Huge reverses loss

The Huge Group's restructuring has paid off, it says, as it has reversed its mid-year loss, and is now focused on growing revenue.

This morning, Huge released its full-year results for February - a day after the JSE deadline - reporting slower revenue growth, but an improved profit.

The company's revenue declined from R608.5 million to R573.5 million, but net profit improved to R8.1 million, from R7.4 million. At half year, the company made a R5.8 million loss, which has now been reversed.

However, auditor KPMG drew attention to a “reportable irregularity”. The auditor highlighted the share trade that saw stock in the company being sold to Huge by directors without shareholders being informed.

The JSE fined CEO James Herbst and chairman Anton Potgieter R5 million each last year for what it called a related-party transaction. The directors are appealing the bourse's decision, as the company says its opinion is that no “reportable irregularity has, or is, taking place”.

Herbst says the company is now on track to target revenue growth as it has completed integrating all its various acquisitions. “It's been a good six months for us; we've turned a lot of things around.”

Huge's turnaround is mainly due to a successful restructuring, which merged the group's two telecommunications businesses, TelePassport and CentraCell, into Huge Telecom.

Huge also reported continuing diversification of its operations with a new subsidiary, Huge Media, launched in January. During the year, the company also increased its stake in the Eyeballs Mobile Advertising operation, which sells advertising applications for mobile phones, from 25% to 77%.

Herbst is bullish on this division's ability to grow revenue and says its installed base, now about 28 000, doubles every month. Huge now intends to market the technology abroad.

Herbst adds that the company has taken an “ultra-conservative” position in managing outstanding debt and provides for debt that may not come in. During the year, the level of bad debt rose to R20.7 million. Huge has also paid down a significant amount of debt, says Herbst.

In the new financial year, Huge Telecom will focus on introducing alternative revenue streams that complement its business. It will also pursue opportunities to increase its client base to grow profit margins.

“Huge Telecom is well positioned to benefit directly from increased managed services sales once the South African economic recovery gains momentum,” it says.

“In the next period, the group anticipates increasing returns from its investment in Huge Telecom. In addition, the group expects the growth of Huge Media and Eyeballs to contribute to group returns,” Huge adds.