Blue Label Telecoms Limited : Unaudited for the half year ended 30 November 2013

Increase in gross

profit by 10% to

R710 million

Increase in gross

profit margins from

6,80% to 7,82%

Increase in EBITDA

by 16% to

R431 million

Increase in headline

earnings per

share by 7% to

37,15 cents

Increase in headline

earnings by 7% to

R246 million

Cash flows from

operating activities

R742 million

As at

ASSETS

Non-current assets

Property, plant and equipment
Intangible assets and goodwill
Investment in and loans to associates and joint ventures
Loans receivable Starter pack assets Deferred taxation assets

Current assets

Inventories
Loans receivable
Starter pack assets
Trade and other receivables
Current tax assets
Cash and cash equivalents

Total assets

EQUITY AND LIABILITIES Capital and reserves

Share capital, share premium and treasury shares
Restructuring reserve
Other reserves
Share-based payment reserve
Transaction with non-controlling interest reserve
Retained earnings
Non-controlling interest Non-current liabilities Deferred taxation liabilities Current liabilities
Trade and other payables
Provisions
Current tax liabilities
Current portion of interest-bearing borrowings
Current portion of non-interest-bearing borrowings

Total equity and liabilities

Share capital, Transaction with

share premium non-controlling Share-based

and treasury Retained Restructuring Other interest payment Non-controlling

shares earnings reserve reserves* reserve reserve** interest Total equity

Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited

Six months ended R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance as at 1 June 2012 3 941 316 1 671 378 (1 843 912) 25 539 (909 572) 38 915 (9 278) 2 914 386
Net profit for the period - 228 940 - - - - (11 378) 217 562
Other comprehensive income - - - 35 288 - - 43 35 331
Total comprehensive income/(loss) - 228 940 - 35 288 - - (11 335) 252 893
Dividends paid - (155 137) - - - - (1 900) (157 037) Treasury shares purchased (17 223) - - - - - - (17 223) Equity compensation benefit scheme shares vested 15 798 - - - - (15 559) (239) - Equity-based compensation movements - - - - - 8 299 (3) 8 296
Transaction with non-controlling interest reserve movement - - - - (395) - 395 - Non-controlling interests acquired during the period - - - - - - 2 829 2 829
Balance as at 30 November 2012 3 939 891 1 745 181 (1 843 912) 60 827 (909 967) 31 655 (19 531) 3 004 144

Balance as at 1 June 2013

Net profit for the period

Other comprehensive income

Total comprehensive income/(loss) Dividends paid

Treasury shares purchased

Equity compensation benefit scheme shares vested

Equity-based compensation movements

Transaction with non-controlling interest reserve movement

Non-controlling interests acquired during the period

Balance as at 30 November 2013

Audited Audited Audited Audited Audited Audited Audited Audited
Year ended R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance as at 1 June 2012 3 941 316 1 671 378 (1 843 912) 25 539 (909 572) 38 915 (9 278) 2 914 386
Net profit for the year - 424 841 - - - - (16 736) 408 105
Other comprehensive income - - - 87 600 - - 288 87 888
Total comprehensive income/(loss) - 424 841 - 87 600 - - (16 448) 495 993
Dividends paid - (155 137) - - - - (3 515) (158 652) Treasury shares purchased (17 223) - - - - - - (17 223) Equity compensation benefit scheme shares vested 15 798 - - - - (15 559) (239) - Equity-based compensation movements - - - - - 16 063 117 16 180
Share of equity movement in associates - - - - - 77 - 77
Transaction with non-controlling interest reserve movement - - - - (21 553) - 7 553 (14 000) Non-controlling interests acquired during the year - - - - - - 6 092 6 092
Balance as at 31 May 2013 3 939 891 1 941 082 (1 843 912) 113 139 (931 125) 39 496 (15 718) 3 242 853

*Included in other reserves is the foreign currency translation reserve and the non-distributable reserve.

**Includes employee compensation benefit reserve.

Revenue
Other income
Change in inventories of finished goods Employee compensation and benefit expense Depreciation, amortisation and impairment charges Other expenses

Operating profit Finance costs Finance income

Share of loss from associates and joint ventures

Profit for the period before taxation

Taxation

Net profit for the period

Other comprehensive income:

Exchange profits on translation of foreign operations

Other comprehensive income for the period, net of tax

Total comprehensive income for the period Net profit for the period attributable to: Equity holders of the parent

Non-controlling interest

Total comprehensive income for the period attributable to:

Equity holders of the parent
Non-controlling interest

Earnings per share for profit attributable to equity holders (cents)

Basic earnings per share Diluted earnings per share** Headline earnings per share
Diluted headline earnings per share**
Dividend per share

Six months ended 30 November 2013

Total segment revenue

Inter-segment revenue

External revenue

EBITDA

Net profit/(loss) for the period net of non-controlling interests

Amortisation on intangibles raised through business combinations net of tax and non-controlling interest

Core net profit/(loss) for the period

At 30 November 2013

Total assets

Net operating assets/(liabilities)

Six months ended 30 November 2012

Total segment revenue 12 247 416 12 077 385 - 94 472 75 559 - Inter-segment revenue (2 781 242) (2 755 918) - (17 884) (7 440) -
External revenue 9 466 174 9 321 467 - 76 588 68 119 -

EBITDA 372 206 399 198 (19 727) 21 075 14 391 (42 731) Net profit/(loss) for the period net of non-controlling interests 228 940 280 980 (24 926) 14 295 8 019 (49 428) Amortisation on intangibles raised through business combinations net of tax and
non-controlling interest 6 913 4 736 2 030 115 32 -

Core net profit/(loss) for the period 235 853 285 716 (22 896) 14 410 8 051 (49 428) At 30 November 2012
Total assets 5 281 016 4 553 734 438 021 95 120 153 563 40 578

Net operating assets/(liabilities) 1 963 301 1 968 640 (10 598) 11 899 31 244 (37 884)
Audited Audited Audited Audited Audited Audited

Year ended 31 May 2013 R'000 R'000 R'000 R'000 R'000 R'000

Total segment revenue 24 720 865 24 363 215 - 220 393 137 257 - Inter-segment revenue (5 736 655) (5 651 135) - (68 973) (16 547) -
External revenue 18 984 210 18 712 080 - 151 420 120 710 -

EBITDA 713 622 796 439 (31 000) 37 055 24 703 (113 575) Net profit/(loss) for the year net of non-controlling interests 424 841 562 824 (54 861) 24 268 13 152 (120 542) Amortisation on intangibles raised through business combinations net of tax and
non-controlling interest 12 675 7 942 4 176 519 38 -

Core net profit/(loss) for the year 437 516 570 766 (50 685) 24 787 13 190 (120 542)

At 31 May 2013
Total assets 5 720 547 4 950 040 481 712 94 581 145 989 48 225

Net operating assets/(liabilities) 1 914 385 1 981 975 (15 567) 3 313 16 904 (72 240)
Weighted average number of shares
Diluted weighted average number of shares
Number of shares in issue

Reconciliation between net profit and core net profit for the period:
Net profit for the period attributable to equity holders of the parent
Amortisation on intangible assets raised through business combinations net of tax and net of non-controlling interest
Core net profit for the period
- Core earnings per share (cents)*

*Core earnings per share is calculated after adding back the amortisation of intangible assets as a consequence of the purchase price allocations completed in terms of IFRS 3(R): Business Combinations.

**Diluted earnings per share and diluted headline earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding for the number of shares that would be issued on vesting under the employee forfeitable share plan.

Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities

Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Translation difference

Cash and cash equivalents at the end of the period

Profit attributable to equity holders of the parent
Net profit on disposal of property, plant and equipment
Loss/(profit) on disposal of subsidiaries
Profit on disposal of associates and joint ventures
Impairment of intangible assets and property, plant and equipment
Headline earnings
Headline earnings per share (cents)
www.bluelabeltelecoms.co.za

"The Group's goal is to enable all consumers to

interact and transact on an equal footing"

Headline earnings per share of 37,15 cents equated to a growth of 7%. In spite of a decline in revenue, EBITDA increased by 16% primarily due to an increase in gross profit by R66 million (10%) and the containment of growth in overheads to 3%. Revenue generated on "pin-less top ups" increased by R310 million. As only the commission thereon is reflected, the effective decline in Group revenue was confined to 1%.
The increase in gross profit, supported by a growth in margins from 6,80% to 7,82%, was achieved through the efficient application of cash resources to inventory purchases at favourable discounts, growth in commissions earned on the distribution of prepaid electricity and compounding annuity revenue.
The South African distribution segment remains the predominant contributor to Group earnings.
It has achieved this by fortifying its foundation, thereby facilitating its ability to expand its offering into its key distribution channels. It is a reliable aggregator of several suppliers, backed up by a responsive service. Its reputation is one of trust, convenience and clear product leadership.
On the international front, Ukash continued to increase profitability, whilst Oxigen Services India ("OSI") and Blue Label Mexico ("BLM") incurred losses. Cash resources accumulated to R1,3 billion of which R742 million was generated from operating activities.

The condensed consolidated interim financial information has been prepared in accordance with the JSE Limited Listings Requirements, the presentation and disclosure requirements of IAS 34 - Interim Financial Reporting and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council. The condensed consolidated interim financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act of South Africa.
This interim financial information has been prepared in accordance with the going concern principle, under the historical cost convention, except for certain financial and equity investments which have been measured at fair value. The accounting policies and methods of computation are consistent with those applied in the annual financial statements for the year ended 31 May 2013, with the exception of the standards that are effective for the first time in the current period. These have been disclosed in note 1 to the annual financial statements for the year ended 31 May 2013. These standards have not had a significant impact on the interim financial information.
In addition, the Group applies core net profit as a non-IFRS measure in evaluating the Group's performance. This supplements the IFRS measures. Core net profit is calculated by adjusting net profit for the year with the amortisation of intangible assets that arise as a consequence of the purchase price allocations completed in terms of IFRS 3(R): Business Combinations.
The results have not been reviewed or audited for the period ended 30 November 2013.

In the comparative year, the technology segment was reported on separately. As the bulk of
its function and services are interdependent in the distribution of airtime, electricity and starter packs, it is more appropriate to house its expenditure in the South African distribution segment. Accordingly, the technology segment has been included in the South African distribution segment and the comparative segmental results in this regard have been restated in accordance with IFRS 8 "Operating Segments".
The decline in revenue by 4% in an increasingly competitive environment was compensated for by an increase in gross profit by 10%. This achievement is consistent with the strategy of focussing on opportunities yielding superior gross marginal returns. The continued shift in consumer behaviour patterns from traditional airtime purchasing to "pin-less top ups", accounted for 3% of the reduction in revenue. The effective decline in revenue equated to 1%.
Commissions earned on the distribution of prepaid electricity increased by R14 million to
R67 million (26%) on revenue of R4,4 billion generated on behalf of the utilities.
After an overhead increase of 5%, the resultant EBITDA of R448 million equated to a 12% growth. These earnings were inclusive of extraneous costs of R19 million that were incurred in the settlement of a contractual dispute and the early termination of a profit share agreement.
Core net profit increased by 8% after a decline in net finance income by R7,8 million net of taxation, congruent with the application of an element of cash resources to bulk purchasing transactions and early settlement discounts. On exclusion of the extraneous settlement costs net of taxation, the core net profit growth would have equated to 13%.

Revenue Gross profit EBITDA
Share of (losses)/profits from associates and joint ventures
- Ukash
- Oxigen Services India
- Blue Label Mexico
- Other
Core net loss
- Equity holders of the parent
- Non-controlling interests
The negative EBITDA of R9,8 million was mainly attributable to legal fees incurred in Africa Prepaid
Services Nigeria ("APSN"). These fees in the comparative period amounted to R19 million. The share of net losses comprised the following:

The Group's share of profits in Ukash, after the amortisation of intangible assets, increased by 59% from R4,4 million to R6,9 million. Of this growth, R1,2 million was attributable to foreign exchange gains. The balance of the growth of R1,4 million was achieved through an increase in profitability by 30%. These results were achieved organically on a revenue increase by 26%, resulting in an increase in gross profit by 38% and EBITDA by 35%, all reported in their local currency.

Blue Label's share of losses increased by R1,1 million to R3,5 million. Although revenue increased
by 30%, the Group's share of EBITDA declined by R2,2 million directly attributable to an increase in payroll and other expenses.
The increase in expenditure was congruent with a defined strategy to focus on the growth of financial services transactions facilitated by its vast network of points of presence. Implementation of this process required the deployment of additional personnel and other resources.
The defined strategy follows OSI's aim of becoming India's first non banked mobile wallet that empowers the unbanked masses to instantly transfer and receive cash across the entire country. Its money transfer services are currently transacting at $1,2 million per day, increasing exponentially
through Oxigen's connectivity with the National Payment Corporation of India. This facilitates the ability
to offer instantaneous services to Oxigen's retail network in India.

In the comparative period, BLM incurred losses to the equivalent of R52 million of which the Group's 45% share equated to R23 million after the amortisation of intangible assets. In the current period, BLM's losses increased to an equivalent of R67 million, of which R12 million was attributable to negative foreign exchange movements. The Group's share of losses equated to R31 million of which R6 million pertained to these foreign exchange movements.
In spite of revenue increasing by 77%, the main reasons for the increase in losses were continued margin compression and an increase in overhead costs. The increase in overhead costs was necessitated by the aggressive roll out of point of sale devices and ancillary support services.
At the end of the reporting period the number of point of sale devices increased to 51 579 net of churn.
The objective will be to continue establishing additional points of presence. The ability to enhance the product offering with the advent of the transactional revenue-producing alliances with Visa and Banamex, will result in additional revenue being generated from the enhanced point of sale base.

This segment comprises Cellfind, Panacea Mobile, Blue Label Engage and Blue Label One. Of the revenue growth of R4 million, Panacea, Blue Label Engage and Cellfind contributed R22 million.
This was offset by a decline of R14 million in revenue generated by the projects and media divisions of Blue Label One. A further R4 million was attributable to the disposal of Content Connect Africa during the comparative period.
The negative performance of Blue Label One manifested itself in the decline in this segment's contribution to core net profit. A positive growth of R8 million in contribution to core net profit by the other companies comprising this segment was entirely offset by movement in losses incurred by Blue Label One of R8 million. As a result, the latter company has been restructured in order to avoid repetition of its negative performance.

The Solutions segment houses Blue Label Data Solutions ("BLDS"), Velociti and CNS Call Centres. BLDS contributed R14 million to EBITDA translating to R8 million at core net profit level.

Although growth in net expenditure was confined to 1%, the negative contribution to core net profit amounted to R50 million.

Depreciation, amortisation and impairment charges increased by R0,8 million.
The amortisation of intangible assets in terms of purchase price allocations declined by R2,9 million in line with the expiration of useful tenure. This was offset by an increase in depreciation and impairment charges to the remainder of the Group's assets by R3,7 million.

Finance costs totalled R81 million, of which R7 million related to interest paid on borrowed funds and R74 million to imputed IFRS interest adjustments on credit received from suppliers. On a comparative basis, interest paid on borrowed funds was R8 million and the imputed IFRS interest adjustment equated to R83 million. Interest paid on borrowed funds was attributable to bulk inventory purchase transactions in which facilities were utilised and repaid during the current period.

Finance income totalled R70 million, of which R16 million was attributable to interest received on cash resources and R54 million to IFRS interest adjustments. On a comparative basis, interest received on cash resources amounted to R26 million and the imputed IFRS interest adjustment to R65 million. The decline in interest received on cash resources was attributable to the partial utilisation of funds on hand for bulk inventory purchase transactions.

Total assets increased by R468 million, of which growth in non-current assets accounted for
R102 million and current assets R366 million.
The increase in non-current assets was mainly attributable to a net growth in intangible assets and goodwill by R36 million, capital expenditure net of depreciation by R10 million and to investment in associates and joint ventures by R60 million.
In June 2013 the Group secured a distribution agreement with a leading reseller for a purchase consideration of R84 million. This, together with other acquisitions totalling R3 million, was offset by the amortisation of intangible assets by R51 million resulting in a net movement of R36 million in intangible assets and goodwill.
The increase in investment in associates and joint ventures was predominantly due to an additional R86 million investment in Blue Label Mexico and the positive impact of R6 million in foreign currency translation reserves, off-set by net losses of R30 million incurred by associates and joint ventures.
The movement in current assets was supported by a growth in cash resources by R359 million, an increase in accounts receivable by R351 million, offset by a decline in inventories by R336 million. The debtors collection period increased from 27 days to 38 days congruent with the granting of extended credit to selected customers. In line with the decline in inventory, the stock turn improved from 38 days to 33 days.
The net profit attributable to equity holders of R246 million, less a dividend of R169 million, off-set by an increase in non-controlling interests of R11 million, were the main contributors to the net growth in capital and reserves.
Trade and other payables increased by R431 million due to the utilisation of additional credit afforded by suppliers. Accordingly, the payment period to creditors increased from 46 days to 62 days.

Cash flows from operating activities totalling R742 million were applied to the purchase of intangible assets to the extent of R87 million, acquisitions of R16 million, additional funding of R86 million to Blue Label Mexico and capital expenditure of R28 million.
Treasury shares acquired for R11 million, dividends paid of R169 million, less dividends received of
R11 million, resulted in a net increase in cash and cash equivalents of R359 million. Cash resources accumulated to R1,3 billion.

Forfeitable shares totalling 3 014 847 (2012: 3 881 276) were issued to qualifying employees. During the period 462 283 (2012: 434 061) shares were forfeited and 3 629 922 (2012: 2 700 512) shares vested.

The disputes between Telkom and Multi-Links, on the one hand, and Blue Label and the other defendants, on the other are pending before the High Court. It is anticipated that a trial date will be allocated shortly. Blue Label's subsidiary, APSN, is proceeding with its claim against Multi-Links arising
out of Multi-Links' wrongful repudiation of the super dealer agreement between Multi-Links and APSN. APSN has also instituted a claim against Telkom arising out of Telkom's wrongful interference with
APSN's contractual rights against Multi-Links. Blue Label and the other defendants vehemently deny the allegations made against them by Telkom and Multi-Links and maintain that they are not liable. Reference is made to the litigation update in the May 2013 Group integrated annual report.

For the remainder of the financial year we expect revenue generated from airtime to be under pressure with the added probability of margin compression.
The recently acquired Ticketpros, a ticketing provider, is a proud partner of premium sporting events in South Africa. Its state-of-the-art technology, allowing it to become the first ticketing engine to launch ticketing purchases on an NFC card or till slip, will enhance the product offerings of the Group through its extensive merchant base to include transport, entertainment and expos.
Acquiring, which is the ability to process credit and debit card payments for products and services on behalf of a merchant, has become a reality through the successful alliance established with MasterCard and Visa. This will enable consumers to transact at store level through the multitude of point of sale devices that Blue Label has deployed both locally and internationally.
The recent announcement of the acquisition of Retail Mobile Credit Specialists ("RMCS"), an enhanced service provider of cellular products and services engaged in the supply of telecommunication products and services, content, data and allied activities, will provide the Group access to new channels for the distribution of both RMCS and Blue Label products and services. The acquisition remains subject to Competition Authority approval.
Oxigen Services India is expected to continue to grow the volume of the financial services transactions it facilitates, as it continues to implement strategies of it becoming India's first non-banked mobile wallet. Blue Label Mexico will continue to grow its points of presence network in pursuit of its strategy of
enhancing its products and service offerings, including transactional revenue.
The conclusion of alliances with MasterCard and Absa in South Africa and with Visa and Banamex in Mexico, will enable financial inclusion in communities where consumers have historically been unable to use formal payment products.

The board of Blue Label Telecoms would once again like to express its appreciation to its suppliers, customers, business partners and staff for their ongoing support and loyalty.
For and on behalf of the board

LM Nestadt BM Levy and MS Levy DA Suntup* CA(SA)

Chairman Joint Chief Executive Officers Financial Director
18 February 2014

*Supervised the preparation and review of the Group's interim results.

Directors: LM Nestadt (Chairman)*, BM Levy, MS Levy, K Ellerine*, GD Harlow*, NN Lazarus SC*, JS Mthimunye*, MV Pamensky, DA Suntup, J Vilakazi*

(*Non-executive)

Company Secretary: J van Eden Sponsor: Investec Bank Limited Auditors: PricewaterhouseCoopers Inc.

American Depository Receipt (ADR) Programme:

Cusip No.: 095648101 Ticker name: BULBY ADR to ordinary share: 10:1

Depository: The Bank of New York, 101 Barclay Street, New York NY. 10286, USA

Blue Label Telecoms Limited

(Incorporated in the Republic of South Africa) (Registration number 2006/022679/06)

JSE Share code: BLU ISIN: ZAE000109088

("Blue Label" or "BLT" or "the Company" or "the Group")

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