Good morning, ladies and gentlemen, and welcome to the Crown Capital's Q2 2022 Results Conference Call. Please note that today's call contains forward-looking statements within the meaning of the applicable Canadian Securities legislation. Forward-looking statements involve known and unknown risks and uncertainties, as well as other factors that may cause actual financial results, performance, or achievements to be materially different from estimated future results, performance, or achievements expressed or implied by those forward-looking statements. For a description of the risks associated with Crown's business, please refer to the company's annual information form and its filings for Q2 fiscal 2022 at SEDAR, that's S-E-D-A-R.com. For your information, today's conference is being recorded, and at this time I turn the call over to your host today, Mr. Chris Johnson. Please go ahead, sir.
Thank you, and good morning, and welcome to today's call. I'm joined, as usual, by Mike Overvelde, our Chief Financial Officer. It was another quarter with strong progress on our key strategic priorities. Grow earnings from asset-light businesses and to reduce our investment in loan-based investments. Our network services group continues to perform well, although we did experience a reduction in profitability this quarter compared to last year due to some noise in last year's numbers, certain contracts reaching end of life, and additional costs to support new sales activity. We are confident the earnings from this segment will grow significantly over the coming years. Our business is well-positioned to address the long-term demand for enhanced broadband connectivity in rural and remote locations. Most significantly, we announced this past quarter that our subsidiary, Community Network Partners, was selected as an internet service provider under the Ontario Connects program.
The Ontario government also issued its own press release on that this week. In connection with this program, Community Network Partners will design, construct, own, and operate a broadband network to deliver high-speed internet access to residents and businesses in Northern Ontario, covering approximately 9,400 households. As we disclosed, the maximum subsidy under this program is just over CAD 150 million, which is expected to be a material portion of the cost to build this network. In addition, our subsidiary, Galaxy Broadband, is leading the industry to deploy low Earth orbit satellite technology in remote areas, including large commercial users and ultimately entire communities. This is an exciting new technology and is expected to be a key growth area for our company.
Another key highlight in the quarter was the completion of the acquisition of Go Direct Global, an e-commerce fulfillment and distribution company, which we had discussed briefly in our Q1 remarks. Go Direct is a company we know very well, having been invested in it through Crown's investment fund since 2011. Go Direct has been transformed in recent years, and we are seeing exceptional growth in both the United States and Canada. Our investment has opened two new warehouse facilities, a U.S.-based facility in Columbus, Ohio, and one in Calgary. The significant growth potential and we regard Go Direct as a key platform for us and a strong contributor to profits over time. Our power platform continues to move ahead gradually. The fund has now six operating projects and a cumulative operating capacity of 8.2 MW.
Of the eight projects under development, four are expected to become operational over the next 6 weeks, 2 projects before the end of the year, and two projects, unfortunately, are now looking at the first half of 2023. In May, the committed capital for the power fund was reduced to CAD 50 million from CAD 58 million, as we intend to fund additional projects through debt to increase our return on equity. The second strategic priority is to reduce our exposure to loan-based investments and redirect these proceeds to growth initiatives, paying down debt, and returning capital to shareholders. We've made outstanding progress on balance sheet transformation over the past couple of years, and since May 2020, we have repurchased almost 3.8 million common shares for an aggregate cost of CAD 26.2 million.
We have seven loans remaining in the Crown Partners Fund, which together with the GP's interest, carried interest, represents approximately CAD 38 million for Crown. We're seeing meaningful progress with the majority of the loans and expect this, a large percentage to repay over the next 12 months. In terms of our other assets, our plans for PenEquity and its two key residential projects are moving along well. Our lumber business is stabilized, and we have some exciting growth prospects in front of it. We expect both PenEquity and lumber to make a contribution to operating profits this year. With that, I'll turn the call over to Mike, who will review the financials.
All right. Thanks, Chris. Good morning, everyone on the line. The press release and financial statements for the quarter were filed last night. It's a relatively straightforward quarter, so I'll keep the remarks pretty brief as usual. As Chris mentioned, the largest contributor of consolidated revenue by far remains our network services segment. Revenues from that segment decreased year-over-year by 6.7%, from CAD 6.8 million a year ago to CAD 6.4 million this quarter, for the reasons that Chris cited.
Just wanna highlight that although those revenues were down slightly for Q2 on a stand-alone basis, on a year-over-year basis, network services revenues were consistent with the prior year levels, and we do have several growth catalysts as you could look out into the rest of this year and next year. This segment contributed net income before income taxes of CAD one million versus CAD 1.7 million in Q2 of last year, inclusive of depreciation and amortization expenses, which totaled CAD 0.9 million in both cases.
The year-over-year decrease reflects a modest reduction in revenues, an increase in some marketing-related activity, and the fact that the year-ago quarter benefited from a CAD 0.3 million expense recovery that clearly wasn't recurring this year. As you'll see throughout the financial statement, you'll find a new segment. You know, it starts with the new revenue line this quarter for distribution services, which represents revenues from the newly acquired Go Direct business. Recall that we acquired this business on June 24th, so right towards the end of the quarter. Since we only owned it for one week in Q2, results from the segment weren't particularly meaningful to these results.
You know, having said that, just to highlight it, the distribution services segment did contribute just under CAD 0.6 million of revenue and a pre-tax profit of CAD 0.1 million in the quarter. We recognized a net investment gain attributable to shareholders of CAD 0.3 million in the second quarter versus a net investment loss of CAD 0.8 million in the same quarter last year. That reflects final repayment in relation to the Mill Street loan, and it essentially reverses the CAD 0.3 million write-down that we took in Q1 on the same investment, such that on a year-to-date basis, our net investment gain was nil.
Note that the unrealized gain and the realized loss in the quarter simply represent a reclassification, now that that loss has been, you know, finally realized, and they net out to nil on a year-to-date basis, as mentioned. We also recognized a very modest net expected loss recovery in the period, versus a credit loss in the prior year period. For Q2 this year, our share of earnings in Crown Partners Fund totaled CAD 0.3 million. That includes a negative CAD 0.1 million in respect of our general partnership interest, as a result of a slight reduction in the accrued performance bonus payable to Crown, by Crown Partners Fund.
That is a number that does, you know, it can move from quarter- to- quarter, but it's still very firmly in a positive territory for us. We also have CAD 0.4 million in respect of our limited partnership interest. Interest revenue, which now solely includes revenues from Crown Power Fund, was not overly material in the period at CAD 360 thousand. That's well down compared with Q2 of last year, because as you'll recall, through the first half of last year, we were still consolidating Crown Partners Fund results, and that was what made up the bulk of that last year. All this activity drove net income in the period of CAD 0.5 million or CAD 0.08 per basic share.
That compares with the net loss of CAD 0.3 million or CAD 0.03 per share in the same period last year. Total equity decreased from CAD 69.1 million at the end of 2021 to CAD 56 million at the end of Q2, almost entirely due to the share buybacks that we've done so far this year, totaling CAD 11 million in addition to the net losses for the year-to-date period. The substantial decrease in our share count in the first six months of this year drove a meaningful increase in book value per share, which is now CAD 9.93 per share. That compares with CAD 9.74 per share year-end and CAD 9.05 per share a year ago on June 30, 2021. Financial position remains solid.
We continue to have the resources to execute on near-term growth plans for the operating businesses. At quarter end, on a consolidated basis, we had cash of CAD 10.8 million and CAD 11 million drawn on the corporate credit facility. That draw again related predominantly to execution of that substantial issuer bid earlier in the year. As Chris mentioned, we do continue to have line of sight on additional capital coming back from Crown Partners Fund over the next several quarters. I guess that summarizes the main financial highlights for the period. In closing, the entire team here continues to have our heads down executing on the main priorities that we've established and that Chris has articulated.
You know, step-by-step, you know, we have transformed the balance sheet, the operating results, and most importantly, we've established what we believe to be a very favorable growth outlook for Crown. We appreciate your continued interest and look forward to updating you on developments in the coming months and with our Q3 earnings in November. With that, I'm gonna turn the call over to questions. Operator, over to you.
Thank you very much, sir. Ladies and gentlemen, if you'd like to ask an audio question, please press star one on your telephone keypad. Please also ensure your mute function is not activated to avoid any potential equipment. Once again, please press star one on your telephone keypad. Today's first question is coming from Nick Corcoran from Acumen Capital. Please go ahead, sir.
Good morning, and thanks for taking my questions. Just a couple questions from me. The first is on the network service segment. Revenue is flat for the first half of the year. Can you provide any color on what we should expect from the segment through the remainder of the year?
Hello, Nick. Thanks for your question. I think it's gonna be a relatively flat still the balance of this year. The growth initiatives we have, primarily the community projects, I don't think will be really revenue this year. A lot of activity is going in just to get the network designed and early construction work started, but the revenue will be next year. We are seeing some growth in the, as I mentioned, the low Earth orbit side of stuff. Like, that technology is really
On the cusp of commercializing and generating revenue to us. We have a number of terminals working, it's just they haven't reached full billing status yet. That will be a significant increase. Some will catch this fall, you know, probably a lot more next year. We are dealing with, you know, in our particular, the wireless segment with the carrier business, we're seeing some steady reduction of business there as just fiber creeps into more and more what was in the past remote markets. We're seeing some attrition on that front. I would expect kind of flat, like, in terms of our budgets. We're achieving budgets, so all this was to be expected. As I said, the growth is more kind of forward-looking beyond this year.
Good color. Maybe switching gears to the Ontario Connects. I know you might be a little bit limited in what you're able to say, but can you provide any additional details on how that project is progressing and when you might be able to start recognizing revenue from that?
It's a pretty big network. Like it's more than 2,000 kilometers of fiber we're gonna be building. It spans, it's in different pockets of the region that kinda spans from the Quebec-Ontario border across really to the Manitoba border, in different pockets here and there. It really needs to be designed and engineered. Like this is, that takes time, and then you need to get your access to rights of way and if you're putting on third-party poles, that's a process that there's a lead time to doing all that. That's the work that's underway right now. It's not really one big project. It's, you know, our projects break down to five individual lots.
We're gonna break that down and probably again into another sorta five per each lot. What we're looking at really is a 25-ish smaller construction projects that need to get designed and then ultimately built. We're gonna be trying to get some of it this fall. Where we can get early starts and quick access to third-party infrastructure, we'll be doing that. The bulk of the construction activity is a seasonal construction activity. We'll be kinda starting up again in April next year with the view that our goal is it's a significant asset. We see a significant demand.
Like this is similar to the network we built in Dubreuilville, where early penetration rates were considerably higher than our expectations, just because you really have an underserved population. As soon as we build it, we're gonna have customers on it. With the financial support from the government, it's an achievable thing to do. Next year we're gonna be putting as much effort as we can to build it. I don't have that yet. Other than to say it's a big project. There's lots of technical people working on it and then probably by the time we're doing our Q3 call, we'll have a bit better estimate in terms of what we see in the scheduling. We'll roll that out under.
Have you been able to start the engineering work on that project?
We started even before the contract was fully awarded. It's as I keep saying, it's a big project, but it's really a series of small projects. There's a list that the groups are going through. Just so if you're aware, like it's not just getting out to the field and putting wires on poles or burying them in the ground and connecting to houses. You have to figure out right away crossings, and you have to figure out how you're actually getting that signal back to, you know, the world, say back to Front Street in Toronto or Winnipeg, where there's actually, you know, Points of Presence.
That situation will be leveraging third-party infrastructure that already exists for backhaul at different points. When you look at the challenge in Northern Ontario, it is just its size. It is a large area. You know, it's a massive area we're covering. Just trying to figure out how to economically get back to the world connected points is what the engineers are doing right now.
That's good color. Then maybe switching gears to GoDirect. Can you speak to the growth potential in this business and how we should maybe think about it through the end of 2022 and into 2023?
We think Go Direct is gonna grow very quickly. It already is exceeding our growth targets. If you read back through our statements, we were making some advances through. We had, as I mentioned, this has been an investment in one of our investment funds for over a decade. Just going through the process of making the investment, working through our essentially our clients in that fund, you know, took some time. All the while still trying to help the business continue on with its customers that had signed up and get facilities open. It was being kind of a, we've been working on this for a while, so we hit the ground running when we eventually closed it at the end of June.
We've opened the two facilities. We're looking through multiple facilities through next year. The third-party logistics industry has been growing very quickly. You know, e-commerce has changed just the way products move around and where our company is quite strong is what we refer to as omni-channel, which is being able to do both B2B, so think of full pallet load distribution combined with, you know, B2C, which is onesies being put in a package and couriered to you. We find that there's a lot of customers that need a full solution. Go Direct's very small in the whole context of a warehousing industry.
If you know, we do a good job and attract the right customers, we can fill up warehouses, you know, pretty well. Well, that's what's been happening. We've been expanding our sales team, expanding our logistics footprint and we're filling warehouses up faster than we had planned. That's great news. Now it's just gonna be just leaning into it and adding additional processes as we grow. That is really our target for the next, you know, future.
Great. Just the last question for me on the loan portfolio. You have seven loans in the portfolio. I think you said in May, you're on track to wind them down in about 12 months. Are you on track, or do you think you might be slightly behind in the process of winding those down?
We're still looking at quite a bit of repayments between now and next July. In terms of number, at least there's a significant number of those that'll likely be closed up completely before you know first half of next year. We have really you know 1 large loan in there, so it does that 7seven loans does get sort of skewed by one loan. It's probably about 35% of fund right now. You know that loan is scheduled to come back, I think, at the end of next year. So it's you know we're on track. You know, as I say, in fact, I think it might be a little quicker. We've seen.
We had a couple energy-related things in there and really good results coming out of those companies right now, which is accelerating repayments. The rest of them are sort of progressing as one would expect.
Great. That's all for me. Thanks for taking my questions.
Thank you very much, sir. Ladies and gentlemen, once again, if you have any questions, please press star one at this time. Thank you. Okay, Mr. Johnson, we do not appear to have any further questions at this time. I'd like to turn the call back over to you for any additional closing remarks. Thank you.
Okay. Well, I appreciate those who were able to join us this morning. For those on the line just reading the script and listening to the call, please feel free to reach out to Mike or I anytime you like. Wish everybody a great day, and we'll talk to you in another quarter.
Thank you very much, sir. Ladies and gentlemen, that will conclude today's conference. Thank you much for your attendance. You may now disconnect. We wish you a good day.