The comparative year included a once off income receipt of 79.4 million rand. On exclusion of this income, headline earnings per share increased by 17 per cent to 64,17 cents.
“This growth was achieved through an increase in gross profit margins from 6.45 to 6.7 per cent on revenue of 19 billion rand, overhead escalation contained at 3 per cent and the effect of the reduction in issued shares resulting from repurchase of Microsoft’s 12 per cent shareholding in December 2011,” Blue Label said in a statement
The distribution of “pin-less top ups”, as an alternative mechanism for the vending of prepaid airtime, continued to escalate during the current year.
Blue label said that the shift in consumer buying patterns has an impact on the treatment of revenue generated thereon, in that only the gross profit is accounted for as revenue.
This gross revenue increased from 177 million to 997 million rand. The effective growth in group revenue therefore equated to 6 per cent as opposed to 1 per cent as reported.
“The growth in earnings, with the South African distribution segment being the main contributor thereto, was achieved in spite of compounding losses in Mexico and a decline in the performance in the call centre operation,” said the statement.
Blue Labels gross profit increased by 6 per cent to 62 million rand, supported by margin increases from 5, 75 to 5, 99 per cent. On exclusion of IFRS adjustments and in turn reflecting the true trading performance of this segment, gross profit increased by R122 million on margin growth from 5, 33 to 5, 90 per cent. Of this growth of 0, 57 per cent, commissions on prepaid electricity accounted for 0, 14 per cent.
The group’s objective in the international segment is to partner with local management in the countries in which it operates. These partnerships result in its international operations being equity accounted for.
The group’s current active international operations, namely, Ukash, Oxigen Services India and Blue Label Mexico are disclosed accordingly under share of losses from associates and joint ventures.
The group’s current dividend policy is to declare an annual dividend. On 18 August 2013, the board approved and declared a gross ordinary dividend (number 4) of 25 cents per ordinary share (21, 25 cents per ordinary share net of dividend withholding tax) for the year ended 31 May 2013.
This dividend of R168 627 261, inclusive of withholding tax, equates to a 2,52 cover on headline earnings. The dividend for the year ended 31 May 2013 has not been recognised in the financial statements as it was declared after this date. The dividend has been declared from reserves.
The group capitalised on its accumulated cash resources by utilising funds to take advantage of bulk inventory purchase opportunities at favourable discount rates. This resulted in an increase in inventory holding and a commensurate decline in cash resources.
Capital and reserves accumulated to 3, 2 billion rand, further solidifying the foundation of group resources. The net asset value at year end equated to R4, 81 per share.