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HUGE GROUP LIMITED - Reviewed Provisional Annual Financial Results for the year ended 28 February 2017

Release Date: 23/05/2017 17:26
Code(s): HUG     PDF:  
Wrap Text
Reviewed Provisional Annual Financial Results for the year ended 28 February 2017

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

REVIEWED PROVISIONAL ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2017

HIGHLIGHTS
   • Revenue up 14%
   • Future reductions in cost of sales to impact profits positively
   • Gross profit margins up 18% from 41% to 48%
   • EBITDA margin up 42% from 15.1% to 21.4%
   • Operating profit 84% higher
   • Operating profit margin up from 10.6% to 17.2%, a 62% increase
   • Balance sheet restructured, equity raised and loans repaid with reductions in interest costs to
     impact future profits positively
   • Profit before taxation 98% higher and profit after taxation 36% higher
   • Earnings per share before acquisition costs up 55%
   • Earnings per share after acquisition costs up 42%
   • Successful post balance sheet acquisition of Connectnet Broadband Wireless (Pty) Ltd

The board of directors ("the Board") of Huge is pleased to present the provisional reviewed
condensed consolidated annual financial results of the Company, its subsidiaries and joint venture
(“the Group”) for the year ended 28 February 2017.

REVIEWED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                           Reviewed                       Audited
                                                    28 February 2017             29 February 2016
                                                         (12 months)                  (12 months)
                                                               R’000                        R’000

 Revenue                                                      245 993                      216 517
 Gross profit                                                 118 612                       88 189
 Other income                                                   1 247                        1 296
 Operating expenses                                          (77 620)                     (66 529)
 Operating profit                                              42 239                       22 956
 Investment income                                                233                          492
 Share of losses from equity accounted
 investments                                                     (22)                          (5)
 Finance costs                                                (5 336)                      (4 697)
 Profit before taxation                                        37 114                       18 746
 Income tax (expense) / credit /                             (10 307)                          910
 Net profit for the period                                     26 807                       19 656
 Non-controlling interest                                         184                          876
 Net profit attributable to owners of the
 company                                                       26 623                       18 780

 Earnings per share before acquisition
 costs (cents)                                                  28.80                        18.55
 Adjusted for:
 Acquisition costs (cents)                                     (2.50)                            -
 Basic earnings per share (cents)                               26.30                        18.55
 Adjusted for:
 Profit on disposal of property, plant and
 equipment                                                         -                        (0.04)
 Headline earnings per share (cents)                           26.30                         18.51
 Total number of shares in issue (‘000)                      115 905                       101 255
 Weighted number of shares in issue (‘000)                   101 360                       101 255

Note: There are no dilutive instruments in issue

REVIEWED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                          Reviewed             Audited
                                                   28 February 2017   29 February 2016
                                                        (12 months)        (12 months)
                                                              R’000              R’000

 ASSETS
 NON CURRENT ASSETS
 Property, plant and equipment                              73 222             61 093
 Goodwill                                                  215 153            215 153
 Intangible assets                                           3 927              1 558
 Investment in joint venture                                   688                709
 Deferred tax                                                7 551              6 415
 Deferred expenditure                                       16 950              6 224
                                                           317 491            291 152

 CURRENT ASSETS
 Inventories                                                   647              1 294
 Trade and other receivables                                42 606             27 568
 Deferred expenditure                                        7 694              9 494
 Cash and cash equivalents                                  70 976              4 555
                                                           121 923             42 911
 Total assets                                              439 414            334 063

 EQUITY AND LIABILITIES
 EQUITY
 Share capital                                             319 421            229 323
 Retained earnings                                          60 361             33 738
 Equity attributable to equity holders of
 parent                                                    379 782            263 061
 Non-controlling interest                                  (3 001)            (3 185)
                                                           376 781            259 876

 NON-CURRENT LIABILITIES
 Finance lease obligations                                   1 331              2 143
 Deferred tax                                                9 942              1 422
                                                            11 273              3 565

 CURRENT LIABILITIES
 Interest bearing liability                                      -             20 000
 Loans from shareholders                                       178                461
 Other financial liabilities                                   753                694
 Current tax payable                                         4 256              1 249
 Finance lease obligations                                   1 166              1 677
 Trade and other payables                                   35 566             36 667
 Bank overdraft                                              9 441              9 873
                                                            51 360             70 621
 Total liabilities                                          62 633             74 186
 Total equity and liabilities                              439 414            334 062

 Number of shares in issue (‘000)                          115 905            101 255
 Net asset value per share (cents)                          325.08             256.66
 Net tangible asset value per share
 (cents)                                                    136.06              42.63

REVIEWED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                               Reviewed                       Audited
                                                       28 February 2017              29 February 2016
                                                            (12 months)                   (12 months)
                                                                  R’000                         R’000

 Balance at 1 March                                             259 876                       248 320
 Total comprehensive income for the
 period                                                          26 807                        19 656
 Issue of new shares                                             90 098                             -
 Dividends                                                            -                       (8 100)
 Balance at 28/29 February                                      376 781                       259 876

REVIEWED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                                                               Reviewed                       Audited
                                                       28 February 2017              29 February 2016
                                                            (12 months)                   (12 months)
                                                                  R’000                         R’000

 Cash flows from operating activities                            25 436                        22 694
 Cash flows used in investing activities                       (25 798)                      (23 860)
 Cash flows from financing activities                            67 215                       (8 893)
 Net cash movement for the period                                66 853                      (10 059)
 Cash at the beginning of the period                            (5 318)                         4 741
 Total cash at the end of the period                             61 535                       (5 318)


SEGMENTAL REPORTING
The directors have considered the implications of IFRS 8: Operating segments and are of the opinion
that the current operations of the Group constitute one operating segment. Resource allocation and
operational management are performed on an aggregate basis. Performance is measured based
on profit or loss before tax as shown in internal management reports that are reviewed regularly by
the Chief Operating Decision Maker (“CODM”), who is the Group’s Chief Executive Officer. The
CODM also regularly reviews the Group Statement of Financial Position.


COMMENTARY

BASIS OF PREPARATION
The reviewed provisional consolidated annual financial results have been prepared in accordance
with the framework concepts and the recognition and measurement principles of International
Financial Reporting Standards (“IFRS”) and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Committee and presented in accordance with the minimum content, including
disclosures, prescribed by IAS 34 Interim Financial Reporting applied to year-end reporting, the
Companies Act of South Africa, and the JSE Limited Listings Requirements (“Listings Requirements”).

Any information included in this announcement that might be perceived as a forward looking
statement has not been reviewed and reported on by the Company’s auditors in accordance with
section 8.40(a) of the Listings Requirements.

The reviewed consolidated annual financial statements for the year ended 28 February 2017 were
prepared under the supervision of the Chief Financial Officer, Mr Z Bulbulia, and will be included in the
2017 Integrated Report to be issued to shareholders on or before 31 May 2017.

ACCOUNTING POLICIES
The accounting policies applied in the preparation of these reviewed provisional condensed
consolidated annual financial results are in terms of IFRS and are consistent with those in the
preparation of the annual financial results of the Company for the year ended 29 February 2016.

INDEPENDENT REVIEWER’S OPINION
The consolidated annual financial statements for the year ended 28 February 2017 were reviewed by
BDO South Africa Inc. in compliance with ISRE 2410, who expressed an unmodified opinion thereon. It
should be noted that this provisional report is itself not reviewed but is extracted from the underlying
reviewed consolidated annual financial statements. The directors take full responsibility for the
preparation of these provisional results and that the financial information has been correctly
extracted from the underlying consolidated annual financial statements. The underlying reviewed
condensed consolidated annual financial statements for the year ended 28 February 2017 and the
reviewer’s report thereon are available for inspection at the Company’s registered office.
COMPANY PROFILE
Huge is an investment holding company listed on the Main Board of the JSE.

Huge Telecom Proprietary Limited (“Huge Telecom”) is the principal operating entity of Huge prior to
the acquisition of Connectnet Broadband Wireless Proprietary Limited (“Connectnet”) and its wholly
owned subsidiary company, Sainet Internet Proprietary Limited (“Sainet Internet”).

The acquisition of Connectnet was completed on 30 March 2017, after Huge’s February financial year
end.

Connectnet is a telecommunications solutions company with a focus on growing its voice, network
connectivity and payment offering. It was established in 2004 and provides connectivity to the card
payment terminals of the commercial banks in South Africa by making use of secure, managed, dual
SIM connectivity over GSM data networks. The company has also expanded into other markets,
including ATMs, integrated points-of-sale, medical/script verifications, telemetry applications, micro-
lending applications and cash vaults.

Sainet Internet is a network service provider and data communications company that markets and
sells a variety of products and services including Internet data services, managed network solutions,
branch connectivity, hosting services and website and system development.

The combination of Huge Telecom, Connectnet and Sainet Internet is compelling. Firstly, the bulk of
Connectnet’s 30 000 customers fit squarely into Huge Telecom’s target customer market (with little
overlap). It is therefore expected that Connectnet will assist Huge Telecom in expanding its base of
customers. Secondly, Sainet Internet creates a critical entry for Huge Telecom to participate in the
data market.

Huge, enlarged by Connectnet and Sainet Internet, is building an investment theme focused on
connectivity, mobile payments and Financial Technology. People live in a connected world –
everyone and everything needs to be connected – Huge Telecom, Connectnet and Sainet Internet
make connections possible. Connectnet and Sainet Internet provide Huge with an entry into the data
telecommunications and mobile payments markets, and an opportunity to participate in the
expected explosive growth of the Internet as it transforms from being a source of information to one
focused on value and its movement. Connectnet’s participation as a trusted service provider in the
payments industry makes it invaluable real estate for expansion into Fintech-type opportunities.

In the Integrated Report of the Company for the year ended 29 February 2016, it was stated that
Huge was embarking on a period of growth and that it intended to do so both organically and by
acquisition. We will continue to drive this strategy within our chosen theme.
FINANCIAL OVERVIEW
Review of operations

Sales

The sale of new products and services is a function of the number of active Business Partners. Greater
numbers of active Business Partners result in greater sales of products and services, lower relative
churn and higher net growth and revenue. The acquisition of new Business Partners is a lead indicator
of increased monthly sales of new telephone lines (or connections), which in turn is a lead indicator of
Huge Telecom’s primary revenue metric – average revenue per trade weighted day.

During the year under review, average monthly sales of telephone lines were 728 units (FY2016: 810
units).

Distribution

A large portion of Huge Telecom’s intrinsic value is its distribution. The distribution model will work
across a broad range of products and services. Very close attention is paid to understanding the
factors that drive distribution and are capable of growing it. Distribution is therefore a key
differentiator – it differentiates Huge Telecom from a competitive perspective. This is where the real
value in Huge Telecom lies – it is the distribution capability that creates the potential.

We continue to grow our distribution capabilities aggressively. During FY2017 we increased our
Business Partners by 108, from 533 to 641 Business Partners. This represents a 20% increase in the total
number of Business Partners. Each of the Business Partners of Huge Telecom has, on average, five sales
representatives. So in terms of “feet on the street”, Huge Telecom’s indirect sales force consists of
over 3 000 personnel.

We also continue to focus on increasing the activity levels of our Business Partners.

Customers

Huge Telecom has over 14 000 customers, of which over 10 700 are corporate customers (FY2016: 9
500) and over 3 300 are SOHO and Residential customers (FY2016: 2 700). It has no more than a 2.4%
exposure to its single largest customer – customer concentration risk is therefore low.

Churn

Churn is the termination of existing telephone lines and this has an impact on the net growth of
telephone lines. Huge Telecom sees the appointment of an increasing number of Business Partners as
an effective recipe to combat relative churn (the churn experienced relative to new sales growth).
The net growth (i.e. sales less churn) of telephone lines is a success indicator for Huge Telecom
because it has an impact on revenue.

During the year under review, average monthly churn of telephone lines was 251 units (FY2016: 295
units).

Revenue

Revenue for FY2017 has increased by 14% when compared to FY2016. There is about a twelve month
lead time between sales activity and its effects on revenue. Net growth or net churn in any period is
felt financially, on average, twelve months later. The revenue generated during FY2017 is a result of
the sales and churn activity in prior periods. The revenue generated during FY2018 will be a function
of the sales and churn activity in FY2017.

The average revenue per trade weighted day is an important measure of sales performance in any
given financial year, which is based on historical sales activity. Average revenue per trade weighted
day exhibited the following trends during FY2017:

Period                                           Change in average revenue per trade weighted day

March 2016 on March 2015                                               10%
April 2016 on April 2015                                                4%
May 2016 on May 2015                                                   29%
June 2016 on June 2015                                                 13%
July 2016 on July 2015                                                 13%
August 2016 on August 2015                                              6%
September 2016 on September 2015                                        5%
October 2016 on October 2015                                            5%
November 2016 on November 2015                                         14%
December 2016 on December 2015                                          8%
January 2017 on January 2016                                           11%
February 2017 on February 2016                                         12%


The mix between calls to mobile and fixed-line numbers (where prices to the former are higher than to
the latter) was 64%:36% during the year (FY2016: 64%:36%).

The average selling price for a mobile minute during FY2017 was R0.92 cents per minute (FY2016:
R0.94).

The average selling price for a fixed-line minute during FY2017 was R0.41cents per minute (FY2016:
R0.40).

Huge Telecom continues to be successful in increasing its fixed annuity income to variable annuity
income ratio. The fixed annuity income consists of channel management fees, on account fees, site
management fees and line rentals, which are protected from price compression, and in fact escalate
annually. Current monthly fixed annuity income charges are in the order of about R5 million (FY2016:
R4 million). Fixed annuity income is growing at about R40 000 per month presently. This has a 66x
multiplier effect on revenue for the next 12 months, or R2.9 million. Our annual fixed annuity income is
therefore running at a rate of R63 million (being R5 million x 12 plus R3 million).

Cost of sales

Cost of sales includes primarily the transmission costs relating to the making of telephone calls and the
direct costs relating to distribution by Huge Telecom of its products and services. Transmission costs
comprise the costs of mobile origination and the costs of international, fixed-line national, fixed-line
local and mobile termination. Mobile origination rates are negotiated commercially whereas fixed-
line national, fixed-line local and mobile termination rates are regulated by the Independent
Communications Authority of South Africa (“ICASA”). The direct costs of distribution consist primarily
of Business Partner commissions.

The mobile termination rate decreased from 16 cents per minute to 13 cents per minute (a 19%
decrease) on 1 October 2016, the fixed-line termination rate between area codes (i.e. national calls)
decreased from 12 cents per minute to 10 cents per minute (a 17% decrease) and the fixed-line
termination rate within area codes (i.e. local calls) decreased from 11 cents per minute to 10 cents
per minute (an 9% decrease). Huge Telecom benefited from these lower termination rates for only 5
months of FY2017. The factors listed above will have had an effect on gross profit margins for the
period under review.

During February 2017, Huge Telecom negotiated notably lower mobile origination rates. If these lower
mobile origination rates were applied to the minutes billed during the twelve months to 28 February
2017 transmission costs would have been R30 million lower.
On 30 January 2017, ICASA started a process in terms of a Government Gazette, number 38042, to
review pro-competitive conditions imposed on licensees in respect of the Call Termination
Regulations of 2014. This may or may not lead to further reductions in mobile termination rates.

Gross profit

Gross profit after direct expenses increased again this year, by 18% from 41% to 48%.

Overheads

The two primary overhead costs in Huge Telecom were well controlled during the year. Excluding the
creation of human resource capacity for Huge, employee costs increased in line with inflation. The
depreciation and amortisation expense increased by 6.7% as a result of increased capital
expenditure on router equipment, a direct result of increased sales activity.

Listing fees were higher as a result of the increased market capitalisation of Huge. The raising of an
increased provision for doubtful debts by Huge Telecom and increased travel costs occasioned by
increased activity relating to the marketing of Huge to the investment community resulted in a drag
on earnings.

EBITDA

EBITDA for FY2016 of R33 million increased to R53 million during FY2017 – a 61% increase. This helped to
expand the EBITDA margin by 42% during FY2017, which rose from 15.1% to 21.4%.

Operating profit

The operating profit for FY2017 of R42 million was 84% higher than the operating profit for FY2016 of
R23 million and this helped to lift the operating profit margin from 10.6% to 17.2%, a 62% increase.

Finance costs

Included in the finance costs of R5.3 million is interest of R3.8 million on a loan owing to Stellar
Specialised Lending Proprietary Limited. The loan was settled in full on 21 February 2017 by the issue
of 3 252 033 ordinary shares of Huge at a price of 615 cents per share. The future earnings per share
benefit of a reduced interest cost but after taking into account the dilution from the issue of shares is
1.7 cents.

Profit after taxation

The increase in profit before taxation, calculated on a year on year basis, of 98% was considerably
higher than the increase in profit after taxation, calculated on a year on year basis, of 36% because
of a full tax charge in FY2017.

Regulatory Matters

This past year has been a relatively quiet year on the regulatory front, when compared to prior years.
However, the delay in dealing with spectrum allocation continues to limit South Africa’s potential.

Future growth prospects

The future growth prospects emanating from the continued high growth in mobile connectivity, the
emergence of services as the next growth area in the mobile industry, scaling, increased capital, an
expanding customer base of SMEs, reducing costs of sale, rising retail prices, widening margins and
the impact of leveraging cross-selling and cross-over opportunities is largely positive for the Company.
The future growth prospects highlighted below represent some of the immediate opportunities that
have been identified by the Company.

There is a profitable vacuum in the market for services. Service companies have been emerging and
building propositions that cater to specific market segment needs while the big networks continue to
roll out a commodity – technology infrastructure. This has allowed innovative service organisations to
steal a march on their bigger rivals by owning the customer relationship and experience. This has
been effective particularly in the Small, Medium Enterprise (“SME”) and Small Office, Home Office
(“SOHO”) and Residential markets – the large networks struggle to compete in these markets
because their core processes are engineered and geared towards supporting either the large
corporates (through large sales forces on the ground) or consumers (through mainstream media
advertising and mass distribution through large retail chains and owned stores). The SME, SOHO and
Residential market segments are also largely price insensitive and are prepared to pay relatively more
for effective and efficient services tailored to their needs.

Huge Telecom is such a service company – it has created a business that is able to provide a more
effective and efficient telephony service as a substitute to Telkom’s fixed landlines, also known as the
copper last mile.

Huge Telecom continues to grow and fortify its unique position in the telecommunications industry. Its
business model is bearing fruit, sales activity is high, its distribution footprint is extensive and growing,
and gross margins are also very high. Cash flows are also large and expanding. With increasing scale
and the planned augmentation of its product and service portfolio, the prospects for Huge Telecom
are looking more attractive than ever before.

Huge Telecom is working with its suppliers currently to expand its telephony service to enable the
provision of a complete set or full suite of functions, including line hunting for inbound telephone calls
(where inbound telephone calls that are received by a single ‘trigger’ telephone number are
distributed to other telephone numbers in a hunt group), calling name presentation (where a
particular telephone number, the trigger number, is presented on all outbound calls) and the use of
geographic telephone numbers, like 011 and 021, as trigger numbers (which follows the porting out of
the telephone number from the fixed landline operator and the porting in of the telephone number
to the mobile operator). The launch date for these services is 1 September 2017. It is expected that
this will have an impact on sales in the future.

Connectnet does not have a voice service to offer its customers. These customers provide Huge
Telecom with a market into which to sell its service.

The core business of Connectnet is very exciting. It is both predictable and highly cash generative,
having paid dividends of R23 million, R28 million and R37 million for the 2014, 2015 and 2016 financial
years respectively, representing more than 40% of EBITDA in each of those years.

Huge has assembled a group of over 44 000 SME customers and it is the value of this real estate that is
important. This collection of customers probably represents one of the largest commercial corporate
databases of SME customers in South Africa. This presents an immense, exciting cross-over
opportunity to distribute relevant and associated products to this database of customers which are
not sold currently by any of the Company’s current subsidiaries.

CAPITAL STRUCTURE

There were 110 901 443 ordinary shares of the Company in issue at the start of the financial year.
9 646 926 ordinary shares were held by Huge Telecom as treasury shares. The Group therefore had a
net 101 254 517 (2015: 101 254 517) ordinary shares in issue. Towards the end of February 2017, the
Company issued 14 650 000 ordinary shares for cash at a price of R6.15 per share, which raised over
R90 million. R20 million of the proceeds were used to settle the short-term loan facility provided by
Stellar Specialised Lending Proprietary Limited.

Post year end, the Company issued another 49 581 884 ordinary shares. 25 208 333 ordinary shares
were issued to the relevant shareholders of Connectnet at a price of R6.00 per share and 24 373 551
were issued for cash at a price of R6.15 per share. The issue of shares for cash, both before and after
year end, raised approximately R240 million in equity capital in terms of a specific authority to issue
shares for cash. As a result, Huge has succeeded in broadening its shareholder base, increasing
liquidity and attracting new and high pedigree shareholders who can act as strategic partners. The
Board of Huge will work with these partners to assist the Company in achieving its objectives of
growing organically and by acquisition. The average daily volume and average daily value traded
during 2016 was 39 457 shares and R193 750. The average daily volume and average daily value
traded thus far in 2017 (as of 18 May 2017) is 126 235 shares and R1 037 738. This is clear improvement
in liquidity, but further improvement is an imperative for the Group as we continue to grow.

TREASURY SHARES

As at 28 February 2017, the Company had 125 551 443 ordinary shares in issue. 9 646 926 ordinary
shares are held by Huge Telecom in treasury, resulting in a net 115 904 517 listed ordinary shares.

LEGAL AND REGULATORY REQUIREMENTS

The Company is currently party to the following litigation:
Arbitration
Dispute between Huge Group and Telemasters Proprietary Limited (“Telemasters”)
During February 2013 Telemasters cancelled an agreement with Huge Group for the supply of MTN
airtime and suspended the SIM cards held by the Company.

In its Statement of Claim issued on 31 May 2013, Telemasters alleges that the Company is indebted to
it in the amount of R4.176m plus interest thereon.

The matter will be subject to arbitration by the Arbitration Foundation of Southern Africa. The assets
and liabilities relating to this dispute have been recognised at levels appropriate to the Company’s
assessment of the outcome of the arbitration hearing. A date has not yet been set for the arbitration
hearing.

Pro-Active Monitoring of Financial Statements

On 21 February 2013, the Company received a letter from the JSE, instructing the Company to restate
its 2010, 2011 and 2012 Annual Financial Statements (the “Relevant Financial Statements”) in so far as
this related to the accounting by the Company for the acquisition of certain single stock futures
contracts (“SSFs”) (the “Restatement Decision”).

The Company is in possession of unqualified audit reports relating to the Relevant Financial
Statements on the basis that the accounting policy in respect of the accounting for the SSFs has
resulted in fair presentation and is in accordance with IFRS.

On 24 April 2015, the Company launched an application in the Gauteng Division of the High Court of
South Africa for the judicial review of the Restatement Decision in terms of the Promotion of
Administrative Justice Act, 20 of 2000.

The review was heard on 2 and 3 May 2017 and judgment was reserved.

Other litigation

The Company and Group engage in a certain level of litigation in the ordinary course of business. The
directors have considered all pending and current litigation and are of the opinion that, unless
specifically provided for, none of these will result in a loss to the Group. All notable litigation which the
directors believe may result in a possible loss has been disclosed.

SUBSEQUENT EVENTS

On 14 February 2017, shareholders approved the acquisition of Connectnet and Sainet Internet for a
total purchase consideration of R418 000 000, which consideration was settled by means of a cash
portion of R266 750 000 and the issue of 25 208 333 Huge ordinary shares at an issue price of 600 cents
per share to the vendors of Connectnet (totalling R151 250 000 in value). The acquisition became
effective on 30 March 2017, resulting in Connectnet becoming a wholly-owned subsidiary of Huge.

Other than as disclosed in this announcement, there are no events subsequent to 28 February 2017
and to the date of this announcement which have had or may have an impact on the Company.

GOING CONCERN

The Board has undertaken a detailed review of the going concern capability of the Company (and
all subsidiary companies of the Company that form the Group) with reference to certain assumptions
and plans underlying various internal cash flow forecasts.

The Board has not identified any events or conditions that individually or collectively cast doubt on
the ability of the Company and the Group to continue as a going concern.

CHANGES TO THE BOARD

Mr Zunaid Bulbulia was appointed as Chief Financial Officer with effect from 27 March 2017. Mr David
Deetlefs who was serving as the Group Financial Director will remain on the board as an Executive
Director.

DIVIDENDS

No dividends were declared during the year under review.

ANNUAL GENERAL MEETING

The annual general meeting of the shareholders of the Company will be held at 10:00am on
Wednesday, 16 August 2017 at the offices of Huge Group, Woody Woods, First Floor, 3M Building, 146a
Kelvin Drive, Woodmead. The notice of annual general meeting forms part of the 2017 Integrated
Report, to be posted to shareholders on or before 31 May 2017. In terms of section 62(3)(a), as read
with section 59 of the Companies Act (Act 71 of 2008), as amended, the record date for purposes of
determining which shareholders of the Company are entitled to participate in and vote at the annual
general meeting is Friday 11 August 2017. Accordingly, the last day to trade in the Company’s shares
in order to be recorded in the Register to be entitled to vote will be Monday, 7 August 2017.

GOVERNANCE

The Group recognises the need to conduct its business with integrity, transparency and equal
opportunity, and subscribes to good corporate governance as set out in the King III Report on
Corporate Governance.

Johannesburg
23 May 2017

Sponsor
Questco (Pty) Ltd
1st Floor, Yellowwood House, Ballywoods Office Park, 33 Ballyclare Drive, Bryanston, 2021

Registered office
1st Floor, East Wing, 146a Kelvin Drive, Woodmead, Johannesburg, 2191 (PO Box 16376, Dowerglen,
1610)

Transfer Secretaries
Computershare Investor Services Proprietary Limited
2nd Floor, Rosebank Towers, 13 Biermann Avenue, Rosebank, 2196
Directors
Non-Executive: Dr DF Da Silva (Chairman), VM Mokholo, SP Tredoux* (Lead Independent Director), DR
Gammie*, AD Potgieter
Executive: JC Herbst (Chief Executive Officer), Z Bulbulia (Chief Financial Officer), D Deetlefs
*Independent

Date: 23/05/2017 05:26:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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