To view the PDF file, sign up for a MySharenet subscription.

BLUE LABEL TELECOMS LIMITED - Short-form reviewed results for the half-year ended 30 November 2019

Release Date: 28/02/2020 07:05
Code(s): BLU     PDF:  
Wrap Text
Short-form reviewed results for the half-year ended 30 November 2019

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)



Short-form reviewed results for the half-year ended 30 November 2019


- Increase in revenue of 2% to R11.5 billion^*
- Increase in gross profit of 10% to R1.21 billion^
- Increase in gross profit margin from 9.75% to 10.52%^
- Headline earnings of 39.98 cents per share
- Core headline earnings of 43.18 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 R27.1 billion to R30.3 billion.
^ Includes continuing operations only.

Overview
The Blue Label Group generated growth in revenue, gross profit and core headline earnings per share for the half-year
ended 30 November 2019. This was a resilient performance in an adverse economic environment. The Group continues to
increase market share and bolster its product and services mix to defend and grow its positions in the market.

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 ended 30 November 2019
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.

The comparative period reflected fair value losses of R493 million relating to the exposure to SPV1 and SPV2 (as
referred to in the SENS announcement dated 22 February 2019) as well as to the recognition of the Group's share of equity
accounted losses in Cell C of R133 million. On exclusion of these negative contributions, core headline earnings amounted
to R487 million in that period.

No further fair value losses relating to the SPVs were recognised in the current reporting period as the exposure
thereto was fully accounted for as at 31 May 2019. As the carrying value of Blue Label's investment in Cell C was fully
impaired for the year ended 31 May 2019, the financial results of Cell C during the current period did not have any impact
on Blue Label's earnings for this reporting period.

Core headline earnings for the current period amounted to R390 million, inclusive of non-recurring once off costs of
R61 million, of which R50 million pertained to extraneous expenditure within the retail division and R11 million to a
fair value loss as a consequence of providing for an increase in the put-option liability for the acquisition of the
remaining 40% minority share of Airvantage and AV Technology which will be settled during the current calendar year. 

The comparative period of R487 million included income of R48 million, of which foreign exchange gains accounted for
R25 million and finance income for R13 million. These movements related to loans provided to Oxigen Services India and
2DFine Holdings Mauritius. No further income in this regard was accounted for in the current reporting period as the loans
were fully impaired as at 31 May 2019. The balance of R10 million related to a fair value gain as a result of providing
for a decline in the put-option liability mentioned above.

On exclusion of the above extraneous costs of R61 million in the current period and the non-recurring income of 
R48 million in the comparative period, core headline earning generated from trading operations increased from 
R439 million to R451 million.

Agreements for the disposal of Blue Label's interests in Blue Label Mobile Group Proprietary Limited ("Blue Label
Mobile") and the handset division of 3G Mobile Proprietary Limited ("3G Mobile") were entered into on 25 September 2019.
Consequently, the earnings generated by these entities have been accounted for as discontinued operations in both the
current and comparative reporting periods. The related assets and liabilities have been reclassified in the Group statement
of financial position as "assets/liabilities classified as held-for-sale".

Group income statement
                                       Group         Group                              Remaining        Growth        Growth   
                                    reviewed     unaudited      Cell C         SPVs      entities     remaining     remaining   
                                    Nov 2019      Nov 2018    Nov 2018     Nov 2018      Nov 2018      entities      entities   
                                       R'000         R'000       R'000        R'000         R'000         R'000             %   
Revenue                           11 488 576    11 273 841           -            -    11 273 841       214 735             2   
Gross profit                       1 208 302     1 098 939           -            -     1 098 939       109 363            10   
EBITDA                               723 221       239 014           -     (492 640)      731 654        (8 433)           (1)  
Share of profits/(losses) from                                                                       
associates and joint ventures         13 040      (148 799)   (133 465)           -       (15 334)       28 374           185   
- Cell C                                   -      (133 465)   (133 465)           -             -             -                 
- Oxigen Services India                    -       (10 197)          -            -       (10 197)       10 197           100   
- Blue Label Mexico                     (564)      (13 002)          -            -       (13 002)       12 438            96   
- United Call Centre Solutions        11 551        13 726           -            -        13 726        (2 175)          (16)  
- Other                                2 053        (5 861)          -            -        (5 861)        7 914           135   
Net profit/(loss) from                                                                               
continuing operations                313 388      (201 142)   (133 465)    (492 640)      424 963      (111 575)          (26)  
Core headline earnings/(loss)        390 304      (128 706)   (123 056)    (492 640)      486 990       (96 686)          (20)  
- from continuing operations         323 512      (202 133)   (123 056)    (492 640)      413 563       (90 051)          (22)  
- from discontinued operations        66 792        73 427           -            -        73 427        (6 635)           (9)  
  Gross profit margin (%)              10.52          9.75                                   9.75                               
  EBITDA margin (%)                     6.30          2.12                                   6.49                               
  Weighted ave shares ('000)         903 958       925 688                                925 688                               
  EPS (cents)*                         34.83        (15.11)                                 52.53        (17.70)          (34)  
  HEPS (cents)*                        39.98        (17.54)                                 49.53         (9.55)          (19)  
  Core HEPS (cents)*                   43.18        (13.90)                                 52.61         (9.43)          (18) 
* Includes continuing and discontinuing operations.

The financial results of the Blue Label Mobile Group and the handset division of 3G Mobile, totalling R67 million, are
disclosed in core headline earnings from discontinued operations and are not included in revenue, gross profit, EBITDA
and net profit/(loss) after taxation.

Group revenue generated by the continuing operations within the Group increased by 2% to R11.5 billion. As only the
gross profit earned on "PINless top-ups", prepaid electricity, ticketing and gaming are accounted for, on imputing the
gross revenue generated thereon, the effective growth in revenue equated to 12% from R27.1 billion to R30.3 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%.

The increase in EBITDA was attributable to fair value losses of R493 million relating to SPV1 and SPV2 incurred in the
comparative period. On exclusion of this negative contribution, EBITDA declined by R8 million to R723 million, net of
the extraneous costs of R41 million incurred in the current period. 

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

Net asset value per share increased from R2.59 to R2.96.

SUBSEQUENT EVENTS
Agreements for the disposal of Blue Label's interests in Blue Label Mobile and the handset division of 3G Mobile were
entered into on 25 September 2019 and approved by Blue Label shareholders on 4 December 2019.

With regard to the disposal of 3G Mobile's trading operations all suspensive conditions have been fulfilled and the
purchase price of R544 million was received on 14 February 2020. 

In relation to the disposal of Blue Label Mobile, certain conditions precedent remain outstanding, the completion of
which is at an advanced stage. Upon fulfilment thereof, R350 million of the selling price of R450 million as well as all
monies paid by Blue Label Mobile towards the acquisition of Hyve Mobile Proprietary Limited and Mobile Content Africa
Limited amounting to approximately R81 million will be received. The remaining R100 million plus interest thereon will 
be contingent upon the terms of the conditions contained in the circular to shareholders published on 6 November 2019.

As at the date of publication of the 31 May 2019 financial statements, The Prepaid Company's Investec banking
facilities had been extended to 29 November 2019. On 29 November 2019, these banking facilities totalling R2.176 billion 
were successfully renewed of which R1.5 billion was extended for a period of 12 months and R676 million for 9 months. 
Of the latter amount, R131 million has been paid to date, with the remaining balance of R545 million to be repaid by 
31 August 2020.

In February 2020, The Prepaid Company renegotiated a further extension of the R1.5 billion facility to 31 March 2021
at which date the exposure to Investec is required to be no more than R1 billion. As at 30 November 2019 the Investec
facilities were disclosed as current borrowings amounting to R2.1 billion, as the extension to 31 March 2021 was only
granted in February 2020.

The board of directors have evaluated the going concern assumption as at 30 November 2019 and considered it to be
appropriate in the preparation of these interim financial statements.

APPRECIATION
The Board of Blue Label would once again like to express its appreciation to its suppliers, customers, business
partners and staff for their ongoing support and loyalty.

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 unqualified reviewed condensed Group financial statements for the half-year ended 
30 November 2019 released on SENS on 28 February 2020, 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 reviewed condensed Group financial statements for the half-year ended 30 November 2019. These may 
be requested by contacting Investor Relations by e-mail at nicolaw@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/2020/JSE/ISSE/BLU/Results19.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

27 February 2020
* Supervised the preparation of the reviewed Group interim results.

Directors: LM Nestadt (Chairman)*, BM Levy, MS Levy, K Ellerine**, GD Harlow*, JS Mthimunye*, DA Suntup, J Vilakazi* 
*Independent Non-Executive **Non-Executive

Company Secretary: J van Eden

Sponsor: Investec Bank Limited

Auditors: PricewaterhouseCoopers Inc.

www.bluelabeltelecoms.co.za

Date: 28-02-2020 07:05:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story