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Prestige Telecom reports its results for fiscal 2011

^{Published on 2011-08-18 05:06:09 - Market Wire}
 

MONTREAL, Aug. 18, 2011 /CNW Telbec/ - Prestige Telecom Inc. ("Prestige" or the "Company") (TSXV: PR) released its audited financial results today for its fiscal year ended March 31, 2011, and filed its financial statements and MD&A for the year. All figures are in Canadian dollars.

Prestige's sales increased by 11% to $137.9 million for fiscal 2011, compared to $124.2 million a year ago. This was mainly due to construction revenues from new entrants and the Majetel Inc. acquisition, combined with volume increases in the engineering segment. Fourth quarter sales increased by 2% to $29.0 million from $28.5 million for the same period a year ago.

Gross margin decreased by $3.9 million in fiscal 2011 to $25.3 million (18% of sales) from $29.2 million (24% of sales) last year, mainly due to the installation segment, for which gross margin as a percentage of sales decreased from 24% to 8%. Gross margin for the fourth quarter decreased by $2.3 million in 2011 to $3.7 million (13% of sales) from $6.0 million (21% of sales) last year, mainly due to the construction segment.

General and administrative expenses as a percentage of sales decreased in fiscal 2011 due to certain cost-cutting measures that included personnel reduction, procurement initiatives and a reduction in discretionary spending. As a result, general and administrative expenses stood at $20.5 million (15% of sales) for fiscal 2011, compared to $20.0 million (16% of sales) a year ago. For the fourth quarter, general and administrative expenses were up $1.1 million to $6.3 million (22% of sales) in 2011, compared to $5.2 million (18% of sales) a year ago, mainly because of an account receivable balance write-off of a customer that filed for bankruptcy

EBITDA¹ for fiscal 2011 was $4.0 million, compared to $8.4 million last year. For the fourth quarter, the Company recorded an EBITDA loss of $2.7 million, compared to an EBITDA of $0.5 million for the same period last year.

The Company incurred transaction and reorganization costs of $2.1 million in fiscal 2011. These include a one-time transaction cost associated with the acquisition of Majetel Inc., severance costs related to a headcount reduction program initiated in August 2010, and costs incurred by the Company to examine options regarding its capital structure. An impairment loss of $13.3 million relating to goodwill and intangible assets was also recorded in the fourth quarter of fiscal 2011.

As a result, Prestige incurred a net loss of $19.7 million or $0.167 per share for fiscal 2011, compared to a net loss of $0.8 million or $0.007 per share a year ago. For the fourth quarter, the Company recorded a net loss of $18.9 million or $0.160 per share, compared to a net loss of $1.3 million or $0.011 per share for the same period last year.

Working capital decreased by $20.3 million to ($13.4 million) as at March 31, 2011, compared to $6.9 million as at March 31, 2010, mainly due to the use of the restricted cash on hand at March 31, 2010, regarding the acquisition of Majetel Inc., as well as the classification as short-term debt of two loans which are due within a year. At March 31, 2011, total assets were $49.5 million, shareholders' equity (deficiency) was ($5.3 million) and net debt was $38.2 million. A total of 118.2 million shares were outstanding.

On June 11, 2011, the Company announced that it had initiated a process to review strategic alternatives available with respect to its capital structure to allow it to continue to operate and meet its obligations as they come due. The success of this process is not guaranteed.

On July 29, 2011, the Company entered into a temporary accommodation agreement with its lender under its operating credit facility. The aggregate borrowings under the facility are essentially capped at the lesser of $24,000,000 and certain thresholds based on weekly cash flows and the borrowing base. The maturity remained unchanged at August 30, 2011, but the new agreement provides the lender with the option to extend the maturity date at its discretion.

About Prestige Telecom Inc.

Prestige Telecom is a leading provider of network engineering, materials furnishing, installation and support services (commonly referred to as EF&I services) required to construct, operate and maintain wireline, wireless and cable television networks. Prestige assists telecommu-nications original equipment manufacturers and service providers to engineer, install and upgrade their infrastructures to support enhanced voice, high-speed data and video services. Prestige Telecom also provides technical and aerial services to the Canadian communications and broadcast industries, including tower supply, engineering, site construction, and infrastructure and equipment maintenance.

In Canada, Prestige has over 1,000 professional and technical personnel operating from nineteen (19) service locations in nine (9) provinces. Prestige's head office is located in Baie-D'Urfé (Montréal), Québec.

[ www.prestigetel.com ]

Forward-Looking Statements

This press release contains certain forward-looking statements with respect to the Company. Such forward-looking statements are dependent upon a certain number of factors and are subject to risks and uncertainties. Management does not assume any obligation to update or revise any forward-looking statements, whether as a result of new information or future events, except when required by the regulatory authorities.

Note to readers: Complete audited consolidated financial statements and Management's Discussion & Analysis of Financial Position and Operating Results have been posted on SEDAR and are available at [ www.sedar.com ].

The TSX Venture Exchange has not reviewed the contents of this press release and accepts no responsibility for the adequacy or the accuracy thereof.