Media release article

Blue Label Telecoms Limited delivers 15% core net earnings growth

Blue Label Telecoms today announced financial results for the year ended 31 May 2011.

Joint CEO's Brett Levy and Mark Levy said: "Organic growth in revenues, a return to profitability in the solutions segment, and a net reduction in the share of losses from associates and joint ventures, were all positive contributors to the increase in group core earnings"

Financial highlights were:

• 13% increase in revenue to a record R18 billion,
• Overheads decreased by 2%,
• Stand-out contribution from prepaid electricity, with commissions earned up 79% to R61 million,
• Share of losses from associates and joint ventures declined from R15 million to R2,8 million,
• 18% increase in net profit after tax to R431 million,
• 15% increase in core earnings to R456 million,
• Headline earnings per share declined by 4% to 46,20 cents,
• Headline earnings per share from continuing operations increased by 15%
• R566 million cash generated from operations, with cash on hand at year end at R2,2 billion,
• Dividend No. 2 of 14 cents per share declared, up 17%.

Revenue comprised sales of physical and virtual prepaid airtime, commissions on the distribution of prepaid electricity, and compounded annuity revenue generated from airtime starter packs.

Growth was augmented by the profit earned on the 40% dilution of the group's equity holding in Blue Label Mexico, issued to Grupo Bimbo for a capital injection of US$20 million in February 2011. Grupo Bimbo is a manufacturer and distributor of bread and related foods to 17 countries in the Americas and Asia. The strategic partnership we have created will result in one of the most extensive direct distribution networks in the world, utilizing Grupo Bimbo's logistical capabilities and footprint to accelerate the roll-out of point of sale devices.

Trading losses and impairments to assets in Nigeria had a negative impact on group earnings. The decline in business activity was attributable to the cancellation of the distribution agreement with Multilinks in November 2010. Arbitration proceedings in this regard are ongoing.

The joint CEO's concluded: "The Blue Label group will continue to focus on expanding its product range offering and distribution network, organically and through acquisition, both locally and internationally."