Blue Label Telecoms has issued a statement warning shareholders that basic, headline and core headline earnings per share for the six-month period ended 30 November 2023 will increase by more than 20% in comparison to the six-month period ended 30 November 2022.
Earnings per share are expected to be between 45.49 and 45.84, compared to -8.74 for the comparative period.
Headline earnings per share, which were 2.09 a year ago, will come in between 45.87 and 45.95, while core headline earnings per share are expected to rise from 3.94 in 2022 to between 47.07 and 47.23 now.
Core headline earnings for the period ended 30 November 2023 amounted to R420-million (November 2022: R35 million), equating to core headline earnings of 47.15 cents per share (November 2022: 3.94 cents per share).
The net positive contributions to the November 2023 basic, headline and core headline earnings per share, resulting from the recapitalisation transaction of Cell C, were attributable to:
* Expected credit losses and fair value movements of R3-million;
* Gain on modification of the Class A Preference shares amounting to R11-million;
* Finance costs of R178-million resulting from increased borrowings related to airtime sale and repurchase obligations, as well as the issuance of Class A Preference Shares; and
* Finance income of R273-million resulting from the loan to Cell C for its debt funding requirements.
Excluding that positive contributions of R65-million in the current period, and the negative contributions of R421-million in the comparative period, primarily resulting from the recapitalisation transaction of Cell C, core headline earnings declined by R100-million (22%) from R455-million to R355-million and core headline earnings per share declined by 23% from 51.72 cents per share in the comparative period to 39.90 cents per share.
This decline in core headline earnings was attributable to a decrease of R119-million in Comm Equipment Company (CEC), while the remaining entities within the group increased by R19-million (10%) compared to the comparative period.
The anticipated decline in CEC’s core headline earnings was a result of a decline in gross profit stemming from increased expenditure related to the distribution agreement, as well as a significant increase in the expected credit loss compared to the comparative period.
This increase aligns with the expansion of CEC’s subscriber base and the deteriorating macroeconomic environment in South Africa, characterised by rising interest rates, power outages, and a depreciating rand. CEC has increased its ECLs in anticipation of heightened future losses, aligning with the approach taken by other consumer lenders.
On exclusion of the positive and negative contributions from both the current and comparative periods, primarily resulting from the recapitalisation transaction of Cell C, earnings per share and headline earnings per share declined by 23% to 38.42 cents per share and by 22% to 38.66 cents per share, respectively.