Blue Label reports earnings turnaround after Cell C write down

Blue Label Group generated growth in revenue, and core headline earnings per share for the half-year ended November 2019, representing a turnaround from the prior period.

“This was a resilient performance in an adverse economic environment,” it said.

The group, specialists in prepaid products and the electronic distribution of virtual merchandise, has undergone a difficult time since its acquisition of a majority holding in mobile operator Cell C.

However, Cell C is no longer a feature following Blue Label’s decision to fully impair its exposure to the struggling operator, in 2019.

Revenue from continuing operations climbed 2% to R11.5 billion, while the group reported an increase in gross profit of 10%, to R1.21 billion.

Gross profit increased by 10% from R1.1 billion to R1.2 billion, underpinned by an increase in margins from 9.75% to 10.52%.

Net profit from continuing operations amounted to R313 million, from a prior loss of R201 million.

Earnings per share and headline earnings per share increased from a negative 15.11 and 17.54 cents per share to a positive 34.83 and 39.98 cents per share respectively.

Core headline earnings for the half-year period amounted to R390 million, equating to core headline earnings of 43.18 cents per share compared to core headline losses of 13.90 cents per share in the comparative period.

On inclusion of the gross amount generated on “PINless top-ups”, prepaid electricity, ticketing and gaming, the effective increase equated to 12% from R27.1 billion to R30.3 billion, Blue Label said.

It said that the comparative period reflected fair value losses of R493 million relating to the exposure to Cell C investment vehicles SPV1 and SPV2, as well as to the recognition of the group’s share of equity accounted losses in Cell C of R133 million.

The core headline earnings of R390 million comprised R323 million from continuing operations and the R67 million that pertained to the discontinued operations.

Read: Blue Label sees big turnaround after Cell C write down