Blue Label Telecoms has continued the strong performance it reported in its interim results earlier this year, turning in a solid earnings performance for the full-year to 31 May 2016.
The JSE-listed technology group, which is in the process of acquiring a 35% stake in mobile operator Cell C for R4bn, said full-year headline earnings rose by 22% to R668m, while it hiked the dividend by 16% to 36c/share.
The strong earnings performance was matched by a 19% improvement in revenue to R26,2bn, which was primarily the result of organic growth driven by new distribution channels and improvements in market share in South Africa.
Although there was a contraction in gross profit margins, gross profit increased by R138m (10% up) to R1,6bn. The decline in margins from 6,67% to 6,15% was directly attributable to revenue generated from large distributors that were afforded additional margin incentives, Blue Label told shareholders.
As a result, growth in earnings before interest, tax, depreciation and amortisation (Ebitda) came in at 9%, to R1,1bn, for an Ebitda margin of 4,41%. Ebitda is a measure of measure of operating performance.
Revenue generated on “Pin-less top-ups” increased by R1,4bn, from R2,7bn to R4,1bn, equating to effective growth in South African distribution revenue of 23% (only the commission earned thereon is recognised).
Net commissions earned on the distribution of prepaid electricity continued to increase, escalating by R33m to R197m (up by 20%) on turnover of R12,1bn generated on behalf of utility providers.
Internationally, Blue Label’s share of losses in Blue Label Mexico fell by 28% to R63m. Oxigen Services India had a R27,7m drag on earnings due to “significant expenditure incurred on the expansion of its mobile wallet subscriber base”. The two international businesses impacted negatively on group headline earnings per share by 9,5c and 4,16c respectively.
Capital and reserves grew to R4,5bn, net of accumulated dividends paid to date totalling R913m, further strengthening the group’s balance sheet.
Blue Label’s share price closed in Johannesburg on Tuesday, before the results were published, at R18,42. The counter has added 83,4% in the past 12 months on strong financial performance and positive sentiment from investors about the impending Cell C acquisition. — © 2016 NewsCentral Media