Huge exceeds profit forecast

By Damaria Senne, ITWeb senior journalist

Johannesburg, 28 May 2008

AltX-listed telecoms company Huge Group says it generated annual revenue of R540 million and operating profit before taxation of R55.89 million.

The company also said in a trading statement yesterday that it generated R243 million during the seven months trading ended 29 February, after it was listed on the stock exchange.

Huge generated earnings per share of 44.17c and headline earnings per share of 44.15c, the statement said.

This exceeded the original profit forecast of 16.42c per share the company published in its prospectus by 169%, further improved on the revised profit forecast of 34.77c per share it published on 12 September 2007, by 27%, it said

Huge's return on equity on an annualized basis was 21.74%, it says. The directors have proposed a maiden dividend of 12c per share, it said.

The posted financials take into account only a single month's contribution from the CentraCell acquisition, which is being merged with Huge Telecom, says CFO James Herbst.

However, they do not include the acquisition of 25% of Eyeballs Mobile Advertising or the impending acquisition of 59% of iTalk Cellular, he says.

Fair comparisons

Herbst emphasises the results are for a newly-listed entity, and only cover the seven months of trading after Huge was listed on the AltX stock exchange.

"We have no prior trading-results as a listed company, which makes prior period comparisons practically impossible," he says.

Herbst suggests says that potential investors analyse Huge's results by using comparisons with the company's industry peers.

They can also look at the track record of revenue growth achieved by Telepassport, Huge's principal subsidiary, he says.

TelePassport has grown revenue since 2003 by a compound annual growth rate averaging 19%, he adds.

The nine-year annual compound growth rate in revenue is 35% and last year Huge Telecom grew revenue by 26%, Herbst says.

Focus on organic growth

Huge group CEO Anton Potgieter says the company will be allowed to grow organically in the next 12 months.

"We do not deny that we may have some additional acquisitions in mind. However, given the high standards we have set so far, anything we consider will have to pass a really high hurdle before it will add value to the Huge Group," he says.

He adds that the company expects its potential group revenues to climb up to R1.2 billion in the next financial year.

Annuity revenues are expected to grow from R540 million to exceed R600 million for the year to end February 2009, he says. The iTalk asset will likely provide additional revenue of R600 million per annum, he adds.