AUDITED RESULTSFor the full year ended 31 May 2018
Revenue increased 1% to R26.8 billion
Including PINless revenue grew 9%
GP increased 7% to R2.28 billion
EBITDA increase 4% to R1.34 billion
Core EPS increased 4% to 120.61c
HEPS increased 1% to 115.42c
Share buy back programme approved
Highlights for the year ended 31 May 2018 - Strong growth relative to telco industry
-
5
10
15
20
25
30
2013 2014 2015 2016 2017 2018
R'b
illio
n
Revenue
-
200.00
400.00
600.00
800.00
1 000.00
1 200.00
2013 2014 2015 2016 2017 2018
Cen
ts
NAV per share
-
200
400
600
800
1 000
1 200
1 400
1 600
2013 2014 2015 2016 2017 2018
R'm
illio
n
EBITDA
-
500
1 000
1 500
2 000
2 500
2013 2014 2015 2016 2017 2018
R'm
illio
n
Gross Profit
0
5
10
15
20
25
30
2013 2014 2015 2016 2017 2018
R'b
illio
ns
Gross PINless Transactional Values
3
FY18 - concluding acquisitions and designing integration
Extension of distribution reach – organic & acquisitively
Expanded product portfolio
Investing in human capital – distribution specialists
Streamlining operational processes – focused customer targeting, speed to market & performance culture
Investing in technology
Strategic imperatives – Built resilient business, deliberate focus on organic & acquisitive growth
The RITE Strategy
» Blue Label Ventures:
• Boutique Tech business accelerator
• iCrypto acquired – disruptive authentication and identity solution
• Security solution establishing true identity through multifactor identification
4
Technology – Future proofing the organisation
Continued investing in technology platforms & skills
Adopting Global best practices – Strategic benefit, reducing the
cost of transactions, increasing speed
Smarter technology creates smarter interaction with customers
Constantly evolving to provide better service & greater access
Technology differentiates us from competitors
Direct correlation in technology, foot traffic and sales
Developing Artificial Intelligence & Machine Learning capabilities
Agility 2013 2014 2015 2015 2016 2016 2017 2018
Transaction Volumes
Total
5
SA & Africa Distribution – built strong base, optimizing for further organic growth
Revenue grew 1% to R26.2 billion
GP increased 8% to R2.0 billion
EBITDA remained at R1.3 billion
EBITDA margins decreased from 5.18% to 5.12%
Core net profit up 56% to R1.4 billion
Data management optimized for targeted growth
National Coverage, across all channels
Hub and spoke strategy developed for increased reach
Business processes streamlined for speed to market
Performance management processes geared up
Strategic partnership focus
SA & Africa
Distribution
2016
R’000
2017
R’000
2018
R’000
Revenue 25 722 540 25 944 102 26 245 206
EBITDA 1 133 433 1 344 714 1 344 824
Core NPAT 750 951 893 106 1 385 494
6
Product Portfolio - Key to competitive positioning and preventing disintermediation
Revenue growth across all product categories
Online continues to grow robustly
Further strides made in electricity
Bill Payments - new products added – DSTV
Ticketing provides differentiation
Other products – early days with strong growth
Growing product portfolio provides new revenue streams
and discourages disintermediation
Blue Label provides a one-stop shop for retailers:
• Blu Approved kiosks increased revenue for retailers
• A magnet for foot traffic
15755000
4870703
7567679
7754295
2543530
29402
316
38520925
18909000
7241124
7746414
10551793
3241641
146859
25278
47862109
19087000
10373515
8123579 13588234
4101704
366186
282736
55922954
0
10000000
20000000
30000000
40000000
50000000
60000000
Wholesale Topupsonline
Topupsoffline
Electricity BillPayments
Ticketing Other Total
SA & Africa Distribution Revenue Rm’s
2016
2017
2018
* Bill payments not included in gross transactional value
7
Product Penetration – Focused product growth
All products achieved increased penetration in channels
Management information & reporting strengthened
Allows intelligent growth of portfolio through:
• Promotion
• Incentives
• Targeted placements
Ensuring quality subscriber growth for the networks
Intelligent credit extension to merchants
Bad debt controlled
Strive to increase products and services available to
customers
Focus on driving additional product sales per channel
89.9% 88.7% 88.3% 89.3% 89.6% 90.2%91.9% 92.7% 93.6% 94.3% 94.6% 94.9%
43.4%46.8%
51.6%54.0%
57.9%
61.7%
66.1%
69.3%72.4%
74.9% 76.7% 76.5%
53.2%54.8%
58.5% 59.5%61.8%
63.9% 65.3%
66.6%68.1% 68.2% 68.9% 69.2%
1.0% 0.9% 0.9% 0.9% 0.9% 2.3%4.8% 13.7%
17.6%21.0%
23.9%
33.4%
5.6% 7.0%9.3%
13.4% 13.2%
17.7% 19.2%23.0% 24.5%
27.1%29.5%
31.1%
0.5% 0.5% 0.5% 0.6% 0.6% 1.4% 2.1% 2.9%4.8% 5.2% 5.4% 5.1%
F16 Q1 F16 Q2 F16 Q3 F16 Q4 F17 Q1 F17 Q2 F17 Q3 F17 Q4 F18 Q1 F18 Q2 F18 Q3 F18 Q4
Product Penetration
Airtime Data Electricity Other Financial Services Ticketing
8
Channel Performance – Wider, deeper reach, superb speed to market & excellent customer service
Corporate and formal retail drive majority of gains
Formal retail delivered 21% growth in face value revenue & 13% in
sales revenue
Corporate has delivered 50% growth in face value revenue & 33% in
sales revenue
Banks looking to deal with one-stop shop and decrease admin costs
Independent market represents major growth platform – hub &
spoke strategy
Improved data collection & reporting – know where to concentrate
expansion drive through customer insights
20%
59% 3%
28% 0% 1%
49%9%
21% 4%
22689
40062
32008
9
Hub & Spoke Strategy - Formal retail provides strong base, growth from independent market
81%31 million people earn less than R6000 per
month
Although 70% of people have bank accounts they
are only used as a means to access cash.
Consumers are shopping closer to home and
finding value in doing so.
Financial inclusion depends on access to virtual
products and services
4500 spokes and 100 hubs delivered in three
months - more signed up daily
10
Blue Label Mobile – new products, new geographies
Operates in 4 verticals – integrated comms, value added services, financial services,
marketing
Highly competitive, mature market
Regulatory and MNO restrictions impacting growth
Focusing on B2B vs. B2C
Strategic drive to bundle service offerings & focus on growth segments across the group
Expand geographically – only at marginal cost and specific fit with MNOs
Deploy complementary MNO grade technology platforms
Mobile 2016
R’000
2017
R’000
2018
R’000
Revenue 291 856 347 858 359 970
EBITDA 111 142 99 101 101 883
Core NPAT 65 333 56 327 59 553
11
Airvantage – new products, new geographies
Acquired Airvantage:
• Extensive experience in nano score card analysis and consumer behaviours
• Guarantees the highest possible service revenue, ensures low levels of bad
debt and churn
• Over 1 million advances per day and over 1 billion USD to date
• Expand top-up offerings over BLU’s product range
• Expansion into Brazil & Africa
• Offer clients a fully managed end to end solution
• Take over non-performing network product & manage on MNO’s behalf
• Evolving/morphing the platform to other business units within BLT
Jan – May 2018 Airvantage
SA
R’000
Airvantage
Brazil
R’000
Revenue 36 929 -
EBITDA 20 649 (12 049)
NPAT 8 267 (5 640)
12
Blue Label Data Solutions – targeted analytics
POPI & CPA compliant
Robust growth continues in competitive market
Opt-In register of 21.1 million entries
• Rebuilt monthly
Focus on lead generation
Blue Nova
• Data analytics drives future business
• Driving understanding of customer behaviour
AI / Data Lakes / Machine Learning
Solutions 2016
R’000
2017
R’000
2018
R’000
Revenue 190 326 177 621 195 089
EBITDA 35 889 34 020 42 838
Core NPAT 16 116 18 956 29 836
13
3G – product range extension: full suite of tier 1 – 4 mobiles; African Focus
Despite the tough economic conditions in SA – 3G growing in a depressed retail
environment
Excellent growth (50%) in African operations – Namibia, Botswana, Mauritius
Biggest distributor of handsets outside of SA Operators
The only distributor in Africa that has Tier 1 – 4 handsets
Only 4PL mobile provider in Africa – full supply chain logistics provider
Further growth into financing hardware infrastructure into government entities
and decoders
3G Mobile Aug 2017– May 2018
R’000
Revenue 2 552 225
EBITDA 286 592
NPAT 196 204
14
Blue Label International – Mexico showing good potential
Mexico:
Mexican economy remains sluggish
Inflation rate expected to decrease from 6.77% to 4.0%
Revenue increased 30% to R4 billion
GP increased 39% to R43 million
EBITDA increased by 98% to almost break-even
EBITDA in positive territory from end-February 2018
NPAT improved 42% to -R43 million
Expecting NPAT profits for BLTS financial year ending 2019 Mexico 2016
R’000
2017
R’000
2018
R’000
Revenue 4 016 614 3 075 053 4 010 909
EBITDA (70 042) (27 358) (485)
NPAT (130 024) (74 395) (42 790)
56.0
57.0
58.0
59.0
60.0
61.0
62.0
63.0
64.0
65.0
66.0
Jan-1
6
Feb-1
6
Mar-
16
Apr-
16
May-1
6
Jun-1
6
Jul-16
Aug-1
6
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
Jan-1
7
Feb-1
7
Mar-
17
Apr-
17
May-1
7
Jun-1
7
Jul-17
Aug-1
7
Sep-1
7
Oct-
17
Nov-1
7
Dec-1
7
Jan-1
8
Feb-1
8
Mar-
18
Apr-
18
May-1
8
Jun-1
8
Jul-18
Active Point of Sale devices 000, UNTs
Blue Label Share of losses is R21.9m in 2018
Cell C Interim Results
CELL C
Brett Levy
Highlights – H1 2018 Key performance indicators
+5%
YOY
Revenue
R7.8 Billion
+16%
YOY
EBITDA
R2.4 Billion
13%
of revenue
Capital Expenditure
R1 Billion
+11%
YOY
Service Revenue
R6.9 Billion
+31%
EBITDA Margin
YOY 3%
-33%
YOY
Net Loss After Tax
R0.6 Billion
Cell C – Strategy & Vision
1. DATA
• Data revenue increased by 20% whilst data traffic has increased
by 62% YOY
• Data revenue now makes up 52% of mobile revenue compared to
46% a year ago; and
• The effective price of data per MB has decreased by more than
28% YOY
4. FTTH
• Competitive products and pricing
• Exceptional organic growth aided by acquisitions going forward;
and
• The customer base grew from 3 733 in H1 2017 to 16 425 in H1
2018.
3. WHOLESALE
• Wholesale revenue increased by R164 million (or 51%) to R486
million YOY driven by the growth in the customer base; and
• Customer data usage in this area generated the bulk of the
revenue growth
2. VOICE
• Voice revenue decreased by 6% YOY in line with a decrease in
voice traffic by 10% YOY
• Effective price of outgoing voice per minute increasing by 3%
YOY; and
• Voice traffic carried by other means such as WhatsApp Calling
and other VoIP services.
5. MTN ROAMING AGREEMENT
• Vastly improved customer experience
• Fixed cost nature results in improved margin as volumes increase
• 4G coverage currently 30% after implementation 80%
Positive results
Summary of reported financial information
R’m H1 2018 H1 2017 % Change
Service revenue 6 861 6 196 11
Non-service revenue 914 1 189 -23
Total revenue 7 775 7 385 5
Gross margin 4 311 3 854 12
Gross margin % 55% 52% 3
EBITDA 2 378 2 048 16
EBITDA margin % 31% 28% 3
Net profit/(loss) after tax (645) (968) 33
Unpacking our subscribers
Million H1 2018 H1 2017 % Change
Total active subscribers 16.3 15.7 4
MVNO subscriber base 1.7 1.3 31
Total active data subscribers 12.1 12.6 4
Data revenue (R’m) 2 961 2 473 20
Capital expenditure (R’m) 1 016 494 >100
Increase in smartphone users YOY 11
Smartphones on our network (million) 9.0 8.1
Rand H1 2018 H1 2017 % Change
Total ARPU 72 70 3
Prepaid 56 56 -
Contract 227 209 9
13.0
0.4
0.7 0.4
1.7
H1 2018 Subscriber Base Composition
12.4
0.5
0.9 0.6
1.3
H1 2017 Subscriber Base Composition
Prepaid Postpaid Hybrid Broadband Wholesale
Other key performance indicators
Revenue by subscriber type
Segment (R mln) H1 2018 H1 2017 % change
Prepaid 3 657 3 363 9
Postpaid 906 882 3
Hybrid 721 774 7
Broadband 384 302 27
Mobile revenue 5 668 5 321 7
Other 183 162 13
Wholesale 486 322 51
Incoming 524 391 34
Service revenue 6 861 6 196 11
50.60%
32%
4.80%
12.60%
Service revenue market share
Vodacom MTN Telkom Cell C
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
H1 2016 H1 2017 H1 2018
Service revenue growth
Cell C Market
Revenue segmented
Segment (R mln) H1 2018 H1 2017 % change
Voice 2 243 2 389 6
Data 2 961 2 473 20
Other 465 458 2
Mobile revenue 5 668 5 321 7
Wholesale, FTTH
and other
669 485 38
Incoming 524 391 34
Service revenue 6 861 6 196 11
Equipment
revenue
914 1 189 23
Total revenue 7 775 7 385 5
Available facilities
Facility Estimated value Status
New ZAR facility R1.4 billion Approved post June 2018
Vendor financing R1.4 billion In progress
Shareholder support R1 billion In progress
Analysis of debt and finance cost
Period 2018 2017
1 January 12.39 13.73
30 June 13.72 13.09
Analysis of forex rates
R mln 2018 2017 2018 2017 2018 2017 2018 2017
Long term debt 6 418 17 914 427 591 145 32 17.8% 7.0%
Short term debt 1 528 417 111 28 14.5% 13.4%
Leases 5 465 5 081 447 451 16.4% 17.8%
Other finance 80 81 218 30- n.r. n.r.
Cash / interest income 674- 159- 33- 23- n.r. n.r.
Net debt excl. leases 7 272 18 172 505 677 363 2 17.2% 7.1%
Net debt inc. leases 12 737 23 253 952 1 128 363 2 16.9% 9.4%
HSF / CEC 1 795 1 959 185 207 18.3% 18.5%
BLT 2 700 309 22.9%
Debt Interest F-X Indicative interest rate
Leases include operating leases recognised as a finance lease, under IFRS 16, to the value of
R3 946 at June 2018 and R3 098 at June 2017.
24
The Way Forward – integration into the Blue Label Machine
Built exceptionally strong base
Original Blue Label business geared for strong
organic growth
Acquisitions adding to Blue Label ecosystem
Integration will generate efficiencies, new growth
opportunities and shareholder returns
Financial Highlights
Dean Suntup
26
Highlights
Increase in revenue to R26.8 billion
Increase in gross profit of 7% to R2.28 billion
Increase in EBITDA of 4% to R1.34 billion
Increase in core headline earnings of 30% to R1.03 billion
Increase in core headline earnings per share of 4% to 120.61 cents
Increase in cash generated from operating cash flows to R3.2 billion
27
Income Statement
May 2018 May 2017 Growth Growth
R’000 R’000 R’000 %
Revenue 26,800,265 26,469,581 330,684 1%
Change in inventories of finished goods (24,518,173) (24,340,581) (177,592) (1%)
Gross profit 2,282,092 2,129,000 153,092 7%
Other income 81,704 16,814 64,890 386%
Overheads (1,023,643) (858,073) (165,570) (19%)
EBITDA 1,340,153 1,287,741 52,412 4%
Depreciation, amortisation and impairment charges (242,604) (112,851) (129,753) (115%)
EBIT 1,097,549 1,174,890 (77,341) (7%)
Net finance expense (111,338) (25,183) (86,155) (342%)
Net profit before taxation 986,211 1,149,707 (163,496) (14%)
Taxation (331,069) (329,816) (1,253) 0%
Net profit after taxation 655,142 819,891 (164,749) (20%)
(Loss)/gain on associate measured at fair value (173,645) 160,200 (333,845)
Share of gains/(losses) from associates and joint ventures 565,812 (164,941) 730,753 443%
Minority interest (53,685) (33,896) (19,789) (58%)
Net profit attributable to equity holders of the parent 993,624 781,254 212,370 27%
28
Adjusted core headline earnings
May 2018
R'000
May 2017
R'000
Growth
R'000
Growth
%
Core headline earnings 1,032,016 795,684 236,332 30%
Core HEPS (cents) 120.61 116.24 4.36 4%
Core headline earnings adjusted for:
Share of losses, fair value loss and loan impairments from Oxigen 256,941 (35,484)
Share of profits from Cell C (569,475) -
Share of profits from 3G Mobile (156,722) -
Share of profits from Airvantage (2,627) -
Fair value gain on derivatives (3,688) -
Transaction interest and costs relating to 3G Mobile acquisition 28,128 -
IFRS interest expense relating to 3G Mobile/Airvantage 64,525 -
Cessation of settlement discounts and interest forfeiture 216,604 -
Once-off winding up cost of Africa Prepaid Services Group 20,737 -
Adjusted core headline earnings 886,439 760,200 126,239 17%
Adjusted core HEPS (cents) 132.56 113.91 18.65 16%
29
Cell C results
R'million
Cell C's losses for 5 months (1 Aug 2017 - 31 Dec 2017) (260)
Cell C's losses for 5 months (1 Jan 2018 - 31 May 2018) (522)
Cell C's losses for the 6 month period Jan 2018 -June 2018 (645)
Less June's reported loss 124
Cell C's loss before tax for 10 months (782)
Recognition of deferred tax asset 1,922
Cell C's net profit for 10 months 1,140
BLT's share of profit for 10 months at 45% 512
Adjustments: 59
IFRS 15 and 16 adjustments (6)
Share scheme adjustment 65
BLT's share of core earnings for 10 months at 45% 571
Headline adjustment (2)
BLT's share of core headline earnings for 10 months at 45% 569
30
3G Mobile results
Aug - Nov 2017 Dec - May 2018 10 Months
Equity Accounted Consolidated to May 2018
R’000 R’000 R’000
Revenue 1,165,196 1,387,029 2,552,225
Change in inventories of finished goods (1,025,718) (1,160,845) (2,186,563)
Gross profit 139,478 226,184 365,662
Other income 959 1,657 2,616
Overheads (34,504) (47,182) (81,686)
EBITDA 105,933 180,659 286,592
Depreciation, amortisation and impairment charges (1,749) (2,144) (3,893)
EBIT 104,184 178,515 282,699
Net finance expense 2,341 2,381 4,722
Net profit before taxation 106,525 180,896 287,421
Taxation (31,505) (59,712) (91,217)
Net profit after taxation 75,020 121,184 196,204
31
Cash flow
May 2018 May 2017
R’000 R’000
Cash generated by operations 3,588,780 1,753,991
Interest received 154,952 52,300
Interest paid (187,489) (105,518)
Taxation paid (368,099) (338,814)
Cash flows from operating activities 3,188,144 1,361,959
Cash flows from investing activities (7,758,379) (320,476)
Cash flows from financing activities 4,166,560 (279,795)
Increase/(decrease) in cash and cash equivalents (403,675) 761,688
Cash and cash equivalents at the beginning of the year 1,350,666 589,027
Translation difference 897 (49)
Cash and cash equivalents at the end of the period 947,888 1,350,666
-
5
10
OpeningBalance
Operating Financing Investing Closingbalance
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THANK YOU
Q & A