GDG Environment Group Ltd.
TSX VENTURE : GDG

GDG Environment Group Ltd.

April 22, 2010 19:57 ET

GDG ENVIRONMENT GROUP - The Company Today Announced its Financial and Operating Results for 2009 and Outlines Strategic Growth Plan

TROIS-RIVIERES, QUEBEC--(Marketwire - April 22, 2010) - April 22, 2010 – GDG Environment Group (TSX VENTURE:GDG) (the "Company" or "GDG") specializing in environmental protection response strategies, today announced its financial and operating results for the year ended December 31, 2009. Despite difficult economic conditions, the Company nevertheless maintained its Research and Development (R&D) investments, which contributed to record a loss of $525,000, compared to earnings of $701,000 (adjusted net earnings of 126,000$ if we exclude a non-recurring life insurance product of $575,000) in fiscal year ending 2008. The Company generated revenue in the amount of $7,078,000 being a decrease of 8.8 % compared to the same period in 2008. Earnings per share, basic and diluted, have ended with a negative outcome of $0.01 compared to a positive outcome of $0.02 in 2008.

In the context of the economic slump and of uncertainties caused by the economic crisis among its main clients, GDG has reinforced its growth plan. GDG has re-assigned resources towards its new activity sectors, namely R&D programs and market development, with the objective of creating new business lines and of exporting its know-how. In the course of this financial year, GDG Environment Group has also reinforced its position in the mainstream of its business sectors, with a foresight of the economic upturn.

GDG Environment Group has set forth two primary objectives to sustain its growth. First, it has set its sights on capturing the dominant market position in Canada in the integrated biorational control of biting flies and disease vectors. Its second primary objective is to diversify its operations in new markets in an effort to offset the seasonality of its cash inflows by setting up an R&D program in the complementary sector of the real-time detection and biological control of blue-green algae in aquatic environments.

2009 Highlights

  • Registration by Pest Management Regulatory Agency (PMRA) of the Company's product "RagWeed Off", and launching of large scale operations for the ecological control of ragweed.
  • Hiring, as R&D Director, of a prominent researcher and expert in nanotechnology and biosensor development.
  • Partnership with a firm specialized in the control of ragweed, allowing the Company to be awarded the majority of contracts the first year of its product homologation ("RagWeed Off").

The following table is an extract from the consolidated financial statements:

GDG ENVIRONMENT GROUP LTD. DATA EXTRACTED FROM CONSOLIDATED FINANCIAL STATEMENTS – EARNINGS  
(In thousands of dollars) Fiscal year ended December 31
2009
  Fiscal year ended December 31
2008
 
Sales $7,078   $7,762  
Cost of sales $4,694   $5,159  
Gross margin $2,384   $2,603  
  33.7 % 33.5 %
Selling and administrative $1,914   $1,783  
Research and development costs $225   $33  
Tax credits on research and development ($148 ) -  
EBITDA (1) $392   $787  
Financial expenses (Note 17) $712   $463  
Depreciation of fixed assets $294   $274  
Total operating expenses $2,998   $2,553  
Earnings (Loss) before the following items : $(614 ) $50  
Other expense (revenue) (Note 18) $2   $(588 )
Earnings (Loss) before income taxes $(616 ) $638  
Income taxes recovered $91   $63  
Net earnings (Net loss) $(525 ) $701  
Earnings (Loss) per share - Basic and Diluted (Note 26) $(0.01 ) $0.02  
(1) The Company uses only one financial measure that is not consistent with Canadian GAAP, namely earnings before interest, income taxes, depreciation and amortization (EBITDA). Such a measure is used because management believes that it provides meaningful information about the Company's performance and operating results. Such a non-GAAP measure has no standardized meaning as prescribed by GAAP and is not necessarily comparable to similarly titled measures presented by other companies. Accordingly, it should not be considered independently of other figures.

Fiscal year ended December 31, 2009

The Company generated revenue in the amount of $7,077,639 for the fiscal year ended December 31, 2009, compared to $7,762,302 for the same period in 2008, being a decrease of 8.8 %.

The decrease in sales for the fiscal year ended December 31, 2009 is due to the economic context which prevailed at the time, resulting in a strong competition and a pressure on prices. Despite this context, the Company maintained its strategic position in obtaining contracts. Moreover, the Company launched large scale operations in the field of ragweed control, following the development and registration of "RagWeed Off".

The gross margin for the fiscal year ended December 31, 2009 is established at $2,383,783 which represents 33.7% of sales compared to $2,602,797 being at 33.5 % of sales for the same period in 2008. The Company has maintained a comparable gross margin despite a decrease in sales in 2009.

Total Research and Development expenses for the year ended December 31, 2009 amounted to $225,992 before tax credits, confirming that GDG Environment Group's strategy is to develop new markets and export its expertise. Expenses for the same period in 2008 amounted to $33,402.

For the fiscal year ending December 31, 2009, the net loss amounted to $525,148 compared to a net earnings of $701,000 in December 31, 2008, which included a non-recurring life insurance product of $575,000.Excluding the product from the life insurance, a net earnings of $126,000, for the 12-month period finishing on December 31, 2008 would be recorded, compared to a net loss of $525,148 for the same period in 2009.

The Company's cash position was $1,004,582 as at December 31, 2009, compared to $1,161,731 as at December 31, 2008. 

The financial statements and the accompanying management's discussion and analysis relating to the Company are available on SEDAR at www.sedar.com and at www.groupegdg.com.

Outlook

Increasingly aware of environmental issues, citizens are showing an ongoing concern for their quality of life. In a period where a sharp upswing in emerging epidemic illnesses is becoming a major source of anxiety on a global scale, public health has become a universal priority. Several nuisance factors associated with the outbreak of such illnesses can be traced to changes in wetlands, where GDG Environment Group can use its technology to intervene effectively. As such, the demand for the Company's services is destined for short-, medium- and long- term growth in both Quebec and Canada, where the Company holds a third of the Canadian market, as well as internationally.

To satisfy increasing demand, the Company has the following development plan: growth by acquisition, by exporting its know-how, as well as by the development of new niches, such as the detection and treatment of cyanobacteria (blue-green algae) in aquatic environments.

Notice of Annual General Meeting:

GDG Environment Group will hold its Annual General Meeting of Shareholders on May 25th 2010 at 14:00 at their corporate headquarters, 430 St-Laurent Street, 2nd floor, Trois-Rivières, Québec.

About GDG Environment Group (www.groupegdg.com)

Since 1980, GDG Environment Group, a recognized Canadian leader in the integrated control of biting flies, offers a broad range of services targeting the improvement of quality of life and the protection of public health, mainly through the biological control of biting flies, vector control and the surveillance and prevention of West Nile Virus in Canada.

GDG Environment Group operates four divisions: GDG Environnement, front-runner in the biological control of biting flies and vector control, GDG Aviation which manages all aerial operations for the Group and Diamond Sylvico, a Northern Quebec subsidiary, firmly established in the Cree Communities and Groupe Bio Services which complement GDG Environnement's services.

GDG Environment Group relies on substantial logistics for the realizations of its mandates: a taxonomy and molecular biology laboratory, a modern fleet of 8 airplanes and helicopters and more than 120 road vehicles.

The Group markets its expertise throughout the country and has a strong team of scientists and managers plus a team of nearly 200 professionals and technicians in the summer. The Group is established as the most important player in Canada, after more than 500 successful mandates in the field of biological control of biting flies and in the management of disease vectors.

Listed on the TSX Venture Exchange since April 2008, the shares of GDG Environment Group are traded under the ticker "GDG" - (TSX VENTURE:GDG).

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • GDG ENVIRONMENT GROUP
    Isabelle Martin
    Vice-Presidente, Operations, Secretary and Chief of finance
    819-373-3097
    Isabelle.martin@gdg.ca