5 / 220
BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
3
/
Business model
POSITIVE CASH
GENERATION
f
Cash-generative business even
during recessionary times.
f
Trading revenue predominantly from
sales of prepaid virtual and physical
mobile and data airtime, prepaid
electricity, hardware and postpaid contracts,
tickets for events, sports and transport, insurance and
other financial and value-added transactional services via
its wholesale, retail and merchant distribution footprint.
f
Trading and annuity revenue from sale of starter packs,
their activation and ongoing utilisation.
f
Annuity revenue from subscription-based services.
f
Interest income derived from a combination of high-revenue
volumes and favourable trading terms.
f
Annual dividend policy.
f
Capital expenditure relates mainly to point-of-sale devices
and IT requirements.
ROBUST GROWTH
FOOTPRINT
f
Licensing of technology as an
alternative to equity investment.
f
Expanding goods and service
offerings in South Africa: prepaid
electricity, prepaid water, ticketing, loyalty
programmes, bill payments, debit and credit
card acquiring, money transfers.
f
Replicating business model in other emerging markets, as
in India and Mexico.
f
Imparting offerings and learnings across global footprint.
f
Established systems and infrastructure through airtime
offerings, facilitating the introduction of new products
and at relatively nominal incremental costs.
f
Growth prospects, through both organic and by mergers
and acquisitions.
INVESTMENT PROPOSITION
THE APPEAL OF PREPAID PRODUCTS AND SERVICES
TO CONSUMERS:
f
Consumers have an alternative of how to pay for products
and services – prepay or as it is sometimes described as
“pay-as-you-go”.
f
Prepaid products and services are the ultimate budgeting
tool, as consumers have absolute choice and control over
what they spend.
f
The majority of prepaid transactions are cash based, thereby
removing the requirement for credit vetting.
f
Prepaid products and services can be conveniently topped
up, either virtually or physically, as and when required by
consumers.
f
Prepaid products and services are sold across a broad
footprint of traditional and non-traditional outlets.
f
Prepaid products and services enable the world’s unbanked
and badly banked consumers to purchase first-world
products and services in a manner which suits them and
allows consumers to transact as and when they wish.
TO SUPPLIERS:
f
Prepaid products and services are cash upfront, thereby
guaranteeing payment.
f
Guaranteed payments translate into no need for debtor
collections and in turn, no bad debts.
TO MERCHANTS:
f
Blue Label’s expanding distribution network covers over
150 000 devices, from major retail chains to registered
individuals. We continue to expand our footprint across
the emerging markets of India and Mexico.
f
Blue Label’s prepaid products and services allow
for multiple products to be sold from one
device, thereby enabling merchants
to have multiple revenue streams
utilising a relatively small retail space.
f
Prepaid products and services are
delivered virtually, thereby
eliminating stock management.
BUSINESS MODEL STRENGTHENED
f
Business founded in 2001 by entrepreneurial thinkers and
commercial implementers.
f
Business model strengthened by restructuring and
consolidation ahead of listing.
f
Listing in November 2007, raised R1.3 billion.
f
Governance and compliance structure strengthened.
f
Global shift in consumer transactional behaviour: from credit
to debit to prepaid terms.
f
High-volume low-margin distribution and sale of e-tokens
of value.
f
Leveraging favourable working capital management.
f
Typical market in emerging and developing economies.
f
Target market is world’s unbanked and underbanked
consumers.
f
Enabling access to prepaid products and services.
f
Strong barriers to entry for competitors include entrenched
relationships, vendor lock-up through systems integration,
ubiquity of POS and proprietary technologies.
f
Long-term contracts with suppliers.
f
Long-term relationships with participants across seven main
distribution channels.
f
Holds approximately 60% of South African prepaid airtime
and about 50% of prepaid electricity market.
f
In-house developed and maintained proprietary technology.
f
Monetising existing footprint by offering additional value-
added services.
f
Processes over five billion transactions per annum.
f
CSI programme.
f
Creative, youthful and talented management team.
OUR
BUSINESS MODEL
Business model strengthened since
listing + positive cash generation
+ robust growth footprint
+ resilience to fluctuations
in economic
conditions