Huge Group - Press Release

Huge Group - Press Release

By Huge Group - Thursday, April 24, 2008

24 April 2008

Trading Profit Higher than Forecast

24 April 2008

Top telecoms company The Huge Group, which listed on the AltX in August 2007, has announced that it expects its maiden profits to be substantially higher than that stated in its prospectus.

Huge's financial results for the year to end-February 2008, which will reflect seven months trading as a listed entity, are expected to be announced at the end of May 2008. The company has released a trading statement which states that, "shareholders are advised that a reasonable degree of certainty exists that the company's earnings per share and headline earnings per share are expected to be 10% to 20% higher."

The statement is based on the 34.77 cents annualised profit forecast update published on SENS in October 2007. The original prospectus forecast was 16.42 cents, which means that Huge has exceeded this original forecast by over 150%.

Huge Group Chief Executive Officer Anton Potgieter says: "The strong synergies created by recent acquisitions, particularly that of CentraCell, have started to generate stronger income and an improved balance sheet."

Potgieter adds: "The CentraCell acquisition meant that we had to review our most recent sales performance to project the growth in new business for the remainder of the financial period." However, the acquisition of CentraCell became effective on 15 February 2008, which means that it only contributed one month to Huge's annual trading results.

Therefore, the major improved performance is mainly due to the rise in contracted annuity income from Huge Telecom's organic growth, additional operating efficiencies and taxable benefits derived from assessed losses available in CentraCell.

It can therefore be assumed that the full synergistic benefits of the CentraCell acquisition are yet to filter through to bottom-line growth.

The national telecoms company had initially forecast lower earnings, but significant sales impetus was created in the five months leading up to the listing, which meant that the group's growth potential significantly exceeded projections.

James Herbst, the Group Financial Director, asserts that the trading statement implies that at a price of 350 cents per Huge Group share the group is trading between an 8.38 and a 9.15 price earnings multiple. At a growth rate greater than 25%, the company is satisfied with its ability to generate future earnings of similar magnitude.

Herbst concludes: "We are further satisfied with our performance relative to our peers on a number of bases, and in particular in our drive to acquire revenue at the correct price.  Huge Group has acquired revenue at a rate of R5.62 per Huge share, relative to its nearest AltX listed competitor whose revenue per share trades below its current share price."


Additional notes:
In terms of paragraph 3.4(b) of the JSE Limited Listings Requirements, a listed company is required to publish a trading statement as soon as it is satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported upon next will differ, by at least 20%, from a profit forecast previously provided to the market in relation to such period.

For further information, please contact Michelle de Pons, Fleishman Hillard SA on 011 548 2008, Anton Potgieter, Chief Executive Officer, on 082 855 0505, James Herbst, Group Financial Director on 082-903-1651 or the company on 011 603 6000.