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Woosh narrows annual loss as accounts tagged by auditor

By Pattrick Smellie, 11 Mar 2015
FYI, this story is more than a year old

Woosh Wireless's financial statements have been tagged by its auditor as the internet service provider narrowed its annual loss by clamping down on costs to offset falling sales.

The Auckland-based company narrowed its loss to $1.32 million in the year ended Aug. 31, from an earlier loss of $2.59 million it said in its financial statements lodged with the Companies Office. Sales fell 22 percent to $12.55 million while total expenses decreased 21 percent to $13.77 million.

Craig Wireless Systems, which is based in California and listed on Canada's TSX, bought 51 percent of Woosh for US$5.5 million in 2011 in a deal to satisfy $20.6 million of debt owed to then-investor Kuwait Finance House. The following year it lifted its stake to 75 percent with an equity injection of US$1 million.

In a note to its financial statements, Woosh said its accounts had been prepared as a going concern and while the loss incurred had depleted its cash resources it was cutting costs to stem further losses. It forecast "further cash injections will be required in order for future cashflow requirements to be met" and had support from Craig Wireless for the next 12 months from balance date.

In its emphasis of matter, auditor William Buck Christmas Gouwland said, without qualifying its opinion, that Woosh's current liabilities exceeded its current assets, and there was "material uncertainty that may cast significant doubt about the group's ability to continue as a going concern". In a letter to the auditor, Craig Wireless said it would provide additional support to Woosh and wouldn't ask for its shareholder loans to be repaid.

As at Aug. 31, Woosh had $7.28 million in shareholder loans, while its cash on hand had shrunk to $184,000 from $448,000 a year earlier.

In August, Woosh started upgrading its sites to cater for 4G technology, completing the first site in November, and anticipates the roll-out will be completed in 18 months. In December, the Ministry of Business, Innovation and Employment granted the telecommunications company a two-year extension to meet compliance requirements related to its 2.3 Gigahertz spectrum rights, giving it until December 2016.

In December, Craig Wireless lodged its financial statements, which show Woosh accounted for the bulk of its annual revenue of C$11.7 million in the year. Craig Wireless said its continuing operations are dependent on its ability to roll-out a 4G network, generate revenue from its subscribers and receive either equity or debt financing. It was also in negotiations with a strategic operating partner.

"The company is currently in discussions with certain related parties in respect of the provision of additional financing to the company in support of its operations and has received expressions of interest in that regard," Craig Wireless said in a statement at the time. "The company will make further announcements upon any developments as they occur."

Craigs Wireless reported a net loss of C$10.8 million in the 12 months ended Aug. 31 compared to a loss of C$10.7 million a year earlier, which stemmed from the telecommunications company's share of losses of joint ventures through the write down in value of Norway spectrum, an impairment on the value of its Greek network assets, and the recording of a convertible debenture in the last quarter of the year, it said.

The group had an operational cash outflow of C$5.7 million in the year, leading to a net decline in cash and equivalents of C$2.5 million, and Craig Wireless's accounts were also tagged by auditor MNP without qualifying its opinion.

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