The Directors have pleasure in presenting the Group annual financial statements of Blue Label Telecoms Limited (Blue Label Telecoms or the Company) and its subsidiary, associate and joint venture companies (the Group) for the year ended 31 May 2022.
Blue Label Telecoms’ core business is the virtual distribution of secure electronic tokens of value and transactional services across its global footprint of touch points. The Group’s stated strategy is to extend its global footprint of touch points, both organically and acquisitively, to meet the significant demand for the delivery of multiple prepaid products and services through a single distributor, across various delivery mechanisms and via numerous merchants or vendors.
The Group recorded a net profit after tax attributable to equity holders for the year ended 31 May 2022 of R1 027 billion (2021: R831 million). Full details of the financial position and results of the Group and its segments are set out in the Group annual financial statements. The Group annual financial statements for the year ended 31 May 2022 were approved by the Board and signed on its behalf on 25 August 2022.
Full details of the authorised, issued and unissued capital of the Company at 31 May 2022 are contained in note 6.1 of the Group annual financial statements.
The Board of Directors have elected not to declare a dividend.
Certain of the Secured Lenders of Cell C, are holders of formerly publicly listed notes issued by Cell C described as USD184 002 000 8.625% First Priority Senior Secured Notes. Shareholders were notified of the convening of a meeting of the holders of the Notes (“Noteholders”) for Noteholders to approve an extraordinary resolution which, amongst other things, will give effect to the compromising of the Noteholders’ claims (“Compromise Offer”).
In terms of the Compromise Offer, Cell C shall, inter alia, restructure its debt owing to certain secured lenders totalling c.R7.3 billion, with such amount being fixed as at November 2019, by compromising the secured lenders’ claims by an offer of 20c to the rand.
The Noteholder meeting was held on 5 July 2022 and Noteholders with the requisite majority voted resolutions in favour of, amongst other things, the compromise offer as set out in Cell C’s consent solicitation memorandum.
The binding long form agreements are expected to be completed in their entirety shortly. It is anticipated that the recapitalisation process, the completion of which has endured for longer than initially anticipated, is expected to close by mid-September 2022.
In August 2022, The Prepaid Company renegotiated a further extension of its Investec facility to 30 September 2023. The Investec facility available to The Prepaid Company at year-end is required to reduce by R120 million to R1.005 billion as at 30 September 2022. At 31 May 2022 the Investec facility is disclosed as current borrowings, as the extension to 30 September 2023, was only granted in August 2022.
The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within its current funding levels into the foreseeable future.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources and facilities to continue in operational existence for the foreseeable future and is not at risk of breaching its covenants. The Group therefore continues to adopt the going concern basis in preparing the financial statements.
The following are the details of the Company’s Directors:
| Name | Office | Appointment date | Date and nature of change |
| Larry M Nestadt (Chairman) | Independent Non-Executive Director | 5 October 2007 | — |
| Brett M Levy | Joint Chief Executive Officer | 1 February 2007 | — |
| Mark S Levy | Joint Chief Executive Officer | 1 February 2007 | — |
| Kevin M Ellerine | Non-Executive Director | 8 December 2009 | — |
| Gary D Harlow | Independent Non-Executive Director | 5 October 2007 | — |
| Nomavuso P Mnxasana | Independent Non-Executive Director | 18 September 2020 | — |
| Joe S Mthimunye | Independent Non-Executive Director | 5 October 2007 | — |
| Dean A Suntup | Financial Director | 14 November 2013 | — |
| Jeremiah S Vilakazi | Independent Non-Executive Director | 19 October 2011 | — |
| Lazarus P Zim | Independent Non-Executive Director | 23 October 2020 | — |
The individual interests declared by Directors in the Company’s share capital as at 31 May 2022, held directly or indirectly, were as follows:
| Nature of interest | ||||||
| Direct beneficial | Indirect beneficial | |||||
| Director/officer | 2022 | 2021 | 2022 | 2021 | ||
|---|---|---|---|---|---|---|
| LM Nestadt (Chairman) | — | — | 10 000 000 | 10 000 000 | ||
| BM Levy | 67 424 914 | 67 275 315 | 17 772 777 | 17 772 777 | ||
| MS Levy | 60 017 506 | 59 867 907 | 17 772 777 | 17 772 777 | ||
| KM Ellerine* | — | — | 120 000 000 | 120 000 000 | ||
| GD Harlow | — | — | 1 285 114 | 1 685 114 | ||
| JS Mthimunye | 130 000 | 130 000 | 242 573 | 242 573 | ||
| DA Suntup | 3 958 476 | 3 879 243 | 177 778 | 177 778 | ||
| SJ Vilakazi | — | — | 8 200 | — | ||
| * | KM Ellerine is a beneficiary of these shares together with multiple other beneficiaries. |
The aggregate interest of the current Directors in the capital of the Company was as follows:
| Number of shares | |||
| Director/officer | 2022 | 2021 | |
|---|---|---|---|
| Beneficial | 298 790 115 | 298 803 484 | |
The beneficial interest held by Directors and officers of the Company constitutes 32.70% (2021 32.70%) of the issued share capital of the Company.
Details of Directors’ emoluments and equity compensation benefits are set out in note 5.3 of the Group annual financial statements and details of the forfeitable share plan are set out in note 5.1.
On 25 November 2021, the Company passed and filed with the Companies and Intellectual Property Commission the following special resolutions:
Except for the aforementioned, no other special resolutions, the nature of which might be significant to shareholders in their appreciation of the state of affairs of the Group, were passed by the Company or its subsidiaries during the period covered at the date of signing these Group annual financial statements.
The Board is satisfied that Ms J van Eden has the requisite knowledge and experience to carry out the duties of a company secretary of a public company in accordance with section 88 of the Act and is not disqualified to act as such. She is not a Director of the Board and maintains an arm’s-length relationship with the Board.
The business and postal address of the Company Secretary appear on the Company’s website at www.bluelabeltelecoms.co.za.
PricewaterhouseCoopers Inc. will continue in office in accordance with section 90(6) of the Companies Act.
Larry Nestadt
Chairman
