Good afternoon, ladies and gentlemen. Welcome to the Blu Label interim results presentation. The period under review represents a defining milestone for Blu Label. During the six months, we successfully concluded the multi-year restructuring of Cell C and its subsequent listing. This was a complex process in which Blu Label played a central and constructive role. As a result, Cell C has been repositioned into a leaner, asset-light and wholesale-enabled operator, supported by a more sustainable capital framework and a materially improved cost base. The successful execution of this transaction marks the culmination of several years of disciplined capital management and strategic oversight. Importantly, Blu Label has resumed dividend distributions, declaring an interim dividend of ZAR 398 million, equating to ZAR 0.4356 per share. The interim dividend represents a distribution of 100% of normalized core headline earnings for the six-month period.
The declaration reflects confidence in the group's financial position, cash generation, and the sustainability of its underlying earnings. I will now begin with the key highlights of our normalized performance and then concluding with our balance sheet and cash position. The group's financial results for the six-month period ended November 30th, 2025, were materially impacted by a series of strategic transactions. These included the acquisition of control of Cell C, the implementation of the pre-listing restructuring initiatives, and the subsequent partial disposal pursuant to the listing. As a result, Cell C transitioned from being equity accounted as an associate to consolidated as a subsidiary and thereafter reverted to associate status. These transactions introduced a level of accounting complexity that created volatility in the underlying performance of the group. Although the related accounting treatments are required, they are not indicative of Blu Label's core operational performance.
Accordingly, to provide a clearer understanding of the group's core performance, I will focus primarily on normalized financial information, which excludes Cell C's results for the six-month period, Comm Equipment Company's contribution for the same period, a goodwill impairment, and all extraneous items relating to the pre-listing restructuring of Cell C. This approach provides a more relevant basis for which to evaluate the group's sustainable earnings profile and ongoing performance.
On a normalized basis for the six months ended November 30th, 2025, the financial highlights were as follows, revenue of ZAR 5 billion as only the gross profit earned on PINless top-ups, prepaid electricity, ticketing, and universal vouchers are recognized as revenue. The imputed gross revenue generated from these sources amounted to ZAR 50.9 billion. Gross income of ZAR 1.353 billion. EBITDA of ZAR 535 million. Net profit after tax of ZAR 389 million. Headline and core headline earnings of ZAR 398 million.
Core headline earnings of ZAR 0.4419 per share, and an interim dividend of ZAR 0.4356 per share. Following the successful restructuring of Cell C and the relinquishment of control, the group will equity account its 49.47% interest in Cell C going forward. These equity accounted contributions will include CEC's earnings following the disposal of CEC to Cell C in November 2025 and its integration into the Cell C group. Accordingly, the group's normalized earnings will incorporate its proportionate share of Cell C's profitability, which will be added to the core headline earning base of ZAR 398 million. This is expected to provide a more comprehensive view of the group's total earnings. Group revenue, excluding Cell C's consolidated results for the three months ended 30th of November 2025, and CEC's results for the full six-month period amounted to ZAR 5 billion.
As only the gross profit earned on PINless top-ups, prepaid electricity, ticketing, and universal vouchers is recognized as revenue, on imputing the gross revenue generated from these sources, the effect of growth in revenue equated to ZAR 5 billion, 11%, resulting in total revenue of ZAR 50.9 billion compared to the prior period of ZAR 45.9 billion. Gross revenue generated on PINless top-ups increased by ZAR 1.8 billion, from ZAR 10.6 billion- ZAR 12.4 billion. Electricity revenue generated on behalf of the utilities increased by ZAR 2.3 billion, 11%, from ZAR 21.9 billion- ZAR 24.3 billion. Commissions earning, primarily calculated based on kilowatt-hour consumption, declined by ZAR 16 million, 10%, from ZAR 161 million- ZAR 144 million. The decline in commissions was driven by margin compression, despite the overall growth in gross electricity revenue, supported by NERSA's approved tariff adjustments and inflationary increases linked to kilowatt-hour usage.
Gross ticketing revenue declined by ZAR 102 million, 14%, resulting in a decline in commission earned of ZAR 7 million. The decline was primarily attributable to lower sales volumes in music festivals and concerts, which have historically generated lower margins offset by a growth in commuter bus channels' revenues. Gross revenue from universal vouchers increased by ZAR 1.7 billion, 23%, from ZAR 7.3 billion- ZAR 9 billion, underpinned by the continued expansion of Blu Voucher sales through financial institution channels. Normalized EBITDA amounted to ZAR 535 million for the period, reflecting the continued resilience of the group's core distribution and payment platforms. Headline earnings and core headline earnings both amounted to ZAR 398 million. Core headline earnings per share amounted to ZAR 0.4419 per share. Blu Label Unlimited Group's reported results included Cell C's equity accounted contribution for the three months ended 31st of August 2025.
Its consolidated results for the three months ended 30th of November 2025 and CommEquipment Company's results for the full six-month period, as the disposal became effective only at the end of November 2025. Included in earnings for the six-month period is a net loss of ZAR 5.2 billion relating to the group's investment in Cell C, which is added back for headline earnings. The loss comprises ZAR 6 billion recognized on the disposal of TPC's investment in Cell C and CEC, following Cell C's listing at a market value of ZAR 9 billion, partially offset by a gain of ZAR 841 million on the remeasurement of the previously held interest when TPC acquired control of Cell C in September 2025.
The group's balance sheet had been materially simplified following the successful implementation of the Cell C pre-listing restructuring and subsequent listing, with much of its historic complexity associated with Cell C's funding instruments and restructuring related transaction now being unwound. Key structural changes included debt to equity conversion. TPC's outstanding debt claims against Cell C were waived, as these amounts owing were not supported by the pre-listing valuation. With the disposal of CEC , TPC disposed of 100% shareholding in CEC to Cell C in exchange for additional Cell C shares. We had an Airtime asset transfer, where TPC returned Airtime to Cell C in exchange for newly issued equity. Finally, we had an SPV restructure, whereby the special purpose vehicles that held equity instruments in Cell C were restructured, further simplifying the group's financial structure.
In this regard, key balance sheet movements included a reduction in Cell C Airtime inventory held by the group of ZAR 3.8 billion. There was a reduction in loans to Cell C of ZAR 3.2 billion, representing The Prepaid Company's and Comm Equipment Company's debt claims against Cell C. Then the loss of control of Cell C Group, including CEC, which resulted in the full derecognition of CEC's assets and liabilities. This included a reduction in tangible assets of ZAR 955 million, goodwill of ZAR 335 million, trade and other receivables of ZAR 448 million, together with a decrease of advances to customers of ZAR 1.6 billion. Interest-bearing borrowings declined by ZAR 1.7 billion, following the derecognition of CEC's facility with African Bank.
Financial assets at fair value through profit and loss of ZAR 372 million were reallocated to the investment in Cell C following the completion of TPC's acquisition of SPV1 and Gramercy's shareholding in Cell C. Investments in associates and joint ventures increased from ZAR 1.7 billion- ZAR 5.9 billion, primarily driven by Blu Label's investments in Cell C. Of this amount, ZAR 1.4 billion, comprising a 15.95% interest in Cell C, sold to Sisonke Growth Partners, has been reclassified as an asset held for sale, leaving a balance of ZAR 4.5 billion recognized within investments in associates and joint ventures. Cash and cash equivalents increased by ZAR 1.8 billion, primarily driven by the proceeds of ZAR 2.7 billion received from the sell-down of 30% shareholding in Cell C, based on the equity valuation of ZAR 9 billion.
A portion of these proceeds is intended to be applied towards the settlement of certain interest-bearing borrowings and other debt obligations, with the remaining cash enhancing the group's liquidity position and supporting ongoing working capital requirements. As a result, the group is positioned with a simpler and more transparent balance sheet and enhanced financial flexibility. The cash flow statement includes Cell C's consolidated results for the three months ended November 2025. Cash generation remains a central focus for the group, and Blu Label continues to demonstrate strong cash conversion once the restructuring-related impacts are excluded.
Normalized EBITDA translated into operating cash flows, supported by disciplined working capital management and capital expenditure aligned with the group's asset-light business model. Net cash generated from operating activities on a normalized basis will amount to approximately ZAR 65 million per month. Thank you. I will now hand over to Brett, who will take you through the operational performance and strategic outlook in more detail.
Welcome to Blu Label Unlimited interim results for the six months ended 30th of November 2025. As we've been telling you over the last couple of interim reports and year-end reports, how we wanted to simplify the group, make it easier for you to understand it, not only from a strategy point of view, but obviously from an income statement point of view and a balance sheet point of view. This is really a point in our time, an inflection point. We're finally there, and as we go through it, we'll touch on it. We'll obviously touch on the listing of Cell C in late November of 2025. Of course, where we are now as Blu Label, where we can look at it as a separate entity.
We can understand it clearly, what we're trying to do, where we're trying to go, understand the cash flow, and of course, separately understand Cell C. Just a bit of a highlight because we want to really take you through our pro forma. We know that the actual results, as Dean will touch on and has touched on, that they are complicated. There is no difference to how it's been reported in the past with a bit more complication because we consolidated Cell C for three months. Our intention really is to take you through a pro forma to show you exactly where Blu Label sits as of the last six months, exactly how we would've looked like without Cell C.
I think proudly to tell you that our revenue sat at ZAR 5 billion, but as we've said to you in the past, you have to impute back the pinless. So our revenue for the six months was just under ZAR 51 billion, or 11% increase from the prior year. Our EBITDA, ZAR 535 million. Our profit after tax, ZAR 389 million. Headline earnings, ZAR 398 million, which equated to core headline earnings of just over ZAR 0.44 . I think most proudly from management and the board to reinstate our dividend policy, and we will be declaring an interim dividend immediately of just under ZAR 0.44 . A big step in Blu Label's world, returning to a dividend yielding company and a growth company all in one. Cell C, wow, what a journey it has been.
I think all of you know that it's been a tough couple of years for us. From the time we bought it, hasn't been simple. But we believed in it. We believed in the strategy eventually of what Cell C was to become. We knew that it was a big part of us sticking with it and to get it to this part. Obviously, we must thank Jorge Mendes and his team, and the board of Cell C and the board of Blu Label. This was a tough thing. Cell C, the noise looked like it was gonna make it. We believed it would. We stuck with it. Proudly so, on November 27th, 2025, Cell C listed on the stock exchange. It was a really, really important day in Cell C's world. It was a really important day in Blu Label's world.
It finally gave Cell C everything we tried to give it in the listing, which was to clean up its balance sheet, which we did, to give it independence, which we did, for them to focus purely on their strategy, which they will. Of course, let them be a standalone where they can show you what Cell C is all about and what they can do. Then, of course, we can concentrate on Blu Label and show you what we can do from a Blu Label perspective. Not to touch too much on Cell C, because they are a listed entity now, and they have their own roadshows, and they will be talking to you directly. But I think for a large part, we finally got it right in the end.
As a whole, we really look forward to see what Jorge and his team can do and what Cell C can do in this market. I think it is going to be an exciting space to watch for all of us. Of course, as you know, we have a shareholding of just under 49.5%. Of course, the empowerment stake, which we funded, for approximately just under 16%. Just some of the highlights on Cell C, which you have seen. The net debt reduced by 0.6%. Service revenue of just under ZAR 5.7 billion. The prepaid revenue up by ZAR 2.7 billion. Post-paid revenue, which was also up at ZAR 1.2 billion. Our wholesale revenue sitting up at 22.5% up. So overall, I know it is a confusing six months for both the Blu Label point of view and Cell C.
Of course, our main objective from both ends is obviously as we go forward, the next six months and onwards will obviously be a clean results from their side and clean results from our side, which we most look forward to. Moving back to Blu Label. Nice to wake up every morning and for all of us just to strategize and just to work on Blu Label. It has been a long time, being able to do that as our exec team and our main team.
There are so many exciting things in Blu Label, things that you have seen in the past, new things that are coming. Today we will share all of that with you. So we have always told you about our different buckets. We have a distribution and payment side. We have a data side, an AI side. We have embedded a financial and digital services side.
Of course, we have what we call infrastructure and energy. Just starting on the data side, we have spoken about this so much over the past. The amount of data that we collect across the board is really good, but it is time to now monetize it, and it is time to actually put it in its pockets. We really understand data in this country. We really understand the customer behavior. We understand, obviously, merchant behavior. Really the idea, obviously with POPIA and everything compliant, is how we now actually target individual merchants and how we target individual customers. Taking this great knowledge that we have developed over all these years in the data space, which we call in our BluNOVA space. Of course, converting that into cash and converting that into a standalone profitable company, which we intend to do.
What we talk about always is new products that we've launched, the differentiator of certain things that we're doing. This product is really one of them. We're now just over our first year, 18 months into the product, through really our test phase. You all know of Airtime Advance, and of course, you understand how Airtime Advance works. We've launched BluAdvance, which really concentrates on the electricity market. We haven't seen a product like this in the market. Just as successful as the Airtime Advance has been, we believe that Electricity Advance has exactly the same potential. Really what that means is that we'll be advancing and are advancing already advances to electricity consumers that obviously need electricity and have run out for a 24, 48 hours, therefore replicating the Airtime Advance into what we call Electricity Advance.
Very exciting product and a product obviously for everyone to watch into the future. We've spoken over years about our treasury and procurement. Of course, the secret here is just to try and add margin onto the treasury. We obviously have been in a bit of a standstill position in the treasury, as of course, everyone knows the free cash that we've made over the years, we've obviously used to support Cell C and to get Cell C to their position. From December of 2025, we as Blu Label are also now standalone. It gives us the ability to rework our treasury. If you go back 10 years ago to 2015, around there, treasury used to make up 44% of our total profits. Today it makes up zero. In fact, it's negative.
This is a very exciting space for us where we trade again with all our suppliers across the board from different products and, obviously use the treasury to our benefit. That obviously works in conjunction with how good our procurement is. Our procurement and our contracts are in place across the board, once again, across all the different products that we do. Treasury now can work hand in hand with procurement and go back to what has been a very lucrative division for us in the past. Our distribution is the key of everything we do, of course. We call it Blu Label Distribution. Obviously, all our IP, our technology is our own, so we don't rely on any outsiders. It's technology that started developing in 2001. It's not necessarily that we have the best technology, but we have technology that's worked, that's worked for years.
We obviously do billions of transactions through it, so it's robust, it's good. Then we have a great team on the ground where we have distribution across the country. Not quite sure there's any part of the country that we don't touch. Our focus is actually quite simple here. We have a lot of customers, around 35 million people transact on our base, if you want to call it that, on our platforms. We have around about 180,000 touchpoints outside of that we deliver to. It's not necessarily about getting more distribution, and it's not necessarily about getting more customers. Of course, we try and do that on a daily basis. What we need to do is we need our merchants and our customers to do more of our products.
Obviously, that comes with a sunk cost that we already have in the system, and obviously incremental profit and growth as you add more and more products onto your existing platform. I am now going to hand you over to Mark, who will take you through what we now call our energy play, which Cigicell and incorporates BluEnergy.
Thank you, Brett. I am very excited to present one of the most exciting verticals we have in the Blu Label Unlimited stable, and that is our integrated energy ecosystem. Many of you have known, and we have spoken Cigicell in the past, and you have seen some news on BluEnergy, and I would like to break them up a little bit more for you to understand the scale and the opportunity that exists in the segment.
Cigicell, as you know, has been a traditional vendor of prepaid electricity on behalf of all the municipalities in South Africa. Today, we distribute approximately between ZAR 3 billion and ZAR 4 billion of prepaid electricity top-ups. What we have found over the many years is we are having a lot of margin compression, which has forced us to start re-looking at how we integrate and manage these municipalities.
The traditional business Cigicell really revolves around vending, which is prepaid, and then on the postpaid side, through our UniPay, our bill engine, you are able to pay your postpaid bills. Within Cigicell stable as well, we have been awarded an RT29, which is a transversal which Cigicell, which is one of seven companies in South Africa, two being telcos, three being hardware vendors, a consulting firm, Cigicell, which allows us, through treasury-funded projects, to deploy smart meters in South Africa. One of the most exciting elements of this business is a terminology or an idea that has been coined Cigicell over the many years. It is called revenue assurance.
What revenue assurance is the ability for municipalities to help them look for lost, stolen, or evaporated tokens of value and billing to the large power users and allow us to increase the revenue for these municipalities. In saying that gap of size of losses is tens of billions of rands a year, which municipalities are buying from their providers and putting it downstream, but not being able to bill or collect the funds correctly. At this stage, we guesstimate that approximately 30% of what is bought is not billed for correctly. The model that we have come up with Cigicell is an at-risk model.
What we do is we would go into a municipality, and I will talk about some of them, and based off a baseline, for example, if a municipality was collecting ZAR 1 billion a month, that is ZAR 12 billion per annum. Anything north of that ZAR 12 billion, Cigicell would participate at a percentage agreed upon with that municipality. Every municipality is different, so every negotiation would be different. But the reality is for us is the ability to then find this lost or stolen electricity and get an enhanced commission on finding it. The only net loser in us doing this job, as it is at risk, is the people that we catch stealing the electricity. This is, again, an at-risk model.
We are a net employer of people in those regions, and we believe that has a significant uplift, not only for the municipality, but also for SARS, because the VATable income or the VATable transactions on this is significant from a SARS perspective. On this model, Blu Label would do is focus on two things. One would be the current environment, i.e., for example, what we would do is our foot soldiers would focus on large power users, which is about 65% of the consumption of electricity in their municipalities. We would deploy an army of people literally to walk door to door to all these large power users. We would geolocate that site so we ensure that that site is registered correctly.
We would then look at potentially replacing that meter within that environment due to the fact that you could be wasting a lot of time and money verifying if the meter is correct. So we then allocate a geolocated address with a meter that is prescribed to that address. We then go back into the system and look at how this person is loaded. Is he loaded as the correct consumer of that electricity, and if he is applying or paying the right tariff for that usage of electricity. It sounds relatively simple. It should be relatively simple, but the ability to then ensure that you are billing correctly, the meters are turning correctly, and you are collecting properly is a massive undertaking and a massive income driver for both the municipality and Cigicell. In each region that we go, as I said, we will employ localized people.
We will train them and ensure that there is longevity in employment for these people in those markets. So massive opportunity. We have recently signed two agreements. We have signed up with Ekurhuleni on a 10-year revenue assurance program. Very excited about that, and I will take you through one of what we call a circle of life, which gives you an an illustrative view of how the mathematics work. And then we have signed recently Tshwane on a three-year, also revenue assurance. There are several others in the pipeline, and once these get going and we can start proving that these revenue drivers are both good for the municipality, good for their providers of electricity because they are able now to pay for the electricity they consume, we are very excited about this opportunity within Cigicell.
We're also able, based on the laws, to do awareness rebulk buying or early settlements for these municipalities. So between all these different verticals Cigicell, the vending, the RT29s, the revenue assurance, the bulk buying and early settlements. Within that revenue assurance stable, also is you will get a percentage of the billing going forward due to that enhanced billing you found.
Then per the Public Finance Management Act, the Municipal Finance Management Act, you have laws up to 36 months that you can back bill that client that you have found that is being incorrectly billed, and we would get a piece of what we could back bill as well. So very, very exciting space for us on Cigicell side. Moving on to the BluEnergy side. I think it's a buzzword in this country is clean power, green power, and there's lots of fragmented opportunities within this country.
One of the big opportunities everyone is referring to is these IPPs, these independent power producers that are going up into north of South Africa, and where the radiation is great, building big solar plants. That is a business going south more where the wind is great, building big mega wind plants or gas or so forth. What we've developed a model which is very unique to this country and very unique to Cigicell, and we call it a nodal model. If I could explain it to you a bit broadly, if you have a producer of energy called Eskom, they would then distribute the energy downstream into provincial, downstream into municipalities, and each municipality would have a number of nodes or substations on their grid. What we want to do is actually build smaller capacities. These capacities are ranging from roughly 10 to 40 MW.
So never looking at replacing their consumption that they're buying from the larger IPPs or Eskom, just looking to complement their off takes, or complement them mitigating their buying through someone else. What is exciting about this model, Cigicell already has revenue streams coming in from their collections of prepaid and through our relationships with that municipality and banks in creating escrow accounts, we're able to create fundable projects within the municipality space by building these smaller solar plants to provide them a piece of their future requirements. What is the benefit to the municipality? Well, they're able, hopefully, to buy at a lesser rate than they're buying, less concentration risk, which would bode well for the municipality and in conjunction with the revenue assurance, ensuring that they collect everything that they're selling for.
So on this nodal model, our intention would be to almost do what we call 20 for 10 MW. We'd look at building two solar environments of 10 MW, one with solar directly, one with batteries. So whilst it's discharging during the day, we're reloading on batteries, and the batteries would then discharge in the evening. So always looking at providing in that scenario a steady 10 MW to the municipality. The real exciting part of this process is our ability to self-fund these programs, and the second thing is to ensure speed to market. So if one was to build a mega plant or a 200 MW plant wherever, you're really looking at a four, probably five-year type of gestation period to build this, and probably about ZAR 4 billion.
What we are able to do is we are able to build 10 20s or 20 10s in parallel within a 15-month space. One is speed to market, the other is concentration risk, where we would have multiple smaller plants within the municipal grid providing electricity to these municipalities at a lesser amount. It allows the incumbents then to take or wheel that energy that they were providing to that municipality anywhere else that they would love to do. The requirements and why it has taken so long is, I think, for many, we and everyone underestimated the complexity of getting these type of sophisticated projects underway. One requires, if I try simplified what one would require to get these things up and running in a municipality, you would need a PPA, a power purchase agreement.
You would need land within a 5-kilometer radius of these substations to make it commercially viable. Once you look at these lands, you have got to see who owns these lands, whether it be government or whether it be private, and then enter into lease, long lease agreements with them to ensure that you are building on environment that has tenure in its lease. You would have analysis on the substation that if you are going to do a 10 or 20-year investment, that those substations can last and have tenure in the ability to survive 10 or 20 years. I think if you take those PPAs, the land, you are looking at 15 hectares for 10 MW. You are looking at these environmental impact studies. One would require cash flow, Cigicell can assist in that. One would require escrow accounts to ensure the security of money.
That is what has really taken us a long time to ensure that we are well-positioned from a BluEnergy component with its Cigicell, in order to fund and drive these types of projects going forward. It is an ecosystem. We are probably the only company in South Africa that can offer from the collections to the deployments of meters, to looking for the stolen electricity, to employing people, to building out potentially smaller plants, whether it be solar or whether it be rooftop, and being able to collectively pay for this through our collection mechanisms. We have also embedded partnerships with the like of the Central Energy Fund, which we work very closely with, and with CoGTA. The third component of the BluEnergy side is what we call a BluEnergy trading license. Very excited to announce this.
What the energy license allows us is literally to then trade in energy. It is to ensure that we can buy energy at the right price, whether we buy from an IPP or we create it, and able to sell it either into the municipality or into a third-party user. The trading aspect lives in isolation. It comes with its own ability to generate its own income in conjunction with what we are building and rolling out in BluEnergy and what we are doing with Cigicell. Just giving you an illustrative example of what I was speaking to is if you look at this, we call them life cycles or circle of life, where we go into a municipality and we do a preliminary overview of what is going on.
If you look at this municipality, they were getting billed, are getting billed roughly ZAR 15.5 billion from Eskom. This municipality would add a 21% margin, which effectively they should be collecting around about ZAR 18.4 billion. If you look at today, their collections, which are based on their collections, is ZAR 14.5 billion. There is a shortfall every single year on what they pay to Eskom. But the delta between what they are collecting to what they should collect in this scenario is close to ZAR 4 billion. That means SARS potentially lose out on the VATable revenue of the ZAR 4 billion. What we make an assumption is, we think we can find at least 40% of the stolen electricity or this lost electricity or badly billed electricity.
For that, we will get incentivized via the agreement that we come up with that municipality. Our target for this municipality, and if you had a three-year or 10-year agreement, would be the one point, in this case, just under ZAR 1.6 billion. We are looking at a 40% recovery, but there are scenarios which we can show you which vary from 5% of what we find up to 50%. You will see that over the 10-year period that you are talking about, if we are able to plug a lot of these holes, these are worth tens of billions of rands to the municipality, which ultimately would feed back into the economy, would be able to pay your suppliers, which would ultimately also feed back into the national treasury. Very excited about this.
We also speak about, in this circle of life, what it would be like if we supplied 100 MW of power, what the net saving to a municipality could look like, which is in this case, about ZAR 40 million. If you amortize that over the 10 years, you are talking about one municipal or one environmental node of about half a billion ZAR over the 10 years. A very exciting space for us to be in. We are well positioned. This has been many, many years in the making.
If you look at the details and complexities of getting these businesses live in the market, for now, we have ticked all those boxes and looking at how to get shovel-ready in the coming weeks or coming months. Thank you very much for your time. I will now hand you over to Brett to close out our presentations. Thank you very much.
Thank you, Mark. I am sure you could have heard what he said, but for us, the energy space is without fail, the most exciting space that we are playing in today. We all know what is going on in South Africa, and actually, it is not only South Africa, it is a problem around Africa and actually around the world. We are positioned extremely well, and we really look forward to the next many, many years where we can make a difference, not only to Blu Label and what we offer you as shareholders, but to this country and what we can do in this energy space.
Just in ending off from me at least is, I will start with the dividend because I know I mentioned it, but really proud that we are certainly paying in. It is the first time we have actually paid an interim dividend. This is our ninth dividend. In the past, we only paid annual dividends, so really proud to bring it in. The dividend is basically 100% of our pro forma numbers on our core earnings of ZAR 398 million, and we are happy to return to shareholders after a long wait that shareholders had to have, obviously, a dividend, and of course, the reignition, and reigniting rather, of our dividend policy going forward.
Just to end off on our outlook, our focus, what we are doing. We have always said the greatest thing about Blu Label is that we are a growth company for sure. Obviously, in what we have, but the exciting prospects of the new products and the new spaces that we are playing in, I think are really exciting. So growth for us is extremely important. But along with growth, there is obviously a cash generator business.
Our CapEx is really relatively low to the market and what we do, and therefore, we should be a growth company with a cash generator company with obviously a dividend-yielding company. So our management, we want to thank them. I think across the board of all our subsidiaries, everyone in their own right helped for us to get to this position. And when I say this position, I really mean the listing of Cell C on November 27th, being able to split us apart, being able to give them their wings and let them go on their way, and obviously, [inaudible] and Blu Label to get their own wings and to go on our way. So we look forward to the next year. We are already halfway through it. We obviously are already three months into our second six months, so only three months left.
So looking forward to seeing you guys on the road showing shortly, and more importantly, what the future holds for Blu Label. So thank you all very much, and I will now open the floor to questions. Good afternoon, everybody, and welcome to our interim results. We are now and obviously welcome to everyone on the web and online. And we are now going to open up the floor to questions. Let us start with, is there anybody online?
Thank you. At this stage, we do not have any questions on the telephone lines.
Okay, perfect. Thank you. So let us through to us. The first question is from Jonathan Kennedy-Good. Hi, Johnny. I hope you are all good. How did the board think about the dividend declared, and is there a dividend policy going forward? Yeah, great question to start with. The question that we are really proud to reinitiate, which is our dividend going forward.
Let's resolve for the second part. We obviously have a dividend policy in place, which was that up to 50% of our net profits we paid out in dividends up to it. We were doing that up until the time when we stopped paying dividends in 2018. This dividend was a long thought of dividend, meaning we worked really hard on the pro forma to simplify our business to show the market exactly what Blu Label is doing and what Blu Label did for the 6 months to November of 2025 to put it in actual results. Of course, as you saw that we made on a core headline earnings, ZAR 398 million after tax.
The board decided because we hadn't paid a dividend over the last obviously eight years, was to pay out 100% of the dividend on the core earnings of what we made, which we're really proud of and we think is a good dividend. Going forward, we obviously will come back to the market in the next couple of months, and we will put forward exactly our dividend policy going forward, exactly where we sit. But we are paying dividends again. The ratios we will finalize with the market in the next couple of months. The next question is from Jonathan again. Is the decline in electricity commissions reflective of a once-off change in commission rate, or will there be further reductions going forward?
Hi, John. The reality on vending is that it's not turnover-based commission. It's based on the kilowatt. Unfortunately, in this circumstance, when government or municipalities change and add a 9% or 12% or 18% increase in tariffs, it doesn't benefit us because for ZAR 100 you used to buy 10 kW, we got commission on 10 kW. Now for ZAR 100, you're buying 8 kW. So we're having natural attrition due to the higher cost of electricity for less kilowatts.
Every three odd years, contracts come up for renewal for vending, and generally, they are under pressure. But we are seeing due to no more load shedding, that volumes in terms of kilowatt usage have been increasing. So you're sort of having a counterbalance between the increase in kilowatt usage to revenue growth. Obviously all these other programs which are coming into the Cigicell World will complement its earnings going forward.
Thank you, Mark. Moving on to the next question from Philip Short. How's it, Phil? Can you please give us an update if any new municipal contracts regarding the revenue assurance model have been awarded? If so, the size of those specific opportunities and how we can think about it contextually in terms of earnings going forward.
It's a great question, and it's finally we've got a good answer. We've been talking about revenue assurance for many, many years. Revenue assurance is a phrase and a project or program that was developed and coined by Blu Label and Cigicell. You'll hear the market, you'll hear people in government talking about revenue assurance, and we're proud to say that's something that we're driving. The ability to look for what we call lost, stolen or evaporated types of billing is a major plus for our economy. One, it is going to fulfill a couple of roles. One, it will improve cash flows in munics, it will allow munics to pay for what they bought, it will increase revenues for SARS because everything's VATable on those billings.
The only net loser in this equation is the people that are doing the system an injustice, the crooks or people that are being dishonest on the billing. So far to date, and these are years in the making, we've signed Ekurhuleni, which is a 10-year revenue assurance agreement, and we signed Tshwane, which is a three-year revenue assurance agreement. Just to put it into perspective, 65% of usage in municipalities, large power users. You're not talking about going to audit millions and millions of households and stuff. You're talking about 13,000 in each munic that one would have to go visit, go geo-locate, go ensure that the meter's working correctly, and ensure that they are being billed the correct amount, at the correct tariff. There is a structure in place which keeps everyone understanding what everyone can bill.
We set a baseline with the municipality, i.e., what they've been billing over the last year or two. We do this at 100% risk, which is important because there are no monies changing hands unless we find an enhanced revenue driver for these munics. Also what we're very proud of is in each munic that we sign up, is we will be a net employer and trainer of people for the tenure of those agreements because you have to constantly do audits and processes.
Are there many in the pipeline? Yes. Today, we distribute a big volume of electricity, all these munics. We're hoping that, once these get going, every munic in this country should be driving an at-risk revenue assurance program to help them plug the leak. So yeah, there's lots of pokers in the fire. The two we are proud that we have concluded, which have taken a long time to conclude, is the Ekurhuleni and Tshwane.
Thank you, Mark. Over to the next question. Just to clarify, there is still 16% of Cell C shares via the BEE structure that is sitting on your balance sheet as an asset for sale, which you will be selling within the next 12 months. That cash is still to flow to Blu Label. I will go to the next question because it is actually pretty similar from Paul. How is it, Paul? Could you please clarify the asset held for sale?
Of course, that is what we just said, the BEE stake. Will this be sold to an existing BEE partner or another party for the balance sheet value in the next 12 months? What do we intend to do with the cash? Yes, it is an asset for sale. We are planning on moving it, as we said, in the next 12 months. It was never our intention to finance the BEE.
It was how the listing ended up and what we needed to do. That is what it was. That cash will come back into Blu Label. The cash will be used in the normal course of Blu Label, which is trading. What we are really trying to reduce is to get to a position where our debt will. We are there already, but that our debt is only for trading and any free cash is used for trading because that is where the treasury and procurement division of ours can really kick in and where we can really advance organically the profits of Blu Label. We have started the journey of it already, and we will obviously announce it to the market as we go and what we have done with it, but we do not foresee any problems moving it in the next 12 months. Okay.
The next one is a duplicate. The next one is from Mark [inaudible]. How is it, Mark? Are you able to give us a sense of what the comparative would have looked like for your core results for Blu Label EBITDA and core HEPS? Hi, Mark. I will answer that, actually. We would love to. The kind of work that went into getting to the core of what we showed, obviously a lot goes into it.
It is very, very difficult to do a comparative. We try to do it, but obviously the complexities of which would then relate to November 2024, with obviously everything that was in there with Cell C, with CEC, not only stripping that out as simply as that, but actually when money flowed from us to Cell C and what that came with, and then of course converting it at the end. Some we converted, some we did not.
Unfortunately, we cannot give an exact comparative like for like look of it. What we can do and what we will definitely do is on the pro forma that we have given, we will then break that up to each of you as we go on the roadshow and any questions that you want to send to us afterwards. That breaks it up into line items that will give you full accessibility and full view to model Blu Label and to see exactly where we are today and of course, where we are going into the future. The next one is from Paul again. Has Blu seen any income from the revenue assurance business in electricity? We have been waiting for this for a few years. Is some income likely to come in in the next six months?
No, there has not been anything on the revenue assurance as yet. Programs, once they are signed, you sign SLAs. You go into an aggressive tender process to get a 10-year agreement, goes through a Section 33, because otherwise the general tenure of a tender is three years. It has been a real prolonged process through it. It will probably take, once you get running, three to four months, before the cycle starts to turn. Probably not too much in this financial year unless things can change. But definitely going forward and then obviously for the tenure of those agreements, it does allow for an annuity-based income, because once you do your audit and you are managing and maintaining it, you would just have to keep going back on a monthly base to verify that everything is being correctly collated and added.
There is stuff like in the RT29, which is the treasury-funded meter deployments. We have done a few. There are a few more awards to come in this financial period. Government budgets are around the corner where they are renewing municipality and treasury budgets for the next year, so we are looking forward to that as well. Lots of opportunity. Hopefully, we can get some in by the end of May this year.
Excellent. Thank you, Mark. The next one is from [Myron]. How is it, [Myron]? How are you? Hi. Well done on paying the interim dividend and close to 100% of HEPS. Is it the expectation that Blu will pass through Cell C's dividend to shareholders like Vodacom used to do with Safaricom dividend? I think that is a great question, by the way. As Cell C has indicated to the market that they predict to start paying dividends in May of 2027, that is obviously very good news for Blu Label and our shareholders. Their policy is also up to 50% of their profits. As I have indicated, their profits of around about ZAR 1.8 billion. That obviously is a big number in the Blu Label world. Will we pass that through? Of course, the consideration of a board will be taken.
Our intention is to pay as big a dividend as possible. Yes, unless there is something else on the horizon and there is nothing at the moment, no shareholder should panic that Brett and Mark are making acquisitions and doing it. It is a question that has been asked to us often. Our main focus now is to bring the cash back into Blu Label. It has left the system for far too long. So focus number one, simplicity, ease of numbers, show you exactly where we are, collect up the cash, growth story with paying dividends. I do not have an exact answer for you, [Myron], but it will be considered and I am sure at least a piece of it done, but we will deal with it closer to the time. The next question is from Nick [inaudible]. How is it, Nick?
There are currently two entry points into Cell C which can undermine the value of the Cell C share price. What is the plan for the Cell C shares owned by Blu? Nick, this is a question that is asked to us very often. Obviously, what everyone can see is that there is not much liquidity in Cell C. There I state the obvious, and that the liquidity will come in the future from Blu Label. We are definitely in no rush, and we are definitely in no rush to do this irresponsibly. We are in a lockup, first of all. When we listed Cell C last year, we signed a 12-month lockup. That is until the end of November this year that we cannot sell any shares from a Blu Label perspective. The BEE is different.
That can move, but I am talking about the 49.5% that we own. Yes, we will definitely move shares into the market into the future, very responsibly in line with the market. We will be talking to the market to understand the needs and wants of the market. It will be done, I repeat it, extremely responsibly. There is no rush to do it. If it is over two years or five years, whatever it may be, it will move. What we will end up with, we always stated in our PLS that we wanted to end up with between 25% and 30%. That is ideally where Blu Label wants to end up with at the end of it. Anywhere between, call it 20% to 25%, is what we will deal with in the future, and as I said, extremely responsibly.
The next question is from [Myron] again. Brett, can you please explain to me like I am a 10-year-old how the treasury function can create extra cash flow? [Myron], the last time I saw you definitely did not look 10 years old. You looked about 14, but I will try explain it as a 10-year-old. It is actually very simple this, and this is one of the greatest IP and trading of Blu Label. If I take everyone back 10 years to 2015, the treasury function made up 44% of the entire profits of Blu Label. Today, the treasury function is negative in Blu Label.
All that we do is on the procurement side, how we procure in the telcos world, in the electricity world, in the transport world, in all the different procurements that we do. We buy differently, buy up front, buy a couple of months, settle differently, and with cash in our system, it adds enhanced margin onto our bottom line.
By doing absolutely zero new, by just doing exactly what we do now, but in a different format of how we buy and pay for our stock, it adds incremental margin to our bottom line. I hope that explains it. The more cash that comes in, we look at a return, by the way. I think we have told the market this before, all cash on our side, at a return of around 22% a year. That is actually the goal internally. The next question is from Preshendran Odayar. How is it, Presh?
Congrats on the results and bigger congrats on the dividend. Following on from the revenue assurance model from the municipalities, how much have you actually earned? Sorry, it is a bit of a repeat from the question before. I think not to ignore Presh, but I think Mark has answered it already. [Myron] again. Mark, what is your current annual running cost for the Electricity Revenue Assurance Division?
At the moment, it is sunk cost within our environment. It does not sit aside or standalone business. What would happen over time is we would get managers to run certain programs, but to date, there is no additional cost. We have leveraged off the relationships, the partnerships that we have, and ultimately, in time, as you start employing more people in that, you would see an increase in expenditure, but a massive increase in income. In short, there has been no fundamental increase in OpEx at this stage.
Thank you, Mark. For now, the last question from Nick [inaudible]. Blu has the opportunity to become an asset-light, highly cash-generative business. This will translate into a high ROE and high share price. Can you offer some guidance on the ROE that the business can generate? Have you established an ROE target you can share with us? I will give you a bit of a guideline. We will not go too much into it, but you are 100% right, Nick, this is a cash generator business. It always has been. If it was not a cash generator business, I am not sure Cell C would be here today. The reason, amongst many, Jorge and his team are definitely a reason why we made it to the end.
But before Jorge's time, and of course, Wally's time, the reason why Cell C had the legs to get to where they are is because of the cash that Blu Label generates. So we proudly generate cash. We are a very asset- and CapEx-light business. So we will deliver to the market both a growth company as well as a dividend cash-yielding business. From a ROE point of view, internally, we would be very disappointed if we were below 18%. That's really what we worked towards before the purchase of Cell C. I think at some stage, shareholders must bring in what comes in from Cell C into the total of what we're doing. So Blu Label as a standalone will be and will be measured as a standalone.
But of course, we've invested a lot of money into Cell C, and what we bring back from Cell C will somehow, we'll have to bring it into how we look at the whole picture, because that will obviously scale it in a very positive way for us upwards in cash and in profits, obviously. So yeah, I think we know internally what we wanna do as Blu Label. We definitely do not wanna get into a CapEx-heavy business, which we won't, and we definitely wanna remain in a cash business with growth. Just following on with you, Nick. Do you think Blu will have negative working capital? What is the targeted gap between the days in inventories and debtors and the days in creditors? Over to you, Dean.
Yeah. So just with regards to our working capital, as I said in my presentation, with regards to the listing of Cell C, this has really simplified the results of our group. You can see from our balance sheet, our inventory levels are lower. Our debtors and creditors now have a normalized basis. So CEC would have left our group. So we shouldn't see any material movements in our working capital requirements. Just to keep into consideration, as Brett said, when we are trading and we're doing bulk purchase buys or early settlement discounts, our inventory levels would move, but accordingly, that inventory will turn into cash in a very short period of time. So our stock levels, it'll be very short. We no longer hold any of the Cell C stock. That was all returned, and we will trade on very low inventory levels.
And with regards to the cash generated from operations, as I mentioned in our speech, we achieving approximately ZAR 65 million- ZAR 70 million normalized operating earnings or cash generation from operations. As Nick said, our CapEx is very light. We don't have any material leases. So we will generate approximately 70%-80% of free working cash conversion.
Thank you, Dean. Just going back online. Are there any questions online?
Thank you, sir. Confirmed we have no questions from the telephone lines.
Okay. More questions have come through here from [Myron]. Brett, your current holding in Cell C is around 49%, and your ultimate holding is 20%-25%. Why not distribute the rest to shareholders? What stops this? Dean: Are there tax considerations? In short, [Myron], that is definitely one of the considerations the board of Blu Label will consider once we are out of our lock-up. Your question is good. If it is the full 20%, that I cannot answer. But distribution in species of Cell C to shareholders is definitely a consideration for the Blu Label board, and we will consider it at our year-end board meeting, and of course, as we are out of the lock-up. Tax considerations, I am not quite sure, actually.
From a dividend in specie from a tax perspective, the company would pay the tax on the dividend that is distributed in specie. If it is distributed to an institution or a financial institution, then the tax would not apply for that institution.
Paul, you wanted to bring this up. Okay. Not to bring up the dark past, but could you provide a waterfall of what you spent on Cell C, including loans, capital, assistance over time to what is valued at today? I will break it up to you from a high level. Our initial investment into Cell C was ZAR 5.5 billion. Our initial investment into the SPVs was ZAR 650 million. So let us just call that ZAR 6.1 billion. We spent ZAR 1.2 billion buying out the shareholders at ZAR 0.20 in October, so that is ZAR 7.3 billion. Obviously, CEC was not part of it. We bought that separately in the return of CEC and 3G Mobile Proprietary Limited at the time. That has been a good return in total. And of course, then the stock holding that we held of Cell C stock.
Our total investment in Cell C is probably around about ZAR 11.5 billion-ZAR 12 billion with all the stock. There is obviously some of that we have recouped through the time and how the stock was managed on our side. So I would probably go to say at a very high level that our absolute break even in Cell C is around ZAR 11 billion. Obviously, the initial was at ZAR 9 billion, where we did the first 30%. So we are not far off our break-even point. We are there, thereabout, but I am sure that Cell C will deliver a lot more than our break-even point. But happy to, when we sit together, Paul, to break it down a little bit further for you as well. And that is it. Oh, sorry. No. Yeah. All right.
Just in closing, first of all, in no specific order, we would really like to thank Jorge Mendes and the team of Cell C and the board of Cell C. As we all said, the listing of Cell C was a tremendous milestone in our lives. A great point, a great time for Cell C and for us. I know there has been a few people that have come to us to say, you did it a bit cheaper, you did whatever. We are happy with it. We did 30%. It was the right thing to do, and I have no doubt that that will come to show everyone in the future. It allows Cell C to do exactly what they need to do. And for the first time in eight years, Blu Label is now on its own. We can show it to you simplistically.
We are going to show it to you simplistically, and we are going to, more importantly, bring it through in the results and the dividends. And then lastly, a big thank you to our board, to our management, to our chairman, Larry Nestadt, and a big welcome to our chairman designate, Lindsay Ralphs, that you would have read the SENS tomorrow. I mean, yesterday. It is prepaid.
There is a nice handover period from now until our end-of-year results at the end of August, where Larry, who has been with us for 19 years, has been an absolute mentor to us, as we call him, the gray-haired man. But actually, 19 years later of being listed, I think we all got a bit of gray hair, but he definitely was the first with gray hair with us. So a big, big thank you to Larry. A very big welcome to Lindsay. Yeah, we are already three months into the second half, so only three months left. And look forward to seeing you all on the roadshow and having a chat only about Blu Label for the first time in many, many years. Cheers.