Huge to continue despite further losses
Alt-X listed Huge Group says it will press on despite suffering yet another operating loss for the year ended February 2013.
Revenue declined to R266.3 million, from R384 million in 2012, but the group reduced its operating loss to R1.22 million, from R2.97 million before.
Huge Group did however; report a net loss for the period of R11.89 million, from a prior loss of R4.4 million, and a headline loss per share of 4.1 cents, from 5.9 cents in 2012.
“The board has made a detailed assessment of the going concern capability of the group with reference to certain assumptions and plans underlying various cash flow forecasts.
“The board has not identified any events or conditions that individually or collectively cast significant doubt on the ability of the company and the group to continue as a going concern,” it said.
Huge’s telecom grouping is its principal revenue generator, but declined to R266 million from R384 million in the previous year, a decrease of 30%.
Huge Telecom and Huge Mobile provide voice, messaging, data and video connectivity services utilising a wireless, GSM-based, fixed-cellular, last-mile solution.
Looking ahead, the group said that a key to revenue growth in the future is the number of active selling Business Partners. “Huge Telecom sees the appointment of an increasing number of Business Partners as an effective recipe to combat current and future churn.
“Business Partner activity will have a material impact on the sale of new connections and on revenue in the future. This is the focus for FY14 – to increase the number of actively selling Business Partners,” it said.
Huge attributed the declines in revenue in FY13 to churn and not from a lack of sales effort or an inability to activate new connections.
“The current trend for churn appears to suggest a reversal – when comparing FY13 to FY12. However, high volume customers (measured by minutes per connection) have been lost and low volume customers (measured by minutes per connection) acquired, which explains the continued declines in revenue,” the group said.
“Having said that, the prospects look good – churn continues to decline and sales of new connections through the channel continue to improve,” Huge said.
Huge Telecom has also been successful in increasing its fixed annuity income stream which consists of channel and site management fees as well as line rentals, all of which are protected from price compression, the group said.
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