Axia Releases Results for Q3FY09

    -   Increased revenues by 11 percent to $17.8 million for the third
        quarter of fiscal 2009 compared to $16.0 million in the same period
        for fiscal 2008.

    -   Net income of $0.7 million ($0.01 per fully diluted common share) for
        the third quarter of fiscal 2009 reflects start-up and commissioning
        costs in France and Singapore and increased business development

    -   Won DSP for Dunkerque in France.

    -   OpenNet received FBO licence and began construction phase.

    CALGARY, May 13 /CNW/ - Axia NetMedia Corporation ("Axia" or the
"Corporation") today announced the results for the third quarter of fiscal
2009 for the period ended March 31, 2009.
    Art Price, Chairman and CEO commented, "The fundamentals of Axia's
business are solid and we expect that our in hand Open Access Next Generation
Networks ("OAN NextGen") in France and Singapore will contribute profitably
over the medium and longer term. In addition, the compelling cost/benefit and
performance characteristics of the three main drivers of the ICT sector,
"advanced wireless services", "computing in the cloud" and "software as a
service" each depend on access to OAN NextGen solutions of the nature deployed
by Axia and, accordingly the market opportunity is growing."
    Mr. Price added, "Earnings in this quarter of $0.7 million reflect
start-up and commissioning costs in France and Singapore and business
development expenses for additional OAN NextGen opportunities. These costs
have caused a negative contribution to Axia's net income of $3.2 million this
quarter. Also, Axia incurs significant ongoing corporate costs as a result of
being a publicly traded company. Axia's Management and Board believe that the
current price of Axia's shares is negatively affected by these costs and does
not reflect the value of our current or future growth opportunities."

    Operational Highlights


    The Alberta SuperNet continued with steady growth despite the deepening
economic pressures associated with an extended period of low commodity prices
and increased cost pressures. Bandwidth sales grew to 67 Gbps at the end of
March 2009 compared to 63 Gbps at the end of December 2008. The Alberta
SuperNet value proposition of high performance for low cost is aligned with
businesses that focus on cost efficiency and productivity. To date, Axia has
not experienced a slowdown in the growth in bandwidth and operating results of
the Alberta SuperNet. However, recent adverse economic conditions may cause a
delay or postponement of incremental network growth opportunities.
    Axia is seeing increasing 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 Axia's clients' significant investments in new and planned network
centric business and public safety systems.


    During the third quarter, Covage was awarded the Delegation de Service
Public ("DSP") for Dunkerque Grand Littoral Networks ("DGL Networks") located
in northern France. Construction is scheduled to begin in June 2009 and is
expected to be completed by June 2010. Subsequent to the end of the quarter,
Covage was awarded the A75 DSP to light and operate an existing dark fibre
corridor along the 340 kilometre highway that runs from Clermont-Ferrand in
the centre of France to Béziers in the Département of Hérault in the south of
    Covage is on schedule to complete its national fibre backbone network by
mid-calendar year 2009. On completion, this project will connect most of
Covage's existing networks to each other and to the main interconnect points
in Paris with an available bandwidth of 400 Gbps (expandable to 800 Gbps).
Covage is actively seeking out new customers for the backbone and in the third
quarter of fiscal 2009, secured a new bandwidth customer for 2 Gbps.
    As at March 31, 2009, Covage had 39 RSPs with 294 bandwidth connections.
Bandwidth sales have grown to 16.6 Gbps at the end of March 2009 as compared
to 15.9 Gbps at the end of December 2008. Covage's addressable market is
approximately 34,000 sites as at March 31, 2009. At the end of March 31, 2009,
the Corporation estimates that Covage's market penetration was approximately 1
    As of today, Covage has submitted three new bids and decisions are
expected within calendar 2009. Covage continues to review all potential
opportunities in light of current market conditions and the degree that the
opportunity complements Covage's existing assets.


    In Singapore, Axia was successful in leading the OpenNet Consortium
during the bid/award phase. Through Axia NGNetworks Asia, Axia has a 30
percent ownership in OpenNet.
    Subsequent to the end of the quarter, on May 4, 2009, OpenNet completed
the necessary steps in order to proceed with the construction of its passive
fibre grid. This includes OpenNet being granted its Facilities-Based Operator
(FBO) Licence from the Infocomm Development Authority of Singapore ("IDA") to
provide passive fibre-based services for an initial standard term of 25 years.
Construction to 60 percent of premises in Singapore is expected to be complete
in 2010 and to 95 percent of premises in 2012. OpenNet is expected to begin
offering commercial services incrementally, as the grid is rolled out, with
the first services being available by the first half of 2010. During fiscal
2009 and 2010, the activities of OpenNet will be focused on the construction
of the passive fibre grid.
    OpenNet will own the only Fibre to the Premise ("FTTP") grid that
provides 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 all telecom parties
licensed to do so by the IDA. OpenNet's price structure is designed to be
attractive for adoption and promote end-users choice of active service
providers. StarHub, as the IDA-selected Operating Company ("OpCo"), will be
one of the authorized customers of OpenNet to provide active services over
OpenNet's fibre.
    Subsequent to quarter end, the Corporation announced that Axia NGNetworks
Asia's IntelliNet consortium was unsuccessful in its bid to become Singapore's
OpCo and the contract was awarded to StarHub, Singapore's incumbent cable
    Axia expects that Axia NGNetworks Asia will have OAN NextGen
opportunities that leverage both Axia NGNetworks Asia's position in Singapore
and Axia's experience and track record elsewhere.

    New OAN NextGens

    The Government of Australia announced that it would be proceeding with a
Fibre to the Premise ("FTTP") National Broadband Network ("NBN") for Australia
and committed up to $43.0 billion (Australian) of government funds in a Public
Private Partnership ("PPP") structure to ensure it would be completed. The
government made this decision when it concluded that the responses to the NBN
Request for Proposal ("RFP") were not value for money and the change from
Fibre to the Node ("FTTN") to FTTP was in the Government of Australia's
    Axia was a qualified respondent to the initial Government of Australia
RFP that contemplated a FTTN approach and $4.7 billion of Government support.
Axia proposed a PPP structure community interconnect grid combined with phased
FTTP and wireless local access. The proposal depended on funding by both the
Commonwealth and the capital markets.
    The Government of Australia is now organizing to implement the announced
NBN and is beginning the process of acquiring services from the private
sector. Axia will evaluate the opportunities that may be available to it as
the Government's plans develop.

    Bought Deal Financing of Subscription Receipts

    On March 24, 2009, Axia closed the bought deal financing announced on
March 4, 2009 for 11.5 million subscription receipts at $1.65 per subscription
receipt for gross proceeds of $19.0 million. This included 1.5 million
subscription receipts sold pursuant to the exercise in full of the
over-allotment option. The issuance of common stock from treasury for this
transaction was conditional on the Corporation being successful in its
Intellinet consortium bid for the Singapore OpCo opportunity, which it was
not. Accordingly, the gross proceeds were returned to the subscribers and the
treasury issuance of additional common shares did not occur. During the
current quarter, Axia expensed all of the costs incurred in this financing,
which totalled $0.8 million, and were allocated to the Business Development
expense for the Asia business segment.

    Q3FY09 Consolidated Financial Information

    Consolidated revenue for the quarter was $17.8 million, a decrease of
$1.1 million from $18.9 million for the prior quarter of fiscal 2009. Revenues
increased by 11 percent to $17.8 million for the third quarter of fiscal 2009
compared to $16.0 million in the same period for fiscal 2008. Revenues for the
first nine months of fiscal 2009 were $52.6 million, an increase of $5.0
million from $47.6 million for the first nine months of fiscal 2008.
Consolidated gross profit for the quarter was $6.4 million or 36 percent of
revenue which is a decrease of $1.6 million from the $8.0 million or 42
percent of revenue reported for the prior quarter. As compared to the first
nine months of fiscal 2008, gross profit decreased by $0.2 million from $22.0
    Net income for the current quarter was $0.7 million ($0.01 per fully
diluted share), and $5.6 million for the nine month period of fiscal 2009
($0.08 per fully diluted share), a decrease of $1.8 million from $2.5 million
($0.04 per fully diluted share) for the previous quarter and a decrease of
$1.0 million compared to the same nine month period of fiscal 2008.
    The decrease in the Corporation's net income results for the current
quarter and nine months of fiscal 2009 are due to: i) losses incurred in
Covage's largest DSP, Sem@for77, which is typical for a network in the early
stages of activation. The early stages of activation involve operating losses
and a higher depreciation expense as the assets are initially activated; and
ii) increased business development expense associated with the bought deal
financing and proposals being pursued during the quarter.
    As at March 31, 2009, Axia's working capital was $22.1 million as
compared to $32.2 million for the prior quarter. This decrease was anticipated
as the Corporation is currently investing funds in network construction and
acquisitions for Axia's expanding operations in both France and Singapore. As
at March 31, 2009, Axia had $28.8 million in cash and unrestricted short-term


    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 consequence, next generation network investments are being considered in
some jurisdictions as economic stimulus initiatives.
    Axia will continue to invest business development funds to investigate
and assess the best available opportunities. Axia's Management and 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 available sources. The
Corporation intends to maintain its strong balance sheet approach. Axia's
management and the Board considers all these factors as we seek the path that
we believe will maximize longer-term shareholder value.

    Conference Call Scheduled

    A conference call for the investment community will be held Thursday, May
14, 2009 at 3 p.m. (Eastern) and 1 p.m. (Mountain). Axia Chairman and CEO Art
Price and Chief Financial Officer Peter McKeown will participate.
    To participate in the conference call, please dial (416) 646-3096 in
Toronto and internationally. If you are connecting from other parts of Canada,
dial 1-800-814-4853. 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:

    A replay of the conference call will be available at (416) 640-1917 or
1-877-289-8525, passcode 21305623 followed by the number sign from 5 p.m. (ET)
Thursday, May 14, 2009 to midnight (ET) Thursday, May 21, 2009, or through the
webcast archives at

    About Axia

    The unaudited Consolidated Financial Statements for the third quarter of
fiscal 2009 ended March 31, 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 and are also posted at
    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
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.


    (unaudited)                                          March 31,   June 30,
    ($000s)                                                  2009       2008
    Current assets:
      Cash                                              $   7,885  $   2,210
      Short-term investments                               20,887     25,867
      Restricted short-term investments                     4,142      4,763
      Accounts receivable                                  29,487     25,222
      Loan to related party                                 1,500          -
      Prepaid expenses                                      2,290      1,326
      Future income tax asset                                  39         24
                                                           66,230     59,412

    Property and equipment                                 64,655     49,373
    Intangible assets                                       8,758      6,699
    Goodwill                                                4,201      4,201
    Advances to joint venture                                   -      1,785
    Other assets                                            1,518        816
    Equity investment                                         456          -
    Restricted long-term investments                        2,235      4,310
    Future income tax asset                                 4,816      4,608
                                                        $ 152,869  $ 131,204

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable and accrued liabilities          $  36,700  $  29,826
      Income taxes payable                                  5,572      5,306
      Current portion of deferred revenue                   1,682      1,061
      Current portion of lease obligation                     150        284
      Current portion of cost of excess space                  61         61
                                                           44,165     36,538

    Deferred revenue                                        6,118      1,503
    Lease obligation                                            -         77
    Cost of excess space                                       66        115

    Shareholders' equity:
      Share capital                                        48,102     48,074
      Contributed surplus                                   3,489      2,893

      Retained earnings                                    44,560     38,986
      Accumulated other comprehensive income
        Unrealized gain on short-term investments             133        193
        Unrealized gain on translation of
         self-sustaining operations                         6,236      2,825
                                                           50,929     42,004
                                                          102,520     92,971
                                                        $ 152,869  $ 131,204


    For the three and nine months ended March 31, 2009 and 2008 (unaudited)

                                          Three months           Nine months
    (000s except per share amounts)    2009       2008       2009       2008
    Revenue                       $  17,846  $  16,003  $  52,570  $  47,589
    Cost of products and
     services sold                   11,466      9,524     30,801     25,561
    Gross profit                      6,380      6,479     21,769     22,028
      Marketing                         333        248        928        728
      Administration                  1,214        852      3,421      2,358
      Business development            2,108      1,897      6,101      5,962
      Stock-based compensation          235        238        609      2,279
      Net interest and financing
       charges (income)                (386)      (382)    (1,407)    (1,964)
      Depreciation and amortization   1,751      1,411      4,099      3,292
                                      5,255      4,264     13,751     12,655
    Income before the following       1,125      2,215      8,018      9,373
      Loss on equity investment         (84)         -       (320)         -
      Gain on disposal                    3        333        374        333
    Income before income tax          1,044      2,548      8,072      9,706
      Current income tax              1,063        881      3,680      4,007
      Future income tax (recovery)     (677)    (1,382)      (938)      (922)
                                        386       (501)     2,742      3,085
    Net income before
     minority interest                  658      3,049      5,330      6,621
      Minority interest                   2         14        244          3
    Net income                          660      3,063      5,574      6,624
    Retained earnings,
     beginning of period             43,900     34,446     38,986     30,885
    Retained earnings,
     end of period                $  44,560  $  37,509  $  44,560  $  37,509

    Net income per share
      Basic                       $    0.01  $    0.05  $    0.09  $    0.10
      Diluted                     $    0.01  $    0.05  $    0.08  $    0.10

    Weighted average shares
      Basic                          63,593     63,593     63,593     63,518
      Diluted                        64,280     66,474     65,645     63,533


    For the three and nine months ended March 31, 2009 and 2008 (unaudited)

                                          Three months           Nine months
    ($000s)                            2009       2008       2009       2008
    Net income                    $     660  $   3,063  $   5,574  $   6,624
    Other comprehensive income,
     net of tax:
        Unrealized gain (loss) on
         short-term investments         (31)       280        265        265
        Transfer losses on sale
         of short-term investments        -          -       (205)         -
      Unrealized gain (loss) on
       translation of self-
       sustaining operations         (1,481)     4,469      3,289      4,929
    Other comprehensive income
     (loss)                          (1,512)     4,749      3,349      5,194
    Comprehensive income (loss)   $    (852) $   7,812  $   8,923  $  11,818


    For the three and nine months ended March 31, 2009 and 2008 (unaudited)

                                          Three months           Nine months
    ($000s)                            2009       2008       2009       2008
    Cash provided by (used in):
    Operating activities:
      Net income                  $     660  $   3,063  $   5,574  $   6,624
      Items not involving cash
        Depreciation and
         amortization                 1,751      1,411      4,099      3,292
        Future income tax              (677)    (1,382)      (938)      (922)
        Loss on equity investment        84          -        320          -
        Gain on disposal                 (3)      (333)      (374)      (333)
        Minority interest                (2)       (14)      (244)        (3)
        Cost of excess space            (24)        (4)       (49)       (48)
        Stock-based compensation        235        238        609      2,279
                                      2,024      2,979      8,997     10,889

    Changes in non-cash working
     capital items                     (109)    (2,121)     1,660    (25,773)
                                      1,915        858     10,657    (14,884)
    Financing activities:
      Decrease in restricted short
       and long-term investments      7,795          -      2,696          -
      Issue of common shares             15          -         15        225
      Repayment of lease obligation     (72)       (67)      (211)      (201)
                                      7,738        (67)     2,500         24
    Investing activities:
    Short-term investments           (4,169)    (2,588)     4,980      4,069
      Acquisitions                        -     (1,189)    (2,370)    (2,232)
      Advance to joint venture            -     15,797      1,785     11,467
      Equity investment                (525)         -       (781)         -
      Purchase of property
       and equipment                 (9,908)    (9,553)   (16,809)   (12,563)
      Disposal of property
       and equipment                      -      1,321          -      1,321
    Purchase of property and
     equipment included in
     accounts payable                 6,047       (633)     3,513      8,529
                                     (8,555)     3,155     (9,682)    10,591
    Effect of currency translation
     on cash balances and cash
     flows                           (1,189)     1,511      2,200      1,149
    Increase in cash                    (91)     5,457      5,675     (3,120)
    Cash, beginning of period         7,976      2,285      2,210     10,862
    Cash, end of period           $   7,885  $   7,742  $   7,885  $   7,742

    %SEDAR: 00002394E

For further information:

For further information: please visit Axia's website at, or
contact: Dawn Tinling, VP, Investor Relations and Communications, Axia
NetMedia Corporation, (403) 538-4074,

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