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| Group Nov 2024 R'000 |
Group Nov 2023 R'000 |
Growth R'000 |
Growth % |
||||
|---|---|---|---|---|---|---|---|
| Revenue | 7 245 092 | 7 581 356 | (336 264) | (4%) | |||
| Gross profit | 1 625 720 | 1 597 881 | 27 839 | 2% | |||
| EBITDA | 653 155 | 697 003 | (43 848) | (6%) | |||
| Finance costs | (532 402) | (459 311) | (73 091) | (16%) | |||
| Finance income | 442 662 | 352 592 | 90 070 | 26% | |||
| Net profit after tax | 395 353 | 406 423 | (11 070) | (3%) | |||
| Core headline earnings | 424 302 | 419 575 | 4 727 | 1% | |||
| Gross profit margin (%) | 22.44% | 21.08% | |||||
| EBITDA margin (%) | 9.02% | 9.19% | |||||
| Weighted average shares ('000) | 898 859 | 889 918 | |||||
| Share performance | |||||||
| EPS (cents) | 43.98 | 45.67 | (1.69) | (4%) | |||
| HEPS (cents) | 46.01 | 45.91 | 0.10 | 0% | |||
| Core HEPS (cents) | 47.20 | 47.15 | 0.05 | 0% | |||
Group revenue amounted to R7.2 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 growth in revenue equated to R3.5 billion (8%), resulting in a total revenue of R47.4 billion compared to the prior period of R43.8 billion.
Gross profit increased by R28 million (2%) from R1.598 billion to R1.626 billion, corresponding to an increase in margins from 21.08% to 22.44%. This increase in margins can be partially attributed to the growth in "PINless top-ups", prepaid electricity, ticketing and universal vouchers, where only the gross profit earned thereon is recognised as revenue.
EBITDA decreased by R44 million (6%), from R697 million to R653 million, while core headline earnings recorded a marginal increase of R5 million from R419 million to R424 million.
The decline in EBITDA and the modest growth in core headline earnings were primarily driven by a reduction in the Comm Equipment Company (CEC) subscriber base, a lower average revenue per user (ARPU) and increased finance costs associated with the sale of a portion of the CEC handset receivable book. The proceeds from the sale were transferred from CEC to The Prepaid Company (TPC) and ultimately to Cell C through the acquisition of airtime.
Earnings per share for the current and prior periods were 43.98 cents and 45.67 cents, respectively. Headline earnings per share for the same periods were 46.01 cents and 45.91 cents, respectively.
| Nov 2024 R'000 |
Nov 2023 R'000 |
Growth R'000 |
Growth % |
||||
|---|---|---|---|---|---|---|---|
| Revenue | 7 122 292 | 7 437 977 | (315 685) | (4%) | |||
| Gross profit | 1 580 144 | 1 551 981 | 28 163 | 2% | |||
| EBITDA | 700 452 | 751 647 | (51 195) | (7%) | |||
| Finance costs | (530 997) | (459 272) | (71 725) | (16%) | |||
| Finance income | 440 395 | 350 490 | 89 905 | 26% | |||
| Net profit after tax | 448 910 | 463 965 | (15 055) | (3%) | |||
| Core headline earnings | 470 906 | 477 231 | (6 325) | (1%) | |||
| Gross profit margin (%) | 22.19% | 20.87% | |||||
| EBITDA margin (%) | 9.83% | 10.11% | |||||
Revenue generated within the Africa Distribution segment declined by R316 million (4%) from R7.4 billion to R7.1 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 thereon, the effective growth in revenue equated to R3.5 billion (8%) from R43.7 billion to R47.2 billion.
Gross revenue generated on "PINless top-ups" declined by R247 million from R10.8 billion to R10.6 billion, though in line with expectations.
Electricity revenue generated on behalf of the utilities increased by R3.1 billion (16%) from R18.9 billion to R21.9 billion. Net commission earnings, primarily calculated based on kilowatt-hour (kWh) consumption, remained stable at R146 million. The constrained growth in commissions was driven by inflationary increases linked to kWh usage and higher electricity consumption following the cessation of load shedding. However, this was offset by margin compression, despite overall growth in gross electricity revenue, supported by NERSA-approved tariff adjustments.
The gross revenue generated from universal vouchers increased by R1.1 billion (17%) from R6.2 billion to R7.3 billion, driven by the continued traction of BluVoucher sales through financial institution platforms. Additionally, gross ticketing revenue increased by R37 million (5%) to R718 million, primarily from revenue generated through commuter bus channels.
Gross profit increased by R28 million (2%) to R1.580 billion, up from R1.552 billion, with the gross profit margin improving from 20.87% to 22.19%.
EBITDA decreased by R51 million (7%), from R752 million to R700 million and core headline earnings decreased by R6 million from R477 million to R471 million.
The decline in EBITDA and core headline earnings were primarily driven by a reduction in the CEC subscriber base, a lower average revenue per user (ARPU), and increased finance costs associated with the sale of a portion of the CEC handset receivable book.
| Nov 2024 R'000 |
Nov 2023 R'000 |
Growth R'000 |
Growth % |
||||
|---|---|---|---|---|---|---|---|
| Revenue | 122 800 | 143 379 | (20 579) | (14%) | |||
| Gross profit | 45 576 | 45 900 | (324) | (1%) | |||
| EBITDA | 11 601 | 19 267 | (7 666) | (40%) | |||
| Share of profit from associates and joint ventures | 12 058 | 5 738 | 6 320 | 110% | |||
| Core headline earnings | 30 062 | 21 909 | 8 153 | 37% | |||
| Gross profit margin (%) | 37.11% | 32.01% | |||||
| EBITDA margin (%) | 9.45% | 13.44% | |||||
A decline in SMS volumes resulted in a decrease in revenue of R21 million (14%) from R143 million to R123 million.
Gross profit declined marginally by R0.3 million (1%), from R45.9 million to R45.6 million. However, profit margins improved from 32.01% to 37.11%, despite a decrease in revenue.
EBITDA declined by R8 million (40%) from R19 million to R11 million, primarily due to an R8 million loss on the sale of an associate company during the period. Excluding this loss, as well as the impact of learnership initiative costs of R10.3 million in the current period and R8.7 million in the prior period, EBITDA increased by R2 million (7%) from R28 million to R30 million.
Core headline earnings increased by R8 million (37%) from R22 million to R30 million.
Of the core headline earnings of R30 million, BLDS accounted for R20 million. Blue Label Communications and Blu Train generated earnings of R4 million and R12 million, of which the Group's share amounted to R2.2 million and R8 million, respectively.
Of the core headline earnings of R22 million in the prior period, BLDS accounted for R17.7 million, I Talk Holdings and I Talk Financial Services generated earnings of R5 million, of which the Group's share amounted to R2 million. Blue Label Communications and BluTrain generated earnings of R1 million and R5 million respectively, of which the Group's share amounted to R0.6 million and R1.7 million, respectively.
| Nov 2024 R'000 |
Nov 2023 R'000 |
Growth R'000 |
Growth % |
||||
|---|---|---|---|---|---|---|---|
| EBITDA | (57 950) | (70 344) | 12 394 | 18% | |||
| Net loss after tax | (75 974) | (76 574) | 600 | 1% | |||
| Core headline earnings | (75 974) | (76 574) | 600 | 1% | |||
The negative contribution to Group core headline earnings declined by R0.6 million (1%) from R76.6 million to R76.0 million.
Depreciation, amortisation and impairment charges increased by R25 million to R97 million. Of the latter amount, R35 million (2023: R35 million) pertained to depreciation on capital expenditure, R12 million (2023: R5 million) to depreciation raised in terms of IFRS 16 - Leases, R15 million (2023: R2 million) to impairments and R35 million (2023: R30 million) to the amortisation of intangible assets of which R15 million (2023: R15 million) emanated from purchase price allocations on historical acquisitions.
Finance costs increased by R73 million from R459 million to R532 million. Of the latter amount, R493 million related to interest paid on borrowed funds, R3 million to the unwinding of the lease liability in accordance with IFRS 16, and R36 million to other finance costs. In comparison, to the prior period, R431 million related to interest paid on borrowed funds, R2 million to the unwinding of the lease liability, and R26 million to other finance costs.
The recapitalisation transaction of Cell C in September 2022 resulted in an additional R37 million (2023: R164 million) in finance costs, incurred due to increased borrowings related to airtime sale and repurchase obligations, R15 million (2023: R13 million) for the issue of Class A Preference Shares and R72 million (2023: Nil) from finance costs recognised on the sale of the CEC's handset receivable books.
Excluding the aforementioned recapitalisation interest, finance costs increased by R127 million from R282 million to R409 million. This increase was primarily driven by an additional R92 million in interest incurred on short-term working capital facilities secured for bulk inventory purchases at favourable rebates. Additionally, R43 million of the increase resulted from CEC's R1.9 billion working capital financing facility with African Bank, while the remaining R10 million was attributed to other finance costs. These increases were partially offset by an R18 million reduction in finance costs, in line with a decrease in the Group's working capital facility from R1.36 billion to R1.16 billion, as well as a blended 0.25% decline in interest rates compared to the prior period.
Finance income increased by R90 million from R352 million to R442 million. Of the latter amount, R15 million was attributable to interest received on cash resources, R42 million to the loan provided to Cell C relating to the CEC R1.1 billion deferral amount, R351 million from the loan extended to Cell C as a component of the debt-funding required as part of the recapitalisation transaction, R28 million from interest accrued on the overdue trade receivable balance owed to CEC by Cell C and R6 million from other loans advanced.
In the prior period, R16 million was attributable to interest received on cash resources, R54 million to the loan provided to Cell C relating to the CEC R1.1 billion deferral amount, R273 million from the loan extended to Cell C as a component of the debt-funding required as part of the recapitalisation transaction and R9 million from other loans granted.
Total assets increased by R398 million to R15.5 billion, of which non-current current assets accounted for R404 million, offset by a decrease in current assets of R6 million.
The increase in non-current assets included a R392 million increase in loans to associates and joint ventures, as well as a R74 million increase in intangible assets. These increases were partially offset by a R28 million decline in financial assets measured at fair value through profit and loss, a R22 million decrease in property, plant, and equipment, and a R13 million reduction in investments in associates following the sale of an associate company.
The net decline in current assets included a decrease of R192 million in loans to associates and joint ventures, a R184 million reduction in inventory, resulting from the destocking of surplus prepaid airtime during the period, and a R260 million decrease in advances to customers, primarily due to the partial sale of CEC's handset receivable book. These decreases were partially offset by an increase of R610 million in trade and other receivables.
In November 2024, CEC concluded additional arrangements with financial institutions, enabling the sale of its handset receivables. During the current period, CEC sold handset receivables with a gross value of R357 million. As a result thereof, advances to customers declined by R257 million, from R1.24 billion on 31 May 2024 to R979 million on 30 November 2024. Excluding the disposal of handset receivables, CEC's advances to customers increased by R86 million over the same period.
The increase of R201 million in loans to associates and joint ventures is primarily attributable to the interest accrued of R351 million from the loan extended to Cell C as a component of the debt-funding and reinvestment instrument and a reversal of expected credit losses on these loans amounting to R34 million. This was partially offset against repayments received thereon of R52 million. Additionally, R42 million related to accrued interest on the loan extended for the CEC deferral amount, with a reversal of expected credit losses of R11 million, offset by repayments received thereon of R159 million. Furthermore, associate loans receivable of R23 million were reclassified to third party loans following the sale of an associate company.
Net profit attributable to equity holders amounted to R395 million, resulting in accumulated capital and reserves of R5.5 billion.
Non-current liabilities decreased by R361 million, comprising a reduction in non-current borrowings of R293 million and deferred taxation liabilities of R60 million.
Current liabilities increased by R364 million, primarily due to an increase in current borrowings of R601 million, offset by a reduction in trade and other payables of R235 million.
Cash generated from trading operations amounted to R424 million. Working capital movements included a decrease in inventory of R183 million and advances to customers of R221 million, offset by an increase in trade and other receivables of R582 million and accounts payable of R222 million. After incurring net finance costs of R375 million and taxation of R151 million, net cash utilised in operating activities amounted to R129 million.
Net cash flows utilised in investing activities amounted to R167 million, primarily attributable to the purchase of intangible assets amounting to R267 million, property, plant and equipment of R32 million and the advancement of third-party loans totalling R19 million. These outflows were partially offset by the net repayment of loans from associates and joint ventures of R122 million, dividends received from associates amounting to R13 million and proceeds of R10 million from the sale of an associate company.
Included in net loan repayments by associates and joint ventures of R122 million were capital repayments by Cell C of R117 million partially offset by net loans of R5 million granted to other associates and joint ventures.
Cash flows generated from financing activities amounted to R257 million, of which R293 million related to a net increase in interest-bearing borrowings. These inflows were partially offset by dividend payments of R22 million to minority shareholders of subsidiary companies and lease repayments of R14 million.
Cash and cash equivalents accumulated to R857 million at 30 November 2024.
Conditional shares totalling 12 221 660 (2023: 17 336 415) were issued to qualifying employees. During the period, 3 369 519 (2023: 511 995) shares were forfeited and 5 138 208 (2023: 12 694 462) shares vested.
The Blue Label Board would like to extend its gratitude to the staff, suppliers, customers, and business partners for their ongoing support and dedication to the Group.
For and on behalf of the Board
LM Nestadt
Chairman
BM Levy and MS Levy
Joint Chief Executive Officers
DA Suntup* CA(SA)
Financial Director
19 February 2025
| * | Supervised the preparation and review of the Group's unaudited six-month period ended results. |
