COMMENTARY

SUMMARISED GROUP INCOME STATEMENT

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.