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Huge boosts margins

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 28 May 2015

Huge Group reported "marginally" better revenue in the six months to February, which came in at R204.6 million compared with R203.6 million a year ago.

However, the JSE-listed company says its profitability has improved during the year. Its pre-tax profit was reported at R17.2 million, compared with R15.96 million a year ago. Its net profit was flat year-on-year.

Huge explains it is a "different company today when compared to 12 months ago" as it has strengthened its balance sheet and the performance metrics related to Huge Telecom are "very positive". It notes this unit's sales activity is expanding rapidly, revenue is increasing, gross margins are high and there is positive cash flow generation which continues to improve.

"Huge Telecom's cash flows now position Huge Group to pay dividends and grow, whether organically or by acquisition."

Its largest entity, Huge Telecom continued to grow its distribution capabilities, growing its business partners 47% from 289 to 425 during the year. Huge notes this unit's connectivity services are distributed mainly to small, medium and micro enterprises.

It provides connectivity services to more than 9 800 customers. It has no more than a 1.3% exposure to its single largest client, which it says means its customer concentration risk is low.

During the year, average monthly sales of telephone lines increased from an average of 689 units last year to an average of 1 044 units in the year under review. Sales measured by the number of telephone lines sold (excluding churn) increased 55% during the year, it says.

"The average customer life of all of the existing customers of Huge Telecom is 6.43 years."

Huge notes it has a 12-month lead-time between any sales activity and the effect on revenue, so sales during the year will only be felt in the next reporting period. Subsequent to year-end, it says revenue for March and April 2015 is 8.7% higher than revenue for March and April 2014.

In addition, billed minutes for March and April 2015 are 17.9% higher than billed minutes for March and April 2014. Its average revenue per user is also about nine time that of MTN across Nigeria and South Africa, at R694.

However, Huge notes its average selling price for a mobile minute during the year was 87c compared with 93c a year ago. It notes the telecoms unit has been successful in increasing its annuity revenue.


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