HUGE GROUP LIMITED - Close out of derivative contracts

Close out of derivative contracts

HUGE GROUP LIMITED
(Registration number 2006/023587/06)
Share code: HUG    ISIN: ZAE000102042
(“Huge” or “the Group” or “the Company”)


CLOSE OUT OF DERIVATIVE CONTRACTS


Huge and its subsidiary companies have held various derivative
contracts over the Company’s ordinary shares. Any movement in the
price of the Company’s ordinary shares (Reference Instruments) has
an impact on the value of these derivative contracts.

Huge Telecom Proprietary Limited (HugeTel), a wholly owned
subsidiary company of the Company, was the holder of contracts for
difference (CFDs) over 3 904 579 Huge ordinary shares (the Huge
CFDs).

On 8 October 2014, HugeTel closed out the Huge CFDs at a spot
price of 170 cents per Reference Instrument (the Close Out).

Accordingly, the Group is no longer exposed to the movement in the
price of derivative contracts over its own ordinary shares.

FINANCIAL EFFECTS OF THE CLOSE OUT
The unaudited pro forma financial effects as set out below have
been prepared in terms of the JSE Listings Requirements and the
Guide on Pro Forma Financial Information, issued by SAICA and are
based on the audited results of Huge for the year ended 28
February 2014, to assist shareholders of Huge in assessing the
cumulative impact of the Close Out on the earnings per share and
net asset value per share of the Company.

These pro forma financial effects have been prepared for
illustrative purposes only, and because of their nature, may not
fairly present Huge’s financial position, financial performance,
changes in equity and results of operations and cash flows after
the Close Out. It has been assumed for purposes of the pro forma
financial information below that the Close Out was prepared using
the most recently published results and that the Close Out was
effective at 28 February 2014 for compiling the statement of
financial position purposes, and 1 March 2013 for compiling the
statement of comprehensive income purposes.

The directors are responsible for the preparation of the pro forma
financial information, which has not been reviewed by the
Company’s auditors.
Audited Results             Before the Pro forma After      %
                            Close Out  adjustment the       change
                            (cents)    (cents)    Close
                                                  Out
                                                  (cents)
Basic earnings per share    13.54      (0.43)     13.11     (3.18)
Headline earnings per
share                       13.66      (0.43)     13.23     (3.15)
Diluted earnings per
share                       13.54      (0.43)     13.11     (3.18)
Diluted headline earnings
per share                   13.66      (0.43)     13.23     (3.15)
Net asset value per share   269.34     2.98       272.32    1.11
Net tangible
asset/(liability) value
per share                   (2.25)     2.98       0.73      132.44
Weighted number of shares
in issue after deducting
treasury shares (‘000)      89 255     -          89 255    -
Number of shares in issue
after deducting treasury
shares (‘000)               80 255     -          80 255    -

NOTES AND ASSUMPTIONS

-   The figures set out in the “Before the Close Out” column above
    have been extracted from the Company’s audited results for the
    year ended 28 February 2014 (the Final Results).
-   The figures set out in the “After the Close Out” column above
    reflect the Financial Effects of the Close Out on the Final
    Results assuming that the Close Out was implemented on 1 March
    2013 for earnings and headline earnings per share purposes.
    In this regard:
        o The after tax effect of the cost of implied interest
          charges of R58 262 incurred during to the year ended 28
          February 2014 has been reversed, which has an on-going
          effect;
        o The after tax effect of the benefit of mark to market
          variation margins of R585 687 reflected during the year
          ended 28 February 2014 has been reversed, which has an
          ongoing effect based on the change in the price of the
          Reference Instruments;
        o The after tax effect of the mark to market variation
          margins determined by taking the difference between the
          price of the reference instruments underlying the CFDs
          on 1 March 2013 of 70 cents and the price of the
          Reference Instruments underlying the CFDs on the date of
          the Close Out of 170 cents, has been added to earnings
          and headline earnings for the year ended 28 February
          2014, which has a once-off effect.
 -  The figures set out in the “After the Close Out” column above
    reflect the Financial Effects of the Close Out on the Final
    Results assuming that the Close Out was implemented on 28
    February 2014 for net asset and tangible asset value per
    share purposes. The after tax effect of the mark to market
    variation margins determined by taking the difference between
    the price of the Reference Instruments underlying the CFDs on
    28 February 2014 of 85 cents and the price of the Reference
    Instruments underlying the CFDs on the date of the Close Out
    of 170 cents has been added to tangible assets and net
    tangible assets as at 28 February 2014, which has a once-off
    effect.


Johannesburg
10 October 2014

Designated Advisor
Afrasia Corporate Finance Proprietary Limited

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