Huge reports solid performance and grows value for shareholders26 November 2010 - Huge GroupHuge Group, an AltX-listed investment holding company which is focused on building shareholder value and specialises in telecommunications and media, today reported unaudited results for the six months ended 31 August 2010. Huge reported a 275% increase in basic earnings per share, turning from a loss of 5.43 cents per share in August 2009 to earnings of 9.49 cents per share in the first half of this financial year. The net asset value per share rose 19% to 272 cents per share. This extended the financial turnaround which was achieved in the second half of the 2010 financial year, when the successful consolidation of businesses and improved efficiencies in its principal revenue earner, Huge Telecom, resulted in improved profits at year-end. The Group achieved net profit after tax of R9.6 million, up 263% from 31 August 2009, and reflected cash reserves totalling R13.5 million at the end of the period. Gross profit for the first six months of the year amounted to R52.6 million, an increase of 3.0% from the R51.0 million recorded in the first half of the 2009 financial year and the level of bad debts in the current period declined by R2.3 million when compared to the comparative reporting period. Total turnover for the first six months ended 31 August 2010 amounting to R275.3 million, decreased by 2.3% from the R282.0 million generated during the six months to the end of August 2009. This decline is however a direct result of the decisions of the major mobile network operators (MNOs) to terminate paying connection incentive commission (CIC). The CIC paid by the MNOs in the current period was R13.7 million compared to R29.1 million paid in the prior period. “The sales performance of the company is therefore better reflected by excluding the effects of changes in CIC on turnover. Cellular airtime sales increased 2.7% and sales of other products and services increased 23.4%,” said CEO James Herbst. Huge Telecom, the wholly-owned subsidiary of the Group which generates the majority of its revenue, will remain focused on providing a complete spectrum of managed telecommunication services to South African businesses and is well positioned to benefit directly from the increased demand for managed services. The company continues to monitor developments in the telecommunications industry to ensure that its business model is appropriate, optimal and sustainable. Regarding the recent announcement by ICASA on the reduction in interconnect rates, Herbst said: “Huge Telecom welcomes lower termination rates on the basis that lower termination costs will drive down input costs, increase demand, and deliver growth in the voice traffic generated by Huge Telecom’s 6,000 clients.” Huge expects market forces to drive price point parity in wholesale termination rates, with a positive impact on revenues and profits. Eyeballs, a subsidiary of the Group whose “Eyeballs” technology displays advertising and content images on mobile phones, has established the commercial viability of its product set in South Africa and is now exploring partnerships to deploy its offering in the international market. A number of international distribution agreements have already been signed. The BlackBerry version was successfully released, as planned, in June 2010 and currently accounts for four out of five successful downloads. Huge Media continues to grow its base of installed users in the South African mobile advertising market and estimates a market for mobile smartphones in SA of some 4.7 million devices. Further SA growth in users is expected to be substantial. ”Going forward the Group will continue to focus on operational efficiencies, treasury management and cost containment in an effort to further increase operating profitability and shareholder value, and with very low levels of long term debt the Group has the balance sheet to succeed in these endeavours,” Herbst concludes.
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