
23 November 2017