Axia Releases Results for Fiscal 2009 and Q4FY09

    
    -   Increased revenues by 9 percent to $69.8 million for fiscal 2009
        compared to $63.8 million for fiscal 2008. Revenue for the quarter
        was $17.3 million from $17.8 million for the prior quarter of fiscal
        2009.

    -   Net income for the current quarter was $0.4 million or $0.01 per
        fully diluted share and $6.0 million for fiscal 2009 or $0.09 per
        fully diluted share, a decrease of $0.3 million from $0.7 million or
        $0.01 per fully diluted share from the previous quarter and a
        decrease of $2.1 million from $8.1 million or $0.13 per fully diluted
        share from fiscal 2008.

    -   Hérault and A75 segments in France are activated and accepting
        customer connections.

    -   Government of Newfoundland and Labrador selected Axia's proposal to
        deliver on its Government Broadband Initiative.
    

CALGARY, Sept. 21 /CNW/ - Axia NetMedia Corporation ("Axia" or the "Corporation") today announced the results for the fourth quarter and year end of fiscal 2009 for the period ended June 30, 2009.

Art Price, Chairman and CEO commented, "Our business units in Alberta, France and Singapore are on plan. Axia has a strong balance sheet with funds and cash flow that exceed its investment obligations. Revenue from providing next generation network services continues to grow. Axia continues to deliver services and a value proposition that is core to the growing digital economy and the evolution of the Information and Communication Technology sector."

Mr. Price added, "Since our last quarterly report, large cap issuers in the ICT sector have typically experienced marked improvement in their share values while share values of small cap ICT issuers, in particular those listed in Canada, have only increased marginally. In spite of Axia's sound fundamentals and performance, Axia shares are being valued in the market in the range of $1.30 to $1.50. Axia's Management and Board are evaluating the trends in the capital markets as they relate to Axia to ensure that decisions made are aligned with providing our shareholders with the best prospects to receive value for their investment."

Operational Highlights

Alberta

Axia's Alberta SuperNet business continues to generate stable revenues and cash flows. In today's environment, Axia is seeing opportunity for high availability network services through the replacement or augmentation of its clients' existing non-SuperNet services. This is driving greater consideration of the Alberta SuperNet as a cost competitive and capable network alternative to support the delivery of its clients' significant investments in new and planned network centric business and public safety systems. Axia is working with the Government of Alberta to increase their functional use of the Alberta SuperNet and increase their bandwidth usage while reducing their cost structures by leveraging the Alberta SuperNet.

France

Axia's France business continued to develop according to plan with the activation of the Hérault segment whose first bandwidth customer was connected by the end of June 2009. Additionally, Covage has begun to market services in A75, its newest segment. In Sem@for77, Covage signed a contract to provide bandwidth to 60 local government sites as an extension of the initial design.

Covage is on schedule to complete its national fibre backbone by the end of calendar year 2009. Construction of the Dunkerque Grand Littoral Network has begun and is expected to be completed in June 2010.

As at June 30, 2009, Covage had 44 Retail Service Providers ("RSPs") with 659 broadband connections that consist of 334 bandwidth connections and 325 dark fibre connections. Bandwidth sales have grown to 17.9 Gbps at the end of June 2009 as compared to 16.6 Gbps at the end of March 2009.

Covage's addressable market is approximately 34,000 sites as at June 30, 2009 with a current estimated market penetration of approximately 2 percent.

Covage is focused on leveraging its existing infrastructure, including its national fibre backbone infrastructure, in partnership with key RSPs in order to accelerate its market penetration. Covage is developing a new offer targeting 200 specific business parks with close to 5,000 businesses for which the connection costs would be minimized due to 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.

The French Government has announced an initiative to create a consortium of operators to deploy Fibre to the Premise ("FTTP") in medium density areas and Covage is interested in participating provided it is an open access network. Consequently departments are re-evaluating their plans to prepare for FTTP initiatives.

As of today, 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.

Singapore

Axia owns a 30 percent equity investment in OpenNet which is responsible for providing passive fibre services to every premise in Singapore. During the summer of 2009, OpenNet began its FTTP deployment throughout Singapore. Construction to 60 percent of the premises in Singapore is expected to be completed in 2010 and to 95 percent of premises in 2012. OpenNet is expected to begin offering commercial services, as the grid is rolled out, with the first services being available by the first half of 2010.

The majority of the costs being incurred by OpenNet to build and commission the fibre grid will be capitalized during this construction and commissioning phase.

Axia believes that the OpenNet Network 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.

Newfoundland and Labrador

On August 7, 2009, Axia announced that the Government of Newfoundland and Labrador had selected Axia's proposal in response to the Government's 2008 Request for Proposal to build and manage distinct aspects of its Government Broadband Initiative ("GBI"). Contract negotiations have begun and will continue over the next few months. Construction is anticipated to begin in April 2010.

When completed, the GBI will connect more than 1,000 government facilities that include healthcare institutions, libraries, schools, and other offices in communities spanning all regions of the province. It will also enhance the ability of retail service providers to offer similar services to local residential and business customers in Newfoundland and Labrador.

Axia is pleased to have been selected by the Government of Newfoundland and Labrador to deliver on the GBI. As the Corporation moves through the negotiation process, Axia's unique solution will demonstrate Axia's ability to add value to the Government of Newfoundland and Labrador and meet its policy objectives.

New Opportunities

As a result of its success in Alberta, France and Singapore, the Corporation is pursuing potential next generation network opportunities in other jurisdictions around the world. Axia continues to evaluate potential opportunities in Asia, Australia, New Zealand and the United States.

FY2009 and Q4FY09 Consolidated Financial Information

Consolidated revenue for the quarter was $17.3 million, a decrease of $0.5 million or 3 percent from $17.8 million for the prior quarter. Revenue for fiscal 2009 was $69.8 million, an increase of $6.0 million or 9 percent from the $63.8 million reported for fiscal 2008. Consolidated gross profit for the quarter was $6.5 million or 38 percent of revenue which is an increase of $0.1 million as compared to $6.4 million or 36 percent of revenue for the prior quarter. As compared to fiscal 2008, gross profit remained about the same.

Net income for the current quarter was $0.4 million or $0.01 per fully diluted share and $6.0 million for fiscal 2009 or $0.09 per fully diluted share, a decrease of $0.3 million from $0.7 million or $0.01 per fully diluted share from the previous quarter and a decrease of $2.1 million from $8.1 million or $0.13 per fully diluted share from fiscal 2008.

As at June 30, 2009, Axia's working capital was $11.6 million as compared to $22.1 million for the prior quarter. Compared to June 30, 2008, working capital has decreased $11.3 million or 49 percent from $22.9 million. The Corporation continues to deploy both its available cash and the cash it generates from operating activities, in network construction in France and in funding the capital required by OpenNet in Singapore. As at June 30, 2009, Axia had $24.3 million in cash and unrestricted short-term investments.

Outlook

Axia's business is based on next generation digital 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 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 committing to any new contracts. However, as a consequence of the instability in the capital markets, and the low price of its common stock at this time, the Corporation may decide not to pursue certain opportunities.

Conference Call Scheduled

A conference call for the investment community will be held Tuesday, September 22, 2009 at 3 p.m. (Eastern) and 1 p.m. (Mountain). Axia Chairman and CEO Art Price, President Axia Canada and Executive Vice-President Murray Sigler and Chief Financial Officer Peter McKeown will participate.

To participate in the conference call, please dial (416) 644-3426 in Toronto and internationally. If you are connecting from other parts of Canada, dial 1-800-731-5319.

Please call ten minutes prior to the start of the call. A live webcast (listen only mode) of the conference call will be available at:

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2798620

A replay of the conference call will be available at (416) 640-1917 or 1-877-289-8525, passcode 21314094 followed by the number sign from 5 p.m. (ET) Tuesday, September 22, 2009 to midnight (ET) Tuesday, September 29, 2009 or through the webcast archives at http://www.newswire.ca.

About Axia

The audited Consolidated Financial Statements for the year ended June 30, 2009 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 are also posted at www.axia.com.

Axia provides Real Broadband(TM) IP services and solutions through planning, designing and operating no conflict Open Access Next Generation Networks. Axia has networks 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 OAN NextGen contracts, the timing of completion and estimated total costs of these 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

    (000s)                                                June 30,   June 30,
                                                             2009       2008
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash                                              $  10,040  $   2,210
      Short-term investments                               14,266     25,867
      Restricted short-term investments                     4,014      4,763
      Accounts receivable                                  28,083     25,222
      Prepaid expenses                                      2,038      1,326
      Future income tax asset                                  20         24
    -------------------------------------------------------------------------
                                                           58,461     59,412

    Property and equipment                                 69,041     49,373
    Intangible assets                                       8,459      6,699
    Goodwill                                                4,201      4,201
    Advances to joint venture                                   -      1,785
    Other assets                                            1,299        816
    Investment under equity accounting                      3,798          -
    Restricted long-term investments                        2,915      4,310
    Future income tax asset                                 5,127      4,608
    -------------------------------------------------------------------------
                                                        $ 153,301  $ 131,204
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable and accrued liabilities          $  37,254  $  29,826
      Income taxes payable                                  4,479      5,306
      Current portion of deferred revenue                   4,962      1,061
      Current portion of lease obligation                      77        284
      Current portion of cost of excess space                  66         61
    -------------------------------------------------------------------------
                                                           46,838     36,538

    Deferred revenue                                        5,041      1,503
    Lease obligation                                            -         77
    Cost of excess space                                       56        115

    Shareholders' equity:
      Share capital                                        48,111     48,074
      Contributed surplus                                   3,741      2,893

      Retained earnings                                    44,972     38,986
      Accumulated other comprehensive income
        Unrealized gain on short-term investments              76        225
        Unrealized gain on translation of
         self-sustaining foreign operations                 4,466      2,793
    -------------------------------------------------------------------------
                                                           49,514     42,004
    -------------------------------------------------------------------------
                                                          101,366     92,971
    -------------------------------------------------------------------------
                                                        $ 153,301  $ 131,204
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

    For the years ended June 30, 2009 and 2008
                                          Three months            Year ended
    (000s except per share amounts)    2009       2008       2009       2008
    -------------------------------------------------------------------------
    Revenue                       $  17,277  $  16,216  $  69,847  $  63,805
    Cost of products and services
     sold                            10,773      9,289     41,574     34,850
    -------------------------------------------------------------------------
    Gross profit                      6,504      6,927     28,273     28,955
    Expenses
      Marketing                         375        224      1,303        952
      Administration                  1,948      1,560      5,369      3,918
      Business development            1,030      2,406      7,131      8,368
      Stock-based compensation          256         20        865      2,299
      Net interest and financing
       charges (income)                 (60)      (544)    (1,467)    (2,508)
      Depreciation and amortization   1,809      1,369      5,908      4,661
    -------------------------------------------------------------------------
                                      5,358      5,035     19,109     17,690
    -------------------------------------------------------------------------
    Income before the following       1,146      1,892      9,164     11,265
        Share of loss of equity
         investment                      (5)         -       (325)         -
        Gain on disposal                  -          -        374        333
    -------------------------------------------------------------------------
    Income before income tax          1,141      1,892      9,213     11,598
    -------------------------------------------------------------------------
        Current income tax            1,044      1,024      4,724      5,031
        Future income tax
         (reduction)                   (315)      (609)    (1,253)    (1,534)
    -------------------------------------------------------------------------
                                        729        415      3,471      3,497
    -------------------------------------------------------------------------
    Net income before
     non-controlled interest            412      1,477      5,742      8,101
        Net loss attributable to
         non-controlled interest          -          -        244          -
    -------------------------------------------------------------------------
    Net income                          412      1,477      5,986      8,101
    -------------------------------------------------------------------------
    Retained earnings,
     beginning of year               44,560     37,509     38,986     30,885
    -------------------------------------------------------------------------
    Retained earnings,
     end of year                  $  44,972  $  38,986  $  44,972  $  38,986
    -------------------------------------------------------------------------

    Net income per share
      Basic                       $    0.01  $    0.02  $    0.09  $    0.13
      Diluted                     $    0.01  $    0.02  $    0.09  $    0.13
    -------------------------------------------------------------------------

    Weighted average shares
     outstanding
      Basic                          63,602     63,537     63,602     63,537
      Diluted                        64,254     66,406     66,578     63,844
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    For the years ended June 30, 2009 and 2008
                                          Three Months            Year Ended
    (000s)                             2009       2008       2009       2008
    -------------------------------------------------------------------------
    Net income                    $     412  $   1,477  $   5,986  $   8,101
    Other comprehensive income,
     net of tax:
      Transfer losses on sale of
       short-term investments           (35)         -        110          -
      Unrealized gains (losses)
       on short-term investments         39        (73)      (227)       193
      Unrealized gain on
       translation of foreign
       operations                    (1,801)      (330)     1,641      4,598
    -------------------------------------------------------------------------
    Other comprehensive income       (1,797)      (403)     1,524      4,791
    -------------------------------------------------------------------------
    Comprehensive income          $  (1,385) $   1,074  $   7,510  $  12,892
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the years ended June 30, 2009 and 2008
                                          Three Months            Year Ended
    (000s)                             2009       2008       2009       2008
    -------------------------------------------------------------------------
    Cash provided by (used in):
    Operating activities:
      Net income                  $     412  $   1,477  $   5,986  $   8,101
      Items not involving cash
        Depreciation and
         amortization                 1,809      1,369      5,908      4,661
        Future income tax
         (reduction)                   (315)      (612)    (1,253)    (1,534)
        Share of income (loss)
         of equity investment             5          -        325          -
        Gain on disposal of
         investments                      -          -       (374)      (333)
        Non-controlled interest           -          -       (244)         -
        Cost of excess space             (5)       (43)       (54)       (91)
        Stock-based compensation        256         20        865      2,299
    -------------------------------------------------------------------------
                                      2,162      2,211     11,159     13,103

    Changes in non-cash working
     capital items                    8,201     (3,738)     6,582    (24,481)
    -------------------------------------------------------------------------
                                     10,363     (1,527)    15,789    (11,378)

    -------------------------------------------------------------------------
    Financing activities:
      Decrease (increase) in
       restricted cash and
       investments                     (552)    (9,063)     2,144     (9,028)
      Issue of common shares             10          -         40        226
      Repayment of lease obligation     (73)       (69)      (284)      (270)
    -------------------------------------------------------------------------
                                       (615)    (9,132)     1,900     (9,072)
    Investing activities:
      Short-term investments          6,621     14,231     11,601     17,865
      Business combinations            (615)         -     (2,985)    (2,230)
      Reduction in advance to
       joint venture                      -          -      1,785     11,710
      Investment under equity
       accounting                    (3,347)         -     (4,123)         -
      Purchase of property and
       equipment                     (4,351)    (2,321)   (19,496)   (24,629)
      Disposal of investment              -          -      3,382         21
      Purchase of property and
       equipment included in
       accounts payable              (3,230)      (668)       274      8,020
    -------------------------------------------------------------------------
                                     (4,922)    11,242     (9,562)    10,757
    -------------------------------------------------------------------------
    Effect of currency
     translation on cash
     balances                        (2,671)    (5,987)     1,874      1,041
    -------------------------------------------------------------------------
    Decrease in cash                  2,155     (5,404)     7,830     (8,652)
    Cash, beginning of period         7,885      7,614      2,210     10,862
    -------------------------------------------------------------------------
    Cash, end of period           $  10,040  $   2,210  $  10,040  $   2,210
    -------------------------------------------------------------------------
    

%SEDAR: 00002394E

SOURCE Axia NetMedia Corporation

For further information: 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, dawn.tinling@axia.com

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