Homeserve Reports Third Quarter Results

TORONTO, Jan. 28 /CNW/ - Homeserve Technologies Inc. today reported net loss of $0.5 million on revenue of $1.3 million for the third quarter ended November 30, 2010 as compared to net loss of $1.2 million on revenue of $1.2 million for the third quarter ended November 30, 2009. After preferred share dividends, the net loss to common shareholders was 0.22 per share for the third quarter as compared to a loss of $0.32 per share for the same period of the prior year.

Comprehensive income for the quarter of $22.3 million which is comprised of a net loss of $0.5 million and other comprehensive income of $22.8 million which is attributable to the unrealized gains and losses, net of tax of the Company's investments was up $21.9 million as compared to comprehensive income of $0.4 million for the same period of the prior year.

The primary drivers of the year over year $0.7 million decrease in net loss was attributed to a reduction in staffing and other corporate charges, and the elimination of capital tax by the Ontario government as at July 1, 2010 while the $21.2 million increase in other comprehensive income was driven primarily by the increase in the fair value of the Company's investment in the Brookfield Retail Split LP.

           
Interim statement of income Three months ended
November 30,
Nine months ended
November 30,
($ thousands, except per common share amounts) 2010 2009   2010 2009
REVENUE 1,292 1,217   9,740 9,457
Cost of sales 112 120   387 399
Gross margin 1,180 1,097   9,353 9,058
           
OPERATING EXPENSES          
Selling, general and administrative 484 1,032   1,563 3,139
Amortization of property, plant and equipment 8 42   26 130
Amortization of intangible assets 1,228 1,228   3,684 3,684
Income (loss) from operations before the undernoted (540) (1,205)   4,080 2,105
Investment income - -   - 142
Gain on sale of short-term investments - -   - 839
Net income (loss) for the period (540) (1,205)   4,080 3,086
Preferred share dividends (984) (984)   (2,973) (2,973)
Net income (loss) to common shareholders (1,524) (2,189)   1,107 113
Weighted average common shares outstanding 6,944 6,944   6,944 6,944
Common shares and common share equivalents 6,944 6,944   6,944 6,944
Basic and diluted earnings (loss) per common share $(0.22) $(0.32)   $0.16 $0.02

 

 

 
 
 

 
Interim statements of comprehensive income Three months ended
November 30,
  Nine months ended
November 30,
($ thousands) 2010 2009   2010 2009
Net income (loss) (540) (1,205)   4,080 3,086
Other comprehensive income 22,838 1,647   24,874 2,246
Comprehensive income 22,298 442   28,954 5,332

Outlook

The award of the Government of Canada Contract ("GOC Contract") for the combined Canadian Forces, Government of Canada Department and Agencies and the Royal Canadian Mounted Police to a subsidiary of BRPS for a five year term with two one-year renewal options, which commenced on December 1, 2009, secures significant relocation volumes from which the Company earns licensing fees.

ICON

In calendar 2011, the Company expects the following two significant impacts to its cash flow: the renewal of the ICON licensing arrangements and the timing of the GOC relocation file initiations as they relate to ICON licensing fee renewal terms. Commencing April 1, 2011, the ICON licensing arrangements renew for a two year term at which time fees earned per relocation file are expected to decrease to $200 per file from the current calendar year volume based $500, $400 and $250 per file fee. At 25,470 relocation files for fiscal 2010 this change would result in royalty fee decline from $10.4 million to $5.1 million. A substantial portion of the Company's ICON fees (80% in fiscal 2010) are earned from the GOC relocation contract. A significant portion of the GOC files are typically initiated during the spring and accordingly to the extent these files are initiated post March 31, 2011, the amount of licensing fees earned by the Company will be reduced as compared to prior years.

Despite the anticipated impact to cash flows in 2011 noted above, management anticipates that the fees earned from the GOC contract will provide sustainable cash flows for the Company in the immediately foreseeable future.

Brookfield Retail Split LP

During the Quarter, the Company invested $9 million as part of a consortium led by Brookfield Asset Management (the "Consortium") that sponsored the recapitalization of General Growth Properties, Inc. ("GGP") as part of a plan of reorganization that enabled GGP to emerge from Chapter 11 bankruptcy proceedings (the "Plan"). Under the terms of the Plan, the Consortium received shares and warrants of GGP as well as shares and warrants of Howard Hughes Corporation ("HHC"), a separate public company that owns the master planned community business formerly carried on by GGP as well as certain development assets which were spun off from GGP under the Plan. The fair value of the Company's interest in the Consortium (which is held through a Brookfield controlled entity) is determined based on published and exercisable prices of Consortium's underlying investments, with appropriate adjustments resulting from liquidity restrictions embedded in the investment under the Plan and the Consortium arrangements.

About Homeserve

Homeserve is a Canadian based software development and services company focused on home-related services for the real estate, relocation and banking industries. Homeserve provides a one-stop shopping service for home buyers and sellers, offering real-estate related products and services throughout the customer's purchasing and selling cycle, coordinated by a proprietary software system and contact centre.

Forward - Looking Statements

This press release contains forward-looking information, including "forward-looking statements". The words "will", "intends", "expected" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause Homeserve's performance to differ materially from the description of the investment expressed or implied by such forward-looking statements. Although Homeserve believes that the anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include general economic conditions; interest rate changes; availability of equity and debt financing; and other risks and factors described from time to time in the documents filed by the Company with the securities regulators in Canada including in the Annual Information Form under the heading "Risk Factors." The Company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.


Additional Information

Detailed financial information and Management's Discussion and Analysis of Results and Financial Condition as at and for the quarter ended November 30, 2010 is posted on Homeserve's website (under Investor Relations, Financial Information) at www.homeserve.ca and should be read in conjunction with this press release and the Company's audited financial statements for the year ended February 28, 2010, which are and is also available on SEDAR's website at www.sedar.com.

SOURCE Homeserve Technologies Inc.

For further information:

Stephen Tsao, Homeserve Technologies Inc.
(416) 510-5307 or stsao@brookfieldrps.com

Profil de l'entreprise

Homeserve Technologies Inc.

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