Blu Label Unlimited Group Limited (BLU) Earnings Call Transcript & Summary

Welcome, everybody, and welcome to Blue Label's interim results ending November 30, 2024. We will start with our strategy and our vision. Our strategy and our vision is broken up into 8 integral parts of where our concentration lies on a daily basis. We find ourselves in an interesting place. At least 2 or 3 of everything that crosses our desk either organically or going forward, must fit into at least 2 or 3 of these categories, and that brings interest to what we have to do. Number one, technology; two, product; three, distribution; four, energy; five, treasury and procurement; six, special projects; seven are postpaid; and eight, of course, Cell C. Starting with technology, transaction junction. As you know, this is a prominent independent switch in South Africa and Africa. We are integrated into most of the banking sector, most of the retail sector and is known as the old Postilion switch, adding a dynamic view to what we have in the technology space. Aeon, our proprietary switch. The IP that belongs to this is all internal IP and where this becomes interesting is from a service and product point of view. Because it's all proprietary, because it's all in-house, obviously, gives us the ability to move with speed when delivering new products and, of course, with services that we add on. The third part of our technology is BLU Nova. We've spoken about BLU Nova in the past. And as you know, this is our data section. Data is a big part of our future. It's a big part of most companies' future. The question is, of course, what do you do with the data that you have? How do you monetize the data that you have? From our point of view, the data we're collecting from the distribution of all our touch points, the distribution, of course, of all our products and services allow us to create these data lakes and to actually provide what we call an alternative scorecard. An alternative scorecard is something different to all the scorecards that you know out there and gives us the ability to touch and deal with certain clients and certain people out there that traditional banks can't. We understand where you buy your electricity. We understand how you buy your ticket in. We understand where you buy your telcos. And this gives us the ability to obviously interact with people of all kinds, all different grades in South Africa and allows us to touch the whole of South Africa from beginning to end. Moving on to product, obviously, a category that we concentrate on heavily. The 3 products that we, I guess, are really proud of that we've done really well on, and we believe have a lot of legs. BLU Voucher, Ringas and UniPIN. Our BLU Voucher is our online product. You've heard of me speak of this in the past. This does all of your DSTV top-up payments on a monthly basis, your electricity and of course, our aggregator of the gaming companies. It's a product that we've seen really advance in the market. And currently today, we're doing over ZAR 1 billion a month on a single voucher. Ringas is our unique voucher that covers all of the networks. So instead of buying a unique voucher that is for Vodacom, MTN, Cell C or Telkom, you now have the ability to buy Ringas voucher, which obviously crosses over all of them. And UniPIN, which is our electricity, obviously, covering all of the municipalities. Obviously, we would love one voucher that would cover all of our products. But because of the different margins that we have in the different products, as I've explained in the past, you will always have to have vouchers that are unique to categories. So for now, really happy and following these really closely. We have BLU Advance, which is a new product that we've launched. We passed the testing phase. This is what you know in the telcos world as advances on actual telcos. Our BLU Advance is advances on electricity, so emergency electricity top-up, very unique product, unique only to Blue Label and a product that we believe will advance tremendously into the future. Our next product is obviously Ticketpro. Ticketpro, as you know, we concentrate heavily on transport ticketing, game ticketing and event ticketing. The real idea here really is to change ticketing and how ticketing is done. And we are making a big difference in the transport world, especially in the [ petco ] world of transport and how you actually use a ticket in petco today is very different. So ticketing, although it's a huge category that holds different kinds of events and obviously, sports, the one that we are really concentrating on is transport ticketing. Our Bluecom, another product of ours, working in our reverse billing side. And really, what we're trying to do is just differentiate our products into different categories. Our marketing. A lot done here actually to promote our brand. We have a lot of content that comes through our business. We have a lot of different ways of distributing the content and marketing is playing a bigger role in everything that we do. Blue Label data services is obviously a unique way of putting data to certain customers, certain insurance customers and really giving them the golden ticket of data that is very specific to a clientele to an area. We obviously follow POPI compliant and obviously, all the regularity that sits behind it. SIM cards, we've been speaking about this product for years, and I have no doubt we'll be speaking about SIM cards for many years to come. We are very cognizant of the eSIM that will be coming into the future. I think what you have to know in a country like South Africa, the adoption of eSIM will take longer. So if you travel overseas today, you'll see that in a lot of countries, you only get the option of eSIM. South Africa, the adoption is taking a bit longer. And I probably believe that the ultimate uptake of eSIM will probably be around 30% to 40%. That being, of course, the actual phone itself, the cost of the phone and the uptake of our specific market. So we continue to distribute over 2 million SIMs a month. We are net positive on a monthly basis. We are net positive, obviously, on a yearly basis and a category that has really performed well over many, many years and over the last 10 years at least. Where the rubber hits the road in Blue Label, which is our distribution. As you know, our main distribution of South Africa is Blue Label distribution. And this is where we touch the banking sector, the informal sector, the formal sector, the petroleum forecourts. And really, the idea is to make sure that we can take all products and all services countrywide, touching every single household and every single person no matter where you are in our country. The most important thing here is that we create a single platform, a platform for you, the customer and, of course, our customer, the merchant or the bank or the retailer. This allows you from a single point to obviously be able to distribute multiple products and, of course, any quantity of that product. It allows you to do cash in, cash out and of course, gives you the one-stop shop for everything that you want to do as a merchant and of course, as a customer itself. Our concentration in where South Africa is going is a lot in the informal world and, of course, in the banking sector. Blue Label proud itself of what we've done in the banking sector and what we've done in the petroleum forecourts and in the retail sector and working closely with certain companies in the informal side along with us to make sure that we cover that intensely. The last part of our distribution is something that we've mentioned to you over the last 2 presentations and something that we're actually very proud of, and that is BLU Train. This is the employment of people and not only the employment of people, but also the training of these people and then the reemployment of them into our network. Very unique to Blue Label, something unique to South Africa. And what we really believe is we can make a great difference, a great difference to Blue Label company and a great difference actually to South Africa by being able to train and employ thousands and thousands of people on a monthly and yearly basis. We are working extremely closely with the Department of Employment and Labor. And in the next 12 months, we believe that we will employ and train 16,680 people in this division alone. That obviously makes a great difference in the Blue Label world for selling our products and getting our branding and products out there. And of course, to employment out there makes a massive difference. So one that not only is good for us, but one that we are really proud of as Blue Label. We've changed the space. You've heard of us talk about it in the past, which was CigiCell. CigiCell has actually grown into a much bigger space. So it's actually its own category now called energy. CigiCell, as you know it, we deal with multiple municipalities, the distribution of tokens on behalf of the municipalities. This year is extremely complicated, a lot more complicated than you think. Everything is in an online environment. You're dealing with multiple different municipalities and of course, Eskom themselves. So Eskom themselves are about 50% of the market and then around 270 municipalities make up the other 50%. CigiCell over the years has done a really good job on the token vending side and obviously making sure that electricity can be bought anywhere, anytime. However, you would have all read and you would have all followed that in South Africa, we have a lot of concentration on what we call the fix up around our municipalities and what we can do there to make services out of the municipalities better. The one that we have spoken about and one that is really starting to gain momentum, I think, across all the municipalities in South Africa is what we call revenue assurance. And really, what this is, is helping out the municipalities and giving them added ability to collect all the uncollected money that the municipalities are losing on a daily, monthly and yearly basis. Once again, over and above the people that I spoke to from the employment point of view, we will be employing thousands of people across the country in different municipalities, not in the municipalities, but for us, for the municipalities that will be doing revenue assurance, which will be doing the collections of outstanding amounts and of course, making sure that these amounts are kept up to date. So CigiCell is obviously [ morphine ] out of just the token vending into doing much more services into the municipalities, which leads me into BLU Energy, which what we're really trying to do is enhance the production of alternative energy through green energy to these municipalities. So now as an energy space in Blue Label, which I think, is without doubt the most exciting space that Blue Label is in today. We are working on the actual production of green energy to the municipalities. We're obviously working on the actual distribution, which we've done over the years. And then the final piece of the ecosystem, which is the collection of the monies. So a very, very strong part of what we're doing is working closely with the municipalities and enhancing the revenue stream that we can do per municipality, obviously, the customer base being the customer base. Moving on to our next segment, which is our treasury and procurement. And what I'm really trying to do is break it up so you can understand Blue Label in its segments rather than as a whole and in the company's names that I've spoken about in the past. Treasury and procurement, along with obviously, the energy sector is without a doubt the exciting parts of Blue Label. As you know from the past, our procurement lies in telcos, electricity, ticketing, gaming, VAS products. Nothing changes around that side. We obviously deal with wholesale, we deal with retail. We deal with independent and informal, obviously, the banking sector. But treasury for us is a major focus because as we turn and as we've told you and Cell C, we will deal with from a separate point of view. But -- as long as no more money needs to go from Blue Label into Cell C, which we have told you that we've come to an end that Cell C is doing really well and on their own. Obviously, this gives the ability for Blue Label to start generating the cash that it always did over the years. And this allows our treasury to act in a very positive way and actually become a whole economic center for us around the procurement and the treasury. So it's one to watch for the future. It's an exciting part of what we're doing. I'll take you back a few years, but if I go back to around 2015, 2016, what's really interesting here is treasury used to make up 44% of our total profits of our group. Today, treasury is a negative to our group because of the money that we've laid out, obviously. But if it made up 44% of our group, a mere 9, 10 years ago today being zero to negative, obviously, upside in treasury and procurement is obviously exciting to all of us. We've started a new division. And the reason we started this division is actually to focus on it more clearly rather than to have too many balls in the air. It's called special projects. When I started, I told you anything we're looking at organically or that comes into us, both locally and internationally, must fit into at least 2 or 3 of the categories or the segments that I was -- that I have been speaking to. And special projects takes us on. We have a unique team in head office. We have a team that focuses on this directly. It's new opportunities for Blue Label. It's added opportunities for Blue Label. But what's really interesting about this division -- these projects are all projects that move the needle. So nothing that is in the norm, which will go down to the different subsidiaries. That is normal. Anything that fits into special projects, which today, we have 6 of them, by the way. Those projects, should they come off are all projects that move the needle and change everything in the Blue Label world positively. So a focused division, a new division and doing things a little bit differently to how we did in the past. On CEC and our postpaid, Jorge will obviously touch on Cell C and the postpaid side and where we're going and the strategy around it. Just some high-level highlights from it. Our handset revenue was over ZAR 1 billion. Our service revenue just on ZAR 859 million for the half year. Our subscriber base sitting on around 830,000, very similar to what I reported to you at the end of May, which was 831,000 and our ARPU very consistent at ZAR 220. I guess what's really exciting here is the movement that we made. Obviously, as we said to you, we have not had a good 6 months in CEC, a lot of cleanup, a lot of fix up. I did explain that we expect the same all the way through to May in CEC and coming into the new year of June, July of this year and obviously flowing into our May '26 year, we believe that CEC will be back to normal, back to the numbers and the profitability that you know of the past. We've obviously had some big losses in it. Dean will touch specifically on the losses we've had on it. But I think nothing that we weren't expecting once we had actually cleaned it up, actually all on budget to what we were expecting on the cleanup. What's good about this is we drew a line in the sand. We knew exactly where we were. We knew what we had to do over the last 12 to 18 months to clean it up and to get it back to where we needed to go to. We knew that the front end, which Cell C themselves do a lot better. So pass over a lot of the services or pass back a lot of the services to Cell C, which we've done. That's taken us many months to get that right. And that CEC concentrate on what we really do well. Obviously, the management of the book, our relationship with African Bank, the scorecard and everything really what CEC was built on initially. Cell C, as I said to you, we're going to go into it in a lot more detail in this presentation. There's been a lot of demand from -- demand or request from everyone to really get into more of the detail of Cell C rather than pieces of it. And Jorge will be speaking after me to go into exactly that and to give you more detail and more that you have all been asking for. Just to end off with, some of the financial highlights for the period. I know that I've mentioned this before, but you can't really look at the revenue as you see it from a Blue Label perspective. The reason for that is you've seen a decrease in it on a yearly basis. That's obviously because all our products are now in a PINless world. If you impute back all our products from a PINless world, our actual revenue for the half year was ZAR 47.4 billion, up from ZAR 43.8 billion, so 8% increase. So just under ZAR 48 billion of revenue through the books of Blue Label for the half year. So obviously, a substantial amount. So what we report is obviously what is not our PINless products, as I said, the ones that are decreasing, so ZAR 7.2 billion. We had an increase in our gross profit of 2% to ZAR 1.63 billion. We have an increase in our gross profit margin to 22 -- just on 22.5%. And that's, once again, yes, we do have a few products that are coming through that have higher margin, but the real increase in our gross profit margin is also coming through because, obviously, more of our products are PINless. So you've seen the gross profit come through without the revenue on the top line. And our core headline earnings per share of ZAR 0.472 in line with last year, so up a little bit, up 0.4%. But I think everything in the right direction when you exclude the losses that we faced in CEC for the year, huge losses actually, the rest of the group really performing well and compensating for the -- as I said, the cleanup and the losses in CEC. So overall, I think really satisfied with Blue Label's 6 months performance. I think when it comes to Cell C, more than satisfied, I think the turnaround there in Cell C has been short of exceptional. We understand there's obviously more to do and a lot more to do. But Jorge and his team have done a phenomenal job. They continue to do a phenomenal job. And if you compare our 6 months of 2024 to our prior 6 months of '23, I think the numbers will speak for themselves. But more so than the numbers, I just think where Cell C has positioned itself as a brand, where Cell C has positioned itself as a company. And of course, where it's positioning itself within the Blue Label Group is something that makes the next 6 months and of course, the next couple of years really exciting for us. So thank you from my side, and I'll now hand you over to the CEO of Cell C, Jorge Mendes.

Thank you very much, Brett, and good to be here. Thanks for having me. Really a pleasure to be here. I think today, we're going to talk about some of the highlights that we've had in half 1. Firstly, executing on our strategic priorities have driven double-digit growth, I think really phenomenal by the team. The second is this has resulted in a really good robust financial performance. Really interested to tell you about our CapEx-light model and how that's yielding positive results so far and what we plan to do with that particular structure. A really stellar performance in the MVNO business, which we've been clear is a strategic priority and pillar, so really keen to talk more on that. And of course, the brand performance is showing some significant momentum so far with still a lot to come. And then very, very proud to be awarded the best video experience overall in South Africa for the first time. So we really have moved a long way from a network perception -- perspective. So executing on our strategic priorities, making sure that we drive double-digit growth. First and foremost, of course, we needed a good solid network. And I'm really proud to tell you that we've achieved 97.9% on average network availability. We've come a long way in this particular space. We've also unlocked MOCN carrier network. So effectively, we now have the pioneering of MOCN roaming across the market, which is fantastic. That allows us roaming partners on both networks. We've also been the first network to make a VoLTE call in Africa on a cloud-native system, ENGIE Voice over an AWS infrastructure. And the network campaigns are really trying to ensure that we've got confidence building with our customers. So we've been globally awarded as the most improved network in South Africa. I think that's a phenomenal achievement from where we've come from. And then something that I'm really proud of is making sure that our network performs really well. And we have been announced as the network that's best for video in South Africa. So really, really important to make sure that we do that. Reinforcing value perception to really grow and monetize the base. We're making sure that we continue to drive demand for broadband connectivity. We've seen substantial growth in our MVNO business, and that's a strategic pillar. I'll talk a little bit about that in more detail shortly. And then managing our postpaid business and the real integration of CEC into Cell C. We continue to show good momentum, and we're building good momentum across our enterprise business. And then we want to make sure that we really fully leverage our partner ecosystem. So really scaling beyond the core revenue, making sure that we take advantage of the strong partnerships that we have in our business, setting our sites beyond core and leveraging the partner ecosystem that we have, delighting our customers with best-in-class service experience. We have done 11 stores so far already on the brand refresh that we did in August. So that's proving to be really successful. We are also considering channel expansion and making sure that we are present everywhere. Our digital channels are showing significant improvements in growth. We've invested in this. And then driving the infectious brand, really proud of the brand refresh, as I said, that took place in August. Nothing should stop you an invitation for all South Africans to switch to see what it's like on the Cell C network, expanding our brand presence and visibility. And of course, notwithstanding some of our sponsorship properties, the Comrades Marathon, Sharks Rugby, Rugby Legends, Wheel of Fortune and a few others. We really want to make sure that we continue to drive the best culture. We've been very deliberate, very intentional about this, and that's starting to perform really, really well throughout the organization. And so that's the impressive performance that we've seen across the business. But more specifically in the MVNO business, this is what it's resulted in. We now have total revenue that's grown 13%, EBITDA grown 87%, service revenue, 7% gross margins up 23 points. Broadband revenue is up 26%. The cash balance has improved significantly at 111%. And that's a big shift from where we were. Our MVNO revenue, as I've been speaking about, grown very solidly at 22%. Blended ARPU is now nicely up 14% and mobile data traffic up 27%. A really robust set of results, and we want to make sure that we continue on this journey. I think a standout to ensure that we really are talking about our priorities is the MVNO business. It now contributes 10.2% of total revenue. So that's up nicely. And we want to make sure that voice continues to grow. It has grown 10%. It's a key focus area for us. As circuit switch voice continues to decline in the market, so do we face that. So this is quite a key KPI and driver. MVNO data has grown 92%. And of course, the MVNO customers, and this is at an HLR level has grown 20%. So I think a really significant performance here on the MVNO positioning. As I've said before, it's a strategic pillar. And now to go through a few more of the financial KPIs and drivers, I'll hand over to El.

Thank you, Jorge, and thank you, everybody, for joining us. I'm just going to take you through some high-level numbers from our end. Previously, we've always been accounting for everything and disclosing everything from a management account perspective. And we've evolved that reporting a little bit just to make sure we are in line with industry, but also to continue to tell the story so there is no drop of information in between. Firstly, we'll show you the management account view, then there will be an IFRS view. Just as a reminder, the big differential between us and most of industry is that we have the CEC or Comm Equipment relationship. They own the handset book, which means on our end as Cell C, we are actually agent. So we show the revenue on a net perspective for IFRS. But for management accounts, we actually do separate it out so we can manage the business that way. Looking at the core numbers from a growth perspective. If you look at our management account numbers, we are seeing substantial growth, as Jorge mentioned, 13%, getting to a revenue number of ZAR 6.7 billion. That has been driven by different aspects within the business. Service revenue, as Jorge mentioned, up 7%. But you're also seeing growth within equipment and MVNOs, as he'd mentioned as well. Our ARPU at ZAR 102, which is blended ARPU is up 14%, which is showing some great and improved performance across postpaid and prepaid. Looking at our gross margin, it's up 23% year-on-year, now just at ZAR 2 billion. That growth has been driven by optimized commercials across the board and more efficient cost structures in our direct costs and continues to improve over time. Looking at EBITDA. EBITDA has improved by 87%. That is driven mostly by the performance within gross margin, but is also contributed to by some efficiencies within our operating expense line. If you then look at the IFRS perspective of our numbers, and I'll apologize for us being counters because we do complicate it here. From an IFRS perspective, you will definitely see that the revenue looks flatter, and that flattening in revenue is actually a change in mix. From a mix perspective, our service revenue up 8%. Prepaid revenue is up 4% within that service revenue, and MVNO is consistently at the 22%, which means our other revenue lines, mostly driven by equipment are then down on average 7%. Our gross margin fairly in line between IFRS and management account reporting, up 27%. But from a gross margin percentage perspective, we're actually up 7% in total. Improved cost efficiencies continue to drive this performance and as you're seeing between the management accounts and IFRS accounting. EBITDA remains relatively similar between the 2 views, and that EBITDA improvement of 79% is mostly driven by the cost efficiencies. Our EBITDA margin at 13% has also improved by circa 44% year-on-year. If you then look at our balance sheet, our balance sheet is starting to show improvements. From a total assets perspective, we have increased assets by 71%. Although we continue on our asset-light model, we are improving our IT infrastructure across the board for the customer-facing interactive and systems and also softwares. Our liabilities at ZAR 14.4 billion are 4% up. That increase is primarily driven by our loans in that the loans have been accumulating interest but would only be due for payments from October of '24. So that movement is expected to then start reducing as we continue into the balance of the year. But if you look at the composition of our liabilities, about 50% of our liabilities are actually shareholder related. That would be both long-term debt and also short-term debt, both loans and other liabilities. The improvement in our negative equity is sitting at 9%, and that is directly attributable to just better performance and improved profitability. I'll now just hand over to Jorge, who will take us through the balance of the year.

Thank you very much, El. I think from a brand perspective, we remain really, really resilient and are recognized by our customers. So let me highlight a few. We are still a top 30 most valuable brand in South Africa as recognized by Kantar, something we're really proud of. As we know, we haven't been in the market for a long time. We're coming back. We're coming back with a vengeance. And so it's really, really important to get this recognition. We've also been recognized by customers in the Ask Afrika report as the best home Internet provider. So really beating our peers, again, something we're super proud of. And then we've been awarded the best overall video experience in South Africa by OpenSignal, something that's really, really proud because we have come a long way in building this ecosystem around what we do with our infrastructure and how we show up for our consumers. We continue to strengthen our brand presence. We've launched a number of outlets, 11 to be specific. We're going to launch a handful still this month, and that's a journey that we continue on brand expansion. So I think the way the brand is showing up is really starting to resonate very, very well with South Africans. And not that we're saying it, it's our customers telling us this in some of these research surveys that have been conducted, so something that we're really proud of. And then I think looking forward, some key opportunities to fuel growth even more. We're looking at continuing to execute on our strategic priorities. We're being deliberate about this. We're being intentional. We really want to make sure that we integrate the postpaid business fully. We're well underway with that journey, and I think that's going to yield some really strong results, taking complete ownership of end-to-end experience. Further investment in digital platforms and capabilities. We have fully migrated our prepaid billing system. We've got an unbelievable platform, a really modern platform, and we're going to continue to do this. We are investing in other technologies to make sure that we really leapfrog and make customers get an amazing experience with the Cell C brand. Continue to drive high performance and value-driven culture is critically important to us. It's been key to the success that we've enjoyed so far, and I think it's going to be absolutely pivotal in what we do going forward. Continue to accelerate the growth in MVNOs and of course, scale some of the B2B business, some really important green shoots starting to show there, leveraging the CapEx-light model and forging strong ecosystem partners. I think the CapEx-light model is something unique in this game. We've spoken about MOCN roaming, and that proves to be a unique differentiator, which I think would yield good results going forward. And then as I've said, operational intensity across all lines of business must continue. We must ensure that we do not rest at this stage. There's a long way to go, but we really are seeing positive momentum, and we expect that to continue. Thank you very much.

Thank you, Jorge. Good afternoon, everyone. The highlights for the period ended 30th of November 2024 were as follows: revenue of ZAR 7.2 billion, on inclusion of the gross amount generated on PINless top-ups, prepaid electricity, ticketing and universal vouchers, the effective increase equated to 8% from ZAR 43.8 billion to ZAR 47.4 billion. Gross profit increased by 2% to ZAR 1.626 billion, with an increase in gross profit margin from 21.08% to 22.44% and core headline earnings for the period was ZAR 0.4720 per share. With reference to group revenue, revenue generated on prepaid airtime and PINless top-ups declined by ZAR 496 million from ZAR 15.6 billion to ZAR 15.1 billion, though in line with expectations. Electricity revenue generated on behalf of the utilities increased by ZAR 3.1 billion, 16% from ZAR 18.9 billion to ZAR 21.9 billion. Net commissions earned primarily calculated based on kilowatt hours consumption remained stable at ZAR 146 million. The constrained growth in commission was driven by inflationary increases linked to kilowatt hours usage and higher electricity consumption following the cessation of load shedding. However, this was offset by margin compression despite overall increase in gross electricity revenue, supported by NERSA approved tariff adjustments. Gross revenue generated from universal vouchers increased by ZAR 1.1 billion, 17% from ZAR 6.2 billion to ZAR 7.3 billion, driven by continued traction of BLU Voucher sales through the financial institution platforms. Additionally, gross ticketing revenue increased by ZAR 37 million, 5% to ZAR 718 million, primarily from revenue generated from commuter bus channels. Total group revenue amounted, as I said, to ZAR 7.2 billion and as only the gross profit earned on PINless top-up, prepaid electricity, ticketing and universal vouchers is recognized as revenue. On imputing the gross revenue generated from these sources, the effective growth in revenue equated to ZAR 3.5 billion, 8%, resulting in a total revenue of ZAR 47.4 billion compared to ZAR 43.8 billion. Gross profit increased by ZAR 28 million, 2%, from ZAR 1.598 billion to ZAR 1.626 billion, corresponding to an increase in margins from 21.08% to 22.44%. This increase in margins can be primarily attributed to the growth in PINless top-ups, prepaid electricity, ticketing and universal vouchers, where only the gross profit earned thereon is recognized as revenue. EBITDA decreased by ZAR 44 million, 6%, from ZAR 697 million to ZAR 653 million, while core headline earnings recorded a marginal increase of ZAR 5 million from ZAR 419 million to ZAR 424 million. The decline in EBITDA and the modest growth in core headline earnings were primarily driven by a reduction in the Comm Equipment Company subscriber base, a lower average revenue per user and increased finance costs associated with the sale of the portion of the CEC handset receivable book. The proceeds from the sale were transferred from CEC to the prepaid company and ultimately to Cell C through the acquisition of Airtime. Core headline earnings per share increased from ZAR 0.4715 per share in the prior period to ZAR 0.4720 per share. Moving to the balance sheet. Total assets increased by ZAR 398 million to ZAR 15.5 billion, of which noncurrent assets accounted for ZAR 404 million, offset by a decrease in current assets of ZAR 6 million. The increase in noncurrent assets included a ZAR 392 million increase in loans to associates and joint ventures as well as ZAR 74 million increase in intangible assets. The net decline in current assets included a decrease of ZAR 192 million in loans to associates and joint ventures, a ZAR 184 million reduction in inventory resulting from the destocking of surplus prepaid airtime during the period and a ZAR 260 million decrease in advances to customers, primarily due to the partial sale of the handset receivable book. These decreases were partially offset by an increase of ZAR 610 million in trade and other receivables. In November 2024, CEC concluded an additional agreement with financial institutions, enabling the sale of the handset receivables. During the current period, CEC sold handsets receivables with a gross value of ZAR 357 million. And as a result, advances to customers declined by ZAR 257 million from ZAR 1.24 billion on the 31st of May 2024 to ZAR 979 million on the 30th of November 2024. Excluding the disposal of handset receivables, CEC's advances to customers increased by ZAR 86 million over the same period. The increase of ZAR 201 million in loans to associates and joint ventures is primarily attributable to the interest accrued of ZAR 351 million from the loan extended to Cell C as a component of the debt funding and reinvestment instrument and the reversal of the expected credit losses on these loans amounting to ZAR 34 million. This was partially offset against repayments received thereon of ZAR 52 million. Additionally, ZAR 42 million relates to accrued interest on the loan extended for the CEC deferral amount with the reversal of the expected credit loss of ZAR 11 million, offset by repayments received thereon of ZAR 159 million from Cell C. Net profit attributable to equity holders amounted to ZAR 395 million, resulting in accumulated capital and reserves of ZAR 5.5 billion. Noncurrent liabilities decreased by ZAR 361 million, comprising a reduction in noncurrent borrowings of ZAR 293 million and deferred taxation liabilities of ZAR 60 million. Current liabilities increased by ZAR 364 million, primarily due to an increase in current borrowings of ZAR 601 million, offset by a reduction in trade and other payables of ZAR 235 million. Moving on to the cash flow statement. Cash generated from trading operations amounted to ZAR 424 million. Working capital movements included a decrease in inventory of ZAR 183 million and advances to customers of ZAR 221 million, offset by an increase in trade and other receivables of ZAR 582 million and accounts payable of ZAR 222 million. After incurring net finance costs of ZAR 375 million and taxation of ZAR 151 million, net cash utilized in operating activities amounted to ZAR 129 million. Net cash flow utilized in investing activities amounted to ZAR 167 million, primarily attributable to the purchase of intangible assets amounting to ZAR 267 million; property, plant and equipment of ZAR 32 million and the advance of third-party loans totaling ZAR 19 million. These outflows were partially offset by net repayments of loans from associates and joint ventures of ZAR 122 million, dividends received from associates amounting to ZAR 13 million and the proceeds of ZAR 10 million from the sale of an associate company. Included in net loan repayments by associates and joint ventures of ZAR 122 million are capital repayments by Cell C of ZAR 117 million, partially offset by net loans granted to other associates and joint ventures of ZAR 5 million. Cash generated from financing activities amounted to ZAR 257 million, of which ZAR 293 million related to an increase in interest-bearing borrowings. These inflows were partially offset by dividend payments of ZAR 22 million to minority shareholders of subsidiaries and lease repayments of ZAR 14 million. Cash and cash equivalents accumulated to ZAR 857 million at the 30th of November 2024. We'd like to extend our gratitude to the Blue Label Board of Directors, the staff, suppliers, customers and business partners for their ongoing support and dedication to the group. Thank you. The floor is now open to questions.

Good afternoon, everybody. And as we said, welcome to our interim results for the 30th of November 2024. I think I'll go first to see if there's anyone online. Can I check online if there's any questions? Online? Can you hear me?

At this stage, there are no questions.

Excellent. Thank you very much. Okay. So moving on to the questions sent through to us. The first question is from Philip Short. First question is to me. Brett, can you expand on your comments regarding treasury? Is it a matter of bulking up on cash? Yes, it's almost as simple as that. Treasury, as I said in my presentation, used to make up 44% of the total profits of our group. We have the ability to bulk buy in many different products that we do as well as early settle. Really, what it is, is going forward, not having to tie up our cash in Cell C, and I think there's a question later on where we'll touch on it in more detail, allows us, obviously, to generate the cash that we do on a monthly basis and we're really doing what we do on an everyday basis, just doing it better and in large sums of money. So this one, we're really excited about because there's really no blue sky that sits behind it. There's no -- nothing new that we have to do. We just got to get back into a cash position. And of course, that's what we're starting to do. So we will expand on this as we report on the next reports, obviously, going forward. The next question is from Philip as well. It's to you, El. Last year, Cell C guided for financial year May '25 EBITDA at around ZAR 2.1 billion, which from our calculations will put net profit at around ZAR 500 million for the new full year. Is Cell C still on track for that?

Phil, thank you for that. Just in summary, yes, we are basically still in line with that expectation, normalized, still looking to achieve the EBITDA of ZAR 2.1 billion and at NPAT looking positive still. So what we expected initially from the year is definitely still rolling through to the balance of the year. So we're still looking good to meet it.

Thank you, El. Howard, your question was very similar to the last one that we just answered. So I'll take it as answered. Unless you want to add anything to it, please send it through to us. The next question is from Rory. How is it Rory? How are you doing? The first question is on Cell C interest on loans. You said that it accrued until October -- this is to Jorge and El, by the way. You said that it accrued until October of 2024. Can one then interpret that to mean that you have begun servicing your debt and actually paying interest and principal since the end of October 2024. In particular, Cell C begun making interest payments to Blue Label.

Thank you for the question, Rory. So from an accounting perspective, we have the imputed interests that we then had to account for, for the period. And hence, that's what's resulted in the increase in our loans. If you then look at from a repayment perspective, repayments started in October of '24 for some of the debt since the debt had different repayment periods. From a TPC perspective or from a Blue Label perspective, the payments then commenced in January. So there are slight different nuances from that perspective, but we have definitely started repaying.

Yes. So I can second that. We've -- all interest payments are up to date. There have been no capital repayments to us, but that's not because they haven't been. There's no capital repayments until March of 2026 next year, where there's a bullet payment to Blue Label of ZAR 1 billion. So all on track. And yes, happy that we're getting our interest now. Please don't stop. The next question is also from Rory. Please, can you unpack the anticipated cash flow between Blue Label and Cell C over the next 24 months? Yes, this is a great question and one that I'm looking forward to put into the market. So the good news is that we fulfilled our -- let me use the word promises of our recap of October, September, October of 2022. The last payments went into Cell C on schedule in December. We are now fully, I guess, paid up, if I can use that word from a Blue Label perspective. We expect no more money to go into Blue Label -- into Cell C from Blue Label over the next 12 months, 24 months or 36 months, right, or ever. So we really are happy Cell C is on its own. They're doing good. They've really turned the corner. And over and above of not putting in money, we have already started a small destock, which is good at approximately around ZAR 20 million to ZAR 25 million a month around there. So that's extremely positive on our side because, obviously, no new cash going in, and we obviously begin to destock with our big stock position on our balance sheet. So yes, all good on that front. The next question is from Philip to Jorge. How has postpaid revenue performed? Can you please talk about Cell C's postpaid strategy and CEC's role in it?

Yes. Thanks, Phil. Nice to hear from you. I think the revenue piece has been touched on already, but I'll talk a little bit about the plans. I think the first is that we launched customer-centric plans, tariff plans to the market, the new Elevate plans that are consumer-centric and have got significantly more value. That's gone live in November. I think we've also improved the scorecard with some significant system enhancements. So that's proving to be really good. This also improves your scorecard and so on. New channel commercials have gone out. So we split it between physical and call center channels. So those commercials have gone out. We've started rebranding the stores. We've done almost 20 so far, and they're showing some significant improvements, both in postpaid business and in every other line of business, and they're showing up very nicely. So they're looking really good. So I think overall, we're really starting to make sure that the channels are in place. We are doing some channel expansion as well into other channels that we have not had the presence in so far. The base has remained fairly flattish if you take a 830,000 kind of number. ARPUs are improving nicely, but we really want to make sure that the quality of what we're doing is good. So if you look at the postpaid business, managing migration parts and upgrade journeys are critically important because if you put price increases in the market, for example, it's 3, 4 months, they'll be completely eroded if you don't have a good upgrade journey. So that's starting to be nicely enhanced that you protect that revenue growth. Lots of ongoing discussions with handset OEMs to get to the right level of deal support. So we've got the right deal structures in the market. So I'm quite optimistic that we've got a good future ahead of us. It's been kind of a year of cleaning up and fixing up and improving some stuff, and the teams are working well together. So I'm quite optimistic about the way forward.

Thank you, Jorge. Next question is from Howard Lowenthal. On consolidation May '25, Cell C's EBITDA, what will effect on EPS for the group? Too soon for us to answer that. Obviously, the consolidation is a massive project for us, which we obviously are working through. Consolidation for May is not -- I'll answer the next question at the same time, which is from [ Rounock ] to do with ICASA and ComCom. Consolidation for May '25 is not going to happen. The reason for that is, as you know, we have ICASA approval already. We have ComCom and awaiting a date for tribunal. We believe the date for tribunal should be around May to August. That's the indication that we have from the regulatory body. Nothing untowards. The opposition to it is really, I think, healthy question. So nothing that we believe is standing in the way. I think I mentioned that the whole -- the last time. It's unfortunate that it takes this long. I'm not sure that for what we were doing should take this long, but that's what it is. So closer we get to the consolidation and as soon as we obviously got a clear indication when the date is, and of course, then we have to get it awarded and approved, we will obviously put out a very comprehensive what the consolidation between Blue Label and Cell C looks like and of course, how that affects our May '26 numbers. The next one is from Myuran. This is a good one. Took a few more questions than I thought to get this one. But how will your treasury requirement for cash compete with potential dividends to shareholders? When can we expect dividends from Blue? Yes. I think that's a good question, and I think it's a good one for us to answer. We've told you in the past, obviously, one of the requirements of the banks was that we couldn't pay dividends or share buybacks. As you've seen, we've obviously reduced our entire debt that we took on for the recap in its entirety. So we owe 0 from any monies taken on from the recap. We have, in fact, reduced our main rolling facility down, which used to sit around ZAR 1.5 billion to ZAR 1.160 billion. We did take on a new short-term facility of ZAR 300 million, which was to use -- which we used to pay out the last ZAR 300 million to Cell C of the ZAR 1.2 billion, so ZAR 900 million from our own cash and ZAR 300 million from the banks, which that's a new facility. So outside of that, our balance sheet on debt is really looking healthy, really looking strong. My opinion, the strongest it's been for many, many years. So I think the short answer is, of course, we take it to our Board before our final -- I mean, at our final results. And this will obviously be a hot topic. And hopefully, Blue Label will resume paying dividends this year. But obviously, that's a Board decision that will be taken in August. The last question that I have is just a statement actually from our side it's a part of a question, but -- we do understand that -- and I know we've had this chat with some of you individually, but we do understand the complexity of our results and understand the complexity of understanding them and reading them. It's not done on purpose. I state the obvious on that. We hopefully now that Cell C has the same year-end as us, that this will hopefully be the end of complexity and going forward, the complexity falls away and our results become easier to read. But in saying that, we do have an open door here for any shareholders or any funds that wish to have a one-on-one with our council side and really understand them in more detail, both from a Cell C perspective and a Blue Label perspective, we really offer that. So we can't change the complexity of it for now. We're hopefully getting a little bit better. And as I said, in May '26, hopefully, a lot better because of the hopeful consolidation and the ease of having the same year-end. But in the meantime, if anyone would like to take us up on that, our offer stands and we're more than happy to engage with any of you on a one-to-one basis. And I think -- going back to anyone on the lines. Is there anyone on the line who have a question?

At this stage, there are still no questions.

Okay. Well, then I think that's going to wrap it all up from our side. We'd like to thank the respective Chairmans on both the Cell C and Blue Label side and the Boards on both sides and their respective support for us through the 6 months. And of course, to our management and the people of Cell C and Blue Label, thank you. I think overall, it was a good 6 months, specifically in Cell C. So Jorge, to you, El and your team, well done. I think a lot of excitement and for the first time, a nice base to talk on and to go forward on. So we've seen a lot of you on our roadshow. And outside of that, hopefully, we'll see you all soon. Have a great day.