Wrap Text
Reviewed condensed consolidated provisional results for the year ended 28 February 2021
HUGE GROUP LTD
(Registration number 2006/023587/06)
Share code: HUG ISIN: ZAE000102042
("Huge" or "Huge Group" or "the Group" or "the Company")
REVIEWED CONDENSED CONSOLIDATED PROVISIONAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2021
The board of directors of Huge Group (the Board) is pleased to present the reviewed condensed
consolidated provisional results for the year ended 28 February 2021 (the Provisional Results).
COMMENTARY
Huge had a challenging start to its 2021 financial year. The pandemic created considerable
uncertainty and significantly impacted our first quarter's financial performance - so much so that the
balance of the financial year was reduced to catching up. Our associate company's dispute with Cell
C Service Provider Company and the successful migration by Huge Telecom of all its customers from
Cell C's mobile telephone network to MTN's mobile telephone network certainly exacerbated the
challenges we faced. However, the Group companies proved resilient and the negative impact was
minimised. The Group is better placed - now more than ever - to grow in 2021/2022 and to fulfil the
objectives of the Growing Huge Strategy.
Huge spent a considerable amount of time in 2020/2021 identifying the market segments in which it
wishes to be invested and so its focus in the future will be growing and acquiring businesses in the
converging connectivity, cloud, software and x-Tech markets. Huge's interest in Adapt IT Holdings is
evidence of this focus.
As at 28 February 2021, the Group's net debt position is R135 million, while it still has access to R80 million
in funding. At 28 February 2021, the Group's Debt to EBITDA ratio is 1.49. In terms of the ZAR200 Million
Term Facility Agreement (the Facility), the Group's Debt to EBITDA ratio may not exceed 2.5 times. Huge
is entitled to make distributions provided that, after taking into account the intended distributions, the
Group's Debt to EBITDA ratio is less than 2.5 times.
In the prior year, shareholders of Huge approved the granting of options to the Chief Executive Officer,
the Chief Operating Officer and the Chief Financial Officer. IFRS requires Huge to create a share-based
payment equity reserve equal to the independent calculation of the value of the options and to do so
by making non-cash charges in the statement of comprehensive income. These charges are non-cash
charges that have no effect on the operating performance of our underlying companies. To deal with
similar accounting transactions like this share-based payment expense, Huge has introduced, and will
continue to use, additional measures of EPS and HEPS which better reflect normalised profit for a period
based on operating performance.
Normalised EPS for the period was flat whilst normalised HEPS for the period was 11% higher when
compared to the prior comparative period. While gross margins declined in the most part due to
revenue declines of 5%, and once off impairments of work-in-progress and inventories (resulting from
the impact of the pandemic), these charges were offset by repeatable cost savings and once-off
waivers of loan claims by fellow shareholders. The higher credit loss allowance occasioned by the fraud
previously reported will now decline to more acceptable levels.
The Group continues to enjoy the support of Futuregrowth Asset Management Proprietary Limited
through the Facility.
Future prospects
Huge's investment strategy is to focus on opportunities that can leverage its customer real estate. There
must be tangible proof that an opportunity is sustainable and, crucially, that the opportunity can
successfully be made commercial for it to be pursued. Huge's earnings and cash focus means it
actively avoids investment opportunities that are dilutive, that might negatively impact earnings or that
might impose excessive capital commitments. The Board believes that Huge's investment strategy will
maximise value for all its stakeholders.
SALIENT FEATURES
Extracted from the reviewed Group provisional financial results for the year ended 28 February 2021:
NORMALISED CONDENSED CONSOLIDATED PROVISIONAL RESULTS
Reviewed Audited
28 February 28 February
2021 2020
(12 months) (12 months)
Figures in Rand R'000 R'000
Revenue 469 857 492 145
Operating profit 130 852 134 782
Earnings per share 57.82 57.58
Headline earnings per share 63.04 57.03
The normalised condensed consolidated provisional results (the Normalised Results) are the responsibility of the Board and are
provided to shareholders to illustrate the operating performance of the Group had the Group not had to raise the R34.61 million
IFRS2 share-based payment expense relating to the Executive Share Option Agreements. Due to its nature, it may not fairly
present the provisional results. A comprehensive analysis and explanation of the Executive Share Option Agreements is provided
in the 2020 Integrated Report on pages 124 to 125.
CONDENSED CONSOLIDATED PROVISIONAL RESULTS
Reviewed Audited
28 February 28 February
2021 2020
(12 months) (12 months)
Figures in Rand R'000 R'000
Revenue 469 857 492 145
Operating profit 90 235 134 782
Earnings per share 36.77 57.58
Headline earnings per share 41.98 57.03
The condensed consolidated statement of comprehensive income includes the R34.61 million IFRS2 share-based payment
expense relating to the Executive Share Option Agreements. The Board is of the view that the expense is a non-cash IFRS charge
unrelated to the actual operating performance of the Group and therefore the Normalised Results presented is a better
representation of the Group's operating performance.
DIVIDEND
The Board is cognisant that these are uncertain times and it is prudent to preserve cash due to
uncertainties relating to COVID-19. Ordinary shareholders are advised that the Board is of the view that
it is prudent to wait for some time to elapse before making a final dividend declaration for the year
ended 28 February 2021 (FY2020: Nil).
SHORT FORM ANNOUNCEMENT
This short form announcement is the responsibility of the Board and is only a summary of the information
contained in the full announcement (the Full Announcement). The Provisional Results have been
reviewed by the Group's auditor, Moore Johannesburg Incorporated, who expressed an unmodified
review conclusion thereon.
This short-form announcement does not contain full or complete details pertaining to the Group's
results. Any investment decisions by investors and/or shareholders should therefore be based on
consideration of the Full Announcement which may be downloaded from the Group's website at
www.hugegroup.com/huge-group-unlocking-business-opportunity-financials/ and may be viewed at
the registered offices of the Company and the Sponsor, at no charge, during office hours from the date
of this announcement for a period of 30 days. The Full Announcement is also available on the JSE's
website at https://senspdf.jse.co.za/documents/2021/jse/isse/HUG/ye2021.pdf.
Registered office
Unit 6, 1 Melrose Boulevard, Melrose Arch, Johannesburg, 2057
Johannesburg
31 May 2021
Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Date: 31-05-2021 05:30:00
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