Huge Group’s income statement has been splashed in red ink for the six months to 31 August 2009.
The telecommunications company, listed on the JSE’s AltX, has turned in a net loss of R5,9m. That compares to a net profit of R7,4m in the comparable six-month period in 2008.
At the same time, revenue has plummeted to R282m, from R308,9m previously.
It has also decided not to pay a dividend to shareholders, despite declaring a maiden dividend a year ago of 12c/share.
Huge Group published its interim results this morning, two days later than the deadline required by the JSE. The bourse yesterday said it would send a letter of warning to Huge Group about the late publication of its numbers.
Company CEO James Herbst, pictured, blamed the late publication on “formatting” issues with the JSE’s Sens news service.
In notes accompanying the financial statements, Huge Group has, in part, blamed a decline in cellular airtime revenue for the poor results.
To counter this, the company has “initiated an increased focus on sales”, developed a “widely expanded product and service offering”, and appointed an MD of sales and an MD of channel and distribution at subsidiary Huge Telecom.
At the same time, operating costs have increased due to a higher salary bill, an increase in bad debts and higher legal fees.
In addition, the “impairment of derivatives contracts currently held by the company reduced pre-tax earnings by R9,4m in the current period due to downward movements in the Huge share price”.
“The total possible future exposure to these derivatives contracts amounts to R10,2m, which represents the net total possible future loss to the company in this regard.”
In the period, the company also raised a R20m overdraft.
Despite the financial difficulties, Huge Group says it “continues to perform well at an operating level”.
“Notwithstanding the reductions in revenue over the period, the company has continued to maintain gross margins at acceptable levels.” — Duncan McLeod, TechCentral
