Over the past 20 years, Blue Label has played a vital role in South Africa by enabling informal merchants to earn a living and support their families. In spite of a tumultuous year, precipitated by the COVID-19 pandemic, our gross revenue (including the gross amount generated on 'PINless top-ups', prepaid electricity, ticketing and gaming) in excess of R66 billion. At the time of writing, South Africa has survived three waves of the COVID-19 pandemic. During these ebbs and flows, we at Blue Label demonstrated a steely resilience that stems from inbuilt adaptability and agility. Our employees worked from home as required and met our targets within the agreed timeframes. Most of our business units achieved their budgets, despite the unpredictable lockdowns and resulting operating challenges. These outcomes testify to the sustainable resilience of Blue Label teams and processes throughout an extremely testing period.

COVID-19

We attribute much of our success to the fact that Blue Label responded quickly and effectively to the crisis. Staff wellbeing was prioritised and weekly briefings kept employee motivation and productivity at satisfactory levels.

The COVID-19 pandemic has undoubtedly spurred on the widespread and rapid adoption of technology, also known generally as 'The Fourth Industrial Revolution'. Digital channels have become part of everyday life in almost every demographic across the world, with demand for digital products surging as users seek to avoid in-person transactions. As a leading digital distribution business, Blue Label is ideally placed to leverage this new trend.

The speed with which consumers adapted to purchasing their products digitally is working in Blue Label's favour. Not only have previously resistant consumers adapted to digitised services - they now expect them at the touch of a button or screen.

Blue Label's broad portfolio of digital products has become more visible as the overall population of digitally astute consumers ramps up fast across all segments. This offers a distinct competitive advantage and improved margins, due to existing products being cheaper to market than entirely new products and services.

The Group has settled into a 'new normal' hybrid operational model that permits our employees to work from home - especially during stricter lockdown times - while still maintaining team cohesion and company loyalty. While Blue Label people at all levels thrive on the interactivity of working at company premises, many have taken naturally to remote working. We are accordingly fine-tuning our working model to maintain productivity across all business units and are pleased to report that our employees have mostly responded positively to their work situations.

Innovation

Most Blue Label divisions performed well during the year, although those set up for face-to-face engagement did encounter severe headwinds.

The divisions mostly impacted by COVID-19 were our call centres and Ticketpro. The traditional call centre model relies heavily on employees being present at the office to complete their training and making their calls. At the onset of the COVID-19 pandemic our call capability declined from an average of 1 500 dialling seats per day to approximately 500 dialling seats as entire call centre floors were temporarily closed to protect our personnel.

We responded by developing a novel and virtual call centre product called 'I Talk To You' that enables us to train anyone to work from home as a call centre operator for Blue Label to sell third party or Blue Label products. This stroke of innovation has not only resolved our pandemic-related call centre difficulties, 'I Talk To You' has reduced our call centre costs and offers thousands of South Africans the opportunity to build their own call agent careers from the safety of their own environments and earn additional income.

Although severely affected by in-person restrictions at events, Ticketpro has introduced streaming events, with three of our programmes appearing on DStv. During this quiet period we rebuilt our ticketing engine to create one of the most innovative bus transport ticketing systems in the country. While Ticketpro's short-term earnings have slipped, we look forward to realising significantly healthier returns when people return to public events and travelling.

Blue Label launched two products during the pandemic to boost customer convenience and flexibility. Our incoming Blu voucher is a single product that covers all Blue Label online products, thereby replacing the need for consumers to purchase multiple vouchers for various online products. Ringas is a mobile network voucher that covers all of the main networks, being Vodacom, MTN, Cell C and Telkom. We continually drive innovation and over the next year look forward to launching several new offerings.

Strategy and outlook

Over the past year, our 'back to basics' focus has served us well and for now we will continue focusing on short- and medium-term core opportunities. There is considerable reward in upselling to current customers in tandem with attracting new customers. At the same time, adding new products to existing platforms delivers more benefits at a lower cost. Blue Label utilises flexibility and speed to stay relevant in rapidly shifting markets and fortunately has always shown the ability to identify and capitalise on the 'next big thing'. Prepaid airtime was first, followed by prepaid electricity. Transport ticketing and data intelligence now offer a host of new opportunities. However, in the year ahead we are focusing on slick execution of all our products and services, whether long established or new to market.

Our competitors are crowding the marketplace with similar products to ours, which challenges Blue Label to maintain its market-leading positions. Continuing to build trust and credibility is fundamental to being seen as the digital ecosystem of choice, rather than as a product provider that can be outcompeted on price.

Throughout the pandemic to date Blue Label has worked diligently to maintain near-perfect system reliability across all our offerings, which solidified the Group's status as a trusted digital services provider.

We are maintaining our competitive advantages through our proactive approach to customers, better technology offerings, reliable network uptime and an enhanced product range.

To summarise, unlike many businesses, Blue Label is not in survival mode, although acutely aware that we need to take extra care of our employees in this time of emotional and mental vulnerability. While we retained all employees when the pandemic decimated South African employment, we could not protect our people from the anxiety, depression and stress that the pandemic wrought. The Group has accordingly prioritised internal wellness as integral to Blue Label's teamwork-based and resilient culture.

Appreciation

When considering who we need to thank for our success this year, we are simply and hugely proud of every single person in Blue Label. Success at this level is a team effort - and was achieved in a year when it would have been so much easier to lie low at home and say, 'It's not my job'. Our people amazed us by stepping up to the plate and hitting those home runs time and time again. You, our Blue Label employees, are truly exceptional.

We also extend a special thanks to our Board of Directors for their astute support and direction during this challenging year. On 15 September 2021, James Newman joined the Blue Label executive as our incoming COO. We look forward to working with the capacity and operational expertise he brings to our ranks.

The team is grateful to our business partners who believed in us and helped us reach a stellar 20 years in business during a particularly grim time. We recognise that the year ahead remains somewhat uncertain, with no clear end to the pandemic in sight. Nevertheless, we are confident in our now-proven resilience. Let's see what more that Blue Label can achieve in the highly unpredictable year ahead.

Brett Levy

Joint Chief Executive Officer

Mark Levy

Joint Chief Executive Officer

27 September 2021