JSE-listed Blue Label Telecoms on Thursday posted a 5% decline in gross profit to R3.3-billion for the year ended May 31, 2024.

However, its gross profit margin ticked up from 18.41% to 22.57% year-on-year, 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.

In line with this, the group’s revenue declined 23% to R14.6-billion.

Blue Label joint CEO Brett Levy said that the inclusion of the gross revenue generated equated to a 16% growth in revenue to R12.5-billion, resulting in a total revenue of R89.3-billion, an increase on the R76.8-billion reported in the prior year.

Earnings before interest, taxes, depreciation and amortisation declined by 18% to R1.21-billion during the year ended May 31, 2024, excluding the positive contributions of R20-million in the current year and negative contributions of R146-million in the prior year.

Of this decline, Comm Equipment Company (CEC) showed a negative impact of R368-million, while the remaining group operations contributed an additional R110-million compared with the year ended May 31, 2023.

Core headline earnings for the year under review amounted to R679.48-million, equating to core headline earnings per share (HEPS) of 76.08c, compared with R401.96-million and HEPS of 45.55c in the year before.

Excluding the positive contributions of R66-million in the current year and the negative contributions of R523-million in the prior year, primarily resulting from the recapitalisation transaction of Cell C, core HEPS declined by 34% to 68.66c, down from 104.83c apiece in 2023.

Core headline earnings declined by 34% to R613-million owing in part to a decrease of R188-million for CEC.

The decline in CEC's core headline earnings was primarily attributable to a decline in gross profit stemming from a decrease in earnings resulting from the expiry, in November 2022, of certain elements of the revenue-sharing agreement, increased expenditure related to the distribution agreement and an increase in the amortisation of handset subsidies.

As part of the recapitalisation transaction of Cell C, and to further assist with their working capital requirements, The Prepaid Company (TPC) is obligated to purchase R1.2-billion of additional prepaid airtime through four quarterly payments of R300-million each.

To fund these working capital requirements for Cell C, CEC sold a portion of its handset receivable book to financial institutions. The funds generated from this transaction are transferred from CEC to TPC, and ultimately to Cell C through the acquisition of the airtime.

The remaining entities within the group, particularly TPC, faced a reduction in core headline earnings owing to the cessation of certain rebates and a reduction in discounts from Cell C, following its recapitalisation.

Earnings per share (EPS) for the current and prior years amounted to 72.49c and 30.48c respectively. On the exclusion of the contributions resulting primarily from the recapitalisation transaction of Cell C from both the current and prior years, EPS and HEPS declined by 35% to 65.07c a share and 66.22c a share, respectively.