Blue Label Telecoms has published an initial trading statement for the year ended 31 May 2020, alerting shareholders that basic, headline and core headline earnings per share are expected to increase by more than 20% in comparison to the previous year, when a loss was reported.
According to the statement, the predominant negative contributions to the May 2019 basic, headline and core headline earnings per
share were attributable to:
* Cell C’s trading losses, impairment of its property, plant and equipment, the impact of a derecognition of its deferred tax asset and the consequent impairment of Blue Label’s total investment therein.
* Fair value downward adjustments of the complete exposure relating to SPV1 and SPV2 (the structure of which was detailed in the trading statement published on SENS on 22 February 2019).
* A fair value downward adjustment of Glocell Distribution, attributable to the impact of unfavourable wholesale trading conditions therein.
* An impairment of Blue Label’s total investment in the Oxigen India group, including 2Dfine Holdings Mauritius, as well as providing for loan impairments and guarantees payable thereon.
* Partial impairments of goodwill relating to Viamedia and Blue Label Connect and a partial impairment of the investment in the SupaPesa joint venture.
These factors are the primary contributors to the expected growth in earnings for the year ended 31 May 2020, according to the trading statement.
They will, however, be offset by a negative impact on the closure of the WiConnect retail stores as a result of perpetuating losses incurred on a monthly basis.
In addition, exposure to the Edcon group amounting to R49-million has been provided for in full. Of this amount, R21-million relates to the retail stores.
The Blue Label Group however, generated positive cash flows from its trading operations for the year ended 31 May 2020. This, together with the proceeds received from the disposals of the 3G handset division and the Blue Label Mobile Group, have been applied to reduce interest-bearing debt and in turn the strengthening of the Group’s balance sheet.