| Thu 25 Nov 2010, 17:42 | | HUG - Huge Group Limited - Unaudited interim results of huge for the six months |
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HUG
HUG
HUG - Huge Group Limited - Unaudited interim results of huge for the six months
ended 31 August 2010 and update on the previously announced SSF transactions
HUGE GROUP LIMITED
(Registration number 2006/023587/06)
Share code: HUG ISIN: ZAE000102042
("Huge" or "the Group" or "the Company")
UNAUDITED INTERIM RESULTS OF HUGE FOR THE SIX MONTHS ENDED 31 AUGUST 2010 AND
UPDATE ON THE PREVIOUSLY ANNOUNCED SSF TRANSACTIONS
HIGHLIGHTS FOR 31 AUGUST 2010
* Financial turnaround continues to improve profitability
* Basic earnings per share up 274.8%
* Headline earnings per share up 272.5%
* Long term debt of only R1.3 million
* Net asset value per share up 19.1% to 272.3c per share
The board of directors of Huge is pleased to present the unaudited interim
results for the six months ended 31 August 2010.
UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 31 AUGUST 2010
Condensed Consolidated Statements of Financial Performance
Unaudited Unaudited Audited
31 August 31 August 28 February
2010 2009 2010
(6 months) (6 months) (12 months)
R R R
Revenue 275 371 023 282 009 503 573 516 182
Gross profit 52 590 049 51 076 777 119 495 995
Other income 614 916 2 038 892 830 975
Operating expenses (57 440 528) (49 986 018) (117 045 158)
Operating (loss)/profit
from operations (4 235 563) 3 129 651 3 281 812
Investment income 3 202 968 - 4 485 384
Net change in fair
value of financial
instruments 13 705 772 (9 434 325) 8 360 236
(Loss)/Income from equity
accounted investments (483 934) 329 780 166 284
Finance costs (1 419 221) (4 977 125) (8 038 923)
Profit / (loss)
before taxation 10 770 022 (10 952 019) 8 254 793
Income tax expense (1 676 910) 5 198 665 (187 087)
Net profit / (loss)
for the period 9 093 112 (5 753 354) 8 067 706
Non controlling interest 464 005 (101 263) 961 153
Net profit / (loss) 9 557 117 (5 854 617) 9 028 859
attributable to owners
of the Company
Earnings before
interest, taxation,
depreciation and
amortisation 21 388 735 27 297 667 36 865 712
Basic earnings per share (cents) 9.49 (5.43) 8.58
Headline earnings per share (cents) 9.42 (5.46) 8.79
Diluted earnings per share (cents) 9.49 (5.43) 8.58
Diluted headline 9.42 (5.46) 8.79
earnings per share(cents)
Dividends - - -
Total number of
shares in issue (`000) 95 901 106 167 102 113
Weighted number of
shares in issue (`000) 100 752 107 858 105 199
Earnings/(loss) 9 557 117 (5 854 617) 9 028 859
attributable to ordinary
shareholders
Adjusted for:
Profit on
disposal of property,
plant and equipment (66 600) (37 168) (59 957)
Net loss on further - - 366 773
acquisition of
Eyeballs Mobile
Advertising
Tax effect - - (86 346)
Headline earnings/(loss) 9 490 517 (5 891 785) 9 250 892
Condensed Consolidated Statement of Financial Position
Unaudited Unaudited Audited
31 August 31 August 28 February
2010 2009 2010
R R R
Assets
Property, plant and equipment 36 856 468 50 143 113 43 573 867
Goodwill 215 153 482 223 475 925 215 153 482
Intangible assets 22 196 773 6 612 873 22 106 583
Investments in joint venture 383 042 563 885 540 291
Investment in associates 2 063 986 2 062 025 2 390 672
Investments 389 409 336 840 389 409
Loans to associate companies 234 972 - -
Deferred tax 3 996 975 14 955 720 9 497 797
Current assets
Inventories 28 200 363 23 648 593 14 825 421
Trade and other receivables 135 770 718 101 409 112 108 069 904
Loans to associate companies 1 710 925 1 096 064 1 637 478
Current tax receivable 1 797 816 1 797 816 2 488 386
Cash and cash equivalents 13 540 511 - 11 430 271
Total assets 462 295 440 426 101 966 432 103 561
Equity and liabilities
Share capital 9 590 10 617 10 211
Share premium 221 073 428 228 822 360 226 429 430
Reserves 1 215 038 296 467 1 215 038
Retained earnings 38 864 016 14 423 429 29 306 900
Equity attributable to equity
holders of parent 261 162 072 - 256 961 579
Non controlling interest 257 492 888 476) 721 499
Non current liabilities
Loans from shareholders - 18 416 104 -
Finance lease obligations 1 293 153 7 025 385 4 171 704
Other financial liabilities - - -
Deferred tax - - 3 885 162
Current liabilities
Loans from associate companies 809 006 - 2 208 308
Loans from shareholders 4 425 603 - 8 973 884
Other financial liabilities 850 649 24 659 930 2 606 254
Finance lease obligations 5 547 100 4 833 657 5 199 529
Trade and other payables 187 229 291 107 820 791 147 046 550
Shareholders for dividends 14 952 14 952 14 952
Bank overdraft - 20 666 750 -
Current tax payable 706 122 - 314 140
Total equity and
liabilities 462 295 440 426 101 966 432 103 561
Number of shares in issue (`000) 95 901 106 167 102 113
Net asset value per share (cents) 272.32 228.57 251.64
Net tangible asset value per
share (cents) 24.83 11.85 19.29
Condensed Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
31 August 31 August 28 February
2010 2009 2010
R R R
Net profit (loss) for the
period attributable to owners
of the Company 9 557 117 (5 854 617) 9 028 859
Other comprehensive income
- Gains on property revaluation - - 797 044
Taxation related to components
of other comprehensive income - - (537 865)
Other comprehensive income for
the period net of taxation - - 259 179
Total comprehensive
income/(loss) for the period
attributable to owners of the
Company 9 557 117 (5 854 617) 9 288 038
Condensed Consolidated Statement of Changes in Equity
Unaudited Unaudited Audited
31 August 31 August 28 February
2010 2009 2010
R R R
Balance at 1 March 257 683 078 249 407 489 249 407 483
Total comprehensive income/
(loss) for the period 9 557 117 (5 854 617) 8 326 885
Issue of shares - - -
Purchase of own shares (5 356 623) - (2 393 334)
Share option reserve - - 659 392
Non controlling interest (464 005) (888 476) 1 682 652
Balance at 28 February/
31 August 261 419 564 242 664 397 257 683 078
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
31 August 31 August 28 February
2010 2009 2010
(6 months) (6 months) (12 months)
R R R
Cash flows from
operating activities 22 043 101 (25 393 896) 27 177 889
Cash flows from
investing activities (9 698 693) (3 813 781) (6 203 956)
Cash flows from financing
activities (10 234 168) (5 244 217) (23 370 152)
Net cash movement for
the period 2 110 240 (34 451 894) (2 354 871)
Cash at the beginning
of the period 11 430 271 13 785 144 13 785 142
Cash and cash equivalents
acquired - 41 348
Total cash at the end
of the period 13 540 511 (20 666 750) 11 430 271
SEGMENTAL REPORTING
The directors have considered the implications of IFRS 8: Operating Segments and
are of the opinion that the current core operations of the Group are
substantially similar to one another and that the risk and returns of these
operations are likewise similar. Resource allocation and management of the
current operations are performed on an aggregate basis and as such the business
of the Group is considered to be a single aggregated business. The lines of
revenue are disclosed separately to the chief operating decision maker, the
Group`s CEO, and are therefore reported as such in terms of IFRS 8.
Eyeballs Mobile Advertising (Proprietary) Limited ("Eyeballs") and Huge Media
(Proprietary) Limited ("Huge Media") represent separate operating segments but
are still in the start up phases of their respective businesses and revenues are
immaterial relative to the quantitative thresholds set out in IFRS 8.
The revenue lines are indicative of the products and services the Group
provides. These products and services are distributed countrywide to all clients
with no geographical differentiation.
Revenue by operating segment
Unaudited Unaudited Unaudited
31 August 31 August 28 February
2010 2009 2010
(6 months) (6 months) (12 months)
R R R
Airtime 249 871 646 243 307 822 496 657 976
Connection incentive bonus 13 676 680 29 110 100 57 555 950
Marketing incentive 3 610 740 3 605 730 7 216 320
Telephone managed services 2 254 914 1 844 998 3 469 679
SMS services 2 878 607 2 453 606 5 082 880
International airtime 1 475 913 1 179 062 2 492 624
Hardware rental and sales 690 524 508 186 1 040 753
Advertising income 40 375 - -
Distributer income 871 624 - -
Total revenue 275 371 023 282 009 503 573 516 182
All inter-segment revenues have been excluded.
COMMENTARY
COMPANY PROFILE
Huge is an investment holding company listed on the Alternative Exchange (AltX)
of the Johannesburg Stock Exchange Limited ("JSE"). The Group is focused on
building shareholder value. Its treasury operations are mandated to maximise the
financial position of the Company in the debt and equity markets using cash and
derivative based instruments.
Huge Telecom (Proprietary) Limited ("Huge Telecom"), a wholly owned subsidiary
of Huge and the principal trading operation of the Group, is South Africa`s
leading "Communication Expense Management" and "Managed Telecommunications"
company.
Eyeballs (77% owned by Huge) is a technology provider whose "Eyeballs"
technology consists of a software application that recipient users download and
install on their mobile phones. It displays advertising and content images on
the phone screen when calls are made or messages are received.
Huge Media`s (100% owned by Huge) strategy is to be a media owner focused on the
advertising industry. It commenced commercial operation on 20 January 2010.
Further investor and shareholder information is available at www.hugegroup.com.
ACCOUNTING POLICIES
The condensed consolidated financial statements for the period ended 31 August
2010 have been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRS) and the
presentation and disclosure requirements of International Accounting Standard
34, Interim Financial Reporting, as well as AC500 as issued by the Accounting
Practices Board, the Listings Requirements of the JSE Limited and Schedule 4 of
the Companies Act, Act 61 of 1973, as amended. The accounting policies applied
to the six month period ended 31 August 2010 are consistent, in all material
respects, with those used in the Annual Financial Statements of the prior
periods.
CHANGE IN ACCOUNTING ESTIMATES
In the current period management revised the accounting estimate in providing
for possible bad debts. The effect of this revision is a decrease in the
provision for bad debts for the current period of R1.2 million, and an increase
in the income tax expense of R0.3 million. The after tax effect of this change
in estimate was approximately R0.9 million.
FINANCIAL OVERVIEW
GROUP`S FINANCIAL PERFORMANCE
Huge continues to focus on operational efficiencies, treasury management and
cost containment in an effort to further increase operating profitability and
shareholder value.
The Group has achieved considerable success in each of these areas in the last
six months and continues to strive for further improvement.
INVESTMENT HOLDING ACTIVITIES
The Company has been acquiring its own shares under the general authority
granted to the directors at the last four annual general meetings. The most
recent of these AGM`s was held on Friday, 1 October 2010.
The dates of the acquisitions of the shares are set out below:
Transaction Purchaser Number of Price Total
Date ordinary per value
shares share of
acquired transaction
01 Jun 2010 Huge 3 200 000 75.00 2 416 924.78
10 Jun 2010 Huge 74 500 75.00 56 275.37
11 Jun 2010 Huge 320 330 80.00 257 271.17
15 Jun 2010 Huge 836 910 80.00 668 058.89
18 Jun 2010 Huge 8 015 81.00 6 519.44
20 Jun 2010 Huge 12 000 86.00 10 329.87
21 Jun 2010 Huge 106 000 84.00 89 415.47
28 Jun 2010 Huge 244 600 89.00 219 945.11
29 Jun 2010 Huge 72 000 98.00 71 047.34
30 Jun 2010 Huge 1 337 750 116.00 1 560 836.09
Total 6 212 105 5 356 623.53
On a net basis the Group has repurchased exposure over 15 859 031 ordinary
shares giving the Company the future prospect of reducing the number of ordinary
shares in issue to 95 900 969.
TELECOMMUNICATIONS ACTIVITIES
Huge Telecom is the Group`s principal revenue generator.
Total turnover generated in the six months ended 31 August 2010, showed a
decrease of 2.3% to R275.3 million, from the R282.0 million generated during the
six months to the end of August 2009.
The decline in total turnover is a direct result of the decisions of the major
mobile network operators (MNOs) to cease paying connection incentive bonuses
(CIB). CIB revenues earned by Huge Telecom in the current period were R13.7
million compared to R29.1 million in the prior period. Although the loss of CIB
revenue will affect Huge Telecom`s revenue line, the Group has identified cost
containment measures in respect of this revenue item, which will largely
eliminate the impact on operating profit margins over the medium to longer term.
Excluding the effects of lost CIB revenue, overall Group revenue reflects an
improvement in the current period. Cellular airtime sales increased 2.7% from
R243.3 million to R249.9 million. Sales of other products and services
increased 23.4% from R9.6 million to R11.8 million. The directors of Huge
Telecom believe that the significant investment which it made in new executive
and senior management skills will support a continuation of this positive trend.
Gross profit for the first six months of the year amounted to R52.6 million, an
increase of 3.0% from the R51.0 million recorded in the first half of the 2009
financial year.
The increase in gross profit margins was primarily due to further improvements
in the management of Huge Telecom`s directly controllable input costs. The
revenue assurance department that was established in the prior reporting period
to enhance the management of airtime available for sale was instrumental in
continuing to reduce the airtime lost through expiry.
MEDIA ACTIVITIES
Eyeballs continued to develop its proprietary in-application mobile phone
advertising technology, in support of its technology provider strategy.
The Eyeballs technology is available for all Symbian Smartphones (which includes
most Nokia phones and several LG, Samsung and Sony Ericsson models). The
BlackBerry version was successfully released, as planned, in June 2010. Other
operating systems will continually be considered based on the size of the
addressable market. Currently, Blackberry installations account for four out of
five successful downloads.
The technology was independently valued at R16 million on the acquisition of a
controlling interest in Eyeballs by the Group and is recognized as a technology-
related intangible asset of the Group in terms of IAS38: Intangible Assets and
IFRS 3: Business Combinations.
Huge Media, a wholly owned subsidiary of Huge, which was established with the
objective of taking the Eyeballs` technology to market under the consumer brand
name "Goodyz" has acquired more than 65 000 installed users since its commercial
launch in late January 2010. To date Goodyz has served 43 million user
impressions, of which 28.7 million were available to be sold for advertising.
At an expected retail rate, based on similar retail rates of other types of
media, of 15 cents per advertising impression the revenue generating capability
of Huge Media is substantial.
GROUP OPERATING EXPENSES
Group operating expenses incurred during the period increased by R7.5 million
from R49.9 million to R57.4 million.
This increase is predominantly attributed to employment costs, which increased
from R30.4 million to R38.0 million. Because Huge Telecom`s fixed overhead
platform has the capacity to support a twofold increase in volumes, the Group
can leverage the existing overhead platform to increase operating profit
margins. These investments in skills to support significant growth in
throughput, which were initiated in the previous financial year, resulted in
increased employment costs. The Huge directors continue to regard these
investments as a catalyst for sustainable profit growth. The positive effects of
the investment have already been felt.
The level of bad debts in the current period continued to decline, showing a
decrease of R2.3 million versus the comparative reporting period as a result of
the Group`s continued focus on the management, analysis and categorisation of
the debtors` book of Huge Telecom. The current provision of R10.6 million is
considered to be an adequate bad debt provision. Management continues to believe
that a normalised bad debt to revenue ratio of 1% represents the inherent risks
in a business such as Huge Telecom. Huge Telecom`s current policy in providing
for possible bad debts is as follows:
a 50% of all debtors older than 180 days with an active, status;
b 50% of all "disconnected" debtors;
c 70% of all "handed over" debtors;
d 100% of all "liquidated" debtors;
e 20% of all debtors on an agreed "payment plan";
f 30% of all "suspended" debtors;
GROUP NET CHANGE IN FAIR VALUE OF FINANCIAL INSTRUMENTS
The gain on single stock futures (SSFs) and contracts for difference (CFDs)
increased the pre-tax earnings of the Group by R13.7 million in the six month
period ended 31 August 2010 - this compared to the loss of R9.4 million in the
comparative prior period.
GROUP PROFIT
The Group reported net profit before taxation of R10.7 million for the six month
period ended 31 August 2010, reflecting an increase of 198% compared to the loss
of R11.0 million reported in the six months ended 31 August 2009.
The Group achieved net profit after tax for the six months ended 31 August 2010
of R9.6 million, up 263% from the 31 August 2009 results.
BALANCE SHEET CONSIDERATIONS
The increase in inventories is a result of recent change in suppliers of airtime
to Huge Telecom. Management expects significant destocking in the second half
of the financial year.
The increase in inventories and accounts receivable balances is supported by a
similar increase in accounts payable, thereby positively impacting cash and cash
equivalents. Cash generated from operating activities during the six month
period ended 31 August 2010 amounted to R22.0 million, which compares favourably
to earnings before interest, taxation, depreciation and amortisation (EBITDA),
which amounted to R21.4 million.
Long-term debt, including finance lease obligations and loans from shareholders,
declined R7.5 million during the period under review.
The board of directors has considered the impact of the termination of CIB
revenue and is of the opinion that over the medium term cost containment
measures and alternative strategies identified by the Company will largely
eliminate the negative effects of the termination of CIB revenue. Accordingly,
the directors are of the view that no impairment of goodwill is required in the
current period.
FUTURE PROSPECTS
While the Group anticipates increasing returns from its investment in Huge
Telecom in the medium to long term, factors outside the control of the
directors, such as the termination of CIBs, negatively impacted the
profitability of the Company in the current period. Accordingly, Huge Telecom is
focussing on ensuring that the company has the required flexibility to navigate
any short term industry changes.
Investor interest in the Eyeballs technology is growing and is indicative of the
underlying value of this investment.
Investment Holding Activities
The Group will continue to consider the purchase of shares in the Company that
trade at a discount to its fair value by making use of its general authority to
repurchase shares. This general authority is limited to a maximum of 20% of the
issued ordinary share capital and will be used by Huge to unlock long-term value
for shareholders.
Telecommunication Activities
Huge Telecom remains committed to its strategy of providing a complete spectrum
of managed telecommunication services to South African businesses. During the
period under review, it continued to improve its positioning to benefit directly
from the increased demand for managed services including Communications Expense
Management.
Huge Telecom continues to monitor developments in the telecommunications
industry to ensure that its business model is appropriate, optimal and
sustainable.
The recent decisions of the major MNOs to cease payment of CIBs only to those
customers acquiring SIM cards for use in providing managed telecommunications or
traditional LCR (least cost routing) services has been considered by the
company.
Although CIB is treated as turnover from an accounting perspective, it is better
reflected as a reduction in the wholesale input cost of terminating minutes on
the networks of the MNOs. This reduction in cost can be aggregated with the
retail discounts currently enjoyed by the company.
Accordingly, the termination of CIB by the major MNOs has had the effect of
raising the input price of wholesale suppliers in the industry by approximately
30%, which effect is totally opposite to the stated objectives of the Department
of Communications (DOC) and ICASA (the Independent Communications Authority of
South Africa) of lowering call termination charges in South Africa.
Huge welcomes the announcement made by ICASA on 29 October 2010 of an impending
drop in interconnect rates between telecommunications providers in South Africa
on the basis that the reductions in interconnect rates should reverse the
effects of the termination of CIBs referred to above.
Huge Telecom, a significant wholesale client of the MNOs, supplies mobile voice
services to 6,000 clients across South Africa, totalling some 500 million
outbound mobile airtime minutes per annum. Because of this significant client
base Huge Telecom has the bargaining power to negotiate favourable terms of
trade.
The industry regulator, ICASA, announced that from 1 March 2011, peak mobile
termination rates will drop to 73 cents per minute, from the current level of 89
cents per minute, the peak national fixed line termination rate will decline to
28 cents per minute, and the peak local fixed line termination rate will drop to
20 cents per minute. Further reductions are to be enforced in 2012 and 2013.
Huge expects that the Least Cost Routing industry will be an immediate
beneficiary of the regulated price reductions. Huge expects market forces to
drive price point parity in wholesale termination rates, with a positive impact
on revenues and profits.
A reduction in input costs could translate into additional profit for Huge
Telecom as well as downstream benefits for Huge Telecom`s clients.
Huge Telecom`s business model has deliberately avoided the large capital
investments in infrastructure required by a VoIP (voice over Internet protocol)
over legacy Diginet operation, whilst delivering a competitive offering as a
leading player in its target market.
Huge Telecom welcomes lower termination rates on the basis that lower
termination costs will drive down input costs, increase demand, and deliver
growth in the voice traffic generated by Huge Telecom`s 6,000 clients.
The current business models involving the provision of VoIP generally require
the commissioning of Diginet leased lines, copper cables supplied by Telkom that
serve the purpose of mimicking the copper last mile. New technologies are
reducing the reliance on the copper last mile to homes and businesses, with an
emphasis on a wireless last mile. Huge Telecom, with its 32,000 network and
customer premises equipment components, is a current provider of the equivalent
of a wireless last mile.
Huge Telecom believes that VOIP over a wireless environment will replace VOIP
over a fixed line Diginet environment.
Huge Telecom will continue focusing on introducing alternative revenue streams
that complement its business. It will also pursue opportunities to increase its
client base to enhance capacity utilisation and further improve gross and
operating profit margins.
Media Activities
Having established the commercial viability of its product set in South Africa,
Eyeballs is exploring partnerships to deploy its offering in the international
market. To this end, a number of international distribution agreements have
already been signed.
It is the view of the board of directors of Eyeballs that the technology
represents an international rather than local opportunity - notwithstanding its
success to date in the South African market.
Huge Media continues to expand its base of installed users in the South African
mobile advertising market. Vodacom, South Africa`s largest mobile phone
operator, currently has more than 2.5 million Smartphones on its network, up 65%
over the prior year. On the basis that Vodacom estimated its share of the
mobile market at 53% at the end of March 2010, Huge Media estimates that the
market for mobile Smartphones in South Africa is approximately 4.7 million
devices. As at the date of this report, and since its commercial launch in
South Africa in January 2010, the Eyeballs technology has been installed
successfully on approximately 64 000 compatible devices. Further South African
growth in users is expected to be substantial.
GENERAL REPURCHASE OF SHARES FOR CASH
From 1 March 2010 to 31 August 2010 financial year Huge repurchased 6 212 105
shares. The Company has been unable to cancel these shares in accordance with
Section 85 of the Companies Act (Act 61 of 1973), as amended, as errors have
been identified on the CM15 forms previously submitted by the Company to CIPRO.
The Company is in the process of submitting CM16 and CM14A forms to CIPRO with a
view to correcting these errors. On confirmation from CIPRO that the updated
CM16 and CM14A forms have been registered the Company will take the necessary
steps to cancel the shares and terminate them from listing on the JSE. The cost
of the shares acquired was R5 356 624 and the average price was 86.2 cents per
share.
LEGAL AND REGULATORY REQUIREMENTS
Shareholders are referred to the condensed audited results of Huge for the year
ended 28 February 2010, which results were released on SENS on 31 May 2010. The
condensed audited results included a modified audit opinion as a result of the
auditors identifying what they believed to be a reportable irregularity. The
Company`s directors continue to believe that, having regard to the information
currently available, no reportable irregularity has taken, or is taking, place
for the reasons set out in the SENS announcement.
CIRCULAR
Shareholders are referred to the previous announcements dated 27 November 2009,
29 March 2010, and 3 May 2010 updating shareholders on the progress made by the
Company in producing the circular required by the JSE Limited ("the JSE") in
terms of certain SSF transactions undertaken by the Company on 16 October 2008.
In terms of the SENS announcement dated 3 May 2010 it was anticipated by the
directors that the circular would be approved by the JSE and posted by the
Company to shareholders on or about 17 May 2010, with a general meeting of the
Company scheduled to take place on or about 8 June 2010.
The Company was given permission, in terms of the JSE`s approved process, to
submit the circular for formal approval on 7 June 2010.
On the 30th September 2010 the JSE Limited wrote to the Designated Advisor to
the Company, expressing its concern about the content of the circular in
question and declining the approval thereof.
The 30 September 2010 Letter was extensive, incorporating 99 paragraphs and 23
pages of comment relating to the subject matter of the circular. The Company
replied swiftly to the comments raised by the JSE by incorporating these
paragraphs, where applicable, verbatim into the circular. The revised circular
was emailed to the Designated Advisor on or about 7 October 2010 and forwarded
to the JSE shortly thereafter.
On 14 November 2010 the JSE wrote to the Designated Advisor requesting them to
cross reference the circular with the 30 September 2010 Letter. The amended
circular, incorporating the requested cross-referencing, was delivered to the
JSE on 17 November 2010. The Company accordingly awaits the approval of the JSE
of the circular.
The failure to close the matter is of concern to the board of directors of the
Company. However, the board of directors is committed to resolving the matter
within the time frames and processes stipulated by the JSE.
The Company is therefore no longer in a position to estimate the date of
approval by the JSE of the circular in question. Shareholders will be advised
as soon as the circular has been approved by the JSE.
SUBSEQUENT EVENTS
No events material to the understanding of this report have occurred in the
period between the period-end date and the date of this report.
CHANGES TO THE BOARD OF DIRECTORS AND COMPANY SECRETARY
With effect from 4 August 2010, Mr Manogaran Pillay resigned from the board of
directors. Mr Pillay remains a director of Huge Telecom.
With effect from 6 October 2010 Mr Anton Daniel Potgieter resigned as Executive
Chairman of the Company and from the office of Executive Chairman of the board
of directors. Mr Potgieter remains an executive director of the Company and a
member of the board.
With effect from 6 October 2010 Mr Stephen Peter Tredoux was appointed to the
office of Chairman of the Company and the board of directors. Mr Tredoux remains
a non-executive director of the Company.
With effect from 21 October 2010, Mrs Michelle Allison Meth resigned from the
board of directors. Mr James Charles Herbst will be acting as interim financial
director whilst the Company secures the services of a new financial director.
DIVIDENDS
No dividends will be declared.
GOVERNANCE
The Group recognises the need to conduct its business with integrity,
transparency and equal opportunity and subscribes to the spirit of good
corporate governance as set out in the King III Report on Corporate Governance.
JOHANNESBURG
25 November 2010
Designated Advisor:
Arcay Moela Sponsors (Proprietary) Limited
Number 3, Anerley Road, Parktown, 2193
Auditors:
KPMG Inc.
KPMG Crescent
85 Empire Road, Parktown, 2193
Registered office:
Block 2, Woodlands Drive Office Park, 5 Woodlands Drive, Woodmead, Johannesburg,
2191 (PO Box 16376, Dowerglen, 1610)
Transfer secretaries:
Computershare Investor Services (Proprietary) Limited, Ground Floor, 70 Marshall
Street, Johannesburg
Directors:
SP Tredoux (Non-executive Chairman), KD Jarvis* (Lead Independent Director), BA
McQueen*, D Tredoux*, MR Beamish*, JC Herbst (CEO & Acting Financial Director),
AD Potgieter, VM Mokholo
*Non-executive
Date: 25/11/2010 17:42:20 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
