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BLUE LABEL INTEGRATED ANNUAL REPORT 2014
AIRTIME
MATERIAL IMPACTS
AND RISKS
In determining the material risks of the Group, a formalised “top down” risk management process is applied.
The following key impacts and risks have been identified:
Risk
Context
Mitigating factors
Fluctuating
economic
conditions,
including
certain political,
social and
environmental
conditions in
South Africa
These factors can affect
consumer health, and
in turn could have an
adverse effect on revenue
and profitability, in spite
of the Group’s historical
resilience to adverse
economic conditions.
It has been the Group’s experience that the diversity of its
mix of products and services and distribution channels has
limited its exposure to economic downturns and strikes.
Consumers appear to be unwilling to reduce spending on
utilities, transport and airtime. In this regard the Group’s
products continue to be in demand.
The Group is focusing on its existing platforms, both locally
and internationally. Its vast geography of point-of-sale
presence afford continuous opportunities to provide additional
products and services to be expedited on these growing points
of presence.
Margin
compression
Network operators
determine the margins to
the prepaid airtime
distribution channel.
Blue Label may not always
be able to pass on to the
retailer or customer any
margin compression
enforced by the network
operators.
Management is confident that based on historical trends,
the Group will be able to continue to pass on any margin
compression to the distribution channel. Any margin
compression is also likely to force inefficient distributors out of
the distribution chain, a trend welcomed by management. In
addition, the Group is constantly looking to add new product
and service offerings comparable at higher margins than its
traditional business, through the leverage of its significant
distribution footprint and merchant relationships.