Despite the prevailing market
conditions, the Group delivered
pleasing results, with core headline
earnings and profitability metrics
strengthening across the business.
DA SUNTUP
Financial Director
The 2025 financial year demonstrated Blu Label's ability to deliver resilient results in a challenging operating environment. During the period we strengthened our balance sheet in a year, supported by strong operational delivery, disciplined financial management and significant strategic progress. Despite the prevailing market conditions the Group delivered pleasing results, with core headline earnings and profitability metrics strengthening across the business.
Revenue growth remained firm, with total effective turnover expanding to R96 billion on the inclusion of PINless top-ups, prepaid electricity, ticketing and universal vouchers. Notably, gross profit margins improved to 24.0%, supported by efficiencies and a shift in revenue mix. This margin expansion and disciplined cost management, translated into an increase in EBITDA to R1.6 billion. At the bottom line, net profit attributable to equity holders rose to R2.5 billion, with accumulated capital and reserves strengthening to R7.6 billion.
The reversal of the Cell C impairment, together with Blu Label's share of Cell C's earnings marked a turning point in the Group's investment in the business, while simultaneously underscoring the resilience of our balance sheet. Beyond Cell C, our financial position reflects deliberate steps to balance growth investments with prudent capital management.
Looking ahead, we focus on driving operating leverage, unlocking further efficiencies across our ecosystem, and creating value from our investments.
| Group May 2025 R'000 |
Extraneous contributions* May 2025 R'000 |
Remaining May 2025 R'000 |
Group May 2024 R'000 |
Growth remaining R'000 |
Growth remaining % |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 14 050 177 | — | 14 050 177 | 14 598 444 | (548 267) | (4%) | ||||
| Gross profit | 3 375 003 | — | 3 375 003 | 3 295 038 | 79 965 | 2% | ||||
| EBITDA | 1 604 090 | 176 313 | 1 427 777 | 1 225 475 | 202 302 | 17% | ||||
| Finance costs | (1 090 314) | — | (1 090 314) | (1 121 356) | 31 042 | 3% | ||||
| Finance income | 803 857 | — | 803 857 | 901 884 | (98 027) | (11%) | ||||
| Reversal of impairments in associates | 1 555 042 | 1 558 621 | (3 579) | — | (3 579) | |||||
| Share of (loss)/profit from associates and joint ventures | (55 376) | (1 606 557) | 1 551 181 | 15 416 | 1 535 765 | 9 962% | ||||
| – | Group's share of Cell C's accumulated net losses from 1 June 2019 to 31 May 2024 | (1 606 557) | (1 606 557) | — | — | — | ||||
| – | Group's share of profits from Cell C from 1 June 2024 to 31 May 2025 | 1 507 904 | — | 1 507 904 | — | 1 507 904 | ||||
| – | Group's share of profits from other associates and joint ventures | 43 277 | — | 43 277 | 15 416 | 27 861 | 181% | |||
| Net profit after tax | 2 484 243 | 128 375 | 2 355 868 | 647 386 | 1 708 482 | 264% | ||||
| Headline earnings adjustment | 1 612 163 | 1 584 653 | 27 510 | 10 311 | 17 199 | 167% | ||||
| Headline earnings | 4 096 406 | 1 713 028 | 2 383 378 | 657 697 | 1 725 681 | 262% | ||||
| Core headline earnings | 4 147 296 | 1 713 028 | 2 434 268 | 679 488 | 1 754 780 | 258% | ||||
| Gross profit margin (%) | 24.02% | 24.02% | 22.57% | |||||||
| EBITDA margin (%) | 11.42% | 10.16% | 8.39% | |||||||
| Weighted average shares ('000) | 898 408 | 898 408 | 893 117 | |||||||
| Share performance | ||||||||||
| EPS (cents) | 276.52 | 262.23 | 72.49 | 189.74 | 262% | |||||
| HEPS (cents) | 455.96 | 265.29 | 73.64 | 191.65 | 260% | |||||
| Core HEPS (cents) | 461.63 | 270.95 | 76.08 | 194.87 | 256% | |||||
| * | The net positive extraneous contributions to Group earnings for the year ended
31 May 2025 were all attributable to the Group's successful investment in Cell C, a
testament to our strategic decisions and can be broken down as follows:
|
Group revenue amounted to R14.1 billion. As only the gross profit earned on "PINless top-ups", prepaid electricity, ticketing and universal vouchers is recognised as revenue, on imputing the gross revenue generated from these sources, the effective revenue growth equated to R6.7 billion (7%), resulting in a total revenue of R96 billion compared to the prior year of R89.3 billion.
Gross profit increased by R80 million (2%) from R3.295 billion to R3.375 billion, corresponding to an increase in margins from 22.57% to 24.02%. This margin increase is a testament to our growth in "PINless top-ups", prepaid electricity, ticketing and universal vouchers, where only the gross profit earned thereon is recognised as revenue.
Excluding net positive extraneous contributions of R176 million in the current year, EBITDA increased by R202 million (17%), from R1.225 billion to R1.428 billion. This increase reflected a R288 million decline in Comm Equipment Company (CEC), offset by a R490 million increase across the remaining Group entities compared to the prior year.
The decline in EBITDA in CEC was primarily driven by a reduced subscriber base and a lower average revenue per user (ARPU).
Included in the Group's share of losses from associates of R55 million is the recognition of the Group's share of Cell C's accumulated net losses from 1 June 2019 to 31 May 2024, which amounted to R1.607 billion. This was partially offset by the Group recognising its share of Cell C's net profits of R1.508 billion in the current year, primarily attributable to the recognition of a portion of Cell C's deferred tax asset, and R43 million in profits from other associates. As at 31 May 2025, the Group has fully recognised its share of all previously unrecognised historical losses associated with Cell C.
Excluding net positive extraneous contributions of R1.713 billion, the core headline earnings saw a substantial increase of R1.755 billion (258%), from R679 million to R2.434 billion. This growth was driven by a R347 million decline in CEC, offset by a R2.101 billion increase across the remaining Group entities compared to the prior year.
Core headline earnings per share (excluding extraneous contributions) increased by 256% from 76.08 cents in the prior year to 270.95 cents.
Earnings per share for the current and prior years were 276.52 cents and 72.49 cents, respectively. Headline earnings per share for the same years were 455.96 cents and 73.64 cents, respectively.
Excluding the extraneous contributions in the current year, earnings per share increased by 262% to 262.23 cents, while headline earnings per share increased by 260% to 265.29 cents.
| May 2025 R'000 |
Extraneous income* May 2025 R'000 |
Remaining May 2025 R'000 |
May 2024 R'000 |
Growth remaining R'000 |
Growth remaining % |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 13 824 555 | — | 13 824 555 | 14 343 953 | (519 398) | (4%) | ||||
| Gross profit | 3 293 626 | — | 3 293 626 | 3 215 296 | 78 330 | 2% | ||||
| EBITDA | 1 756 679 | 176 313 | 1 580 366 | 1 354 629 | 225 737 | 17% | ||||
| Finance costs | (1 087 912) | — | (1 087 912) | (1 120 225) | 32 313 | 3% | ||||
| Finance income | 799 853 | — | 799 853 | 896 028 | (96 175) | (11%) | ||||
| Reversal of impairments in associates | 1 558 621 | 1 558 621 | — | — | — | |||||
| Share of (losses)/profit from associates and joint ventures | (80 624) | (1 606 557) | 1 525 933 | (2 489) | 1 528 422 | 61 407% | ||||
| – | Group's share of Cell C's accumulated net losses from 1 June 2019 to 31 May 2024 | (1 606 557) | (1 606 557) | — | — | — | ||||
| – | Group's share of profits from Cell C from 1 June 2024 to 31 May 2025 | 1 507 904 | — | 1 507 904 | — | 1 507 904 | ||||
| – | Group's share of profits from other associates and joint ventures | 18 029 | — | 18 029 | (2 489) | 20 518 | 824% | |||
| Net profit after tax | 2 628 052 | 128 375 | 2 499 677 | 769 270 | 1 730 407 | 225% | ||||
| Headline earnings adjustment | 1 601 195 | 1 584 653 | 16 542 | 10 510 | 6 032 | 57% | ||||
| Headline earnings | 4 229 247 | 1 713 028 | 2 516 219 | 779 780 | 1 736 439 | 223% | ||||
| Core headline earnings | 4 280 137 | 1 713 028 | 2 567 109 | 801 571 | 1 765 538 | 220% | ||||
| Gross profit margin (%) | 23.82% | 23.82% | 22.42% | |||||||
| EBITDA margin (%) | 12.71% | 11.43% | 9.44% | |||||||
Revenue generated within the Africa Distribution segment saw a decline of R519 million (4%) from R14.3 billion to R13.8 billion. However, when considering the gross profit earned on “PINless top-ups”, prepaid electricity, ticketing and universal vouchers, the effective growth in revenue equated to R6.7 billion (8%) from R89.1 billion to R95.8 billion, showcasing a strong market performance.
The gross revenue generated on ‘PINless top-ups' increased by R72 million from R21.76 billion to R21.83 billion, aligning with our expectations and demonstrating the success of our business strategy.
Electricity revenue generated on behalf of the utilities increased by R8.1 billion (22%) from R36.2 billion to R44.2 billion. Net commission earnings, primarily calculated based on kilowatt-hour (kWh) consumption, increased by R30 million (12%) from R263 million to R293 million. The commission growth was driven by inflationary increases linked to kWh usage and higher electricity consumption. However, margin compression offset this, despite overall growth in gross electricity revenue, supported by NERSA-approved tariff adjustments.
Gross revenue from universal vouchers declined by R601 million (4%) to R15.3 billion, compared to R15.9 billion in the prior year. The decrease resulted from the termination, of voucher sales at the end of the previous year, which contributed R5.2 billion in the comparative year but carried negligible margin. Excluding this once-off impact, underlying growth amounted to R4.6 billion (42%), underpinned by the continued expansion of BluVoucher sales through financial institution channels.
Despite a decline in gross ticketing revenue of R143 million (9%), commissions earned increased by R2 million (2%). The improvement was driven by growth in commuter bus channel revenues, offset by a reduction in sales from music festivals and concerts, which have historically generated lower margins.
Gross profit increased by R78 million (2%) to R3.294 billion, up from R3.215 billion, with the gross profit margin improving from 22.42% to 23.82%.
Excluding net positive extraneous contributions of R176 million in the current year, EBITDA increased by R226 million (17%), from R1.355 billion to R1.580 billion. This increase reflected a R288 million decline in CEC, offset by a R514 million increase across the remaining Group entities compared to the prior year.
The total reversal of impairments on associates of R1.559 billion related to the initial impairment of R2.5 billion recognised against Blu Label's investment in Cell C as at 31 May 2019. This reversal aligns with the improvement in Cell C's equity valuation. Of the total impairment, R962.5 million was reversed in November 2022, with the balance of R1.559 billion was reversed in the current year.
Included in the Group's share of losses from associates of R81 million is the recognition of the Group's share of Cell C's accumulated net losses from 1 June 2019 to 31 May 2024, which amounted to R1.607 billion. This was partially offset by the Group recognising its share of Cell C's net profits of R1.508 billion in the current financial year, primarily attributable to the recognition of a portion of Cell C's deferred tax asset, and as R18 million in profits from other associates. As at 31 May 2025, the Group has fully recognised its share of all previously unrecognised historical losses associated with Cell C.
Core headline earnings increased by R3.478 billion, from R802 million to R4.280 billion.
Excluding the net positive extraneous contributions of R1.713 billion, core headline earnings increased by R1.766 billion (220%), from R802 million to R2.567 billion. This growth reflects a R347 million decline in CEC, offset by a R2.112 billion increase across the remaining Group entities compared to the prior year.
| May 2025 R'000 |
May 2024 R'000 |
Growth R'000 |
Growth % |
||||
|---|---|---|---|---|---|---|---|
| Revenue | 225 622 | 254 491 | (28 869) | (11%) | |||
| Gross profit | 81 377 | 79 742 | 1 635 | 2% | |||
| EBITDA | 20 050 | 29 193 | (9 143) | (31%) | |||
| Share of profit from associates and joint ventures | 25 248 | 17 905 | 7 343 | 41% | |||
| Core headline earnings | 53 874 | 43 831 | 10 043 | 23% | |||
| Gross profit margin | 36.07% | 31.33% | |||||
| EBITDA margin | 8.89% | 11.47% |
A decline in SMS volumes resulted in a decrease in revenue of R29 million (11%) from R254 million to R226 million.
Gross profit increased marginally by R1.6 million (2%) from R79.7 million to R81.3 million, while the gross profit margin improved from 31.33% to 36.07%, despite a decline in revenue.
EBITDA declined by R9 million (31%) from R29 million to R20 million, primarily due to an R8 million loss on the disposal of an associate company during the year. Excluding this loss, as well as the impact of learnership initiative costs of R20 million in the current year and R17 million in the prior year, EBITDA increased by R2 million (4%) from R46 million to R48 million. Core headline earnings increased by R10 million (23%) from R44 million to R54 million.
Of the core headline earnings of R53.9 million, BLDS accounted for R32.4 million. Blue Label Communications and Blu Train generated earnings of R17.1 million and R21.1 million, of which the Group's share amounted to R8.2 million and R13.3 million, respectively.
Of the core headline earnings of R43.8 million in the prior year, BLDS accounted for R29.7 million, I Talk Holdings and I Talk Financial Services generated earnings of R18 million, of which the Group's share amounted to R5.4 million. Blue Label Communications and Blu Train generated R1.5 million and R14.7 million earnings, of which the Group's share amounted to R0.9 million and R7.8 million, respectively.
| May 2025 R'000 |
May 2024 R'000 |
Growth remaining R'000 |
Growth remaining % |
||||
|---|---|---|---|---|---|---|---|
| EBITDA | (174 857) | (157 957) | (16 900) | (11%) | |||
| Net loss after tax | (188 645) | (164 174) | (24 471) | (15%) | |||
| Core headline earnings | (188 209) | (164 174) | (24 035) | (15%) |
The negative contribution to Group core headline earnings increased by R24 million (15%) from R164 million to R188 million.
Depreciation, amortisation and impairment charges increased by R29 million to R193 million. Of the latter amount, R70 million (2024: R69 million) pertained to depreciation on capital expenditure, R24 million (2024: R13 million) to depreciation raised in terms of IFRS 16 – Leases, R22 million (2024: R14 million) to impairments and R76 million (2024: R68 million) to the amortisation of intangible assets of which R30 million (2024: R30 million) emanated from purchase price allocations on historical acquisitions.
Finance costs declined by R31 million from R1.121 billion to R1.090 billion. Of the latter amount, R1.004 billion was related to interest paid on borrowed funds, R6 million was used to unwind the lease liability in accordance with IFRS 16, and R80 million was used for other finance costs. Compared to the prior year, R1.082 billion was related to interest paid on borrowed funds, R4 million was used to unwind the lease liability, and R35 million was used for other finance costs.
The recapitalisation of Cell C gave rise to additional finance costs of R231 million (2024: R462 million). These costs comprised R57 million (2024: R272 million) relating to borrowings associated with the airtime sale and repurchase obligations, R22 million (2024: R29 million) attributable to the issue of Class A Preference Shares, R15 million (2024: Nil) from the unwinding of Cell C recapitalisation obligations to SPV5 and Gramercy, and R137 million (2024: R161 million) arising from finance costs recognised on the sale of CEC's handset receivable books.
Excluding the impact of the Cell C recapitalisation, underlying finance costs increased by R200 million, from R659 million to R859 million. This increase was primarily driven by an additional R144 million in interest incurred on short-term working capital facilities secured to fund bulk inventory purchases at favourable rebates. A further R41 million arose from CEC's R1.9 billion working capital financing facility with African Bank, while the remaining R46 million related to other finance costs. These increases were partially offset by a R31 million reduction in finance costs, following a decrease in the Group's working capital facility from R1.34 billion to R1.16 billion, together with a blended 0.46% decline in interest rates compared to the prior year.
Finance income declined by R98 million from R902 million to R804 million. Of the latter amount, R35 million was attributable to interest received on cash resources, R78 million to the loan provided to Cell C relating to the CEC R1.1 billion deferral amount, R632 million from the loan extended to Cell C as a component of the debt-funding required as part of the recapitalisation transaction, R47 million from interest accrued on the overdue trade receivable balance owed to CEC by Cell C and R12 million from other loans advanced.
In the prior period, R44 million was attributable to interest received on cash resources, R102 million to the loan provided to Cell C relating to the CEC R1.1 billion deferral amount, and R600 million from the loan extended to Cell C as a component of the debt-funding, R100 million from interest accrued on the overdue trade receivable balance owed to CEC by Cell C and R56 million from other loans granted.
Total assets increased by R4.6 billion to R19.8 billion, comprising growth of R1.2 billion in non-current assets and R3.4 billion in current assets.
The increase in non-current assets included a R1.711 billion increase in investments in associates, a R168 million increase in advances to customers, a R44 million increase in intangible assets and a R61 million increase in deferred taxation assets. These increases were partially offset by a R664 million decline in loans to associates and joint ventures, a R55 million decrease in property, plant and equipment, and a R28 million decline in financial assets measured at fair value through profit or loss.
The net growth in current assets included increases of R1.501 billion in loans to associates and joint ventures, R1.064 billion in trade and other receivables, R410 million in financial assets at fair value through profit and loss, R240 million in advances to customers and R256 million in inventory.
The increase in investments in associates of R1.711 billion included the reversal of R1.559 billion relating to the initial impairment of R2.5 billion in Blu Label's investment in Cell C, an additional investment of R241 million relating to SPV5's funding obligation to Dark Fibre Africa, as a result of the Cell C recapitalisation, and the Group's share of Cell C's earnings for the current year amounting to R1.508 billion, offset by the recognition of the Group's share of Cell C's accumulated net losses for the period 1 June 2019 to 31 May 2024 amounting to R1.607 billion.
The increase in financial assets at fair value through profit or loss of R382 million related primarily to the Group's rights to acquire an equity interest in Cell C from SPV1 and Gramercy. These rights are accounted for as derivative instruments measured at fair value.
The net increase of R837 million in current and non-current loans to associates and joint ventures is primarily related to the Cell C debt-funding and reinvestment instruments, the CEC deferral loan, and acquiring a new loan from Gramercy of R408 million. Total interest accrued on these instruments amounted to R709 million, reversals of expected credit losses totalled R308 million, partially offset by repayments of R538 million. Loans receivable also decreased by R23 million following the reclassification of iTalk loans to third-party loans following the disposal thereof.
Net profit attributable to equity holders amounted to R2.5 billion, resulting in accumulated capital and reserves of R7.6 billion.
Non-current liabilities decreased by R105 million, reflecting a reduction in non-current borrowings of R166 million and deferred tax liabilities of R133 million, partially offset by an increase of R185 million in financial liabilities at fair value through profit or loss relating to the Class B Preference Shares.
Current liabilities increased by R2.2 billion, primarily due to an increase in current borrowings of R1.5 billion and an increase of R640 million in trade and other payables.
The total increase of R1.3 billion in current and non-current borrowings mainly reflected higher utilisation of short-term working capital facilities for bulk inventory purchases.
Cash generated from trading operations amounted to R488 million. Working capital movements include an increase in inventory of R264 million, trade and other receivables of R1.1 billion and advances to customers of R479 million, offset by an increase in accounts payable of R694 million. After incurring net finance costs of R633 million and taxation of R321 million, net cash utilised in operating activities amounted to R466 million.
Net cash flows utilised in investing activities amounted to R301 million, primarily attributable to the purchase of intangible assets amounting to R443 million, property, plant and equipment of R49 million and the additional investment in Cell C through SPV5 of R100 million. The repayment of loans by associates and joint ventures of R245 million partially offset these outflows.
Included in loan repayments by associates and joint ventures of R245 million are capital repayments by Cell C of R231 million and capital payments by other associates and joint ventures of R14 million.
Cash flows generated from financing activities amounted to R692 million, of which R750 million related to a net increase in interest-bearing borrowings. These inflows were partially offset by dividend payments of R26 million to minority shareholders of subsidiary companies and lease repayments of R30 million.
Cash and cash equivalents accumulated to R821 million at 31 May 2025.
The Board of Directors has elected not to declare a dividend.
There have been no changes in the individual interests held directly and indirectly by the Directors in the Company's share capital after year-end.
I want to thank the staff, suppliers, customers, and business partners for their ongoing support and dedication to the Group.
For and on behalf of the Board
Financial Director
30 September 2025
BLU Label Unlimited Integrated Annual Report 2025
