How we create value

In allocating our capital to our strategy's levers among the various value drivers, we need to consider the trade-offs between the resources available to us. The <IR> Framework categorises these resources into six capitals that are affected or transformed by the activities and outputs of an organisation. All our decisions seek to maximise positive outcomes and mitigate negative impacts.




	Our resources		Operating inputs

	Financial capital The pool of funds available to Blue Label.		Equity capital; Debt capital; Working capital.


	Manufactured capital Physical objects and infrastructure that are available to Blue Label to use for the distribution of goods and services.		Property plant and equipment to the value of R195 million, including: R82 million vending machines and POS devices; R63 million computer equipment; R28 million motor vehicles.


	Intellectual capital The knowledge-based intangibles that sustain the quality of our product and service offering, which provides Blue Label's competitive advantage. These include our innovations, collective knowledge and systems.		Skills, expertise and institutional knowledge; Entrepreneurial culture and agile practices; Operating systems, policies, processes and procedures; Reporting and communication; Proprietary technology, software and IT systems; Targeted analytical processes, machine learning and artificial intelligence.


	Human capital The competencies, capabilities and experience of our employees and how they innovate, collaborate and align with Blue Label's objectives.		1 566 permanent staff members; Experienced Board, Executive and General Management; Performance management system; Various training courses.

	Social and relationship capital The strength/efficacy of our relations with various stakeholder groups and networks, as well as our brand and reputation, and our social licence to operate.		Relationships with all stakeholder groups, including: Employees, customers, shareholders, government and regulators, partners and suppliers and media. CSI initiatives Trust Blu Foundation NPC; Boys and Girls Clubs of South Africa.

	Natural capital Any natural resources or environmental assets (such as soil, water, atmosphere and ecosystems), which provide a flow of useful goods and/or services, now and in the future.		Electricity; Water; Fuel; Paper.

Business activities

Blue Label is a mobile technology company that specialises in prepaid products and the electronic distribution of virtual merchandise and value-added services, including the full and seamless reconciliation of billions of nano transactions

Our Company philosophy is to relentlessly drive financial inclusion for the mass market. We combine technical innovation with entrepreneurial flair to bring products and services associated with the developed world directly to the doorsteps of people who may be geographically and economically isolated from the mainstream. By doing so, we create jobs, support the growth of small businesses, and assist in bridging the digital divide.

Our resources

Operating outputs

Outcomes and resource trade offs

Our resources

Financial
capital

Operating outputs

Revenue: R17.8 billion;
Gross profit: R2.93 billion;
Capital expenditure: R78 million;
Finance activities: R668 million;
Lease payments: R38 million;
Taxes paid: R166 million.

Outcomes and resource trade offs

A strong balance sheet and sufficient working capital to fund the operations that support long-term sustainability;
Investments into technology, processes and key personnel that ensure sustainability and competitive advantage;
Economic benefits to employees, partners, and suppliers;
Good stewardship of our investors' financial capital.

We leverage financial capital to invest in our business and to grow our competitive market position. This has a positive impact on the human, intellectual, and social and relationship capitals. We create jobs, support the growth of small businesses, and relentlessly drive financial inclusion for the mass market.

There is an important trade-off between short and long-term investment associated with financial capital. It is important to balance the interest of short-term benefits with those of long-term sustainable growth objectives. While both are important for different stakeholders at different times, it is a key focus in our strategic decision-making process.

Our resources

Manufactured
capital

Operating outputs

Capital expenditure incurred: R78 million.

Outcomes and resource trade offs

Ability to deliver valuable services and solutions in response to changing consumer demands;
Strategically located outlets offering convenient customer access to products and services;
Secure and productive working environments.

By investing in equipment, outlets and distribution capacity, we increase our manufactured capital, but negatively impact natural capital and, in the short term, financial capital.

Automation of routine tasks through technology may in the long term reduce human capital.

Outcomes and resource trade offs

Our resources

Intellectual
capital

Operating outputs

Purchase of intangible assets: R47 million*;
Accelerating our digitisation projects to fast-track our ability to be responsive to our new environment;
Improved responses to changing consumer needs;
Brand reinforcement and market communication;
Accelerated deployment of new technologies;
Effective controls and processes;
Full legal and regulatory compliance;
Risk identification and mitigation.

Outcomes and resource trade offs

Creative solutions increase productivity, cost savings, and synergies;
Proprietary systems/solutions add value and secure sophisticated contracts.

Our technical innovation and entrepreneurial drive are central to effectively serving the unbanked market segment.

Improved investment in business processes and new systems is growing our intellectual capital and indirectly benefiting our human, and social and relationship capitals, but negatively impacting financial capital in the short term.

Outcomes and resource trade offs

Our resources

Human
capital

Operating outputs

Building an organisation that is future fit, inclusive business with a growth mindset;
Salaries and benefits spend: R780 million;
Most organisations were impacted by the Great Resignation, however BLT managed to retain 87% of staff;
Employee well being has become part of our strategy to succeed;
Employee engagement is more centred around creating meaningful jobs and creating an environment that creates purpose;
Continue to invest in learnership development and leadership programmes to enable us to grow individuals and critical skills. Total spend: R68 million.

Outcomes and resource trade offs

A vibrant, diverse and flexible workforce committed to the long-term success of Blue Label;
Improved effectiveness, skills and expertise.

Significant people-related investments in initiatives decreases our financial capital in the short term, but positively impacts our human, and social and relationship capitals. Over the longer term, this enables us to have the people and capabilities required to deliver our strategy and performance targets.

In turn, our appeal as an employer of choice and our brand value increase our intellectual capital.

Outcomes and resource trade offs

Our resources

Social and
relationship
capital

Operating outputs

Building sustainability programmes that impact communities and youth development;
Initiatives aimed to build entrepreneurs and SMME's;
Supporting flagship beneficiaries that align to our shared socio-economic values through the Trust Blu Foundation;
SED spend: R17.5 million;
Strategic partnerships with renewable energy suppliers for one of our prime CSI projects in Orange Farm.

Outcomes and resource trade offs

Business efficiency through collaboration with producers and suppliers;
Building trust and respect;
Social relevance in the communities we operate in;
Brand reinforcement and market communication;
Sustained confidence from shareholders and investors.

Trusted, long-term partnerships with customers. Stakeholder-related investments reduce our financial capital in the short term but positively impact our social and relationship capital. Over the longer term, this enables us to have a community of stakeholders that are loyal and supportive to our brand and provide our social licence to operate.

Outcomes and resource trade offs

Our resources

Natural
capital

Operating outputs


	2022		2021		Increase/ (decrease) in spend	Increase/ (decrease) in usage
	R'000	Usage	R'000	Usage	(%)	(%)
Electricity (kWh)	3 575	2 026 636	3 183*	1 986 933*	12	2
Water (kl)	463	9 927	446*	10 175*	4	(2)
Petrol (l)	10 042	484 921	7 321	486 130	37	—
Diesel (l)	1 696	85 325	884	54 811	92	56
Paper (kg)	183	8 614	127	5 836	44	48

*	The prior year numbers have been restated to exclude a duplication of electricity and water expenditure.

With the emergence from Covid-19 lockdowns and the general increase in the cost of natural capital, we have seen an increase in the usage and cost of electricity, water, fuel and paper.The reduction in water usage is due to incorrect charging by the provider and subsequent corrections.

Outcomes and resource trade offs

Responsible management of waste and emissions;
Focus on sustainable use of our resources.

While certain business activities impact our natural capital (for example, use of fossil fuels and related emissions), these positively impact the human, social and relationship, and financial capitals.

We are aware of the environmental impacts of our operations and activities and focus on the responsible use of resources. Blue Label views digital products and services as having significant potential to deliver positive environmental outcomes.

Outcomes and resource trade offs