Audited results for the year ended 31 May 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)
Audited results for the year ended 31 May 2021
Financial Highlights and Salient Features
- Revenue of R18.8 billion*
- Gross profit of R2.38 billion (2020: R2.12 billion)
- Increase in gross profit margin from 10.05% to 12.66%
- Interest-bearing borrowings reduced to R1.7 billion (2020: R2.3 billion)
- Headline earnings of 86.16 cents per share (2020: 58.16 cents per share)
- Net cash generated from operating activities of R1.5 billion (2020: R1.3 billion)
- Core headline earnings of 89.65 cents per share** (2020: 62.71 cents per share)
* On inclusion of the gross amount generated on "PINless top-ups", prepaid electricity, ticketing and gaming,
the effective increase equated to 10% from R59.9 billion to R66.0 billion.
** On exclusion of non-recurring income of R47 million in the current year and extraneous costs of R163 million
in the prior year, core headline earnings per share from continuing operations increased by 16% to 81.50 cents
per share compared to 70.54 cents per share in the prior year.
Core headline earnings for the year ended 31 May 2021 amounted to R788 million, equating to core headline earnings
of 89.65 cents per share, of which R763 million related to continuing operations and R25 million to discontinued
Core headline earnings for the prior year amounted to R562 million, equating to 62.71 cents per share, of which
R469 million related to continuing operations and R93 million to discontinued operations.
On exclusion of non-recurring income of R47 million in the current year and extraneous costs of R163 million
in the prior year, as illustrated in the tables below, core headline earnings from continued operations increased
by R84 million from R632 million to R716 million. On exclusion of the items noted in the tables below, core headline
earnings per share from continuing operations increased by 16% from 70.54 cents per share in the prior year to
81.50 cents per share.
On exclusion of non-recurring income and extraneous costs in both the current and prior year, earnings per share
and headline earnings per share from continued operations increased by 15% to 77.31 cents per share and 17% to
78.01 cents per share respectively.
Earnings per share amounted to 94.55 cents per share, of which 91.67 related to continuing operations and 2.88 cents
per share related to discontinued operations. In the prior year earnings per share amounted to 13.89 cents per share,
of which 25.30 related to continuing operations and (11.41) cents per share related to discontinued operations.
The financial results of WiConnect in the current year of R25 million, as well as those of Blue Label Mobile, the
Handset division of 3G Mobile and WiConnect, totalling R93 million in the prior year, are disclosed in core headline
earnings from discontinued operations and are not included in the continuing operations' revenue, gross profit, EBITDA,
and net profit after taxation.
Revenue generated by the continuing operations within the Group declined by 11% to R18.8 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 10% from R59.9 billion to R66.0 billion.
Gross profit increased by R259 million (12%) to R2.38 billion, congruent with an increase in margins from 10.05% to 12.66%.
Group income statement
For the year ended 31 May 2021
Group income* Remaining Group costs** Remaining Growth Growth
May 2021 May 2021 May 2021 May 2020 May 2020 May 2020 remaining remaining
R'000 R'000 R'000 R'000 R'000 R'000 R'000 %
Revenue 18 821 290 - 18 821 290 21 135 326 - 21 135 326 (2 314 036) (11)
Gross profit 2 383 254 - 2 383 254 2 124 611 - 2 124 611 258 643 12
EBITDA 1 360 273 131 777 1 228 496 825 364 (387 754) 1 213 118 15 378 1
Share of profits/(losses) from
associates and joint ventures 2 951 (6 554) 9 505 16 598 - 16 598 (7 093) (43)
- Blue Label Mexico (6 554) (6 554) - (5 806) - (5 806) 5 806 100
- Other 9 505 - 9 505 22 404 - 22 404 (12 899) (58)
Net profit from continuing operations 805 286 126 175 679 111 226 786 (376 824) 603 610 75 501 13
Core headline earnings 787 580 71 663 715 917 562 132 (209 979) 772 111 (56 194) (7)
- from continuing operations 762 599 46 682 715 917 469 113 (163 240) 632 353 83 564 13
- from discontinued operations 24 981 24 981 - 93 019 (46 739) 139 758 (139 758) (100)
Gross profit margin (%) 12.66 12.66 10.05 10.05
EBITDA margin (%) 7.23 6.53 3.91 5.74
Weighted average shares ('000) 878 463 878 463 896 409 896 409
Share performance from continuing operations
- EPS (cents) 91.67 77.31 25.30 67.34 9.97 15
- HEPS (cents) 83.32 78.01 48.73 66.93 11.08 17
- Core HEPS (cents) 86.81 81.50 52.33 70.54 10.96 16
* The predominant positive contributions to Group earnings in the current year were attributable to:
- realised foreign exchange gain on the USD20 million liquidity support provided to SPV2(1);
- partial recoupment of losses by the Retail division as a result of the closure of the WiConnect stores in the prior
- once-off income, including the disposal of the Group's interest in Blue Label Mexico(3).
Extraneous Fair value
income* movements(1) WiConnect(2) Once-offs(3)
May 2021 May 2021 May 2021 May 2021
R'000 R'000 R'000 R'000
EBITDA 131 777 16 009 - 115 768
Net profit from continuing operations 126 175 16 961 - 109 214
Core headline earnings 71 663 16 961 24 981 29 721
- from continuing operations 46 682 16 961 - 29 721
- from discontinued operations 24 981 - 24 981 -
** The predominant negative contributions to Group earnings in the prior year were attributable to:
- fair value downward adjustments of the Glocell loan and an unrealised foreign exchange loss on the USD20 million
liquidity support provided to SPV2(4);
- impairments of goodwill relating to Blue Label Connect and a partial impairment relating to Glocell Distribution(5);
- extraneous expenditure within the Retail division as a result of the closure of the WiConnect stores(6); and
- once-off expenditure and income(7).
Extraneous Fair value
costs** movements(4) Impairments(5) WiConnect(6) Once-offs(7)
May 2020 May 2020 May 2020 May 2020 May 2020
R'000 R'000 R'000 R'000 R'000
EBITDA (387 754) (115 065) (213 584) - (59 105)
Net profit from continuing operations (376 824) (96 481) (213 584) - (66 759)
Core headline earnings (209 979) (96 481) - (183 773) 70 275
- from continuing operations (163 240) (96 481) - - (66 759)
- from discontinued operations (46 739) - - (183 773) 137 034
On exclusion of the above non-recurring income of R132 million in the current year and extraneous costs of R388 million
in the prior year, EBITDA increased by R15 million from R1.21 billion to R1.23 billion.
The anticipated increase in overheads, which included costs attributable to additional headcount and expenditure incurred
in order to enhance IT Infrastructure, escalate the quantum of distribution channels, enhance capacity in the Customer
Interaction Centre and implement value added services and financial service strategies, contributed to the limited
increase in EBITDA.
The Blue Label Group generated positive cash flows from its trading operations for the year ended 31 May 2021.
Glocell Distribution Proprietary Limited
On 29 June 2021, The Prepaid Company acquired the remaining 52% shareholding in Glocell Distribution for a total purchase
consideration of R137 million, of which R126 million was discharged by way of a conversion of debt owing by Glocell
Proprietary Limited, the owners of 40% of the company, to The Prepaid Company. The balance of 12% was acquired by
The Prepaid Company for R11 million. Over and above the cost of acquisition of 52% of Glocell Distribution by The Prepaid
Company, the latter assumed Glocell Proprietary Limited's obligation of R105 million to Investec Bank Limited.
Subsequent to year-end, The Prepaid Company renegotiated a further extension of its Investec facility to 30 September 2022,
whereby the facility of R1.45 billion was increased by R105 million relating to the Glocell Proprietary Limited facility as
referred to above. From December 2021 the exposure to Investec is required to be reduced by R50 million per month, with the
balance owing to be no more than R1 billion.
As at 31 May 2021 the Investec facility is disclosed as current borrowings, as the extension to 30 September 2022 was only
granted in August 2021.
In August 2021, CEC entered into a debt funding agreement with Investec. Its mezzanine facility with Investec was due to expire
on 31 August 2021 but has been extended to 31 March 2022.
As at 31 May 2021 CEC's debt facility was disclosed as current borrowings, as the extension to 31 March 2022 was only granted
in August 2021.
Airvantage and AV Technology put obligations
In October 2020, the minority shareholders of Airvantage Proprietary Limited (Airvantage) and AV Technology Limited (AV Tech)
exercised their rights to put their 40% shareholding therein to Blue Label Telecoms (BLT), in line with the initial agreements
that were concluded between the parties in 2017. The purchase consideration under the put options, as determined by the parties
in December 2020, for the 40% shareholdings in Airvantage and AV Tech, amounted to R152 million and USD4.6 million respectively
In February 2021, the parties concluded an agreement legislating for a deferral of the purchase price payable to the minority
shareholders of Airvantage and the minority shareholder of AV Tech from 31 December 2020 to 31 March 2021, with subsequent
extensions being granted, payable in six equal monthly instalments, inclusive of interest, commencing on 30 November 2021.
If Cell C Limited is able to pass a solvency and liquidity test, the primary obligation in respect of the put options are
transferrable to Digital Ecosystems Proprietary Limited (DE), formerly Blue Label Mobile Proprietary Limited, in terms of the
agreement concluded with it in September 2019.
An agreement between BLT and DE was reached in August 2021, whereby the parties agreed that BLT's primary obligations to the
minority shareholders will be transferred to DE ahead of any Cell C test in respect of its solvency and liquidity. This agreement
is subject to the fulfilment of certain conditions precedent.
If, however, Cell C is unable to pass the solvency and liquidity test in the future, the primary obligation in respect of the put
options may revert back to BLT.
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.
This short-form announcement is the responsibility of the directors of the Company. This short-form announcement is based on an
extract of the audited summarised Group annual financial statements released on SENS on 26 August 2021. The announcement itself
is not audited and does not contain full or complete details.
The summarised Group financial statements have been audited by PricewaterhouseCoopers Inc., who expressed a modified opinion
thereon. The auditor also expressed a modified opinion on the consolidated annual financial statements from which the summary
consolidated financial statements were derived.
Any investment decision by investors and/or shareholders should be based on consideration of the full SENS announcement and audited
Group annual financial statements. These results together with a copy of the accompanying auditor's reports and key audit matters
may be requested by contacting Investor Relations by e-mail at firstname.lastname@example.org 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/2021/JSE/ISSE/BLU/FYresults.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
26 August 2021
* Supervised the preparation and review of the Group's audited year-end 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: 26-08-2021 02:01:00
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