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BUSINESS MODEL
AND STRATEGIC
OBJECTIVES
LEADERSHIP
GOVERNANCE
OPERATING
PERFORMANCE
SHAREHOLDERS’
INFORMATION AND
ADMINISTRATION
FINANCIAL
PERFORMANCE
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
97
FINANCIAL DIRECTOR’S
REPORT
CONTINUED
REVENUE
Revenue of R19.4 billion does not include the
turnover of Oxigen Services India, Blue Label Mexico
and Ukash, as these international associate and joint
venture companies are equity accounted for only.
The vending of “PINless top-ups” continues to gain
momentum as a convenient and alternative
mechanism for the distribution of prepaid airtime.
Only the gross profit earned thereon is accounted for
in Group revenue as opposed to the gross revenue
generated from transactions of this nature. These
sales increased from R997 million to R1.7 billion,
equating to an effective increase in Group revenue
of 6% as opposed to 2%.
GROSS PROFIT
Gross profit increased by R78 million (6%) with
margins increasing by 0.26% from 6.70% to 6.96%.
The increase in gross profit margins was achieved
through the application of cash resources to bulk
inventory purchases at favourable rebates and early
settlement discounts.
Further growth was attributable to increases in
commissions earned on the distribution of prepaid
electricity, with turnover generated on behalf of the
utilities escalating to R8.8 billion.
OVERHEADS
Overheads comprising employee costs and operating
expenses totalled R588 million, confining an increase
to R15 million (3%).
EBITDA
The resultant EBITDA amounted to R788 million, an
increase of 11% before headline earnings
adjustments.
DEPRECIATION AND AMORTISATION
Depreciation, amortisation and impairment charges
decreased by R0.6 million.
The amortisation of intangible assets, in terms of
purchase price allocations, declined by R2.5 million
in line with the expiration of useful tenure. This was
offset by an increase in depreciation on the remainder
of the Group’s assets by R1.9 million.
FINANCE COSTS
Finance costs totalled R167 million, of which
R23 million related to interest paid on borrowed
funds and R144 million to imputed IFRS interest
adjustments on credit received from suppliers. On a
comparative basis, interest paid on borrowed funds
amounted to R24 million and the imputed IFRS
interest adjustment equated to R143 million. Interest
paid was attributable to the cost of financing bulk
inventory purchase transactions and early settlement
payments attracting discounts, for which facilities
were utilised and repaid during the current year.
FINANCE INCOME
Finance income totalled R156 million, of which
R39 million was attributable to interest received
on cash resources and R117 million to IFRS interest
adjustments on credit provided to customers. On a
comparative basis, interest received on cash resources
amounted to R45 million and the imputed IFRS
interest adjustment to R128 million. The decline
in interest received was attributable to the partial
utilisation of funds on hand for bulk inventory
purchase transactions, early settlement discounts
as well as for the funding of the acquisitions of
RMCS and a distribution channel.