MISSISSAUGA, ONTARIO today reported financial results for the
period ended September 30, 2007.
The reporting period is a shortened period brought about by the
Company's decision to change its financial year end to September
30. The Company's decision to change year ends was made public in a
notice dated October 23, 2007. Accordingly, these results reflect
the results of operations and financial performance for the two
month period ending September 2007, and the five month period
ending September 2007. The comparative periods are the three month
and six month periods ending October 31, 2006.
Consolidated revenue for the two month period ended September
30, 2007 was $9.9 million, an increase of 85% from the most
comparable period last year, which included three months of
revenue. Included in revenue the period ending September 30, 2007
is $4.6 million of revenue contribution from UTS Geophysics,
representing 46% of consolidated revenue, and $5.4 million or 54%
of the total from Aeroquest Limited.
Consolidated revenue for the five month period ending was $19.3
million, an increase of 90% from the six month period ended October
31, 2006. After accounting for the difference in months between the
five month period ended September 30, 2007 and the six month period
ended October 31, 2006, organic revenue growth in Aeroquest was
approximately 50%, resulting from an overall increase in business
activity reflected in an increase in the number of systems in the
field and an increase in line kilometers flown. The remainder of
the growth in revenue came from the inclusion of UTS Geophysics
revenue for the three months since the closing of this acquisition
on July 3, 2007.
Gross profit in the two month period was $3.9 million, or 39% of
revenue, while gross profit for the year-to-date was $7.7 million
or 40% of revenue. Year-to-date, the consolidated gross profit
margin in the Company's helicopter operations has been lower than
recent historical averages while gross margins in fixed wing
operations are higher than recent historical averages. The negative
variance in margins in helicopter operations has been primarily a
result of unusually bad weather during the summer and fall flying
season in several areas of Canada where the Company conducts
surveys, most notably in Northern Saskatchewan, Northern Quebec and
the Province of Newfoundland and Labrador. Gross margins in
helicopter operations are expected to improve as the weather in
these areas returns to normal.
Operating profit for the two months period ending September 30,
2007 was $1.4 million, or 15% of revenue, while operating profit
for the five months period ending was $3.1 million or 16% of
revenue. Operating profit was reduced by $0.2 million and $0.4
million for the two and five month periods respectively as a
consequence of a loss on foreign exchange brought about by the
weakening of the US dollar relative to both the Canadian and
Australian dollars during the period. Operating profit was also
reduced by $0.5 million and $0.9 million for the two and five month
periods respectively due to non-cash intangible asset amortization
expenses resulting from the acquisition of UTS Geophysics.
Net income for the two months period ending was $1.1 million or
$0.05 per share, as compared to $0.9 million, or $0.06 per share
for three months period ending October 31, 2006. Net income for
five months period ending September 30, 2007 was $2.0 million or
$0.09 per share.
Operating cash flow before changes in working capital was $1.8
million, or $0.08 per share for the two months period ending
September 30, 2007 and $3.4 million or $0.15 per share for the five
month period ending September 30, 2007.
Capital expenditures totaled $0.6 million and $1.6 million for
the two and five month periods ended September 30, 2007,
representing 6% and 8% of revenue respectively. This is in line
with the Company's expectations.
"We continue to be very pleased with the progress of both
Aeroquest and UTS Geophysics." said Roy Graydon, President &
CEO of Aeroquest; "While we have faced difficult weather throughout
the summer and fall in many of our Canadian survey areas, the
diversification brought about through the acquisition of UTS
Geophysics has proved to be very beneficial in allowing us to
maintain our margins and sustain our growth throughout this
period." Contract backlog in both helicopter and fixed wing
operations remains strong heading into the Northern Hemisphere's
winter season with a total backlog at September 30, 2007 of $16.3
million, comprised of $8.4 million in helicopter operations and
$7.9 million in fixed wing operations.
About Aeroquest International
Aeroquest International is a world leader in the development and
operation of innovative and proprietary airborne geophysical
surveying platforms servicing the mineral exploration, oil and gas,
and environmental industries. Directly, and through its sister
company UTS Geophysics, Aeroquest fields a fleet of helicopter and
fixed wing systems and is active on almost every continent in 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
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
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As at Sept. 30, 2007 April 30, 2007
Assets (Unaudited) (Audited)
Current
Cash and cash equivalents $ 5,398,777 $ 4,706,035
Accounts receivable 8,014,717 3,758,228
Unbilled contracts in progress 2,312,098 23,029
Prepaid expenses and deposits 462,109 606,144
------------------------------------
------------------------------------
Total current assets 16,187,701 9,093,436
Long term
Long term investments (Note 1) 90,001 16,001
Capital assets (Note 2) 7,618,873 3,649,769
Intangible assets (Note 3) 20,431,860 -
Goodwill (Note 4) 9,199,108 -
Future income taxes (Note 10) 143,747 1,567
------------------------------------
------------------------------------
Total long term assets 37,483,589 3,667,337
------------------------------------
------------------------------------
Total Assets $ 53,671,290 $ 12,760,773
------------------------------------
------------------------------------
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued
liabilities $ 5,325,928 $ 2,134,442
Income taxes payable 2,238,543 994,943
Deferred revenue 3,838,463 1,761,281
Promissory notes (Note 5) 536,449 -
Capital lease obligations (Note 6) 292,466 -
------------------------------------
------------------------------------
Total current liabilities 12,231,849 4,890,666
Long term
Promissory notes (Note 5) 2,597,339 -
Capital lease obligations (Note 6) 720,230 -
Future income taxes (Note 10) 6,566,056
------------------------------------
------------------------------------
Total Liabilities 22,115,474 4,890,666
------------------------------------
------------------------------------
Shareholders' equity
Share capital (Note 8) 27,403,594 5,992,289
Contributed surplus (Note 8) 1,320,461 1,102,228
Accumulated other comprehensive income 72,794 -
Retained earnings 2,758,967 775,590
------------------------------------
------------------------------------
Total shareholders' equity 31,555,816 7,870,107
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Total Liabilities and Shareholders' Equity $ 53,671,290 $ 12,760,773
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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 two For the three For the five For the six
months months months months
ended ended ended ended
Sep. 30, '07 Oct. 31, '06 Sep. 30, '07 Oct. 31, '06
Sales $ 9,944,268 $ 5,387,482 $ 19,299,618 $ 10,152,455
Cost of sales 6,077,781 2,388,050 11,573,913 5,188,447
--------------------------------------------------------
--------------------------------------------------------
Gross profit 3,866,487 2,999,432 7,725,705 4,964,008
--------------------------------------------------------
--------------------------------------------------------
Expenses and
other items
Amortization of
intangible
assets 534,499 31,253 892,587 62,505
Depreciation of
capital assets 371,074 259,300 694,808 426,838
Development
expense 115,128 149,858 287,554 314,343
Foreign exchange
(gain)/loss 240,518 3,793 384,363 (5,248)
General and
administrative 1,156,581 953,324 2,353,069 1,720,776
Stock based
compensation
expense 4,582 21,330 11,458 144,830
--------------------------------------------------------
--------------------------------------------------------
Total operating
expenses 2,422,382 1,418,858 4,623,839 2,664,044
Operating profit 1,444,105 1,580,574 3,101,866 2,299,964
Other costs
(income) (Note 12) 38,346 (24,151) (420) (35,197)
--------------------------------------------------------
--------------------------------------------------------
Income before
income taxes 1,405,759 1,604,725 3,102,286 2,335,161
Income taxes
(Note 10)
Current 649,933 659,504 1,408,701 826,118
Future (290,009) - (289,792) -
--------------------------------------------------------
--------------------------------------------------------
Net income
for the period $ 1,045,835 $ 945,221 $ 1,983,377 $ 1,509,043
--------------------------------------------------------
--------------------------------------------------------
Revaluation of
long term
investments to
fair market value (1,000) - (1,000) -
Unrealized gain on
translation of self
sustaining foreign
operations 23,990 - 25,793 -
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Total comprehensive
income, for the
period $ 1,068,825 $ 945,221 $ 2,008,170 $ 1,509,043
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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
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For the two For the three For the five For the six
months months months months
ended ended ended ended
Sep. 30, '07 Oct. 31, '06 Sep. 30, '07 Oct. 31, '06
Retained earnings
(deficit),
beginning of
period, as
previously reported $ 1,713,132 ($ 840,885) $ 530,561 ($ 1,136,790)
Cumulative
effect
of change in
accounting
policy (Note 9) - 365,685 245,029 97,768
-------------------------------------------------------
-------------------------------------------------------
Retained earnings
(deficit),
beginning of
period, as
restated 1,713,132 (475,200) 775,590 (1,039,022)
Net income 1,045,835 945,221 1,983,377 1,509,043
-------------------------------------------------------
-------------------------------------------------------
Retained earnings,
end of period $ 2,758,967 $ 470,021 $ 2,758,967 $ 470,021
-------------------------------------------------------
-------------------------------------------------------
Earnings per
share (Note 11)
Basic $ 0.05 $ 0.06 $ 0.09 $ 0.10
Fully diluted $ 0.04 $ 0.05 $ 0.08 $ 0.09
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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 two For the three For the five For the six
months months months months
ended ended ended ended
Sep. 30, '07 Oct. 31, '06 Sep. 30, '07 Oct. 31, '06
Cash provided by
(used in)
Operating
activities
Net income for
the period $ 1,045,835 $ 945,221 $ 1,983,377 $ 1,509,043
Operating items
not requiring
cash
Depreciation of
capital assets 371,074 259,300 694,808 426,838
Amortization of
intangible assets 534,499 31,253 892,587 62,505
Translation of
self-sustaining
foreign
operation 23,991 - 25,794 -
Future income
taxes (290,009) 22,792 (289,792) 22,792
Interest
accretion on
promissory notes 76,434 - 76,434 -
Stock based
compensation 4,582 21,330 11,458 144,830
-------------------------------------------------------
-------------------------------------------------------
Operating cash
flow before
changes in
non-cash working
capital 1,766,406 1,279,896 3,394,666 2,166,008
Accounts
receivable 493,102 (1,122,315) (1,160,771) (1,429,172)
Prepaid expenses 156,414 (27,409) 144,035 (1,386)
Unbilled
contracts
in progress (803,589) 33,203 (927,830) 43,763
Accounts payable
and accrued
liabilities 959,155 (367,934) (762,718) (163,453)
Income taxes (803,066) 727,000 (84,273) 893,614
Deferred revenue (1,730,205) 150,679 2,077,182 166,915
-------------------------------------------------------
-------------------------------------------------------
Total cash flow
from operating
activities 38,217 673,120 2,680,291 1,676,289
-------------------------------------------------------
-------------------------------------------------------
Investing
activities
Capital asset
purchases (573,571) (318,192) (1,553,809) (783,509)
Loan receivable - 16,278 - 16,278
Acquisition, net
of cash
acquired (Note 4) (19,090) - (7,321,077) -
-------------------------------------------------------
-------------------------------------------------------
Total cash flow
from investing
activities (592,661) (301,914) (8,874,886) (767,231)
-------------------------------------------------------
-------------------------------------------------------
Financing
activities
Capital lease
payments (86,920) - (110,743) -
Aeroquest
shares redeemed (2,925) (2,925)
Proceeds from
issuance
of common
shares 66,000 1,250 6,998,080 1,250
-------------------------------------------------------
-------------------------------------------------------
Total cash flow
from financing
activities (20,920) (1,675) 6,887,337 (1,675)
-------------------------------------------------------
-------------------------------------------------------
Net change
in cash / cash
equivalents
for the period ($ 575,364) $ 369,531 $ 692,742 $ 907,383
Cash and cash
equivalents,
beginning of
period 5,974,141 3,048,531 4,706,035 2,510,679
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Cash and cash
equivalents,
end of period $ 5,398,777 $ 3,418,062 $ 5,398,777 $ 3,418,062
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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 Shareholders' Equity
Unaudited - Prepared by Management
For the five months ending September 30, 2007
---------------------------------------------------------------------------
Accumu-
lated
other
Contri- compre- Total
Share buted Retained hensive shareholders'
capital surplus earnings income equity
Balance
Apr 30, '07 $5,992,289 $1,102,228 $775,590 $ - $7,870,107
Transit-
ional
adjust-
ment
on
adoption
of
financial
instruments 48,000 48,000
Issuance
of common
shares
for cash 7,650,000 7,650,000
Issuance
of common
shares on
acquisi-
tion 14,620,000 14,620,000
Costs
associated
with
equity
issue (1,005,670) (1,005,670)
Share
issuances
pursuant
to stock
options
exercised 146,975 (63,225) 83,750
Broker
warrants 270,000 270,000
Net income
for the
period 1,983,377 1,983,377
Stock
based
compensa-
tion
expense 11,458 11,458
Unrealized
gain on
translation
of self
sustaining
foreign
operations 25,794 25,794
Revaluation
of long
term
investments
to fair
market value (1,000) (1,000)
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Balance
Sep. 30 '07 $27,403,594 $1,320,461 $2,758,967 $72,794 $31,555,816
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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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