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Blue Label Telecoms (JSE:BLU) News - Unaudited results for the six months ended 30 November 2021
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 2021
Financial highlights and salient features
- Revenue of R9.1 billion*
- Increase in gross profit of 20% to R1.36 billion (2020: R1.14 billion)
- Increase in gross profit margin from 11.87% to 14.93%
- Net cash generated from operating activities of R862 million
- Interest?bearing borrowings reduced to R1.97 billion (30 November 2020: R2.32 billion)
- Headline earnings of 60.86 cents per share (2020: 40.96 cents per share)
- Core headline earnings of 62.69 cents per share# (2020: 42.70 cents per share)
* On inclusion of the gross amount generated on "PINless top?ups", prepaid electricity, ticketing and gaming,
the effective increase equated to 12% from R32.4 billion to R36.2 billion.
# On exclusion of non-recurring income of R148 million in the current period and R22 million in the prior period,
core headline earnings per share from continuing operations increased by 22% to 45.68 cents per share compared to
37.35 cents per share in the prior period.
Group results
Core headline earnings for the period ended 30 November 2021 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.
In the comparative period, core headline earnings amounted to R376 million, of which R351 million related to continuing
operations and R25 million to discontinued operations. Core headline earnings amounted to 42.70 cents per share.
On exclusion of the non-recurring income of R148 million in the current period and R22 million in the prior period,
as illustrated in the underlying tables, core headline earnings from continuing operations increased by R71 million
from R329 million to R400 million and core headline earnings per share from continuing operations increased by 22%
from 37.35 cents per share in the prior period to 45.68 cents per share. This growth was indicative of a robust
trading performance by the Group during the period under review.
The non-recurring income emanated from a fraudulent scheme, operating since 2015, which was perpetrated by two former
senior key executives of a subsidiary company of the Group ("the subsidiary"). These fraudulent transactions were
performed primarily outside the course and scope of the subsidiary's immediate field of commercial dealings, whereby
the perpetrators interposed themselves between intermediary companies and the subsidiary for their own benefit.
In addition, certain transactions were identified evidencing theft of funds from the subsidiary and the fraudulent
concealment thereof. Once-off recoupment income, comprising the aggregate value of assets either realised by or
signed-over to the Group as a result of the fraudulent scheme, amounted to R315 million. This income was partially
offset by professional fees incurred, taxation and the non-controlling interest thereon totalling R167 million,
resulting in a net recoupment of R148 million.
On exclusion of the non-recurring income in both the current and prior periods, earnings per share and headline
earnings per share from continuing operations increased by 24% to 43.69 cents per share and 23% to 43.85 cents per
share respectively.
Earnings per share amounted to 60.71 cents per share, of which 60.59 related to continuing operations and 0.12 cents
per share related to discontinued operations. In the prior year earnings per share amounted to 49.92 cents per share,
of which 46.80 related to continuing operations and 3.12 cents per share related to discontinued operations.
The financial results of WiConnect in the current and prior periods of R1 million and R25 million respectively,
are disclosed in core headline earnings from discontinued operations and are not included in the continuing operations'
revenue, gross profit, earnings before interest, tax, depreciation and amortisation (EBITDA), and net profit after
taxation.
Revenue generated by the continuing operations within the Group declined by 5% to R9.1 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 12% from R32.4 billion to R36.2
billion.
Gross profit increased by R223 million (20%) to R1.36 billion, congruent with an increase in margins from 11.87%
to 14.93%.
Extra- Extra-
neous neous
Group income* Remaining Group income** Remaining Growth Growth
Nov 2021 Nov 2021 Nov 2021 Nov 2020 Nov 2020 Nov 2020 remaining remaining
Group income statement R'000 R'000 R'000 R'000 R'000 R'000 R'000 %
Revenue 9 112 874 - 9 112 874 9 582 022 - 9 582 022 (469 148) (5)
Gross profit 1 360 927 - 1 360 927 1 137 650 - 1 137 650 223 277 20
Other income 323 959 315 132 8 827 93 212 85 830 7 382 1 445 20
EBITDA 902 498 278 118 624 380 703 334 101 839 601 495 22 885 4
Non?controlling interest (60 350) (52 167) (8 183) (26 911) - (26 911) 18 728 70
Net profit from continuing operations 530 440 147 923 382 517 412 605 101 839 310 766 71 751 23
Core headline earnings 548 831 148 934 399 897 376 433 47 211 329 222 70 675 21
- from continuing operations 547 820 147 923 399 897 351 568 22 346 329 222 70 675 21
- from discontinued operations 1 011 1 011 - 24 865 24 865 - -
Gross profit margin (%) 14.93 14.93 11.87 11.87
EBITDA margin (%) 9.90 6.85 7.34 6.28
Weighted average shares ('000) 875 496 875 496 881 557 881 557
Share performance from continuing operations
EPS (cents) 60.59 43.69 46.80 35.25 8.44 24
HEPS (cents) 60.74 43.85 38.14 35.60 8.25 23
Core HEPS (cents) 62.57 45.68 39.88 37.35 8.33 22
* The extraneous contributions to Group earnings in the current period were attributable to:
- Once-off recoupment income, comprising the aggregate value of assets either realised by or signed-over to the Group
relating to the fraudulent scheme. This income was partially offset by professional fees incurred, taxation and the
non?controlling interest thereon (1); and
- Partial recoupment of losses by the Retail division as a result of the closure of the WiConnect stores (2).
Extraneous
income* Once-offs(1) WiConnect(2)
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
** The extraneous contributions to Group earnings in the prior period were attributable to:
- Realised foreign exchange gains on the USD20 million liquidity support provided to SPV2 (3);
- Once?off income, including the disposal of the Group's interest in Blue Label Mexico (4); and
- Partial recoupment of losses by the Retail division as a result of the closure of the WiConnect
stores in the prior period (5).
Fair value
Extraneous move-
income** ments(3) Once?offs(4) WiConnect(5)
Nov 2020 Nov 2020 Nov 2020 Nov 2020
R'000 R'000 R'000 R'000
Other income 85 830 - 85 830 -
EBITDA 101 839 16 009 85 830 -
Net profit from continuing operations 101 839 16 009 85 830 -
Core headline earnings 47 211 16 009 6 337 24 865
- from continuing operations 22 346 16 009 6 337 -
- from discontinued operations 24 865 - - 24 865
On exclusion of the R278 million relating to the non-recurring recoupment income net of professional fees
incurred in the current period and R102 million in the prior period, EBITDA increased by R23 million from
R601 million to R624 million.
As anticipated, the increase in overheads included costs of R25 million attributable to new learnership initiatives,
whereby the benefit thereof is realised by way of income tax savings as a result of the section 12H allowances
being claimed for such learnerships. Furthermore, additional headcount and expenditure incurred in order to enhance
IT Infrastructure and the Group's analytic and product development capabilities, primarily contributed to the limited
increase in EBITDA.
The Group generated positive cash flows of R862 million from its operating activities for the period ended
30 November 2021.
Subsequent events
Banking facilities
In February 2022, The Prepaid Company Proprietary Limited renegotiated a further extension of its Investec facility
to 31 March 2023. The total facility amounting to R1.56 billion outstanding as at 30 November 2021 was reduced by
R340 million to R1.22 billion to date. Thereafter, the exposure to Investec is required to be reduced by a further
R30 million per month in order to reduce the maximum facility balance to R1.01 billion.
Airvantage and AV Technology put obligations
On 14 December 2021, Blue Label Telecoms Limited ("BLT") concluded agreements with the 40% shareholders of each
of AV Technologies Limited (Mauritius) and Airvantage Proprietary Limited (South Africa) ("Airvantage") in terms
of which the put options which they had against BLT were terminated. On 15 December 2021, BLT concluded a put option
agreement with Digital Ecosystems Proprietary Limited (formerly Blue Label Mobile Group) in terms of which the latter
acquired the right to put up to 40% of the shares in Airvantage to BLT by no earlier than 15 December 2022 for
a maximum amount of R110 million. If Cell C Limited, through a board resolution, passes a solvency and liquidity
test prior to 15 December 2022, the put option will be terminated.
Appreciation
We are thankful to all our staff members who have adapted to new ways of working during these unprecedented times
and continue to contribute to the Group's performance. The Board of Blue Label wishes to express its appreciation
to its 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 2021 released on SENS on 23 February 2022 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 2021.
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/2022/JSE/ISSE/BLU/Interims.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 2022
* Supervised the preparation of the unaudited Group interim results.
Directors: LM Nestadt (Chairman)*, BM Levy, MS Levy, K Ellerine**, GD Harlow*, NP Mnxasana*, JS Mthimunye*, DA Suntup,
J Vilakazi*, PL Zim* *Independent Non?Executive **Non?Executive
Company Secretary: J van Eden
Sponsor: Investec Bank Limited
Auditor: PricewaterhouseCoopers Inc.
Additional information available online at www.bluelabeltelecoms.co.za
Date: 23-02-2022 07:05:00
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