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UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2022
Blue Label Telecoms Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/022679/06)
JSE share code: BLU
ISIN: ZAE000109088
(Blue Label, BLT, the Company or the Group)
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2022
Financial highlights and salient features
- Revenue of R9.8 billion*
- Increase in gross profit of 13% to R1.54 billion (2021: R1.36 billion)
- Increase in gross profit margin from 14.93% to 15.67%
- Successful conclusion of the Cell C recapitalisation transaction in September 2022
- Core headline earnings of 3.94 cents per share** (2021: 62.69 cents per share)
* On inclusion of the gross amount generated on "PINless top-ups", prepaid electricity, ticketing and gaming,
the effective increase equated to 9% from R36.2 billion to R39.3 billion.
** Excluding the extraneous contributions of R421 million in the current period, primarily resulting from the
recapitalisation transaction of Cell C, and R148 million in the prior period, core headline earnings per share
increased by 13% to 51.72 cents per share compared to 45.68 cents per share in the prior period.
GROUP RESULTS
Core headline earnings for the period ended 30 November 2022 amounted to R35 million, equating to core headline
earnings of 3.94 cents per share.
The core businesses of the Blue Label Group continued to generate further growth in revenue, gross profit and core
headline earnings per share for the six-month period ended 30 November 2022. The predominant extraneous contributions
to the November 2022 basic, headline and core headline earnings per share, emanated primarily from the recapitalisation
transaction of Cell C.
In the comparative period, core headline earnings amounted to R549 million, of which R548 million related to continuing
operations and R1 million to discontinued operations. Core headline earnings amounted to 62.69 cents per share.
Excluding the extraneous contributions of R421 million in the current period and non-recurring income of R148 million
in the prior period, as illustrated in the underlying tables, core headline earnings increased by R55 million (14%)
from R400 million to R455 million. Core headline earnings per share increased by 13% from 45.68 cents per share in the
prior period to 51.72 cents per share.
Earnings per share amounted to negative 8.74 cents per share. In the prior period, earnings per share amounted to
60.71 cents per share, of which 60.59 cents related to continuing operations and 0.12 cents to discontinued operations.
Excluding the extraneous contributions and non-recurring income in both the current and prior periods, earnings per
share and headline earnings per share increased by 14% to 49.66 cents per share and 49.86 cents per share,
respectively.
Group revenue increased by R710 million (8%) to R9.8 billion. As only the gross profit earned on PINless top-ups,
prepaid electricity, ticketing and gaming are recognised as revenue, on imputing the gross revenue generated thereon,
the effective growth in revenue equated to R3.1 billion (9%) from R36.2 billion to R39.3 billion.
Gross profit increased by R179 million (13%) from R1.36 billion to R1.54 billion, congruent with an increase in margins
from 14.93% to 15.67%.
GROUP INCOME STATEMENT
Extraneous Extraneous
Group costs^ Remaining Group income^^ Remaining Growth Growth
Nov 2022 Nov 2022 Nov 2022 Nov 2021 Nov 2021 Nov 2021 remaining remaining
R'000 R'000 R'000 R'000 R'000 R'000 R'000 %
Revenue 9 823 143 - 9 823 143 9 112 874 - 9 112 874 710 269 8
Gross profit 1 539 635 - 1 539 635 1 360 927 - 1 360 927 178 708 13
Other income 15 071 - 15 071 323 959 315 132 8 827 6 244 71
Bad debts, expected credit losses
and fair value movements (124 058) (44 589) (79 469) (149 036) - (149 036) 69 567 47
Loss on modification of financial instrument (64 500) (64 500) - - - - -
EBITDA 609 405 (109 089) 718 494 902 499 278 118 624 381 94 113 15
Finance costs (247 765) (89 747) (158 018) (68 290) - (68 290) (89 728) (131)
Finance income 131 402 57 906 73 496 35 542 - 35 542 37 954 107
Non-controlling interest (8 759) - (8 759) (60 350) (52 167) (8 183) (576) (7)
Reversal of impairments in associates 962 531 962 531 - - - - -
Share of (losses)/profits from associates
and joint ventures (1 320 127) (1 328 767) 8 640 9 566 - 9 566 (926) (10)
Net (loss)/profit from continuing operations (76 934) (514 315) 437 381 530 440 147 923 382 517 54 864 14
Core headline earnings 34 700 (420 784) 455 484 548 831 148 934 399 897 55 587 14
- from continuing operations 34 700 (420 784) 455 484 547 820 147 923 399 897 55 587 14
- from discontinued operations - - - 1 011 1 011 - -
Gross profit margin 15,67% 15,67% 14,93% 14,93%
EBITDA margin 6,20% 7,31% 9,90% 6,85%
Weighted average shares ('000) 880 749 880 749 875 496 875 496
Share performance from continuing operations
EPS (cents) (8,74) 49,66 60,59 43,69 5,97 14
HEPS (cents) 2,09 49,86 60,74 43,85 6,01 14
Core HEPS (cents) 3,94 51,72 62,57 45,68 6,04 13
^ The extraneous contributions to Group earnings in the current year were primarily attributable to:
- the accounting treatment relating to the recapitalisation transaction of Cell C (1), emanating from:
- finance income of R58 million;
- finance costs of R90 million;
- expected credit losses and fair value movements of R67 million;
- loss on modification of a financial instrument of R65 million as a result of the CEC deferral amount
of R1.1 billion, owing by Cell C, being renegotiated and reclassified from 'trade and other receivables'
to 'loans to associates and joint ventures';
- a partial reversal of R962.5 million relating to the initial impairment of R2.5 billion of Blue Label's
investment in Cell C as at 31 May 2019, congruent with an improvement in its equity valuation; and
- recognition of the Group's share of Cell C's net accumulated losses amounting to R2.2 billion for
the period 1 June 2019 to 30 November 2022 limited to the extent of R1.328 billion, being the aggregate
of the partial reversal of the initial impairment of R962.5 million of Blue Label's investment in Cell C,
as well as additional investments therein amounting to R366 million.
- the accounting implications of the termination of the Airvantage put option obligation for the acquisition
of up to 40% of the shares therein, resulted in a fair value gain of R22 million (2).
Extraneous Recap of
costs^ Cell C (1) Once-offs(2)
Nov 2022 Nov 2022 Nov 2022
R'000 R'000 R'000
Bad debts, expected credit losses and fair value movements (44 589) (66 589) 22 000
Loss on modification of financial instrument (64 500) (64 500) -
EBITDA (109 089) (131 089) 22 000
Finance costs (89 747) (89 747) -
Finance income 57 906 57 906 -
Reversal of impairments in associates 962 531 962 531 -
Share of losses from associates and joint ventures (1 328 767) (1 328 767) -
Net (loss)/profit from continuing operations (514 315) (536 315) 22 000
Core headline earnings from continuing operations (420 784) (442 784) 22 000
^^ The extraneous contributions to Group earnings in the prior period were attributable to:
- once-off recoupment income of R148 million, comprising the aggregate value of assets either
realised by or signed-over to the Group relating to the fraudulent scheme, partially offset
by professional fees and other costs incurred, taxation and the non-controlling interest thereon (3); and
- partial recoupment of losses of R1 million by the Retail division as a result of the closure of the WiConnect stores(4).
Extraneous
income^^ Once-offs(3) WiConnect(4)
Nov 2021 Nov 2021 Nov 2021
R'000 R'000 R'000
Other income 315 132 315 132 -
EBITDA 278 118 278 118 -
Non-controlling interest (52 167) (52 167) -
Net profit from continuing operations 147 923 147 923 -
Core headline earnings 148 934 147 923 1 011
- from continuing operations 147 923 147 923 -
- from discontinued operations 1 011 - 1 011
EBITDA increased by R94 million (15%) from R624 million to R718 million, excluding the extraneous costs of R109 million
in the current period and non-recurring income of R278 million in the prior period.
The anticipated increase in overheads, included costs of R70 million attributable to new learnership initiatives in the
current period and R25 million in the prior period. The benefit thereof is realised by way of income tax savings as
a result of the section 12H allowances being claimed for such learnerships. On exclusion thereof, in both the current
and prior periods, EBITDA increased by R139 million (21%).
EVENTS AFTER THE REPORTING DATE
An announcement was released on 6 February 2023, stating that SNG Grant Thornton ("SNG") replaced PwC as the external
auditors of Blue Label, with Mr A Philippou as the designated individual audit partner. The change in external auditors
is in alignment with the principles of good governance and early adoption of mandatory audit firm rotation, whereby
audit firms shall not serve as the appointed auditor of a public interest entity for more than 10 consecutive years,
with effect from 1 April 2023. The acceleration of the mandatory audit firm rotation was prudent in order to achieve
future cost savings and efficiencies, as SNG is Cell C's auditor, and to ensure alignment with them relating to the
audit of the recapitalisation transaction of Cell C from inception thereof.
APPRECIATION
The Board of Blue Label wishes to express its appreciation to its staff, suppliers, customers and business partners
for their continued support and commitment to the Group.
SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the directors of the Company. This short-form announcement
is based on an extract of the unaudited condensed consolidated financial statements for the half-year ended
30 November 2022 released on SENS on 23 February 2023 and does not contain full or complete details.
Any investment decision by investors and/or shareholders should be based on consideration of the full SENS announcement
and unaudited condensed consolidated financial statements for the half-year ended 30 November 2022. These may be
requested by contacting Investor Relations by e-mail at lionela@blts.co.za and are available for inspection at the
registered offices of the Company during office hours and on the Company's website (www.bluelabeltelecoms.co.za)
at no charge.
The JSE link is as follows:
https://senspdf.jse.co.za/documents/2023/JSE/ISSE/BLU/Interims22.pdf.
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
23 February 2023
* Supervised the preparation of the Group's unaudited six-month period ended results.
Directors: LM Nestadt (Chairman)*, BM Levy, MS Levy, KM Ellerine**, NP Mnxasana*,
JS Mthimunye*, DA Suntup, JS Vilakazi*, PL Zim*, LE Mthimunye*
*Independent Non-Executive **Non-Executive
Company Secretary: J van Eden
Sponsor: Investec Bank Limited
Auditor: SNG Grant Thornton.
Additional information available online at www.bluelabeltelecoms.co.za
