Blue Label Telecoms AGENDA. Strategic Overview. International Distribution. Africa Prepaid Services. Interim Results Presentation.

Transcription

1 AGENDA Strategic Overview International Distribution Africa Prepaid Services Technology Blue Label Telecoms for the half year ended 30 November 2009 Interim Results Presentation Value Added Services Financial Overview South African Distribution

2 Group Structure South African Distribution International Distribution Technology Value Added Services The Prepaid Company Gold Label Activi Technology Services Datacel Crown Cellular Oxigen Services India - Transaction Junction % 60% Cellfind Ventury Ukash 17.25% Activi Deployment Services Content Connect Africa Matragon APS - 72% Mobile Services Company Kwikpay APS DRC - 90% Virtual Voucher APS NIGERIA - 51% The Postpaid Company Blue Label Mexico - 70% Sharedphone 50.1% Blue Label Australasia 50.5% 100% unless otherwise stated S T R A T E G I C 2 O V E R V I E W

3 3 The Telecoms Landscape Mobile market still highly skewered towards prepaid users In 2009 SA mobile customer base grew by 13.8% (slightly lower than 16.8% growth rate recorded in 2007) BLT continues to meet the group s revenue and gross profit targets due to: - Continuing growth within target emerging markets - Increase in prepaid electricity offering - Modest growth in SA cellular market Source: SA Telecoms Report Q4 2009, Business Monitor International Ltd S T R A T E G I C O V E R V I E W

4 4 Global Footprint Mexico United Kingdom Nigeria DRC India Mozambique South Africa Australia Bricks & mortar Technology offerings Afghanistan Bangladesh Benin Botswana Cyprus Czech Republic France Germany Ghana Guinea Bissau Greece Haiti Indonesia Ireland Israel Italy Ivory Coast Lesotho Liberia Middle East Region Netherlands Pakistan Poland Russia Rwanda Sierra Leone Spain Sudan Swaziland Sweden Syria Tanzania Togo Uganda USA Yemen Zimbabwe Two strategies for international expansion: 1. Bricks and Mortar 2. Technology Offerings BLT is focused on servicing the unbanked and badly banked market by providing access to cost effective transactional services S T R A T E G I C O V E R V I E W

5 5 Barriers to Entry The following natural barriers to entry exist in the environments in which BLT operates: - The ease of ability to integrate can be hindered by lag times in the negotiation of supplier and customer contracts - Lock out periods for the processing of new technologies - Customers desire to prioritise for their own objectives and/or products and services These have become some of our greatest assets, achieved by securing long term contracts with customers and suppliers S T R A T E G I C O V E R V I E W

6 6 Highlights g Revenue up 11% to R8.4 billion EBITDA up 24% to R368 million Cash resources up at R1.96 billion Margins improved: Gross profit to 7.4% and EBITDA to 4.4% S T R A T E G I C O V E R V I E W

7 7 International Distribution Mark Levy Joint CEO I N T E R N A T I O N A L D I S T R I B U T I O N

8 8 International Operations - Overview BLT s vision is to derive 50% of revenue from outside of South Africa and 50% of revenue from non telephony revenue BLT remains a leading provider of transactional services within emerging and developing markets Continue to focus on expanding footprint Providing additional tokens of value, enhancing each country s service offering and profitability Introduce all BLT s products and services to existing markets I N T E R N A T I O N A L D I S T R I B U T I O N

9 9 Africa Prepaid Services Changes around costs and efficiencies have led to improved profitability over past 6 months Cost allocation restructured successfully Commencement of trade in Nigeria and divesting from the DRC and Mozambique have improved profitability I N T E R N A T I O N A L D I S T R I B U T I O N

10 10 Africa Prepaid Services (APS Group) Nigeria I N T E R N A T I O N A L D I S T R I B U T I O N

11 11 Africa Prepaid Services - Nigeria Distribution channel rationalisation and decentralisation improved operational efficiencies prior to trading Impetus on stimulating consumer usage to counteract churn Handset promotional activity to drive subscriber growth Growth dependent on: - Correctly priced and positioned o phones - Introduction of starter packs - Increased product and service offering - Increased marketing activity and consumer awareness APS has established the foundation for a sustainable business and continued presence in Nigeria I N T E R N A T I O N A L D I S T R I B U T I O N

12 12 India India I N T E R N A T I O N A L D I S T R I B U T I O N

13 13 Oxigen India Improved revenue, higher margins, containment of expenses translated into significant reduction of losses Gross profit and EBITDA for the period improved due to: - Improving technology and increasing effectiveness of distribution channels - Launch cell phone vending over 3,000 new activations in Oct Implementation of direct to consumer model through State Bank of India in October Introduction of new products and services from non Telco sectors and introduction of direct top-up (PINless recharge) - Improved margins in airtime - More profitable bill payments business I N T E R N A T I O N A L D I S T R I B U T I O N

14 14 Mexico Mexico I N T E R N A T I O N A L D I S T R I B U T I O N

15 15 Blue Label Mexico The period closed with about 2,000 active POS terminals Integrations into retail environments and previously under- or un-serviced channels, e.g. petroleum forecourts Intention to bolster on the ground representation to meet current demand for devices and services Cell phone vending and internet web based sales functions have been trialed and will be launched to service all sectors Existing site revenues continue to grow month on month Average sales per device have steadily increased over the period Strategic, synergistic relationship with the World Organisation of Credit Unions (WOCCU) provides extended reach to both parties On track to achieve the deployment of several thousand POS devices by the end of the financial year Discussions have commenced with several prepaid utility suppliers, bill payment facilitators and Value Added Service providers A F R I C A P R E P A I D S E R V I C E S

16 16 United Kingdom United Kingdom I N T E R N A T I O N A L D I S T R I B U T I O N

17 17 Ukash Maintained expansion of issuing sites in new markets Further growth into known redemption environments like VOIP/telecoms and gaming Improved efficiencies within Ukash ensuring cost containment Strategic agreement concluded with Master Card Re-load and Re-power to replenish prepaid debit cards as well as mobile wallets and e-commerce type environments, to positively impact sales I N T E R N A T I O N A L D I S T R I B U T I O N

18 Technology T E C H N O L O G Y T E C H N O L O G Y

19 19 Activi Switching Overview Cellular Vouchers Banking POSTILION 3 rd Party Suppliers Electricity Networks (Ukash) (TJ) Switch AEON Switch 3 rd Party Host to Host 3 rd Party Hosts STD Accounting Interface Database Accounting Package AEON Merchant Terminal Management System & EVD Terminals Vending/ Self Service Touch Screen WEB Browser Bulk Printing Integrated 3 rd Party Retail devices T E C H N O L O G Y T E C H N O L O G Y

20 20 Projects / Core Capabilities Core IT Infrastructur e & Operational Support Group MIS Platform (and Accounting / Financial Management) EFT Switching Platform EVD/VAS Platform Factory Device Deployment & Support Card Managemen t Platform (Gift Cards/ Loyalty) T E C H N O L O G Y T E C H N O L O G Y

21 21 Technology Highlights g FNB Lotto integration and delivery through Internet Banking, ATM and Mobile Banking Pick n Pay Lotto integration and delivery through POS Accelerated Rollout of POS and Integrations in Mexico Deployment of core platforms in Nigeria Finalisation of electricity integrations in South Africa Navision implementation well underway within SA Distribution and Mexico T E C H N O L O G Y T E C H N O L O G Y

22 22 The Mobile Services Company BLT s mobile services aggregation business Services include transactional products and services (airtime and electricity), own products and services (Cellfind products) and 3rd party products and services (mig33 and Facebook) Services presented through several channels including on-phone portal mibli, stand-alone Java applications, WAP, Web & SMS Supports 3rd party integrations such as: - Social networks (e.g. Facebook, Twitter etc.) - B2B (e.g. banking, retail) - B2B2C (e.g. direct-to-consumer services for 3rd parties) Provides a single point of integration for products, services and transactions T E C H N O L O G Y T E C H N O L O G Y

23 23 The Mobile Services Company / 2 A fully featured mobile wallet is live inside MSC allowing customer to: - Make payments - Make deposits (including Ukash) - Shop for goods and services - Make withdrawals - Participate in rewards and loyalty schemes - Perform money transfers Future: - Launch of Blue Label merchant services - Et Extension of aggregation services - Expansion of mibli user base - Growth in MSC services to 3rd parties T E C H N O L O G Y T E C H N O L O G Y

24 24 Value Added Services V A L U E A D D E D S E R V I C E S

25 25 Datacel Severely affected by economic downturn resulting in large scale retrenchments Blue Label Call Centre was closed down due to operational inefficiencies and ongoing losses Velociti continued to diversify its client base to ensure a more balance spread of income Growth plans in Velociti were shelved pending market recovery CNS were equally affected by negative market sentiment, with insurance companies reviewing the direct marketing model and adjusting down commissions Blue Label Data Services performed well V A L U E A D D E D S E R V I C E S

26 26 Cellfind Continues to deliver annuity income through Vodacom and MTN LBS and WASP aggregation businesses Investment in developing generic interfaces to LBS Cellfind s Value Added Services (traffic services, security, tracking devices and weather services) continue to show robust growth Music downloads are well entrenched and growing monthly Expansion of B2B relationships with large corporate customers V A L U E A D D E D S E R V I C E S

27 27 Financial Overview David Rivkind CFO F I N A N C I A L O V E R V I E W

28 28 Financial highlights g Growth Revenue Gross profit EBITDA Operating profit NPAT Core earnings Headline earnings per share Core earnings per share Cash generated from operations R8.4bn R621m R368m R299m R177m R194m cents cents R316m 11% 19% 24% 20% (11%) (10%) (10%) (9%) Xx% F I N A N C I A L O V E R V I E W

29 Financial Overview segmental profile South African distribution International distribution Value added services Technology

30 30 Financial overview Income statement 30 Nov Nov 2008 Growth R 000 R000 R 000 % Revenue % Cost of inventories sold ( ) ( ) Gross profit % Gross Segmental profit revenue % 7.40% 6.92% 6% Other income Overheads South African distribution 7 ( ) ( ) 140 7% EBITDA % International distribution % EBITDA % 4.38% 3.90% 12% Depreciation, Value added services amortisation and impairment charges ( ) 490 ( ) 074 (36%) Operating Technologyprofit % 31% Net Total finance income Finance income % Finance expense (63 105) (50 119) Net profit before taxation % Contribution Taxation ( ) (90 186) Net profit after taxation (7%) Share South of African loss of distribution associates and joint ventures (11 897) 90.3 (14 082) 93.6 Minorities International interest distribution (10 038) 8.0 (1 532) 3.7 Net Value profit added after services taxation and minorities interest (11%) Amortisation on intangibles raised through business combinations net of tax Technology Core net profit after taxation (10%) Earnings Total per share for profit attributable to equity holders (cents) Basic (10%) - Headline (10%) F I N A N C I A L O V E R V I E W

31 31 Financial overview Income statement 30 Nov Nov 2008 Growth R 000 R000 R 000 % Revenue % Cost of inventories sold ( ) ( ) Gross profit % Gross profit % 7.40% 6.92% Other income Overheads Segmental gross profit ( ) ( ) EBITDA % EBITDA % 4.38% 3.90% 12% South African distribution Depreciation, amortisation and impairment charges (68 499) (45 377) Operating International profit distribution % Net Value finance added income services Finance income Technology Finance expense (63 105) (50 119) Net Total profit before taxation Taxation ( ) (90 186) Net profit after taxation Gross 198 profit 850 % (7%) Share of loss of associates and joint ventures (11 897) (14 082) Minorities interest (10 038) (1 532) Net South profit African after distribution taxation and minorities interest (11%) Amortisation International distribution intangibles raised through business combinations net of tax Core net profit after taxation Value added services Earnings per share for profit attributable to equity holders (cents) (10%) -Basic Technology (10%) -Total Headline (10%) F I N A N C I A L O V E R V I E W

32 32 Financial overview Income statement 30 Nov Nov 2008 Growth R 000 R000 R 000 % Revenue Segmental EBITDA margins EBITDA margin % % Cost South of African inventories distribution sold ( ) ( ) Gross International profitdistribution % Gross profit % 7.40% 6.92% 6% Value added services Other income Overheads Total trading operations ( ) ( ) EBITDA % EBITDA % 4.38% 3.90% Depreciation, Segmental EBITDA amortisation and impairment charges (68 499) (45 377) Operating profit % Net finance income Finance South African income distribution % Finance International expense distribution ( ) 349 ( ) % Net Value profit added before services taxation (61%) Taxation ( ) (90 186) Total trading operations % Net profit after taxation (7%) Share Technology of loss of associates and joint ventures (11 (35 897) 561) (14 (22 082) 114) Minorities Corporate interest (10 (40 038) 346) (45 (1 532) 254) Net Total profit support after taxation and minorities interest ( ) 915 ( ) 158 (11%) 13% Amortisation on intangibles raised through business combinations net of tax Total % Core net profit after taxation (10%) Earnings per share for profit attributable to equity holders (cents) -Basic (10%) - Headline (10%) F I N A N C I A L O V E R V I E W

33 33 Financial overview Income statement 30 Nov Nov 2008 Growth R 000 R000 R 000 % Revenue % Cost of inventories sold ( ) ( ) Gross profit % Gross profit % 7.40% 6.92% 6% Other income Overheads ( ) ( ) EBITDA % EBITDA % 4.38% 3.90% 12% Depreciation, amortisation and impairment charges (68 499) (45 377) Operating profit % Net finance income Finance income Finance expense (63 105) (50 119) Net profit before taxation Taxation ( ) (90 186) South African distribution earned finance income of R64m Net profit after taxation Share Imputed of loss interest of associates receivable and on joint debtors ventures balances R20m (R14m in prior period) (11 897) (14 082) (7%) Minorities Interest on interest liquid working capital R44m (10 038) (1 532) Net profit after taxation and minorities interest (11%) Decline in finance income, net of IFRS adjustments, was R46m, mainly due to 500 basis points decline in interest rates. Amortisation on intangibles raised through business combinations net of tax Core net profit after taxation (10%) Earnings per share for profit attributable to equity holders (cents) -Basic (10%) - Headline (10%) F I N A N C I A L O V E R V I E W

34 34 Financial overview Income statement 30 Nov Nov 2008 Growth R 000 R000 R 000 % Revenue % Cost of inventories sold ( ) ( ) Gross profit % Gross profit % 7.40% 6.92% 6% Other income Overheads ( ) ( ) EBITDA % EBITDA % 4.38% 3.90% 12% Depreciation, amortisation and impairment charges (68 499) (45 377) Operating profit % Net finance income Finance income Finance expense (63 105) (50 119) Net profit before taxation Taxation ( ) (90 186) Net profit after taxation (7%) R60m relates to imputed interest payable on creditors balances in terms of IFRS (R48m in prior period) Share of loss of associates and joint ventures (11 897) (14 082) Minorities interest (10 038) (1 532) Net profit after taxation and minorities interest (11%) Amortisation on intangibles raised through business combinations net of tax Core net profit after taxation (10%) Earnings per share for profit attributable to equity holders (cents) -Basic (10%) - Headline (10%) F I N A N C I A L O V E R V I E W

35 35 Financial overview Income statement 30 Nov Nov 2008 Growth R 000 R000 R 000 % Revenue % Cost of inventories sold ( ) ( ) Gross profit % Gross profit % 7.40% 6.92% 6% Other income Overheads Oxigen Services India ( ) ( ) EBITDA Reduction in losses of 68% due to: % EBITDA % 4.38% 3.90% 12% growth in revenue by R130m (21%); and Depreciation, amortisation and impairment charges (68 499) (45 377) Operating reduction profit in overheads of 46% % Net finance income Finance income Ukash Finance expense (63 105) (50 119) Net Comparatives profit before related taxation to two months only as Ukash was acquired in October Taxation The reversal of a deferred tax asset of R3.7m further impacted on their negative contribution. ( ) (90 186) Net profit after taxation (7%) Share of loss of associates and joint ventures (11 897) (14 082) Minorities interest (10 038) (1 532) Net profit after taxation and minorities interest (11%) Amortisation Oxigen Services on intangibles India Pvt Ltd raised through business combinations net of tax ( ) 293 ( ) 768 Core Smart net Voucher profit Limited after taxation (Ukash) 194 (7 542) (195) 926 (10%) Earnings per share for profit attributable to equity holders (cents) Other Basic (10%) -Total Headline ( ) ( ) (10%) 16% F I N A N C I A L O V E R V I E W

36 36 Financial overview Income statement 30 Nov Nov 2008 Growth R 000 R000 R 000 % Core Revenue net profit % Cost of inventories sold ( ) ( ) Gross profit % South Gross African profit % distribution % % % 6% International Other incomedistribution % Overheads ( ) ( ) International distribution associates (12 137) (14 480) 16% EBITDA % Value EBITDA added % services (24.38% 638) % 787 (108%) 12% Total Depreciation, operations amortisation and impairment charges ( ) 964 ( ) Operating profit % Net finance income Technology Finance income ( ) 499 ( ) 858 (97%) Corporate Finance expense (45 (63 510) 105) (46 (50 917) 119) 3% Total Net profit support before taxation ( ) 724 ( ) 958 Taxation ( ) (90 186) (31%) Net profit after taxation (7%) Total (10%) Share of loss of associates and joint ventures (11 897) (14 082) Core Minorities earnings interest per share ( c 038) ( c 532) (9%) Net profit after taxation and minorities interest (11%) Amortisation on intangibles raised through business combinations net of tax Core net profit after taxation (10%) Earnings per share for profit attributable to equity holders (cents) -Basic (10%) - Headline (10%) F I N A N C I A L O V E R V I E W

37 37 Financial overview Balance sheet 30 Nov May 2009 R 000 R000 R 000 R000 ASSETS Non-current assets (2) Property, plant and equipment Intangible assets and goodwill Investments in associates and joint ventures Financial assets at amortised cost Deferred taxation assets Current assets (3) Financial assets at fair value Available for sale financial i asset Financial assets at amortised cost Inventories Loans receivable e Trade and other receivables Current tax assets Cash and cash equivalents Total assets (1) Total assets Increased by R369m (10%) 2. Non-current assets Increase in PPE of R24m, net of depreciation and disposals, was mainly due to capex on POS devices Decrease in intangibles and goodwill of R62m Decrease in investment in associates of R14m. Net decrease in unactivated starter packs of R36m (Financial assets at amortised cost) Reversal of deferred tax asset of R3m 3. Current assets Increased by R460m. Stock turn averaged 3.44 times Debtors collection 24 days F I N A N C I A L O V E R V I E W

38 38 Financial overview Balance sheet 30 Nov May 2009 R 000 R000 R 000 R000 EQUITY AND LIABILITIES Capital and reserves Share capital, share premium and treasury shares (1) Restructuring reserve ( ) ( ) FCTR (17 116) (13 399) Transaction with minority reserve ( ) ( ) Share-based payment reserve Minorities interest (9 252) Retained earnings Non-current liabilities Current liabilities Trade and other payables Current tax liabilities Interest est bearing borrowingso Total liabilities (2) Total equity and liabilities Share capital, share premium and treasury shares Declined due to purchase of treasury shares for the group s share incentive scheme 2. Total liabilities Increased by R191m Average creditor terms 40 days F I N A N C I A L O V E R V I E W

39 39 Financial overview 30 Nov 2009 Cash flow R 000 R000 Cash flows from operating activities (1) Cash flows from investing activities iti (34 958) Cash flows from financing activities (23 730) Increase in cash and cash equivalents Cash flows from operating activities Operating profit growth and focus on working capital management resulted in R316m of cash flows from operating activities Cash and cash equivalents at the beginning of the period Translation difference (8 594) Cash and cash equivalents in subsidiaries disposed of (46 209) 2. Cash on hand at the end of the period accumulated to R1.96 billion Cash and cash equivalents at end of period (2) F I N A N C I A L O V E R V I E W

40 40 Financial overview Dividends No dividend id d has been declared d in line with group s present stated t policy F I N A N C I A L O V E R V I E W

41 South African Distribution Brett Levy Joint CEO S O U T H A F R I C A N D I S T R I B U T I O N

42 Group Structure South African Distribution International Distribution Technology Value Added Services The Prepaid Company Gold Label Activi Technology Services Datacel Crown Cellular Oxigen Services India - Transaction Junction % 60% Cellfind Ventury Ukash 17.25% Activi Deployment Services Content Connect Africa Matragon APS - 72% Mobile Services Company Kwikpay APS DRC - 90% Virtual Voucher APS NIGERIA - 51% The Postpaid Company Blue Label Mexico - 70% Sharedphone 50.1% Blue Label Australasia 50.5% 100% unless otherwise stated S O U T H A F R I C A N D I S T R I B U T I O N

43 43 RICA - Total Subscriber Registrations = Total Registrations per Network (cumulative) Average Registrations per Week /01 20/01 21/01 22/ /01 MTN Vodacom Cell C Virgin S O U T H A F R I C A N D I S T R I B U T I O N

44 44 RICA - Total Agent Registrations = Cumulative Registrations across Networks Total Agents 19/01 20/01 21/01 22/ /01 S O U T H A F R I C A N D I S T R I B U T I O N

45 45 Products Algoa bus ticketing Lotto Ukash PINless Cover2Go S O U T H A F R I C A N D I S T R I B U T I O N

46 46 Cover2Go Successfully launched pilot Cover2Go, a prepaid insurance product, in Umtata in November 2009 Product well received Target LSM to ensure consumers remain loyal and maintain paying their premiums S O U T H A F R I C A N D I S T R I B U T I O N

47 Electricity by Region November Comparison 160,000, ,000, ,000, ,000, ,000, ,000, ,000, ,000, Eastern Cape Free State Gauteng Kwa Zulu Natal Limpopo Mpumalanga North West Northern Cape Western Cape S O U T H A F R I C A N D I S T R I B U T I O N

48 48 South Africa South Africa S O U T H A F R I C A N D I S T R I B U T I O N

49 49 Conclusion Nigeria and India progressing Value Added Services underperforming Product to the People Distribution channel building Introducing new products and services Core South African Distribution segment remains robust S O U T H A F R I C A N D I S T R I B U T I O N

50 Blue Label Telecoms Interim Results Presentation Thank you Q&A

51 51 Financial overview Balance sheet 30 Nov May 2009 R 000 R000 R 000 ASSETS Non-current assets (2) Property, plant and equipment Intangible assets and goodwill Investments in associates and joint ventures Financial assets at amortised cost Deferred taxation assets Current assets (3) Financial assets at fair value Available for sale financial i asset Financial assets at amortised cost Inventories Loans receivable e Trade and other receivables Current tax assets Cash and cash equivalents Total assets (1) Total assets Increased by R369m (10%) 2. Non-current assets Increase in PPE of R24m, net of depreciation and disposals, was mainly due to capex on POS devices Reversal of deferred tax asset of R4m Decrease in intangibles and goodwill of R62m Net decrease in unactivated starter packs of R35m (Financial assets at amortised cost) Decrease in investment in associate of R14m. 3. Current assets Increased by R460m. Stock turn averaged 344times 3.44 Debtors collection 24 days F I N A N C I A L O V E R V I E W