JSE-listed Huge Group, on Wednesday reported a massive 168% rise in operating profit for the year ended February 2018, to R113 million.
Huge Telecom is a voice connectivity or telephony services business that makes use of GSM to provide a wireless ‘last mile’ connection from the customer’s premises to the core of the network (the last mile is the final connection from the core network to the customer’s premises).
Its principal service is substituting fixed-line voice infrastructure, like that provided by a public switched telephone network such as Telkom, with wireless GSM solutions.
The company has more than 15,000 customers (representing approximately 40,000 telephone lines) which comprise corporate organisations of any size and residential consumers, who require a fixed location voice connectivity service.
Through Huge Connect, the group provides connectivity to the card payment terminals of merchants, payment service providers and the commercial banks in South Africa by making use of secure, managed, dual SIM connectivity over GSM data networks. It has over 28,000 merchants as customers.
The company has also expanded into other markets for payment connectivity, including connectivity for ATMs, integrated points of sale, medical/script verifications, telemetry applications, micro-lending applications and cash vaults.
The group said that headline earnings per share increased to 46.34 cents, from 26.30 cents in the prior period.
Total revenue climbed to R401.4 million, from R246 million previously, while earnings before interest, tax, depreciation and amortisation was up to R128 .5 million, from R52.54 million.
Looking ahead, Huge said that its introduction into payment connectivity via Huge Connect will inevitably lead it into related services and ultimately Fintech, “where we anticipate delivering disruptive and innovative solutions to our customers, in partnership with financial institutions”.
“The group is positioned to further invest in extending its current service offerings, as well as deepening them. Each investment will be intentionally designed to increase the size of the customer real estate, which could include niche connectivity solutions, focussed inter alia on opportunities that complement and strengthen existing product and service offerings,” it said.
It noted that the Bureau for Economic Research put the number of formal sector SMEs at around 462,815 at Q2, 2015. “From this data it is apparent that the group is well positioned in the SME market,” it said.
“Following from the success of FY2018, Huge has established its credentials as a large SME service provider, offering connectivity and mobility solutions. Huge has now aggregated a product and service suite that offers significant growth opportunities. In addition, the group’s larger scale, earnings diversification and cash flows have provided it with improved access to debt and equity capital markets.”
“Acquisitive activity will continue to be essential to the ‘Growing Huge Strategy’, with bolt-on acquisitions and service-diversification investments being actively pursued,” it said.