Blue Label Telecoms Integrated Annual Report 2019

28 Blue Label integrated annual report 2019 proceeds will be used to reduce interest-bearing debt. Blue Label is going back to basics through effectively using cash resources to bulk-buy the products and services we offer through our extensive distribution channels. Despite challenging economic conditions in South Africa, the Blue Label business performed well, increasing core headline earnings by 26% to R904 million* on exclusion of the negative impacts as detailed below. I am proud of the resilience shown by the Blue Label team and their constant drive for efficiencies, gross margin expansion and innovation. It has not been easy out there, with price competition and margin compression across the board and our largest partners, the mobile network operators, facing steeply declining prices. The non-executive Board members are completely committed to continuing to mentor our highly THE TRUST BLU FOUNDATION Blue Label was pleased to announce the launch of the Trust Blu Foundation in June 2019. Our aim is to connect and work proactively with non-profit organisations and social enterprise innovators by leveraging our resources, as well as expertise in technology and innovation, to create new solutions to address inequality, economic exclusion and unemployment. We are committed to effecting meaningful and positive socio-economic change in South Africa’s marginalised and vulnerable communities. We recognise that our business does not operate in isolation from society and that we need to align our financial and social returns. * On exclusion of the negative impact attributable to: u u Cell C’s trading losses, impairment of certain of its property, plant and equipment, the impact of the derecognition of its deferred tax asset and the impairment of Blue Label’s total investment in Cell C; u u Fair value downward adjustments of the exposure relating to SPV1 and SPV2 pertaining to the initial recapitalisation of Cell C and the Glocell loan; u u An impairment of Blue Label’s total investment in the Oxigen India group, including 2Dfine Holdings Mauritius, as well as providing for loan impairments and guarantees payable therein; and u u Partial impairments of goodwill and an investment in a joint venture. entrepreneurial and talented management team and returning Blue Label to the cash generative business it was prior to the acquisition of Cell C. We are determined to rebuild stakeholder trust and shareholder value. Larry Nestadt Independent Non-Executive Chairman 29 October 2019 Chairman’s report continued