Directors' report
The Directors have pleasure in presenting the Group and Company 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 2015.
PRINCIPAL ACTIVITIES AND STRATEGY
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.
FINANCIAL RESULTS
The Group recorded a net profit after tax attributable to equity holders for the year ended 31 May 2015 of R578 million (2014: R450 million). Full details of the financial position and results of the Company, the Group and its segments are set out in the annual financial statements and Group annual financial statements. The Group and Company annual financial statements for the year ended 31 May 2015 were approved by the Board and signed on its behalf on 18 August 2015.
GOING CONCERN
The financial statements have been prepared on the going concern basis, since the Directors have every reason to believe that the Blue Label Telecoms Group and the Company have adequate resources in place to continue in operation for the foreseeable future.
ACQUISITIONS
In September 2014 Blue Label Telecoms Limited purchased 75% of Viamedia Proprietary Limited (Viamedia). The purchase consideration was for an initial sum of R144.4 million plus additional amounts totalling up to R103.1 million if warranted profits are achieved by Viamedia. If the warranted profits are not achieved, the above additional payments will be abated on a pro-rata basis. A further R112.5 million or part thereof will be payable if stretched targets over and above the warranted accumulated profits are achieved. Refer to note 26 of the Group annual financial statements for further information.
In March 2015 Viamedia Proprietary Limited purchased 50% of Supa Pesa Africa (Mauritius) Limited for R0.1 million plus an additional amount of R29.5 million if certain profit warranties are achieved. A further R8 million will be payable if stretched targets over and above the warranted accumulated profits are achieved. Refer to note 6 of the Group annual financial statements for further information.
In September 2014 Blue Label Telecoms Limited advanced a further R49 million to Blue Label Mexico S.A. de C.V.. This amount was capitalised resulting in the Group’s shareholding in Blue Label Mexico S.A. de C.V. increasing to 46.64%. Refer to note 6 of the Group annual financial statements for further information.
DISPOSAL
In April 2015 Gold Label Investments Proprietary Limited disposed of its interest in Smart Voucher Limited trading as Ukash for an initial sum of R94.9 million plus additional amounts totalling R17.5 million if certain warranties are achieved. Refer to note 6 of the Group annual financial statements for further information.
SHARE CAPITAL
Full details of the authorised, issued and unissued capital of the Company at 31 May 2015 are contained in note 13 of the Group annual financial statements. There were no shares issued during the financial year ended 31 May 2015 (2014: nil).
SUBSEQUENT EVENTS
Subsequent to year-end, dividend number 6 was declared and approved by the Board.
DIVIDEND
On 18 August 2015 the Board approved a dividend of 31 cents per ordinary share. The dividend in respect of ordinary shares for the year ended 31 May 2015 of R209 097 803 has not been recognised in the financial statements as it was declared after this date. The salient dates are as follows:
| Last date to trade cum dividend | Friday, 4 September 2015 |
| Shares commence trading ex dividend | Monday, 7 September 2015 |
| Record date | Friday, 11 September 2015 |
| Payment of dividend | Monday, 14 September 2015 |
Share certificates may be dematerialised or rematerialised between Monday, 7 September 2015 and Friday, 11 September 2015, both days inclusive.
Before declaring the final dividend the Board applied the solvency and liquidity test on the Company and reasonably concluded that the Company will satisfy the solvency and liquidity test immediately after payment of the final dividend. The final dividend will be paid 26 days after the Directors have performed the solvency and liquidity testing.
Dividends tax is provided for at 15% of the amount of any dividend paid by Blue Label Telecoms, subject to certain exemptions. The dividends tax is a tax borne by the beneficial owner of the dividend and will be withheld by either the issuer of the dividend or by regulated intermediaries.
DIRECTORATE
The following are the details of the Company’s Directors:
| Name | Office | Appointment date | Date and nature of change |
| Larry M Nestadt | 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 | — |
| Neil N Lazarus SC | Non-Executive Director | 5 October 2007 | Resigned 27 January 2015 |
| Yusuf Mahomed | Independent Non-Executive Director | 18 August 2015 | Appointed 18 August 2015 |
| Joe S Mthimunye | Independent Non-Executive Director | 5 October 2007 | — |
| Mark V Pamensky | Chief Operating Officer | 5 October 2007 | — |
| Dean A Suntup | Financial Director | 14 November 2013 | — |
| Jeremiah S Vilakazi | Independent Non-Executive Director | 19 October 2011 | — |
DIRECTORS’ INTERESTS
The individual interests declared by Directors and officers in the Company’s share capital as at 31 May 2015, held directly or indirectly, were as follows:
| Nature of interest | |||||||||||
| Direct beneficial | Indirect beneficial | ||||||||||
| Director/officer | 2015 |
2014 |
2015 |
2014 | |||||||
| BM Levy | 62 548 690 | 75 078 183 | 21 272 778 | 8 272 778 | |||||||
| MS Levy | 55 141 282 | 67 670 775 | 21 272 777 | 8 272 777 | |||||||
| KM Ellerine | — | — | 266 667 | 266 667 | |||||||
| GD Harlow | — | — | 2 414 815 | 2 414 815 | |||||||
| JS Mthimunye | 30 000 | 30 000 | — | — | |||||||
| NN Lazarus | — | 3 803 424 | — | 177 779 | |||||||
| LM Nestadt | — | — | 8 204 674 | 8 204 674 | |||||||
| MV Pamensky | — | — | 5 565 738 | 5 565 738 | |||||||
| DA Suntup | 394 176 | 189 037 | 3 877 778 | 3 877 778 | |||||||
| JS Vilakazi | — | — | — | — | |||||||
* Y Mahomed appointed post year-end.
The aggregate interest of the current Directors and officers in the capital of the Company was as follows:
| Number of shares | |||||
|---|---|---|---|---|---|
| Director/officer | 2015 |
2014 | |||
| Beneficial | 180 989 375 | 183 824 425 | |||
The beneficial interest held by Directors and officers of the Company constitutes 27.20% (2014: 27.69%) of the issued share capital of the Company.
Details of Directors’ and prescribed officer’s emoluments and equity compensation benefits are set out in note 30 of the Group annual financial statements and details of the forfeitable share plan are set out in note 32.
RESOLUTIONS
On 28 November 2014 the Company passed and filed with the Companies and Intellectual Property Commission the following special resolutions:
| • | Approving the remuneration of non-executive directors. |
| • | Granting a general authority to repurchase the Company’s shares. |
| • | Approval to grant financial assistance in terms of sections 44 and 45 of the Companies Act, No 71 of 2008. |
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 and Company annual financial statements.
COMPANY SECRETARY
The Board is satisfied that Ms 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.
AMERICAN DEPOSITORY RECEIPT FACILITY
Blue Label Telecoms has a sponsored American depository receipt facility. The facility is sponsored by BNY Mellon and details of the administrators are reflected on the Company’s website.
AUDITORS
PricewaterhouseCoopers Inc. will continue in office in accordance with section 90(6) of the Companies Act.
Larry Nestadt
Chairman