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Unaudited condensed consolidated interim results for the six months ended 31 August 2020
HUGE GROUP LTD
(Registration number 2006/023587/06)
Share code: HUG ISIN: ZAE000102042
("Huge" or "Huge Group" or "the Group" or "the Company")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2020
The board of directors of Huge Group (the Board) is pleased to present the unaudited condensed
consolidated interim results for the six months ended 31 August 2020 (the Interim Results).
CEO'S COMMENTS
The Growing Huge Strategy remains on track. The pandemic has had an impact on Huge's operating
companies - that much is clear from the 5.5% decline in revenue. Although the revenue decline can
largely be attributed to Huge Telecom, Huge's largest operating company, the pandemic did put pay
to revenue growth across Huge's other operating companies as well.
On 26 February 2020, shareholders of the Company overwhelming approved the granting of options to
the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer. IFRS requires
the Company 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 income statement. An
independent valuer determined that the value of the options is R42 million and the Company will create
a share-based payment reserve of this amount by charging the Company's income statements over
time. This period's charge amounts to R24.1 million, leaving R17.9 million to be charged to future income
statements (R10.5 million in the next 6 months and another R7.4 million in FY2022). These charges are
non-cash charges that have no effect on overall equity. In order to deal with accounting transactions
similar to 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. This will be extended to
various reports and statements.
Normalised EPS & HEPS for the period were about 27% lower than the prior comparative period and this
translates into a normalised profit for the period of R35.6 million, which is R15.1 million or 29.8% lower
than the comparative period's normalised profit of R50.7 million. The decline in revenue contributed to
about a R9.7 million decline in gross profit and operating profit, based on the prior period's gross margin.
In addition, the prior period's gross margin of 73.7%, which benefited from once-off credits to cost of
sales, adjusted downwards to this period's gross margin of 61.4%, which is sustainable, accounts for a
further R28.5 million of the decrease in gross profit and operating profit, which was partially offset by a
R13.2 million reduction in net operating costs. This accounts for the R25 million decline in normalised
EBITDA for the period, from R94.7 million in the prior period to R69.7 in the current period. Had it not been
for the lower revenue, normalised, sustainable EBITDA for the period would have printed at R77.9 million
instead of R69.7 million, based on an additional R13.3 million in revenue at a gross margin of 61.4%. In
the absence of the effects of the pandemic and in the absence of any growth, Huge's normalised,
sustainable, annualised EBITDA is circa R155 million. Based on Huge's current share price of 420 cents,
net shares in issue of circa 164 million, interest-bearing debt of circa R171 million, Huge is trading on an
enterprise value to EBITDA multiple of about 5.5.
SALIENT FEATURES
Extracted from the unaudited Group interim financial results for the six months ended 31 August 2020:
NORMALISED CONDENSED CONSOLIDATED INTERIM RESULTS
Unaudited Unaudited
31 August 31 August
2020 2019
(6 months) (6 months)
Figures in Rand R'000 R'000
Revenue 231 298 244 676
Operating profit 51 777 71 655
Earnings per share 21.50 29.43
Headline earnings per share 21.15 29.21
The normalised condensed consolidated interim results (the Normalised Results) are the responsibility of the Board and are
provided to shareholders to illustrate the performance of the Group had the Group not had to raise the R24.1 million IFRS2
share-based payment expense relating to the Executive Share Option Agreements. However, because of their nature they may
not fairly present the Interim Results. A comprehensive analysis and explanation of the Executive Share Option Agreements is
provided in the 2020 Integrated Report on pages 90-91.
CONDENSED CONSOLIDATED INTERIM RESULTS
Unaudited Unaudited
31 August 31 August
2020 2019
(6 months) (6 months)
Figures in Rand R'000 R'000
Revenue 231 298 244 676
Operating profit 27 683 71 655
Earnings per share 6.92 29.43
Headline earnings per share 6.57 29.21
The condensed consolidated statement of comprehensive income includes the R24.1 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 performance of the Group and therefore the Normalised Results presented is a better representation of
the Group's performance.
DIVIDEND
The Board is cognisant that these are very uncertain times, and it is prudent to preserve cash due to
uncertainties relating to COVID-19. Ordinary shareholders are advised that the Board has decided that
no interim dividend will be declared (HY2020: 6.25 cents per ordinary share).
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).
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/2020/jse/isse/HUG/ie2020.pdf.
Registered office
Unit 6, 1 Melrose Boulevard, Melrose Arch, Johannesburg, 2057
Johannesburg
25 November 2020
Sponsor
Nedbank Corporate and Investment Banking
Date: 25-11-2020 05:16:00
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