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Press release from CNW Group

Canadian Helicopters reports 2011 second-quarter results

Thursday, August 11, 2011

Canadian Helicopters reports 2011 second-quarter results17:36 EDT Thursday, August 11, 2011Revenue growth of 42.6% to $63.3 millionEBITDA of $23.4 million, up from $12.3 million a year earlierAdjusted net income more than doubled to $15.1 million, or $1.15 per shareHNZ transaction closed subsequent to end of Q2MONTREAL, Aug. 11, 2011 /CNW Telbec/ - Canadian Helicopters Group Inc. (TSX: CHL.A, CHL.B) ("the Company"), an international provider of helicopter transportation and related support services, today announced its financial and operating results for the second quarter ended June 30, 2011. These results reflect Canadian Helicopters' conversion to a corporation on December 31, 2010 and the adoption, on January 1, 2011, of International Financial Reporting Standards ("IFRS"). Results for the prior year period have been restated, for comparability. Financial HighlightsQuarters ended June 30,Six months ended June 30,(in thousands of dollars, except per share data)2011201020112010Revenue63,28644,439110,20372,932EBITDA (1)23,35112,25932,27813,037Adjusted net income (2)15,1097,29119,8917,096     Per share/unit - basic and diluted ($)1.150.561.520.54Net income (loss) (3)15,1091,19419,891(19,124)     Per share/unit - basic and diluted ($) (3)1.15n.a.1.52n.a.Cash flows related to operating activities (4)21,3008,35329,0548,680Weighted-average shares/units outstanding (all classes)13,068,70013,068,70013,068,70013,068,700(1)Earnings before interest, income taxes, depreciation and amortization, gain or loss on disposal of property, plant and equipment and share of net loss of an associate, distributions to Unitholders and holders of Exchangeable Class B LP Units and change in fair value of Units and Exchangeable Class B LP Units(2)Excluding certain significant impacts, in 2010, from classifying the Fund Units and Exchangeable Class B LP Units as financial liabilities before the Fund's conversion into an incorporated entity.(3)Prior to December 31, 2010, Units and Exchangeable Class B LP Units were classified as financial liabilities before their conversion into shares of the Company. Therefore, the comparability of the net income (loss) and the concept of earnings per Unit did not apply before the Fund's conversion into an incorporated entity on December 31, 2010. Please refer to the adjusted net income per unit as above.(4) Before net changes in non-cash working capital balancesThe Company generated revenue of $63.3 million, representing an increase of $18.9 million, or 42.6%, over revenue of $44.4 million in the second quarter of 2010. Visual Flight Rules (VFR) revenueincreased $17.8 million primarily due to revenues from medium and additional heavy aircraft contracted in Afghanistan and, to a lesser extent, to higher activity in the domestic mining market. Instrument Flight Rules (IFR) revenue decreased $1.4 million mainly resulting from reduced emergency medical services revenue. Ancillary revenue grew $2.5 million essentially due to the consolidation of maintenance revenues from Heli-Welders and Nampa Valley Helicopters for the full period, versus less than a month last year, and to higher revenue from the DND Contracted Flying Training and Support Contract. Revenue-flying hours increased 27.1% to 19,776 hours.EBITDA for the second quarter of 2011 reached $23.4 million, up from $12.3 million a year earlier.This increase mainly reflects higher operating activity and a more favourable mix resulting from increased activity in Afghanistan where revenues reflect the significantly higher level of effort required to accomplish the work.As a result, second quarter adjusted net income amounted to $15.1 million, or $1.15 per share, versus $7.3 million, or $0.56 per unit in 2010. Adjusted net income excludes certain significant impacts from classifying the Fund Units and Exchangeable Class B LP Units as financial liabilities before the Fund's conversion into an incorporated entity on December 31, 2010. These significant impacts, mostly of a non-cash nature, reduced net income by $6.1 million in the second quarter of 2010.Reflecting higher net income, cash flows related to operating activities before net changes in non-cash working capital balances reached $21.3 million in the second quarter of 2011, up from $8.4 million in the corresponding period a year earlier."We are pleased with the strong performance of Canadian Helicopters in the second quarter.  Our contracted aircraft flew the expected number of hours in Afghanistan in support of the U.S. military, while recovering demand in the domestic mining sector benefited our Canadian VFR operations. Moreover, our recent acquisitions in the repair and maintenance sector continued to perform as expected. As a result of these increased activities, our fixed costs have been more efficiently absorbed which, combined with the nature of our contracted work in Afghanistan, allowed for a significant enhancement in operating profitability," said Don Wall, President and Chief Executive Officer of Canadian HelicoptersSIX-MONTH RESULTSFor the six-month period ended June 30, 2011, revenue reached $110.2 million, up 51.2% from $72.9 million in the corresponding period in 2010. VFR revenue increased $34.4 million mainly due to contracted aircraft in Afghanistan, IFR revenue declined $1.7 million as a result of reduced EMS activity, while ancillary revenue grew $4.6 million reflecting the consolidation of maintenance revenues from Heli-Welders and Nampa Valley Helicopters and higher revenue from the CFTS contract. Canadian Helicopters flew 30,028 hours in the first six months of 2011, up 24.5% from the year prior.EBITDA amounted to $32.3 million, up significantly from $13.0 million a year earlier. Adjusted net income reached $19.9 million, or $1.52 per share, versus $7.1 million, or $0.54 per share, last year. Finally, cash flows related to operating activities before net changes in non-cash working capital balances totalled $29.1 million, compared with $8.7 million in 2010.RECENT EVENTSubsequent to the end of the second quarter, on July 7, 2011, Canadian Helicopters completed its previously announced acquisition of Helicopters (N.Z.) Limited, ("HNZ"). Headquartered in Nelson, New Zealand, HNZ has 11 bases to support operations across New Zealand, Australia, Laos and Cambodia as well as a corporate office in Perth to support its Australian operations. As it is located in the southern hemisphere, HNZ's business will be counter seasonal to the Company's domestic operations in Canada.The transaction purchase price of NZ$154 million (approximately C$123 million) was funded with a combination of cash on hand and a $93 million drawdown on a new revolving credit facility of $125 million. This new facility matures in December 2013.OUTLOOK"The international scope of our operations has been significantly widened by the addition of HNZ to the Canadian Helicopters group of companies.  In addition to contracted services delivered in Afghanistan and Antarctica, our fixed transportation and third party maintenance facilities now span Canada, Australia, New Zealand and regions of southeast Asia. This international character of CHL is integral to our efforts to steadily build shareholder value. In the quarters ahead, we expect our contracts in Afghanistan to continue to generate strong revenues, while domestic demand recovers as a result of momentum in the natural resources sector.  With our financial position remaining solid, we will go on pursuing suitable acquisition opportunities to enhance our core services and extend our reach," concluded Mr. Wall.CONFERENCE CALL Canadian Helicopters will hold a conference call to discuss these results on August 12, 2011 at 11:00 AM (ET). Interested parties can join the call by dialing 416-644-3426 (Toronto) or 1-800-731-5319 (toll free). If you are unable to call at this time, you may access a tape recording of the meeting by calling 416-640-1917 (local) or 1-877-289-8525 (toll free) followed by access code 4463464 followed by #. This tape recording will be available until August 19, 2011.ABOUT CANADIAN HELICOPTERS GROUP INC.Canadian Helicopters Group is an international provider of helicopter transportation and related support services with fixed primary operations in Canada, Australia, New Zealand and regions of southeast Asia. The group also delivers contracted on demand support in Afghanistan and Antarctica. Charter operations are provided under two brands: Helicopters New Zealand (HNZ) in the Asia Pacific and Antarctica regions and Canadian Helicopters Limited (CHL) in Canada and Afghanistan. In addition to charter services, the Company provides flight training and third party repair and maintenance services. With headquarters near Montreal, Canada, the Company operates 160 helicopters and employs approximately 800 personnel.FORWARD-LOOKING STATEMENTS This press release contains forward-looking statements relating to the future performance of the Company and in particular with respect to the continuing business relationship in Afghanistan and expected revenues from USTRANSCOM. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they were made. The Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise unless being required by applicable laws.DEFINITION OF NON-IFRS MEASURES: EBITDA, ADJUSTED NET INCOME AND ADJUSTED EPSReferences to "EBITDA" are to earnings (loss) before net financing charges (income), income taxes, depreciation and amortization, gain or loss on disposal of property, plant and equipment, share of net income (loss) of an associate, distributions to Unitholders and holders of Exchangeable Class B LP Units and change in fair value of Units and Exchangeable Class B LP Units as disclosed in the Summary of Selected Consolidated Financial Information. Since EBITDA is a metric used by many investors to compare issuers on the basis of the ability to generate cash from operations, management believes that in addition to net earnings or loss, EBITDA is a useful supplementary measure.Adjusted net income and adjusted Earnings per Unit information ["Adjusted EPS"] are provided by management to improve the comparability information between 2011 and 2010.  Adjusted EPS is calculated by dividing the net income as disclosed in the statement of comprehensive income, adjusted to add back any distributions to Unitholders and holders of Exchangeable Class B LP Units and to exclude the effect of any change in fair value of Units and Exchangeable Class B LP Units during the 2010 comparative periods, by the weighted average number of Units and Exchangeable Class B LP Units in issue during these periods, regardless whether these units were classified as equity or financial liabilities.EBITDA, Adjusted net income and Adjusted EPS are not earnings measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. Therefore, EBITDA, Adjusted net income and Adjusted EPS may not be comparable with similar measures presented by other entities. Investors are cautioned that EBITDA, Adjusted net income and Adjusted EPS should not be construed as an alternative to net earnings (loss) determined in accordance with IFRS as indicators of the Company's performance, or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows.Note to readers:  Complete consolidated unaudited interim financial statements and Management's Discussion & Analysis of Operating Results and Financial Position are available on Canadian Helicopters' website at www.canadianhelicopters.com and on SEDAR at www.sedar.com.For further information: Canadian Helicopters Group Inc. Don Wall President and Chief Executive Officer  Tel: 780-429-6919 Tel: 450-452-3007