Blue Label ups profit, lifts dividend
Blue Label Telecoms on Tuesday (21 August) reported a modest rise in revenue to to R18.72 billion for the year ending May 2012, from R18.06 billion previously.
Operating profit improved to R658.92 million, from R451.75 million in 2011, while headline earnings per share increased by 40% from 46.20 cents to 64.65 cents.
Earnings before interest, taxes, depreciation, and amortisation (ebitda) increased by 26% to R750 million, however it included a once off other income receipt of R79.4 million.
“The disclosure of information regarding this receipt is restricted by a confidentiality agreement,” Blue Label said.
The group said its board approved a gross ordinary dividend of 23 cents per ordinary share, from a dividend of 14 cents in 2011.
Blue Label Telecoms’ core business is the virtual distribution of secure electronic tokens of value (predominantly prepaid airtime, at present) and transactional services across its global footprint of touch points. It has recently made a big push in the Indian and Mexican markets.
The group noted that its SA Distribution segment remains the predominant contributor to its profitability.
“Prepaid airtime volumes continued to increase and commissions on the sale of prepaid electricity escalated by 39%. Compounded annuity revenue from starter pack bases added momentum to profitability,” it said.
On the international front, Blue Label said that Oxigen Services India has become a profitable entity as a result of the addition of financial service offerings to its bouquet of products.
Ukash has continued to make positive contributions to group profitability.
Whilst Blue Label Mexico’s footprint expansion initiatives have accelerated at a vast rate through the Grupo Bimbo distribution network, the costs of gearing up infrastructure in support of the roll out of point of sale devices resulted in BLM incurring additional losses in the past year.
In Nigeria, Blue Label had it Multi-links contract cancelled in November 2010, however it continued to incur losses in the current reporting period.
The group is currently in an arbitration process to claim $481 million in lost profits from Telkom’s former Nigerian subsidiary. The arbitration has been set down for hearing from 4 November until 15 December 2012.
Looking ahead, Blue Label said it is actively building its SMS aggregation capabilities through its own development and strategic acquisitions.
“Annuity revenue from an expanding starter pack base is expected to compound accordingly.
“The distribution capabilities of Grupo Bimbo, the largest bakery in the world, are expected to add significant momentum to the roll-out of point of sale devices in Mexico,” it said.
Blue Label said that Oxigen Services India is expected to continue its drive into banking services initiatives in partnership with leading banks and financial institutions in India.
“The statement of financial position remains robust and liquid, which augurs well for future
growth, acquisitions and distributions to shareholders,” it concluded.
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