Blue Label Telecoms on Wednesday reported a 1% rise in revenue to R26.8 billion for the year ended May 2018.<\/p>\n
“On imputing gross revenue generated on the continued growth in sales of ‘PINless top-ups’, of which only the gross profit earned thereon is accounted for, the effective growth in revenue equated to 9%,” the group stated.<\/p>\n
However, operating profit declined to R1,097,549, from R1,174,890 before, as did diluted headline earnings per share, from 113.22 cents per share, to 107.41 cents per share.<\/p>\n
Blue Label said that EBITDA increased by 4% to R1.34 billion, underpinned by an increase in gross profit margins from 8.04% to 8.52%.<\/p>\n
Cash generated from operating activities amounted to R3.2 billion, partly facilitating the payment of the cash element of the acquisitive transactions.<\/p>\n
The telecoms group said that core headline earnings for the year amounted to R1.03 billion, an increase of R236 million (30%).<\/p>\n
Core headline earnings per share increased from 116.24 cents per share to 120.61 cents per share (4%), post a dilution resulting from the issue of an additional 272 million shares to fund an element of acquisitions made during the financial year, it said.<\/p>\n
Core headline earnings are calculated after adding back the amortisation of intangible assets as a consequence of the purchase price allocations to headline earnings.<\/p>\n
Blue Label acquired 45% of Cell C in August 2017, for R5.5 billion, and 47.37% of 3G Mobile for R0.9 billion. It then acquired the remaining 52.63% of 3G Mobile for R1 billion in December.<\/p>\n
The core headline earnings comprised the group’s share of profits of R569 million in Cell C which included the recognition of an increase in a deferred tax asset of R1.92 billion, of which the group’s 45% share amounted to R865 million, its profit contributions from 3G Mobile of R157 million and from Airvantage of R2.6 million.<\/p>\n
These contributions were from the effective dates of each acquisition and not for a full year, it said.<\/p>\n
Looking ahead, Blue Label said it is accelerating its programme of providing point of sale devices to traders within the informal market.<\/p>\n
“Blue Label is one of the primary distribution channels for Cell C products and services. The investment in Cell C provides opportunities to realise synergies and enhance product distribution initiatives,” it said.<\/p>\n
3G Mobile continues to expand its handset financing model to include other products, the group said.<\/p>\n
Outside of South Africa, “Blue Label Mexico is seeing consistent growth in revenue, improved gross profit margins and compounding annuity revenue generated from starter pack sales.<\/p>\n
“This is expected to result in a positive contribution to group earnings within the year ahead,” it said.<\/p>\n
Shares in Blue Label Telecoms dropped to their lowest level since 2013 on Tuesday, down as much as 8% to R7.70, following disappointing interim numbers by Cell C.<\/p>\n