Huge shares ease as firm moves to make acquisitions

HUGE Group shares eased more than 2 percent yesterday following reports that the company was involved in plans to make strategic acquisitions in the near future.

The slump ended a threemonth rally by the company on the JSE which saw its stock gaining more than 21 percent.

The company advised its shareholders that it could be looking to make more purchases.

“Shareholders are referred to the renewal of the cautionary announcement, dated August 22, and are advised that Huge remains in exclusive discussions in respect of potential strategic acquisitions which, if pursued, would constitute, on an aggregated basis, a category 2 transaction,” the group said.

The company issued the first cautionary announcement in July and it followed it with another one a month later.

It is not the first time that Huge Group has been involved in the acquisition talks with another company.

Last year, the JSE-listed telecommunications company reached an agreement to acquire ConnectNet Broadband Wireless and its wholly owned subsidiary, tier-one internet service provider Sainet, for R275 million.

The deal also involved the Huge Group taking over ConnectNet debt of R142.9m.

James Herbst alluded last year that they want to grow the business both organically and through the acquisition of complementary businesses.

In the results for the year to end February, the group reported 14 percent growth in revenue to R245.99m.

Earnings before interest, tax, depreciation and amortisation (Ebitda) was 61 percent higher to R53m, up from R33m reported a year earlier.

Ebitda margin also increased to 21.4 percent from 15.1 percent.

Herbst said during the results presentation that the future growth prospects emanating from the continued high growth in mobile connectivity, the emergence of services as the next growth area in the mobile industry, scaling, increased capital, an expanding customer base of small medium enterprises, reducing costs of sale, rising retail prices, widening margins and the impact of leveraging cross-selling and crossover opportunities is largely positive for the company.

The group is expected to release its interim results for the six months to end August sometime in November.

Hugo shares closed 1.13 percent lower on the JSE yesterday at R8.74.