Huge Group said yesterday that despite global and local economic conditions deteriorating significantly, it had grown value of its portfolio and was positioning itself to be a leading provider in the mobile virtual network operator (MVNO) market.
In its results for the six months ended August 31, 2022, the JSE-listed technology investment group whose subsidiaries operate in the telecommunications, media, technology, and software industries, said its net asset value over the past six months had increased from 897 cents per share to 939c per share.
Huge Group has nine principal investments, which contribute to the portfolio’s total value, which is in excess of R1.5 billion.
“We believe that this value is realisable, and although we are cognisant of calls to unlock this value through disposals, we are weighing up these calls against our desire to build the portfolio and continue to increase its value. It is our belief that the current discount to net asset value, reflected in the current share price, will narrow as we realise value from certain investments,” the group said.
Earnings per share were down 42.30c, an 85% drop, from 273.31c a share the prior comparative period, while headline earnings per share increased by nearly 22% to 42.19c in the comparative period.
No dividends have been declared or paid for the period.
Huge group non-executive chairman Veran Kathan said during the period under review, the value of its connectivity investments, comprising Huge Connect, Huge Distribution, Huge Networks, and Huge Telecom decreased because of higher costs of capital and a lower growth backdrop.
“This has been offset by value increases from our recent investments in Glovent and Tethys Mobile, which are x-tech investment opportunities, and Interfile, which is a software investment opportunity,” he said.
Huge CEO James Herbst said the group’s strategy was centred on managing its portfolio of investments to generate greater revenue, margin, profit, and cashflows, generating returns from the receipt of interest and dividends from these investments, as well as generating profit from the disposal of investments.
"Its approach is that of an investment holding entity as opposed to a consolidated operating group,” he said.
Herbst said the investment firm’s board strategy was to deepen its exposure to software and x-tech markets and, in this regard was actively pursuing acquisitions in these markets to augment its current investment portfolio.
He said the Huge Group also entered the MVNO market.
Kathan said Huge Group invested in Tethys Mobile and intended to change its name to Huge Digital as it planned to position it as a leading provider of software services for digital enablement in the MVNO market.
“MTN has recently published an RFP (request for proposal) for digital enablement services, and Huge Digital is responding. We invested in Tethys Mobile because we understand the value of its MVNO digital enablement platform, but our investment could not have been better timed.”
He said shortly after concluding restructuring agreements, the world for branded MVNOs opened.
“There are now many brands in many industries, numbering in the hundreds, who desire to own the digital channel between themselves and their customers – and to do so successfully will require virtual access to a mobile network and access to the digital platforms owned by Huge Digital,” he said.
The group recently had three non-executive directors resign.
“We acknowledge the resignation of three non-executive directors, all of whom are very respected businessmen. We have taken the opportunity by adding new directors with significant experience in transformation, telecoms, credit, mergers and acquisitions, and financial services to an already existing seasoned group of directors,” Kathan said.
Looking forward, Kathan said: “While considerable uncertainty remains because much of the global economic outlook is negative, we remain optimistic about our growth prospects.”
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