MISSISSAUGA, ONTARIO today reported financial results for the
period ended December 31, 2007.
The reporting period is the first full quarter since the
Company's decision to change its financial year end to September
30, which was made public in a notice dated October 23, 2007. As a
result of this change in financial year end, comparative periods do
not line up precisely. The comparative period used in this report
is for the three month period ending January 31, 2007.
The period ending December 31 of each year is expected to be the
Company's slowest season due to the change of seasons, the onset of
winter in the Northern Hemisphere, and the effects of the holiday
season worldwide. Within this context the Company's results were
very solid. Consolidated revenue for the three months ended
December 31, 2007 was $11.2 million, an increase of 173% from the
most comparable period last year. Included in revenue this period
is $4.9 million of revenue contribution from UTS Geophysics,
representing 44% of consolidated revenue, and $6.3 million from
Aeroquest Limited representing 56% of consolidated revenue.
Aeroquest revenue represented a 54% increase over the $4.1 million
reported in the most comparable quarter last year.
Gross profit in the period was $3.9 million, or 35% of revenue.
Gross profit margins in each of Aeroquest and UTS Geophysics
reflect the effect of the seasonality of the business. Project
level margins in both businesses (margins on contracts prior to the
allocation of shared field operations and processing services)
continue to be strong.
Operating profit in the period was $0.2 million, or 2% of
revenue. Operating profit was negatively affected in the quarter by
several items including the effects of stock-based compensation.
Stock-based compensation in the quarter reflected the Company's
annual grant of stock-based incentives and totaled $0.4 million.
Operating profit was also reduced by $0.9 million due to non-cash
intangible asset amortization expenses resulting from the
acquisition of UTS Geophysics, and by certain additional legal and
audit expenses relating to the costs of changing its year-end.
As a result of these charges and reflecting the slow winter
flying season, net income for the period was $0.1 million or $0.00
per share, as compared to $0.2 million, or $0.01 per share for
three month period ending January 31, 2007.
Operating cash flow before changes in working capital was $1.6
million, or $0.06 per share for the period, as compared to $0.5
million, or $0.03 per share in the most comparable period last
year, and reflects the underlying health of the Company's
operations.
Capital expenditures totaled $1.2 million for period,
representing 11% of revenue, which is in line with the Company's
expectations.
Contract backlog showed a modest increase over the last quarter
and sits at $19 million at period end. Backlog is broken down into
$8 million in helicopter backlog and $11 million in fixed wing
backlog.
"Our results this quarter are very solid for this seasonally
slow time of the year and consistent with our expectations." said
Roy Graydon, President & CEO of Aeroquest; "All indications are
that the market for our services remains very strong worldwide and
with the addition, in the quarter, of Geophex to the Aeroquest
Group of Companies, we are making positive steps in advancing our
strategy of expanding the markets for our technologies and
services. We are quite positive and are looking forward to the
remainder of 2008."
About Aeroquest International
Aeroquest International is a global information and technology
services company and a leader in the development and operation of
innovative and proprietary geophysical surveying platforms for the
mineral and petroleum exploration, and environmental services
industries. Directly, and through its sister companies UTS
Geophysics and Geophex, Aeroquest fields a fleet of over two dozen
helicopter and fixed wing systems and is active across the world.
More information about Aeroquest can be found at www.aeroquest.ca.
More information on UTS Geophysics can be found at www.uts.com.au.
More information on Geophex can be found at www.geophex.com.
For Investors
This news release may include statements about expected future
events and/or financial results that are forward-looking in nature
and subject to risks and uncertainties. The Company cautions that
actual performance will be affected by a number of factors, many of
which are beyond its control. Future events and results may vary
substantially from what the Company currently foresees. Discussion
of the various factors that may affect future results is contained
in the Company's recent filings, available on SEDAR.
Aeroquest International Limited
Consolidated Balance Sheets
Unaudited - Prepared by Management
----------------------------------------------------------------------------
As at Dec. 31, 2007 Sep. 30, 2007
Assets (Unaudited) (Audited)
Current
Cash and cash equivalents $ 7,434,021 $ 5,398,777
Accounts receivable 5,780,176 8,014,717
Unbilled contracts in progress 2,144,514 2,312,098
Prepaid expenses and deposits 694,000 462,109
---------------------------
---------------------------
Total current assets 16,052,711 16,187,701
Long term
Long term investments (Note 1) 88,001 90,001
Capital assets (Note 2) 8,343,373 7,618,873
Intangible assets (Note 3) 19,539,272 20,431,860
Goodwill (Note 4) 15,165,862 9,199,108
Future income taxes 142,176 143,747
---------------------------
---------------------------
Total long term assets 43,278,684 37,483,589
---------------------------
---------------------------
Total Assets $ 59,331,395 $ 53,671,290
---------------------------
---------------------------
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities $ 7,667,828 $ 5,325,928
Income taxes payable 2,188,321 2,238,543
Deferred revenue 2,970,433 3,838,463
Promissory notes (Note 5) 2,658,273 536,449
Capital lease obligations (Note 6) 265,882 292,466
---------------------------
---------------------------
Total current liabilities 15,750,737 12,231,849
Long term
Promissory notes (Note 5) 2,536,459 2,597,339
Capital lease obligations (Note 6) 589,088 720,230
Future income taxes 6,190,115 6,566,056
---------------------------
---------------------------
Total liabilities 25,066,399 22,115,474
---------------------------
---------------------------
Shareholders' equity
Share capital (Note 8) 29,888,686 27,403,594
Contributed surplus (Note 8) 1,646,299 1,320,461
Accumulated other comprehensive income 55,228 72,794
Retained earnings 2,674,783 2,758,967
---------------------------
---------------------------
Total shareholders' equity 34,264,996 31,555,816
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 59,331,395 $ 53,671,290
----------------------------------------------------------------------------
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The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
Aeroquest International Limited
Consolidated Statement of Operations and Comprehensive Income
Unaudited - Prepared by Management
---------------------------------------------------------------------------
For the three months ending Dec. 31, 2007 Jan. 31, 2007
Sales $ 11,196,541 $ 4,097,884
Cost of sales 7,279,219 2,513,085
----------------------------------
----------------------------------
Gross profit 3,917,322 1,584,799
----------------------------------
----------------------------------
Expenses and other items
General and administrative 1,880,563 834,142
Development expense 111,168 98,583
Foreign exchange (gain)/loss (56,463) (29,389)
Stock based compensation expense 382,755 -
Amortization of intangible assets 892,587 -
Depreciation of capital assets 511,633 269,635
----------------------------------
----------------------------------
Total operating expenses 3,722,243 1,172,971
Operating profit 195,079 411,828
Other costs (income) (Note 12) 11,587 (31,247)
Contract cancellations costs - 67,500
----------------------------------
----------------------------------
Income before income taxes 183,492 375,575
Income taxes (Note 10)
Current 437,200 165,146
Future (374,370) -
----------------------------------
----------------------------------
Total Income tax 62,830 165,146
----------------------------------
----------------------------------
Net income for the period $ 120,662 $ 210,429
----------------------------------
----------------------------------
Revaluation of long term investments to
fair market value (2,000) -
Unrealized gain (loss) on translation
of self-sustaining foreign operations (15,566) -
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total comprehensive income, for the
period $ 103,096 $ 210,429
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---------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes are
an integral part of these financial statements.
Aeroquest International Limited
Consolidated Statements of Retained Earnings
Unaudited - Prepared by Management
--------------------------------------------------------------------------
For the three months ending Dec. 31, 2007 Jan. 31, 2007
Retained earnings, beginning of period, as
Previously reported $ 2,758,967 $ 260,054
Cumulative effect of change in accounting
policy (Note 9) - 209,967
-----------------------------
-----------------------------
Retained earnings, beginning of period, as
restated 2,758,967 470,021
-----------------------------
-----------------------------
Excess of purchase price over cost on
redemption of shares (204,846) -
Net income 120,662 210,429
-----------------------------
-----------------------------
Retained earnings, end of period $ 2,674,783 $ 680,450
-----------------------------
-----------------------------
Earnings per share (Note 11)
Basic $ 0.00 $ 0.01
Fully diluted $ 0.00 $ 0.01
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--------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes are
an integral part of these financial statements.
Aeroquest International Limited
Consolidated Statements of Cash Flow
Unaudited - Prepared by Management
---------------------------------------------------------------------------
For the three months ending Dec. 31, 2007 Jan. 31, 2007
Cash provided by (used in)
Operating activities
Net income for the period $ 120,662 $ 210,429
Operating items not requiring cash
Amortization of intangible assets 892,587 -
Depreciation of capital assets 511,633 269,635
Future income taxes (374,370) -
Interest accretion on promissory notes 78,345 -
Stock based compensation 382,755 -
Gain on disposal of capital assets (20,032) -
----------------------------
----------------------------
Operating cash flow before changes in
non-cash working capital 1,591,580 480,064
Accounts receivable 2,234,541 (166,644)
Prepaid expenses (231,890) (147,637)
Unbilled contracts in progress 167,584 (154,616)
Accounts payable and accrued liabilities 2,341,901 376,553
Income taxes (50,222) 165,145
Deferred revenue (868,030) 145,191
----------------------------
----------------------------
Total cash flow from operating activities 5,185,464 698,056
----------------------------
----------------------------
Investing activities
Capital asset purchases (1,231,669) (256,965)
Loan receivable - 2,400
Cash cost of acquisition (Note 4b) (2,021,446) -
----------------------------
----------------------------
Total cash flow from investing activities (3,253,115) (254,565)
----------------------------
----------------------------
Financing activities
Capital lease payments (157,726) -
Aeroquest shares redeemed (375,337) (345)
Proceeds from issuance of common shares 635,958 -
----------------------------
----------------------------
Total cash flow from financing activities 102,895 (345)
----------------------------
----------------------------
Net change in cash and cash equivalents
for the period $ 2,035,244 $ 443,146
Cash and cash equivalents, beginning of
period 5,398,777 3,418,062
---------------------------------------------------------------------------
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Cash and cash equivalents, end of period $ 7,434,021 $ 3,861,208
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes are
an integral part of these financial statements.
Aeroquest International Limited
Consolidated Statements of Shareholders' Equity
Unaudited - Prepared by Management
For the three months ending December 31, 2007
Accumu-
lated
other
Contri- compre- Total
Share buted Retained hensive shareholders'
capital surplus earnings income equity
Balance
Sep.
30, '07 $ 27,403,594 $ 1,320,461 $ 2,758,967 $72,794 $ 31,555,816
Aeroquest
shares
purchased
for
cancel-
ation (162,654) (7,837) (204,846) (375,337)
Issuance
of
common
shares
for cash -
Issuance
of
common
shares on
acquis-
ition 1,962,708 1,962,708
Share
issuances
pursuant
to
restricted
stock unit
vesting 22,500 (22,500) -
Share
issuances
pursuant
to stock
options
exercised 115,830 (26,580) 89,250
Warrants
exercised 546,708 546,708
Net income
for the
period 120,662 120,662
Stock
based
compen-
sation
expense 382,755 382,755
Unrealized
gain on
transl-
ation of
self
sustaining
foreign
operations (15,566) (15,566)
Revaluation
of long
term
invest-
ments to
fair
market
value (2,000) (2,000)
---------------------------------------------------------------------------
Balance
Dec. 31
'07 $ 29,888,686 $ 1,646,299 $ 2,674,783 $ 55,228 $ 34,264,996
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes are
an integral part of these financial statements.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Contacts: Aeroquest International Limited Roy Graydon President
& Chief Executive Officer (905) 672-9129, Ext 222 Email:
rgraydon@aeroquest.ca Website: www.aeroquest.ca
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