Axia Releases Results for Q1FY2010
- Increased revenues to $16.2 million for the first quarter of fiscal
2010 compared to $15.8 million for the same period in fiscal 2009.
- Net income for the current quarter was $0.9 million or $0.01 per
fully diluted share compared to $2.5 million for the same period in
fiscal 2009 or $0.04 per fully diluted share.
- Bandwidth usage in France grew to 28.2 Gbps at the end of September
2009 compared to 17.9 Gbps at the end of June 2009.
- Contract negotiations began in September with Government of
Newfoundland and Labrador on its Government Broadband Initiative.
Operational Highlights
Alberta
Axia's Alberta SuperNet business continues to generate stable revenues and cash flows. The Corporation is seeing demand for Axia's high availability Real Broadband(TM) services as its customers' needs evolve. The Alberta SuperNet's province-wide footprint enables Axia services to be offered in each community and form a foundation for its customers to make investments in assets and technology that enable end users to participate in the digital revolution.
As of
During the quarter, the GoA increased funding to Alberta libraries to expand their functionality by becoming their communities' centre for digital connectivity. Many libraries can now offer videoconferencing, giving rural Albertans access to services previously inaccessible in their community. Albertans will be able to use their local libraries as a means for accessing videoconferencing, electronic databases, licensed materials, distance education, telehealth and online business opportunities. This digital transformation is enabled by increased use of Axia's Real Broadband(TM) services provided over the Alberta SuperNet. Axia continues to work with the GoA to further its e-government objectives through optimal use of the Alberta SuperNet.
Axia's
During the first quarter, Covage completed the planned disposition of 20 percent of its interest in the Sem@for77 network segment to the Caisse des Depôts (CDC). The CDC has been purchasing a 20 to 30 percent interest in most network segments owned by Covage as part of its mandate to support the long-term economic development of
Covage has two outstanding bids and decisions are expected by the end of calendar 2009. Covage continues to review all potential opportunities in light of current market conditions and the degree to which the opportunity complements Covage's existing assets.
Axia owns a 30 percent equity investment in OpenNet which is responsible for providing passive fibre services to every premise in
The Corporation believes that the NGNBN will become the network of choice for fixed wireline connectivity by 2015. Axia's share of earnings depends on market penetration. As the market matures Axia forecasts its share of pre-tax earnings to be in the range of SGD$6 million to SGD$14 million per annum at that time.
Newfoundland and Labrador
On
New Opportunities
Axia continues to evaluate potential opportunities in Asia,
Q1FY2010 Consolidated Financial Information
Consolidated revenue for the quarter was
As at
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 governments and as a result, next generation network investments are being considered in some jurisdictions as economic stimulus initiatives.
Although the current economic climate appears to be stabilizing, it remains volatile and sectors of the global capital markets are unstable. Axia continues to review the level and timing of any future capital commitments for new next generation network opportunities and its ability to raise funds on favourable terms prior to making commitments. However, as a consequence of the instability in the capital markets, and the low price of its common stock at this time, it may decide not to pursue certain next generation network opportunities.
Axia will continue to invest business development funds to investigate and assess the best available global opportunities. Axia's management and the Board of Directors (Board) assesses the attractiveness of each new opportunity, including the value of momentum and market position, and considers the need for any additional capital required and the cost of such capital from all available sources. The Corporation intends to maintain its strong balance sheet approach.
Management and the Board will consider all these factors as it seeks the path that it believes will maximize longer-term shareholder value.
Conference Call Scheduled
A conference call for the investment community will be held
To participate in the conference call, please dial (416) 644-3425 in
A live webcast (listen only mode) of the conference call will be available at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2831400
A replay of the conference call will be available at (416) 640-1917 or 1-877-289-8525, passcode 4169796 followed by the number sign from
About Axia
The unaudited Consolidated Financial Statements for the quarter ended
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,
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
(unaudited) (000s) September 30, June 30,
2009 2009
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Assets
Current assets:
Cash $ 8,417 $ 10,040
Short-term investments 21,101 14,266
Restricted short-term investments 3,805 4,014
Accounts receivable 25,539 28,083
Prepaid expenses 2,157 2,038
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61,019 58,441
Investment under equity accounting 3,553 3,798
Restricted long-term investments 2,430 2,915
Property and equipment 60,863 69,041
Intangible assets 7,993 8,459
Goodwill 4,201 4,201
Other assets 1,544 1,299
Future income tax asset 4,968 5,147
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$ 146,571 $ 153,301
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 25,751 $ 37,453
Income taxes payable 4,705 4,479
Current portion of deferred revenue 1,702 4,962
Current portion of long-term debt 1,372 -
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33,530 46,894
Deferred revenue 7,812 5,041
Long-term debt 5,153 -
Shareholders' equity:
Share capital 48,231 48,111
Contributed surplus 4,012 3,741
Retained earnings 45,896 44,972
Accumulated other comprehensive income
Unrealized gain on short-term investments 99 76
Unrealized gain on translation of foreign
operations 1,838 4,466
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47,833 49,514
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100,076 101,366
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$ 146,571 $ 153,301
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See accompanying selected notes to the consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
For the three months ended September 30, 2009 and 2008 (unaudited)
(000s except per share amounts) 2009 2008
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Revenue $ 16,230 $ 15,831
Cost of products and services sold 9,649 8,430
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Gross profit 6,581 7,401
Expenses
Marketing 322 223
Administration 1,422 830
Business development 915 2,425
Stock-based compensation 316 184
Net interest and financing charges (income) 12 (724)
Depreciation and amortization 2,468 982
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5,455 3,920
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Income before the following 1,126 3,481
Share of loss of equity investment (47) -
Gain on disposal of investment 533 -
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Income before income tax 1,612 3,481
Current income tax 907 1,523
Future income tax (reduction) (219) (357)
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688 1,166
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Net income before non-controlling interest 924 2,315
Net loss attributable to non-controlling interest - 149
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Net income 924 2,464
Retained earnings, beginning of period 44,972 38,986
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Retained earnings, end of period $ 45,896 $ 41,450
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Net income per share
Basic $ 0.01 $ 0.04
Diluted $ 0.01 $ 0.04
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Weighted average shares outstanding
Basic 63,695 63,593
Diluted 64,675 64,031
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three months ended September 30, 2009
and 2008 (unaudited)
(000s) 2009 2008
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Net income $ 924 $ 2,464
Other comprehensive income, net of income tax:
Unrealized gains (losses) on short-term
investments (2) 25
Transfer gains (losses) on sale of short-term
investments (21) (205)
Unrealized gains (losses) on translation of
foreign operations 2,626 (4,160)
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Other comprehensive income (loss) 2,603 (4,340)
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Comprehensive income (loss) $ 3,527 $ (1,876)
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CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended September 30, 2009
and 2008 (unaudited)
(000s) 2009 2008
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Cash provided by (used in):
Operating activities:
Net income $ 924 $ 2,315
Items not involving cash
Depreciation and amortization 2,468 982
Future income tax (reduction) (219) (357)
Share of loss of equity investment 47 -
Gain on disposal of investments (533) -
Cost of excess space (14) (11)
Stock-based compensation 316 184
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2,989 3,113
Changes in non-cash working capital items 4,883 (3,697)
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7,872 (584)
Financing activities:
Decrease (increase) in restricted cash and
investments 641 6,874
Issue of common shares 75 -
Repayment of lease obligation (74) (69)
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642 6,805
Investing activities:
Short-term investments (7,335) 6,233
Business combinations - (97)
Reduction in advance to joint venture - 1,738
Increase in bank loan 6,527 -
Purchase of property and equipment (3,930) (8,750)
Disposal of investment 786 -
Changes in non-cash working capital (3,344) 853
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(7,296) (23)
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Effect of currency translation on cash balances (2,841) (4,121)
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Increase in cash (1,623) 2,077
Cash, beginning of period 10,040 2,210
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Cash, end of period $ 8,417 $ 4,287
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%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]
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