Axia Releases Results for Fiscal 2010 and Q4FY10
- Broadband Services revenue increased 5% to $56.2 million for fiscal
2010 from $53.5 million for fiscal 2009.
- Consolidated revenue for the fourth quarter increased 4% to
$18.3 million from $17.6 million for the prior quarter.
- Private sector business on the Alberta SuperNet continues to grow and
now represents 13% of the total bandwidth sold by Axia as compared to
10% at June 30, 2009.
- Covage's total bandwidth grew to 72 Gbps at the end of June 2010 as
compared to 18 Gbps at the end of last fiscal year.
- On September 1, 2010, retail service providers initiated commercial
services using OpenNet.
CALGARY, Sept. 21 /CNW/ - Axia NetMedia Corporation (Axia or the Corporation) today announced the results for the fourth quarter and fiscal year ended June 30, 2010.
Art Price, Chairman and CEO commented, "During fiscal 2010, Axia's sales continued to grow according to plan and new trends in the ICT sector evolved to become part of mainstream strategic planning amongst industry leaders. The four key trends are Cloud Computing, Software as a Service, data mobile services and sensor technologies. Over time these will become the key drivers of demand for Axia's Next Generation Network Services."
Operational Highlights
Alberta
Axia continues to experience demand for its high availability Real Broadband(TM) services as its customers' needs evolve. The Alberta SuperNet's provincewide footprint enables Axia services to be offered in each community and forms a foundation for its customers to make investments in assets and technology that enable end users to participate in the digital revolution. The Alberta SuperNet value proposition of high performance for low cost is aligned with customer requirements that focus on productivity and cost efficiency. Axia also provides Real Broadband(TM) directly to 3,938 Government of Alberta (GoA) sites.
Axia is working with the GoA to leverage the Alberta SuperNet to enable the GoA to take advantage of Software as a Service and Cloud Computing services. This new approach increases ICT-based services and can be delivered for less cost.
During the fourth quarter of fiscal 2010, private sector business growth continued and now represents 13% of the total bandwidth sold by Axia on the Alberta SuperNet. As of June 30, 2010, Axia had 76 customers in 311 communities with an aggregate total of 785 connections as compared to 298 communities and 763 connections at the end of March 31, 2010.
France
Covage's network deployment schedule and initial market adoption remain on track. As at June 30, 2010, Covage had 61 customers with 1,206 broadband connections consisting of 743 bandwidth connections and 463 dark fibre connections. Total bandwidth grew to 72 Gbps at the end of June 2010 as compared to 18 Gbps at the end of last fiscal year. Covage's addressable market is approximately 34,000 sites. As of June 30, 2010, Covage had an addressable market penetration estimated at 3.5%.
During fiscal 2010, Covage developed a new offer targeting 200 specific business parks with close to 5,000 businesses for which the connection costs would be minimized through the deployment of fibre in existing infrastructure. This strategy is supported by a government initiative to encourage migration of business parks from DSL to fibre. Covage now has 109 business parks with fibre to the premise services available to 5,000 potential end users. Covage intends to launch a marketing campaign in partnership with 12 retail service providers targeted at small- and medium-sized businesses that allow them to bundle bandwidth from several end users in the business parks.
As of today, Covage has five outstanding bids for regional network segments. Decisions are not expected on these bids until calendar 2011. Covage reviews opportunities in light of market conditions and the degree to which the opportunities complement Covage's existing assets.
Singapore
OpenNet's construction of the passive infrastructure of the Next Generation National Broadband Network (NGNBN) has been under way since the summer of 2009 and is on schedule for completion by the middle of 2012. On April 28, 2010 OpenNet announced the commencement of commercial operations and is now selling services to parties qualified by the Infocomm Development Authority of Singapore on the portion of the network that is complete. At the end of June, 40% of the construction had been completed. On August 31, 2010 Nucleus Connect, the official NGNBN Operating Company, announced the start of its commercial operations and that it had already signed up five retail service providers who have packaged and are reselling broadband services to end users.
OpenNet owns the only FTTP grid that is organized to provide passive fibre-based services to essentially every residential and commercial premise in Singapore. OpenNet's business is providing these passive services on an open access level playing field basis to retail service providers. OpenNet's prices and services are targeted at making OpenNet's fibre grid the preferred fixed wireline network in Singapore.
New Opportunities
Axia continues to evaluate potential opportunities in Asia, Europe and North America.
On February 16, 2010, the Government of Catalonia (GoC) in Spain issued a tender for the "Xarxa Oberta Project" (meaning the Open Network Project). The objective is to deploy fibre network infrastructure throughout Catalonia that interconnects all of the municipalities of Catalonia. Axia submitted a response to the tender and engaged in the competitive dialogue process. Subsequent to this tender, the GoC issued an update to the tender requesting first that a pilot project to 700 sites be undertaken. On September 15, 2010, Axia submitted a revised response to the GoC in respect of the pilot project.
At the end of January 2010, the Corporation responded to the New Zealand Government's Ultra-Fast Broadband Initiative - Invitation to Participate in the Partner Selection Process (UFB Initiative) and in August 2010, it submitted a refined bid as part of this process. On September 9, 2010, Crown Fibre Holdings Ltd. (CFH), the Crown-owned entity created to manage the New Zealand Government's investment in the UFB Initiative, announced that Axia was not short-listed and stated the reason being that Axia's bid included certain elements that were not part of the Government's UFB policy. Axia has also been involved in the Government of New Zealand's Rural Broadband Initiative (RBI) and bids are due in November 2010. As key elements of Axia's national UFB Initiative proposal served to also support the rural and wireless sectors, the Corporation is evaluating whether Axia's continued participation in the Rural Broadband Initiative competitive bid process is worthwhile.
FY10 and Q4FY10 Consolidated Financial Information
Consolidated revenue for the fourth quarter was $18.3 million, an increase of $0.7 million or 4% from $17.6 million for the prior quarter. Consolidated revenue for fiscal 2010 was $68.5 million, a decrease of $1.3 million from the $69.8 million reported for fiscal 2009. Broadband Services revenue has generally increased quarter over quarter. As of June 30, 2010, Broadband Services revenue had increased 5% to $56.2 million from $53.5 million as of June 30, 2009. However, Other Services revenue has fluctuated significantly as it is driven by network construction, connection and activation activities which vary quarter by quarter.
Consolidated gross profit for the fourth quarter was $6.9 million or 38% of revenue which is an increase of $0.7 million or 10% as compared to $6.2 million or 36% of revenue for the prior quarter. As compared to last year, gross profit decreased by $2.9 million or 10% of revenue to $25.3 million or 37% of revenue.
Net income for the current quarter was $2.0 million ($0.03 per fully diluted share) as compared to $0.4 million ($0.01 per fully diluted share) for the previous quarter. The net income for the current year was $3.4 million ($0.05 per fully diluted share) compared to $6.0 million ($0.09 per fully diluted share) for the prior year. Net income for the current year was adversely impacted by a significant increase in non-cash depreciation and amortization expense for the European business segment which rose by $3.1 million from fiscal 2009, and reflects the number of new regional network segments entering the early activation phase in France.
As at June 30, 2010, the Corporation's working capital was $21.8 million as compared to $11.5 million at June 30, 2009. This net increase of $10.3 million is the net result of the following: (i) an increase in working capital of approximately $12.6 million as a result of the planned dispositions of a portion of the Corporation's interests in regional network companies (which hold its regional network segment interests) to an institution in France; (ii) an increase in working capital as a result of the credit facility obtained in Hérault, a regional network segment in France; and (iii) cash provided by operating activities. As at June 30, 2010, Axia had $22.8 million in cash and unrestricted short-term investments.
Outlook
Axia's business is based on Next Generation Networks that are increasingly seen as critical infrastructure to enable end users to improve their productivity and efficiency. Most of the digital based technology being developed depends on next generation network connectivity. These characteristics are becoming better understood by progressive jurisdictions and as a result, the related public policy and telecom regulation is being reviewed and adjusted to enable deployment of this critical infrastructure. The Corporation will continue to invest business development funds to investigate and assess the best available opportunities globally. Axia's management and the Board of Directors (Board) assess the attractiveness of each new opportunity, including the value of momentum and market position, and consider the need for any additional capital required and the cost of such capital from all available sources.
Axia intends to maintain its strong balance sheet approach. Management and the Board will consider all of these factors as it seeks the path that it believes will maximize longer-term shareholder value.
Conference Call Scheduled
A conference call with the financial community will be held on Wednesday, September 22, 2010 at 3 p.m. (Eastern), 1 p.m. (Mountain). Axia Chairman and CEO Art Price, Axia Canada President and Executive Vice-President Murray Sigler, and Chief Financial Officer Peter McKeown will participate.
To participate in the conference call, please dial (647) 427-7450 in Toronto and internationally. If you are connecting from other parts of Canada, dial 1-888-231-8191. Please call ten minutes prior to the start of the call. In addition, a live webcast (listen only mode) of the conference call will be available at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3155460
Participants are invited to submit questions by email before and during the conference call. Please send them to [email protected].
A replay of the conference call will be available at (416) 849-0833 or 1-800-642-1687, passcode 89242734 from 6 p.m. (Eastern) Wednesday, September 22, 2010 to midnight (Eastern) Wednesday, September 29, 2010 or through the webcast archives at www.newswire.ca.
About Axia
The audited Consolidated Financial Statements for the year and quarter ended June 30, 2010 and related Management's Discussion & Analysis have been reviewed and approved by the Corporation's Audit Committee and Board of Directors. These reports have been filed on SEDAR at www.sedar.com and also posted at www.axia.com.
Axia sells Real Broadband(TM) and passive services on Next Generation Networks that have implemented the Axia NGN Solution. The Axia NGN Solution has been implemented in Alberta, France and Singapore. Axia trades on the Toronto Stock Exchange under the symbol "AXX".
This News Release contains forward-looking statements, including, without limitation, statements containing the words "should", "believe", "anticipate", "may", "plan", "will", "continue", "intend", "expect", "estimate" and other similar expressions which constitute "forward-looking information" within the meaning of applicable Canadian securities laws. These statements are based on our current expectations, estimates, forecasts and assumptions about the operating environment, economies and markets in which we operate and are subject to important assumptions, risks and uncertainties that are difficult to predict. Examples of these statements would include those where Axia forecasts its success and timing in winning new NGN business, the timing of completion and estimated total costs of our networks, the revenues and operating costs associated with these networks over time, and Axia's ability to generate future cash flows and avail itself of other financing alternatives given current market conditions. The assumptions, risks and uncertainties that could cause actual results to differ materially from the forward-looking information, include, but are not limited to, changes in customer markets, changes in demand for our services, our inability to deliver services in a timely and cost efficient manner, technological change, general economic conditions and other risks detailed from time to time in our ongoing filings with the Canadian securities regulatory authorities, including those in our Annual Information Form, which filings can be found at www.sedar.com. Given these assumptions, risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise.
CONSOLIDATED BALANCE SHEETS
June 30, June 30,
(000s) 2010 2009
-------------------------------------------------------------------------
Assets
Current assets:
Cash $ 8,953 $ 10,040
Short-term investments 13,885 14,266
Restricted short-term investments 4,315 4,014
Accounts receivable 20,783 28,083
Prepaid expenses 2,018 2,038
-------------------------------------------------------------------------
49,954 58,441
Investment under equity accounting 8,620 3,798
Restricted long-term investments 2,667 2,915
Property and equipment 57,133 69,041
Intangible assets 5,690 8,459
Goodwill 4,201 4,201
Other assets 1,579 1,299
Future income tax asset 6,595 5,147
-------------------------------------------------------------------------
$ 136,439 $ 153,301
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 23,797 $ 37,453
Income taxes payable 1,010 4,479
Current portion of deferred revenue 2,925 4,962
Current portion of long-term debt 400 -
-------------------------------------------------------------------------
28,132 46,894
Deferred revenue 7,678 5,041
Long-term debt 7,432 -
Shareholders' equity:
Share capital 48,289 48,111
Contributed surplus 4,781 3,741
Retained earnings 48,397 44,972
Accumulated other comprehensive income (8,270) 4,542
-------------------------------------------------------------------------
40,127 49,514
-------------------------------------------------------------------------
93,197 101,366
-------------------------------------------------------------------------
$ 136,439 $ 153,301
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
For the periods ended June 30, 2010 and 2009
Three Months Year Ended
(000s except per share amounts) 2010 2009 2010 2009
-------------------------------------------------------------------------
Revenue $ 18,281 $ 17,277 $ 68,511 $ 69,847
Cost of products and services
sold 11,422 10,773 43,186 41,574
-------------------------------------------------------------------------
Gross profit 6,859 6,504 25,325 28,273
Expenses
Marketing 314 375 1,315 1,303
Administration 1,664 1,948 5,828 5,369
Business development 1,501 1,030 5,063 7,131
Stock-based compensation 224 256 1,109 865
Net interest and financing
charges (income) 263 (60) 325 (1,467)
Depreciation and amortization 1,931 1,809 8,824 5,908
-------------------------------------------------------------------------
5,897 5,358 22,464 19,109
-------------------------------------------------------------------------
Income before the following 962 1,146 2,861 9,164
Share of loss of equity
investment (6) (5) (133) (325)
Gain on disposal of
investments 602 - 1,278 374
-------------------------------------------------------------------------
Income before income tax 1,558 1,141 4,006 9,213
-------------------------------------------------------------------------
Current income tax 755 1,044 3,215 4,724
Future income tax (reduction) (1,166) (315) (2,634) (1,253)
-------------------------------------------------------------------------
(411) 729 581 3,471
-------------------------------------------------------------------------
Net income before
non-controlled interest 1,969 412 3,425 5,742
Net loss attributable to
non-controlled interest - - - 244
-------------------------------------------------------------------------
Net income 1,969 412 3,425 5,986
-------------------------------------------------------------------------
Retained earnings, beginning
of period 46,428 44,560 44,972 38,986
-------------------------------------------------------------------------
Retained earnings, end of
period $ 48,397 $ 44,972 $ 48,397 $ 44,972
-------------------------------------------------------------------------
Net income per share
Basic $ 0.03 $ 0.01 $ 0.05 $ 0.09
Diluted $ 0.03 $ 0.01 $ 0.05 $ 0.09
-------------------------------------------------------------------------
Weighted average shares
outstanding
Basic 63,785 63,602 63,710 63,602
Diluted 63,785 64,254 63,710 66,578
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the periods ended June 30, 2010 and 2009
Three Months Year Ended
(000s) 2010 2009 2010 2009
-------------------------------------------------------------------------
Net income $ 1,969 $ 412 $ 3,425 $ 5,986
Other comprehensive income,
net of income tax:
Transfer gain (loss) on sale
of short-term investments 25 (35) (21) 110
Unrealized gain (loss) on
short-term investments (3) 39 18 (227)
Unrealized gain (loss) on
translation of foreign
operations (2,125) (1,801) (12,809) 1,641
-------------------------------------------------------------------------
Other comprehensive income
(loss) (2,103) (1,797) (12,812) 1,524
-------------------------------------------------------------------------
Comprehensive income (loss) $ (134) $ (1,385) $ (9,387) $ 7,510
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended June 30, 2010 and 2009
Three Months Year Ended
(000s) 2010 2009 2010 2009
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Net income $ 1,969 $ 412 $ 3,425 $ 5,986
Items not involving cash
Depreciation and
amortization 1,931 1,809 8,824 5,908
Future income tax
(reduction) (1,166) (315) (2,634) (1,253)
Share of loss of equity
investment 6 5 133 325
Gain on disposal of
investments (602) - (1,278) (374)
Non-controlled interest - - - (244)
Stock-based compensation 224 256 1,109 865
-------------------------------------------------------------------------
2,362 2,167 9,579 11,213
Changes in non-cash working
capital items 568 5,355 1,519 6,510
-------------------------------------------------------------------------
2,930 7,522 11,098 17,723
-------------------------------------------------------------------------
Financing activities:
Issue of common shares 34 25 109 40
Increase in bank loan (426) - 9,014 -
-------------------------------------------------------------------------
(392) 25 9,123 40
Investing activities:
Decrease (increase) in
short-term investments (792) 2,163 (2,392) 7,418
Decrease (increase) in
restricted investments 317 3,462 (383) 6,186
Business combinations - (616) (2) (2,993)
Reduction in advance to
joint venture - - - 1,772
Increase in equity
investment (3,306) (2,875) (4,917) (4,330)
Purchase of property and
equipment 73 (4,177) (19,167) (22,608)
Purchase of property and
equipment included in change
in non-cash working capital (4,432) (3,230) (6,017) 274
Proceeds on disposal of
investments 2,435 - 11,829 3,543
-------------------------------------------------------------------------
(5,705) (5,273) (21,049) (10,738)
-------------------------------------------------------------------------
Effect of currency translation
on cash balances 20 (119) (259) 805
-------------------------------------------------------------------------
Decrease in cash (3,147) 2,155 (1,087) 7,830
Cash, beginning of period 12,100 7,885 10,040 2,210
-------------------------------------------------------------------------
Cash, end of period $ 8,953 $ 10,040 $ 8,953 $ 10,040
-------------------------------------------------------------------------
%SEDAR: 00002394E
For further information: please visit Axia's website at www.axia.com, or contact: Dawn Tinling, VP, Investor Relations and Communications, Axia NetMedia Corporation, (403) 538-4074, [email protected]
Share this article