Niche telecommunications provider Huge Group is mulling acquisitions after reporting a 45% improvement in headline earnings per share for the year ended 29 February 2016, despite only a modest 6% improvement in revenue.

Operating profit rose by 44% after the group improved efficiencies and controlled expenses.

The strong performance of the group in the past year has helped lift its share price from R3,30 to more than R5. “This price appreciation has significantly strengthened Huge Group’s ability to contemplate mergers and acquisitions on a share for share basis,” it said.

“The volume of shares traded in the last year is also encouraging and this has strengthened Huge Group’s potential ability to acquire companies for cash on the basis of a vendor placing of shares.”

Despite the good earnings performance, the board has elected not to pay shareholders a full-year dividend. Instead, it intends to use the money in other ways. “The board has identified a number of growth opportunities — both organic and acquisitive — that it intends pursuing and, for this reason, believes it is important to build rather than distribute its cash resources.”

The group, which is led by CEO James Herbst, noted that it wants to find new opportunities in the media space that will assist it in creating value from existing investments.

It’s in its core telecoms business, however, where the real growth in the past year has come from.

Gross profits have expanded as the group has grown its distribution channel from 425 to 552 business partners.

“This increase has resulted in higher levels of sales activity and revenues. Huge Telecom now installs five times more telephone lines (or connections) than it did six years ago.”

It said that its distribution network has become a “key differentiator” for Huge Group from both a competitive and investment perspective.