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BLUE LABEL INTEGRATED ANNUAL REPORT 2015
UNDERSTANDING MATERIAL MATTERS
Risk
Context
Mitigating factors
Fluctuating
economic
conditions,
including
certain
political, social
and
environmental
conditions in
South Africa
and on the
international
front
These factors can affect
consumer health, and in turn
could have an adverse effect
on revenue and profitability,
in spite of the Group’s
historical resilience to
adverse economic conditions.
It has been the Group’s experience that the diversity
of its mix of products and services and distribution
channels has limited its exposure to economic
downturns and strikes. Consumers appear to be
unwilling to reduce spending on utilities, transport
and airtime. In this regard the Group’s products
continue to be in demand.
The Group is focusing on its existing platforms,
both locally and internationally. Its vast geography
of point-of-sale presence afford continuous
opportunities to provide additional products and
services to be expedited on these growing points
of presence.
Margin
compression
Network operators
determine the margins to the
prepaid airtime distribution
channel. The Group may not
always be able to pass on to
the retailer, merchant or
customer any margin
compression enforced by
the network operators.
Management is confident that based on historical
trends, the Group will be able to continue to pass
on any margin compression to the distribution
channel. Any margin compression is also likely to
force inefficient distributors out of the distribution
chain, a trend welcomed by management. In
addition, the Group is constantly looking to add
new product and service offerings comparable at
higher margins than its traditional business, through
the leverage of its significant distribution footprint
and merchant relationships.
Declines in
interest rates
As the Group is highly liquid,
declines in interest rates have
an effect on finance income.
Wherever possible, free cash flow is utilised for early
settlements or bulk buying in order to obtain
discounts in excess of prevailing interest rates.
Further
increases in
rand/foreign
exchange rates
Changes to the rand
exchange rate affect the
results reported from, and
any refinancing required by,
associate and joint venture
companies in India, Mauritius
and Mexico.
Every effort will be made to secure the best
available foreign exchange rate for any further
financing required.
For the import to South Africa of devices, tablets,
phones, accessories and hardware, forward cover
is placed with reputable banking institutions.