Blue Label lifts interim headline earnings
JSE-listed Blue Label Telecoms has reported a 7% rise in headline earnings per share of 37.15 cents for the half year ended November 2013, but revenue declined to R9 billion, from R9.5 billion.
Blue Label’s core business is the virtual distribution of secure electronic tokens of value and transactional services.
Operating profit improved to R397 million, from R338.6 million before, with earnings before interest, taxes, depreciation, and amortisation (EBITDA) up by 16% to R431 million, primarily due to an increase in gross profit by R66 million (10%) and the containment of growth in overheads to 3%, the group said.
“These results are predominantly attributable to exponential growth in commissions earned on the distribution of prepaid electricity, compounding annuity revenue generated from starter packs and escalation of the distribution pin-less top ups, an alternative mechanism for the vending of prepaid airtime,” said Frost & Sullivan’s ICT research analyst, Ankit Trivedi.
The South African distribution segment established itself as the main contributor to this financial growth, offsetting the effects of deteriorating performance of the call centre operations and compounding losses in Mexico, due to margin compression and significant increase in overheads, Trivedi said.
On the international front, Ukash continued to increase profitability, whilst Oxigen Services India and Blue Label Mexico incurred losses.
Oxigen Services India
Blue Label said its 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, Blue Label said.
Blue Label Mexico
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. Blue Label’s share of
losses equated to R31 million of which R6 million pertained to foreign exchange movements.
Looking ahead, Blue Label said that for the remainder of the financial year, it expects revenue generated from airtime to be under pressure with the added probability of margin compression.
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,” Blue Label said.
“Blue Label Telecoms is well positioned for growth in South Africa in 2014, due to its partnership with MasterCard and acquisition of Retail Mobile Credit Specialists (RMCS)” said F&S’ Trivedi.
With MasterCard, the strategy is to roll out point-of-sale (POS) devices to 22,000 small traders and rural shops in South Africa, allowing them to accept card payments for the first time.
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