MONTREAL, Feb. 11 /PRNewswire-FirstCall/ -- Avensys Corporation (OTC Bulletin Board: AVNY), a leading manufacturer and distributor of fiber optic components, and integrator of instrumentation and turn-key systems for environmental monitoring, today reported its financial results for the second quarter of its 2008 fiscal year, ended December 31, 2007.

While the Avensys business generated a robust year-on-year improvement of 32% in revenues, there was a 15% decline in revenues from the first quarter of the current fiscal year. The second quarter is historically a slow sales cycle. This slowdown is typically offset by increased spending from customers in the second half of the fiscal year and the Company has no reason to believe that this year will be any different.

In addition, Avensys Tech, the optical component division, curtailed output production during the period in order to train new staff, as demand for products continues to gain momentum. Notwithstanding this, Avensys Tech generated a remarkable 57% increase in sales year-on-year. Avensys Environmental Solutions' revenues declined by 13%. The six month figures are plus 51% and minus 8%, respectively for the two divisions.

The decline in Avensys Corporation's revenues in the three months ended December 31, 2007 was due to a change in the application of revenue recognition policy in the second quarter of fiscal year 2007 with respect to revenue for the C-Chip subsidiary. Prior to signing the technology license agreement in December 2006, C-Chip revenues were being deferred over 36 months. Once the agreement was signed the Company immediately took all the deferred revenue into income, and from December 2006 until December 31, 2007, have been recording royalties only.

As previously communicated, Avensys is focused on its fiber optics and environmental solutions business segments which have demonstrated the most potential for sustainable and long-term growth. As a result, the Company has ended the relationship with its C-Chip business partner, completing this transformation and allowing it to focus on these core businesses.

President and Chief Executive Officer, John Fraser of Avensys Corporation, commented, "During the second quarter, the Company completed its transformation by putting focus on building sustainable and long-term growth from its core businesses. The quarter marks the completed transition of Avensys as we are now focused on becoming a leader in the fiber optics industry. The fiber optics industry is an area marked by remarkable growth and renewal in the past few years, generally caused by a rising demand from the telecommunications industry, and driven by new digital media, high throughput devices as well as an emerging paradigm shift to high output lasers in the fiber optic laser industry. Avensys is also an indirect beneficiary of large scale undersea telecom projects as our Tech division is one of the few component companies in the world with undersea certified production lines. Avensys Solutions division continues to perform steadily and is a solid contributor to our overall revenue stream."

Six Months Results

For the six months ended December 31, 2007, Avensys Corporation reported consolidated revenues of $9.3 million versus $8.6 million recorded for the same period in the prior year. Gross margin improved to 40% as a percentage of consolidated revenues as compared to 27% for the same period last year. Loss from Operations was $1.1 million, compared to $1.7 million, for the same period last year. Net cash used in operating activities for the six months ended December 31, 2007 was $530 thousand, as compared with net cash used of $1.7 million for the same period last year. The Company generated an adjusted EBITDA loss of $778 thousand, as compared with an adjusted EBITDA loss of $697 thousand for the same period last year.

Mr. Fraser concluded, "We ended the period with a working capital surplus of $1.6 million and an amenable working capital and credit facility to help finance our growing business. In addition as a reflection of the significant progress made by the Company, the notes to the consolidated financial statements for the first half exclude the Company's previously disclosed going concern reference. We are now ramping our internal infrastructure for growth and to meet the increased production demand for our products. The restructuring efforts and turnaround in our business is now beginning to pay off and we hope that this will reflect in the building of shareholder value for our investors."

Conference Call

Avensys Corporation will host a conference call today at 11:00am ET and will be simultaneously broadcast live over the Internet at www.avensyscorporation.com or www.vcall.com. Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the Internet broadcast. The online archive of the broadcast will be available within one hour of the live call.

Those who would like to participate on the conference call should dial 877-407-9210 (US and Canada) and +1-201-689-8049 (International).

A replay of the call will be available on the Company's Web site or by dialing 877-660-6853 (US and Canada) and +1-201-612-7415 (International). When prompted please enter access code, #286 and conference ID #271931. The replay will be available one hour following the live call and for two weeks.

Use of Non-GAAP Financial Measures

The Company provides non-GAAP financial measures, such as adjusted EBITDA, to complement its consolidated financial statements presented in accordance with GAAP. Non-GAAP financial measures do not have any standardized definition and, therefore, are unlikely to be comparable to similar measures presented by other reporting companies. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial and operating performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by identifying certain expenses, gains and losses that, when excluded from the GAAP results, may provide additional understanding of the Company's core operating results or business performance, which management uses to evaluate financial performance for purposes of planning for future periods. However, these non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results.


    The company uses adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization, adjusted for debentures and preferred shares
accretion, and changes in fair value of derivative instruments) as a non-GAAP
financial measure in this press release. A reconciliation of EBITDA to the
operating loss before discontinued operations for the second quarter of 2008
is as follows:



                                 Adjusted EBITDA
                      (Expressed in thousands of US Dollars)

                                    For the Three Months    For the Six Months
                                           Ended                  Ended
                                         December 31,           December 31,
                                        2007     2006        2007      2006
                                         $        $           $         $

    Net Loss                           (420)   (1,461)     (2,562)   (1,691)

    Add (Subtract)
    Interest expense, net               178       189         515       435
    Depreciation and
     amortization                       281       216         490       394

    Debentures and preferred
     shares accretion                   219       753         446     1,394
    Loss on redemption of
     convertible debentures               -         -       1,423         -

    Change in fair value of
     derivative financial
     instruments                       (611)     (229)       (339)     (987)
    Income Tax Benefit                 (425)     (165)       (594)     (529)

    Adjusted EBITDA (Loss)             (778)     (697)       (621)     (984)



    Condensed Financial Statements

  Interim Consolidated Financial Statements of Operations and Comprehensive
                          Income (Loss) - Unaudited
          (Expressed in U.S. Dollars, except for per share amounts)

                                    Three Months              Six Months
                                    December 31,              December 31,
                                  2007         2006        2007         2006
                                   $            $           $            $

    Revenue                   4,306,647    4,865,465    9,276,528    8,623,670

    Cost of Revenue           2,811,805    3,947,264    5,561,197    6,336,547
    Gross margin              1,494,842      918,201    3,715,331    2,287,123
    Gross Margin as %
     of Revenue                  34.7 %       18.9 %       40.1 %       26.5 %

    Operating expenses
    Depreciation and
     amortization               281,076      215,775      489,967      393,643
    Selling, general
     and administration       1,565,472    1,451,790    3,177,088    2,861,274
    Research and
     development                697,951      365,957    1,162,262      742,704

    Total Operating
     expenses                 2,544,499    2,033,522    4,829,317    3,997,621

    Operating (loss)
     gain                    (1,049,657)  (1,115,321)  (1,113,986) (1,710,498)

   Other income
     (expenses)                 204,571     (508,765)  (2,041,814)   (507,626)
    Income tax benefits
     - refundable tax           425,422      164,501      594,423     529,102
     credits
    Non-Controlling
     interest                     (160)       (1,438)       (299)      (1,547)
    Results of
     discontinued
     operations                      -             -           -            -
    Net (loss) income
     for the period           (419,824)   (1,461,023) (2,561,676)  (1,690,569)



               Interim Consolidated Balance Sheets - Unaudited
                   (Expressed in thousands of U.S. Dollars)

                                                    December 31,    June 30,
                                                       2007           2007
                                                         $              $
                         ASSETS

    Current Assets                                   8,153,786    7,346,722
    Property and equipment, net                      2,514,374    2,279,973
    Intangible assets                                3,971,008    3,967,213
    Goodwill                                         4,424,610    4,116,872
    Deferred financing costs                           428,501      376,794
    Deposits                                           104,096      105,915
    Total Assets                                    19,596,375   18,193,489


              LIABILITIES AND STOCKHOLDERS' EQUITY

    Total Current Liabilities                        6,543,151    6,749,921
    Long-term debt, less current
     portion                                           203,855      174,412
    Convertible debentures                             986,238    1,275,458
    Balance of purchase price payable                1,462,423    1,194,096
    Derivative financial instruments                 1,961,146       64,510
    Total Liabilities                               11,156,813    9,458,397
    Non-controlling Interest                            25,232       23,193
    Total Stockholders' Equity                       8,414,330    8,711,899
    Total Liabilities and
     Stockholders' Equity                           19,596,375   18,193,489

About Avensys Corporation

Avensys Corporation operates Avensys Inc., its wholly-owned core subsidiary. Avensys Inc., through its manufacturing division Avensys Technologies, designs, manufactures, distributes, and markets high reliability optical components and modules as well as FBGs for the telecom market and high power devices and sub-assemblies for the industrial market. Avensys Technologies is also a pioneer in the development of packaged fiber-based sensors and possesses leading edge intellectual property. Avensys Environmental Solutions, also a division of Avensys Inc., is an industry leader in providing environmental monitoring solutions for air, water and soil in the Canadian marketplace.

Forward-Looking Statements:

Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results, performance and achievement in the future to differ materially from forecasted results, performance, and achievement. These risks and uncertainties are described in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in the Company's plans or expectations.



    For more information, please contact:
    Truc Nguyen or Christopher Chu
    The Global Consulting Group
    T: +1-646-284-9400
    E: tnguyen@hfgcg.com | E: cchu@hfgcg.com

SOURCE Avensys Corporation