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BUSINESS MODEL
AND STRATEGIC
OBJECTIVES
LEADERSHIP
GOVERNANCE
SHAREHOLDERS’
INFORMATION AND
ADMINISTRATION
OPERATING
PERFORMANCE
FINANCIAL
PERFORMANCE
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
29
CHAIRMAN’S
REPORT
CONTINUED
DEAR STAKEHOLDERS
Blue Label continues setting new paradigms for
traditional businesses. This innovation may be
illustrated as a virtual railway system, powered by
a sophisticated and proprietary locomotive –
technology, which distributes prepaid goods and
services. Each additional product distributed is
another carriage on the train and incremental
products can be added at minimal additional cost, as
the heavy lifting to establish the distribution network
is already in place. As a result, profit margins filter
straight to the bottom line. Our virtual railway now
also crosses borders, predominantly in India and
Mexico, in replicating the business model
implemented in South Africa.
Thirteen years ago we started commercialising the
Levy brothers’ concept of offering prepaid airtime to
unbanked and under-banked consumers. The model
has now evolved into a business distributing secure
electronic tokens of value in emerging markets.
Through judicious investing in the distribution channel
by rolling out various types of point-of-sale devices,
we deliver both physical and virtual products
countrywide.
The business model is underpinned by long-term
relationships, be it with the major mobile network
operators, electricity suppliers and utilities, registered
banks and merchant acquirers, or with associates and
joint venture partners.
The Group’s strategy is consistent – to diversify the
range of products we offer while expanding our
distribution footprint through organic and acquisitive
growth. This year our expansion pace increased.
In South Africa, distribution has crystallised into four
categories of products and services. These are prepaid
airtime and starter packs, prepaid electricity, event
and transport ticketing, and financial services such as
bill payments, merchant acquiring using debit and
credit cards and mobile banking. Acquisitions totalling
R336 million were completed, including RMCS.
Subsequent to year-end we announced the purchase
of a majority stake in Viamedia.
In India the uptake of money transfer products has
been rapid, while in Mexico growth in our merchant
acquiring services is progressing steadily,
simultaneously with our POS project roll-out.
The Group reported a growth in headline earnings
per share of 6% to 67.98 cents, on an EBITDA
increase of 10% to R788 million. These results were
achieved on growth in revenue, margin increases and
the limiting of growth in overhead.