Huge Group's focus on targeting higher margin income is paying off as its bottom line doubled in the first half of the year, even as revenue declined.
In the six months to August, the company reported revenue of R99 million, down from 2013's R106.7 million, but noted net profit leapt to R7.4 million, from R3.7 million a year ago.
The bulk of its income has again come from Huge Telecom, traditionally its main revenue-spinner, which saw revenue drop 7.3% to R98.9 million during the half year. However, Huge says its revenue indicators show positive trends as sales activity is improving, and the "compounding effect of annuity sales" started to come through in September and October.
Huge says income for these two months was 10% higher year-on-year. During the period, the unit acquired more than 1 800 new clients and grew net connections by over 5 300 lines. In the first half of last year, it gained 500 clients and added 2 100 net connections.
The listed company also notes Huge Telecoms has been "successful in increasing its fixed annuity to variable annuity ratio". It adds monthly sales records have been set in eight of the 10 trading months since the start of the year and average monthly sales for the financial year have gained 70% year-on-year so far.
In addition, it says, the average line rental on connections has compounded at an average of R152 000 per month between March and October, increasing the monthly line rental book by R1.52 million by the end of last month.
In its results commentary, the company notes it has continued to improve operational efficiencies and contain costs. Operating expenses dropped 16.1% to R33.1 million year-on-year, it says.
Huge notes it aims to take part in the current consolidation wave in the telecoms sector by "participating in merger and acquisition activity". Some 18 months ago, the group simplified its telecoms unit's operational and sales structure, and changed the way it does business.
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