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 2016.
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 2016 of R692 million (2015: R578 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 2016 were approved by the Board and signed on its behalf on 23 August 2016.
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.
Disposal
On 30 October 2015 the Group disposed of its interest in Velociti Proprietary Limited for an amount of R16.5 million. Refer to note 2.2 of the Group annual financial statements for further information.
Acquisitions
The Group’s effective shareholding in Oxigen Services India Private Limited (OSI) prior to March 2016 was 55.83%. Of this shareholding, 37.22% was held by Gold Label Investments (GLI), a wholly owned subsidiary of the Group and 18.61% indirectly through the Group’s 50% shareholding in 2DFine Holdings Mauritius. In March 2016, rights issue was offered by OSI for USD10.5 million (R167 million). The Group exercised its rights for the entire amount through GLI congruent with 2DFine Holdings Mauritius waiving its rights. The effect of this is that GLI’s shareholding has increased from 37.22% to 40.97% and its indirect shareholding of 18.61% has been diluted to 17.21%. The latter has in turn resulted in a gain of R30 million on dilution, being the Group’s share of the increased net asset value emanating from the rights issue. The Group’s effective shareholding in OSI therefore increased by 2.35% to 58.18%.
In September 2015 the Group increased its holding by 0.92% to 47.56% in Blue Label Mexico S.A. de C.V. for an amount of R42.5 million.
Refer to note 2.1 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 2016 are contained in note 6 of the Group annual financial statements. There were no shares issued during the financial year ended 31 May 2016 (2015: nil).
Subsequent events
Subsequent to year-end, dividend number 7 was declared and approved by the Board.
Dividend
On 23 August 2016 the Board approved a dividend of 36 cents per ordinary share. The dividend in respect of ordinary shares for the year ended 31 May 2016 of R242 823 255 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 | Tuesday, 13 September 2016 | |
| Shares commence trading ex dividend | Wednesday, 14 September 2016 | |
| Record date | Friday, 16 September 2016 | |
| Payment of dividend | Monday, 19 September 2016 |
Share certificates may be dematerialised or rematerialised between Wednesday, 14 September 2016 and Friday, 16 September 2016, 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.
Dividend tax is provided for at 15% of the amount of any dividend paid by Blue Label Telecoms, subject to certain exemptions. The dividend 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 | — |
| Yusuf Mahomed | Independent Non-Executive Director | 18 August 2015 | — |
| Joe S Mthimunye | Independent Non-Executive Director | 5 October 2007 | — |
| Mark V Pamensky | Chief Operating Officer | 5 October 2007 | Resigned 30 November 2015 |
| 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 in the Company’s share capital as at 31 May 2016, held directly or indirectly, were as follows: | ||||||||
| Nature of interest | ||||||||
| Direct beneficial | Indirect beneficial | |||||||
| Director/officer | 2016 | 2015 | 2016 | 2015 | ||||
|---|---|---|---|---|---|---|---|---|
| BM Levy | 62 883 164 | 62 548 690 | 21 272 778 | 21 272 778 | ||||
| MS Levy | 55 475 756 | 55 141 282 | 21 272 777 | 21 272 777 | ||||
| KM Ellerine | — | — | 266 667 | 266 667 | ||||
| GD Harlow | — | — | 2 414 815 | 2 414 815 | ||||
| Y Mahomed | — | — | 12 500 | — | ||||
| JS Mthimunye | 30 000 | 30 000 | 5 000 | — | ||||
| LM Nestadt | — | — | 8 204 674 | 8 204 674 | ||||
| MV Pamensky | — | — | — | 5 565 738 | ||||
| DA Suntup | 540 005 | 394 176 | 3 877 778 | 3 877 778 | ||||
| JS Vilakazi | — | — | — | — | ||||
| The aggregate interest of the current Directors in the capital of the Company was as follows: | |||
| Number of shares | |||
| Director/officer | 2016 | 2015 | |
|---|---|---|---|
| Beneficial | 176 255 914 | 180 989 375 | |
The beneficial interest held by Directors and officers of the Company constitutes 26.46% (2015: 27.20%) of the issued share capital of the Company.
Details of Directors’ emoluments and equity compensation benefits are set out in note 5.3 of the Group annual financial statements and details of the forfeitable share plan are set out in note 5.2
Resolutions
On 27 November 2015 the Company passed and filed with the Companies and Intellectual Property Commission the following special resolutions:
- approving the remuneration of non-executive directors; and
- granting a general authority to repurchase the Company’s shares.
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 J 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 at www.bluelabeltelecoms.co.za.
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