Blue Label’s mystery R80m windfall

Blue Label Telecoms is expected to turn in another strong set of results this year, but part of its windfall comes from a mystery source. By Craig Wilson.

Blue Label Telecoms, the JSE-listed company that distributes and resells airtime and other prepaid services, turned in solid results in the six months to November 2011 when it revealed the numbers in February. But part of those results included a confidential income receipt in its mobile business, meaning a boost in headline earnings without clarity about the source of the money.

According to a statement published on the JSE’s Sens news service on Thursday, Blue Label expects headline earnings per share (Heps) for the year ended 31 May 2012 to exceed the Heps of 46,2c for the comparative year by more than 20%. This means investors can expect Heps to be in excess of 55c for the most recent financial year when the numbers are published next month.

The company says the boost to Heps comes as a result of the “nonrecurring receipt” that was disclosed in the first-half numbers. The nonrecurring receipt – an amount of R79,4m – was related to an “extraneous transaction”, the details of which remain confidential.

One analyst TechCentral spoke to said the figure was “unnerving” and shouldn’t be considered with the rest of the company’s results as it wasn’t representative of the underlying business.

The analyst, who did not wish to be named due to his relationship with Blue Label, said he considered the nondisclosure a “poor decision” because it did not instil confidence in investors, even if it did make for good financial figures.

“How did that income come about? And what happens if, say, it’s a settlement as the result of a legal dispute and there’s a claim against that?”

Similarly, the analyst asked what investors would have made of the nondisclosure if it had been money flowing out of the business rather than income being accrued.  — (c) 2012 NewsCentral Media

• Image: Iman Mosaad