Directors' report

The Directors have pleasure in presenting the Group 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 2021.

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 2021 of R831 million(2020: R124 million). Full details of the financial position and results of the Group and its segments are set out in the Group annual financial statements. The Group annual financial statements for the year ended 31 May 2021 were approved by the Board and signed on its behalf on 26 August 2021.

Share capital

Full details of the authorised, issued and unissued capital of the Company at 31 May 2021 are contained in note 6.1 of the Group annual financial statements.


The Board of Directors have elected not to declare a dividend.

Subsequent events and going concern


On 29 June 2021, The Prepaid Company acquired the remaining 52% shareholding in Glocell Distribution for a total purchase consideration of R137 million, of which R126 millionwas discharged by way of a conversion of debt owing by Glocell Proprietary Limited, the owners  of  40%  of  the  company,  to  The Prepaid Company. The balance of 12% was acquired by The Prepaid Company for R11 million. Over and above the cost of acquisition of 52% of Glocell Distribution by The Prepaid Company, the latter assumed Glocell Proprietary Limited’s obligation of R105 million to Investec Bank Limited

Banking facilities

Subsequent to year-end, The Prepaid Company renegotiated a further extension of its Investec facility to 30 September 2022, whereby the facility of R1.45 billionwas increased by R105 millionrelating to the Glocell Proprietary Limited facility as referred to above. From December 2021 the exposure to Investec is required to be reduced by R50 millionper month, with the balance owing to be no more than R1 billion.

As at 31 May 2021 the Investec facility is disclosed as current borrowings, as the extension to 30 September 2022 was only granted in August 2021.

In August 2021, CEC entered into a debt funding agreement with Investec. Its mezzanine facility with Investec was due to expire on 31 August 2021 but has been extended to 31 March 2022.

As at 31 May 2021 CEC’s debt facility was disclosed as current borrowings, as the extension to 31 March 2022 was only granted in August 2021.

Airvantage and AV Technology put obligations

In October 2020, the minority shareholders of Airvantage Proprietary Limited (Airvantage) and AV Technology Limited (AV Tech) exercised their rights to put their 40% shareholding therein to Blue Label Telecoms (BLT), in line with the initial agreements that were concluded between the parties in 2017. The purchase consideration under the put options, as determined by the parties in December 2020, for the 40% shareholdings in Airvantage and AV Tech, amounted to R152 millionand USD4.6 millionrespectively (purchase price).

In February 2021, the parties concluded an agreement legislating for a deferral of the purchase price payable to the minority shareholders of Airvantage and the minority shareholder of AV Tech from 31 December 2020 to 31 March 2021, with subsequent extensions being granted, payable in six equal monthly instalments, inclusive of interest, commencing on 30 November 2021.

If Cell C Limited is able to pass a solvency and liquidity test, the primary obligation in respect of the put options can be transferred to Digital Ecosystems Proprietary Limited (DE), formerly Blue Label Mobile Proprietary Limited, in terms of the agreement concluded with it in September 2019.

An agreement between BLT and DE was reached in August 2021, whereby the parties agreed that  BLT’s primary obligations to the minority shareholders will be transferred to DE ahead of any Cell C test in respect of its solvency and liquidity. This agreement is subject to the fulfilment of certain conditions precedent.

If, however, Cell C is unable to pass the solvency and liquidity test in the future, the primary obligation in respect of the put options may revert back to BLT.

Recapitalisation facility

On 26 August 2021, The Prepaid Company Proprietary Limited, a wholly owned subsidiary of Blue Label and a shareholder of 45% of the issued share capital of Cell C Limited, has concluded a term sheet for an Airtime Purchase transaction with Investec Bank Limited, First Rand Bank Limited (acting through its Rand Merchant Bank division) and other financiers, the proceeds of which are intended to be utilised for the recapitalisation of Cell C. This arrangement is subject to the conclusion of all legal documentation and fulfilment of all conditions precedent under such legal documentation.

Going concern

The performance of the Blue Label Group remains resilient in an adverse economic environment. In spite of the Covid-19 pandemic, the Group has continued to deliver essential services, including electricity, airtime, data and other digital services, as well as providing financial transactional services, which have not been negatively impacted. The Group’s ticketing and call centre operations have been negatively impacted as a result of the Covid-19 pandemic. Cash flow generated by the Group strengthened, with cash generated from operating activities amounting to R1.5 billionin the current year.

The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within its current funding levels into the foreseeable future.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing the financial statements.


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
Nomavuso Mnxasana Independent Non-Executive Director 18 September 2020
Joe S Mthimunye Independent Non-Executive Director 5 October 2007
Dean A Suntup Financial Director 14 November 2013
Jeremiah S Vilakazi Independent Non-Executive Director 19 October 2011
Lazarus Zim Independent Non-Executive Director 23 October 2020

Directors’ interests

The individual interests declared by Directors in the Company’s share capital as at 31 May 2021, held directly or indirectly, were as follows:

      Nature of interest  
  Direct beneficial Indirect beneficial
Director/officer 2021 2020 2021 2020
BM Levy   67 275 315 67 220 664 17 772 778 17 772 778
MS Levy   59 867 907 59 813 256 17 772 777 17 772 777
KM Ellerine*   120 000 000 120 000 000
GD Harlow   1 685 114 1 685 114
N Mnxasana      
JS Mthimunye   130 000 130 000 242 573 242 573
LM Nestadt   10 000 000 10 000 000
DA Suntup   3 879 243 3 850 297 177 778 177 778
JS Vilakazi  
L Zim      

* KM Ellerine is a beneficiary of these shares together with multiple other beneficiaries.

The aggregate interest of the current Directors in the capital of the Company was as follows:

    Number of shares
Director/officer 2021 2020
Beneficial   298 803 484 298 665 237

The beneficial interest held by Directors and officers of the Company constitutes 32.70% (2020 32.69%) 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 5.1.


On 26 November 2020, 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; and
  • granting financial assistance in terms of section 44 and 45 of the Act.

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 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


PricewaterhouseCoopers Inc. will continue in office in accordance with section 90(6) of the Companies Act.

Larry Nestadt