Blue Label Telecoms (BLU) on Wednesday reported diluted headline earnings per share of 45.75 cents for the year ended May 2011 from 48.06 cents a year ago. HEPS were 4% lower at 46.20 cents.
A dividend of 14 cents per share was declared.
Revenue was up 13% at 18.064 billion rand, while operating profit was slightly lower at 451.7 million rand from 454.5 million rand a year ago. Gross profit increased by 51 million rand to 1.07 billion rand and EBITDA increased by 5% to 598 million rand.
The group said organic growth in revenues, a return to profitability in the call centre operations and a net reduction in the share of losses from associates and joint ventures were all positive contributing factors to the growth in group core earnings.
This growth was augmented by an extraneous profit resulting from the dilution of the group's equity holding in Blue Label Mexico. In February 2011, 40% of the share capital of Blue Label Mexico was issued to Grupo Bimbo for a capital injection of US$20 million.
Grupo Bimbo is a manufacturer and distributor of bread and allied foods. As the market leader in the Americas, Grupo Bimbo owns 103 manufacturing plants and more than 1,000 distribution centres strategically located in 17 countries throughout the Americas and Asia. It has one of the most extensive direct distribution networks in the world.
The sale of equity has created a strategic alliance between the two groups, with the objective of utilising Bimbo's logistic capabilities and footprint to accelerate the roll out of point of sale devices, Blue Label said.
Trading losses in Africa Prepaid Services Nigeria (APSN) and the necessity for impairments of APSN following a commitment to dispose of the majority of assets and liabilities in May 2011, adversely impacted on profits. The decline in the financial performance of APSN was attributable to the failure by Multi-links to perform its obligations in terms of the distribution agreement and the consequent cancellation of that agreement arising from Multi-links' repudiation of its obligations.
Further impairments to goodwill and related intangibles in Sharedphone International and Content Connect Africa, as well as the write-off of internally generated intangible assets in Blue Label One and Blue Label Distribution, also inhibited the growth in core earnings.
The net positive growth in core earnings equated to 15%, but headline earnings declined by 4% after the net deduction relating to the extraneous profit in Blue Label Mexico and impairments described above. After extraction of the total negative contribution of APSN as a discontinued operation, the balance of the group increased headline earnings by 13%.
The group continued to generate positive cash flow, with cash generated from operations of 566 million rand. Cash resources accumulated to 2.2 billion rand at year end.
Looking ahead, the group said airtime sales are expected to continue to exceed industry growth norms. Commissions generated from prepaid electricity sales on behalf of utilities are expected to increase both organically and through contracts with additional electricity providers.
The mobile segment is expected to generate advertising revenue on bulk printed prepaid vouchers and point of sale receipt vouchers.
The refocused international segment remains core to achieving footprint growth. The vast distribution network of Grupo Bimbo and the accelerating roll-out of point of sale devices will result in increased volumes of sales of electronic tokens of value in Mexico.
Oxigen Services India is evolving to fulfilling its vision of supplementing its traditional business of a prepaid recharge platform, by providing versatile payment solutions, that will include Mobile Wallet, international remittances and cash cards.
The group would continue to focus on expanding its product range offering and distribution network, organically and through acquisition, both locally and internationally, it said. - I-Net Bridge