There is no link between the decision by Huge Group acting financial director Yvette Neveling to resign and its announcement just hours later that the company has failed to publish in 2011 financial results within the deadline prescribed by the JSE, says CEO James Herbst.
Herbst says Neveling took up another opportunity and that nothing should be read into this and a statement issued hours after the announcement of her resignation that the company needed more time to finalise its financial its results for the year to 28 February 2011.
The statement says Huge Group is “busy clarifying the appropriate accounting treatment relating to certain asset and liability balances as at 28 February 2011”. It says the board is “not currently in a position to authorise the release of the audited consolidated financial statements of the company and its subsidiaries”.
Under JSE rules, Huge Group had until 31 May to publish its results. It’s the second time in as many years that it has failed to meet bourse regulations. It also didn’t publish its interim results to 31 August 2009 in time, prompting censure from the JSE.
It’s not clear what the “accounting treatment” issue in Huge’s latest statement refers to, but it may be related to the impairment of goodwill after mobile operators began cutting whole termination rates, the fees they charge each other to carry calls on their networks. This has put pressure on least-cost routing (LCR) companies like Huge Group that took advantage of arbitrage opportunities while the rates were high.
Rival Vox Telecom recently impaired about R750m, mainly related to the cuts in termination rates. Its subsidiary Vox Orion is the country’s largest player in the LCR market.
Operators have suspended paying “connection incentive bonuses”, or monies for activating new Sim cards, to LCR operators, which has also had a marked impact on their fortunes.
Herbst, who will take on the finance director role in an acting capacity until the post can be filled on a permanent basis, says he expects the company to publish its annual results in the next few days. “We have the final numbers,” he says. “We are just not in a position to authorise their release.”
Huge Group has warned that it expects its earnings per share to fall by at least 20%. The quantum of the fall will not be known until it has reached agreement with its auditors, KPMG, about how to treat the asset and liability balances, he says. — Duncan McLeod, TechCentral
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