Blue Label Telecoms has reported increased revenues, to R26,8-billion, for the year ended 31 May 2018.
Core headline earnings for the year ended 31 May 2018 amounted to R1,03-billion, resulting in an increase of R236-million (30%).
Core headline earnings per share increased from 116.24 cents per share to 120.61 cents per share (4%), post a dilution resulting from the issue of an additional 272 million shares to fund an element of acquisitions made during the financial year.
On 2 August 2017, Blue Label, through its wholly owned subsidiary, The Prepaid Company (TPC), acquired 45% of Cell C for R5,5-billion and 47,37% of 3G Mobile for R0,9-billion. On 6 December 2017, TPC acquired the remaining 52,63% of 3G Mobile for R1-billion. On 2 January 2018, Blue Label acquired 60% of Airvantage for R151-million.
The total of R7,55-billion was partly funded through the issue of 272-million shares amounting to R3,9-billion.
The core headline earnings comprised the group’s share of profits of R569-million in Cell C which included the recognition of an increase in a deferred tax asset of R1,92-billion, of which the group’s 45% share amounted to R865-million, its profit contributions from 3G Mobile of R157-million and from Airvantage of R2,6-million. These contributions were from the effective dates of each acquisition and not for a full year.
The balance of earnings pertained to the remaining companies within the group, inclusive of a derivative fair value gain of R3,7-million and once-off costs of imputed IFRS interest adjustments of R65-million attributable to the acquisitions of 3G Mobile and Airvantage. A further R28-million pertained to interest and costs relating to the 3G Mobile acquisition.
Core headline earnings in the current year were negatively impacted by R217-million as a result of the cessation of early settlement discounts and interest forfeiture. This was in lieu of the utilisation of working capital resources to fund the cash element of the acquisitions.
Investments in Oxigen Services India, Oxigen Online Services India and 2DFine Holdings Mauritius were accounted for as investments in associates and joint venture, applying the equity method up until 30 November 2016. Thereafter, these entities are accounted for as venture capital investments at fair value. The net effect thereof, resulted in a positive contribution to Group earnings of R35-million in the comparative year.
In the current year, a downward fair value movement of R173-million less deferred taxation of R3-million thereon which, together with a net loan impairment of R87-million resulted in a negative impact of R257-million on group earnings.
Group revenue increased by 1% to R26,8-billion. EBITDA increased by 4% from R1,29-billion to R1,34-billion, underpinned by an increase in gross profit margins from
8,04% to 8,52%.
The group’s share of losses in Blue Label Mexico declined from R37-million to R21,9-million (41%).
Cash generated from operating activities amounted to R3,2-billion, partly facilitating the payment of the cash element of the acquisitive transactions.
The net asset value per share increased by 35% to R9.88 and earnings per share increased by 2% to 116.12 cents per share.
Cell C results
On 2 August 2017, The Prepaid Company acquired a 45% shareholding in Cell C.
For the 10 months ended May 2018, Cell C’s net profit amounted to R1,14-billion. This comprised trading losses of R782-million offset by the recognition of a deferred tax asset amounting to R1,92-billion. The group’s share of this net profit is R512-million.
The net result was a positive contribution of R571-million to BLT’s core earnings.