TORONTO, ONTARIO--(Marketwire - Dec. 20, 2011) - Advantex Marketing International Inc. ("Advantex" or the "Company") (CNSX:ADX), a leading specialist in merchant funding and loyalty marketing programs, today announced its results for the three months ended September 30, 2011 ("Q1 F 2012"). All amounts are in Canadian dollars unless otherwise noted.
"We are pleased to report a return to net profit. The strong results from Retail programs for Q1 F 2012 are a vindication of our belief that during fiscal year ended June 30, 2011 the Company had set up a solid platform to grow its merchant base, and ensure growth in its future revenues and profitability," said Kelly Ambrose, Advantex President and Chief Executive Officer.
"In the coming quarters we expect to introduce new product offerings to the small merchant marketplace, that will enable merchants to market their goods and services in new mediums, and save money in their inputs. We expect these new product offerings to generate incremental revenues for the Company," said Mr. Ambrose.
Financial Highlights (ii) |
3 months ended September 30, 2011 ("Q1 F 2012") |
3 months ended September 30, 2010 ("Q1 F 2011") |
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Revenues | : Retail programs (merchant based programs) | $ | 3,835,000 | $ | 3,392,000 | ||
: Online Shopping Mall (discontinued Q3 of fiscal year ended June 30, 2011) | $ | - |
$ | 566,000 |
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: Total | $ | 3,835,000 | $ | 3,958,000 | |||
Gross Margin | 72.8 | % | 68.4 | % | |||
Contribution from Operations before amortization and interest (EBITDA(i)) | $ | 976,000 | $ | 875,000 | |||
Amortization | $ | 92,000 | $ | 153,000 | |||
Stated Interest on loan payable and debentures | $ | 491,000 | $ | 398,000 | |||
Non-cash Interest | $ | 132,000 | $ | 173,000 | |||
Net Profit | $ | 261,000 | $ | 150,000 |
(i) EBITDA is a non-GAAP financial measure which does not have any standardized meaning prescribed by the issuer's GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. For the Company, the most directly comparable measure to EBITDA is Contribution from operations before amortization and interest. |
(ii) Some numbers in the presentation under Financial Highlights may not add due to rounding. |
The Company's revenues from Retail programs increased 13 % during Q1 F 2012 compared with Q1 F 2011, a reflection of increased merchant participation in the programs. The Company's premier product, Advance Purchase Marketing ("APM"), generated revenues of $2.6 million in Q1 F 2012 compared with $2.3 million during Q1 F 2011, and represents 68 % and 67 % of the Company's revenues for Q1 F 2012 and Q1 F 2011 respectively.
Stated interest cost (cash interest paid or payable) for Q1 F 2012 was $0.5 million compared with $0.4 million for Q1 F 2011. The higher dollar cost reflects both an increase in the utilization of the line of credit facility (Loan payable on the balance sheet) which the Company utilized to expand its APM program business, and increase in the coupon of the convertible debenture re-financed in May, 2011 ($6.0 million Convertible debenture with coupon of 10% re-financed as $6.462 million Non-convertible debenture at a coupon of 12%). The re-financing was done to stabilize the Company's access to capital.
About Advantex Marketing International Inc.
Advantex is a specialist in the marketing services industry, managing white-labeled rewards accelerator programs for major affinity groups through which their members earn bonus frequent flyer miles and/or other rewards on purchases at participating merchants. Under the umbrella of each program, Advantex provides merchants with marketing, customer incentives, and additionally pre-purchase of merchants' future sales through its Advance Purchase Marketing (APM) model. Advantex partners include more than 1,150 merchants; CIBC; and Aeroplan. Advantex is traded on the Canadian National Stock Exchange under the symbol "ADX". For additional information on Advantex, please visit www.advantex.com.
Forward-Looking Information
This Press Release contains certain "forward-looking information". All information, other than information comprised of historical fact, that addresses activities, events or developments that the Company believes, expects or anticipates will or may occur in the future constitutes forward-looking information. Forward-looking information is typically identified by words such as: anticipate, believe, expect, goal, intend, plan, will, may, should, could and other similar expressions. Such forward-looking information relates to, without limitation, information regarding: the Company's belief that the strong results from Retail programs for Q1 F 2012 are a vindication of its belief that during fiscal year ended June 30, 2011 the Company had set up a solid platform to grow its merchant base, and ensure growth in its future revenues and profitability; the Company's expectation to the timing of the launch of its new product offerings; the Company's expectation to the acceptance of its new product offerings by the small merchants; the Company's expectation of incremental revenue from the new product offerings; the Company's belief that the re-financing of debenture was done to stabilize its access to capital; the Company's ability to increase merchant participation in its Retail programs; and other information regarding financial and business prospects and financial outlook is forward-looking information.
Forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company, including certain assumptions and expectations of Management. With respect to the forward-looking information contained in this Press Release, the Company has made assumptions regarding, among other things, the size of the market for the Company's programs; its ability to increase merchant participation in its programs; its ability to access future financing; continued affinity partner participation with the Company; continued support from its providers of Loan payable and holders of Debentures payable; current and future economic and market conditions and the impact of same on the Company's business; ongoing and future revenue sources; future business levels; interest and currency rates; the appropriateness of the Company's tax filing position; ongoing consumer interest in accumulating frequent flyer miles; and the Company's ability to manage risks connected to collection of transaction credits.
Forward-looking information is subject to a number of risks, uncertainties and assumptions that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things, changes in general economic and market conditions; changes to regulations affecting the Company's activities; level of merchant participation in the Company's programs; uncertainties relating to the availability and costs of financing needed in the future; termination of the CIBC agreement; termination of the Aeroplan agreement; currency risks; the financial impact from failure to meet its obligations noted under Contractual Obligations section of the Management Discussion and Analysis ("MD&A") for the three months ended September 30, 2011; the inability of the Company to collect under its APM program; the Company's financial status, and other factors, including without limitation, those listed under "General Risks and Uncertainties" and "Economic Dependence" in MD&A for the three months ended September 30, 2011.
All forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
Advantex Marketing International Inc. |
Consolidated Statement of Financial Position |
As at September 30, 2011, June 30, 2011 and July 1, 2010 - (Unaudited) |
September 30, 2011 |
June 30, 2011 |
July 1, 2011 |
|||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | 393,667 | 5,000 | 505,941 | ||||||
Accounts receivable | 856,444 | 842,249 | 700,927 | ||||||
Transaction credits (note 3) | 13,316,325 | 12,408,060 | 9,538,364 | ||||||
Aeronotes (note 6) | - | 66,451 | 381,309 | ||||||
Prepaid expenses and sundry assets | 320,821 | 248,541 | 249,510 | ||||||
$ | 14,887,257 | $ | 13,570,301 | $ | 11,376,051 | ||||
Non-current assets | |||||||||
Other asset (note 6) | 100,000 | 100,000 | - | ||||||
Property, plant and equipment (note 7) | 736,430 | 761,177 | 807,315 | ||||||
836,430 | 861,177 | 807,315 | |||||||
Total assets | $ | 15,723,687 | $ | 14,431,478 | $ | 12,183,366 | |||
Liabilities | |||||||||
Current liabilities | |||||||||
Bank Indebtedness | - | 83,262 | - | ||||||
Loan payable (note 8) | 6,022,774 | 4,917,446 | 3,030,549 | ||||||
Accounts payable and accrued liabilities | 3,243,899 | 3,319,363 | 3,093,652 | ||||||
Liabilities of discontinued operations (note 17) | 407,363 | 432,440 | - | ||||||
14% non-convertible debentures payable (note 9) | - | - | 2,620,705 | ||||||
Convertible debentures payable (note 10) | - | - | 5,217,578 | ||||||
$ | 9,674,036 | $ | 8,752,511 | $ | 13,962,484 | ||||
Non-current liabilities | |||||||||
14% Non-convertible debentures payable (note 9) | 1,748,599 | 1,747,497 | - | ||||||
12% Non-convertible debentures payable (note 10) | 5,402,821 | 5,300,492 | - | ||||||
$ | 7,151,420 | $ | 7,047,989 | $ | - | ||||
Total Liabilities | $ | 16,825,456 | $ | 15,800,500 | $ | 13,962,484 | |||
Shareholders' equity | |||||||||
Share capital (note 11) | 24,110,096 | 24,110,096 | 24,110,096 | ||||||
Contributed surplus (note 12) | 732,795 | 726,795 | 645,879 | ||||||
Equity portion of debentures (note 10) | 2,114,341 | 2,114,341 | 2,114,341 | ||||||
Warrants (note 9/10) | 1,196,013 | 1,196,013 | 374,554 | ||||||
Deficit | (29,255,014 | ) | (29,516,267 | ) | (29,023,988 | ) | |||
Total equity | $ | (1,101,769 | ) | $ | (1,369,022 | ) | $ | (1,779,118 | ) |
Total liabilities and equity | $ | 15,723,687 | $ | 14,431,478 | $ | 12,183,366 |
Commitments (note 18) |
Approved by the Board: |
Director: | "William Polley" | Director: | "Kelly E. Ambrose" | |
William Polley | Kelly E. Ambrose |
Advantex Marketing International Inc. |
Consolidated Statement of Profit/ (Loss) |
For the three months ended September 30, 2011 and 2010 - (Unaudited) |
2011 | 2010 | |||
Revenues | 3,835,107 | 3,957,698 | ||
Direct expenses | 1,044,193 | 1,252,409 | ||
Gross profit | 2,790,914 | 2,705,289 | ||
Operating Expenses | ||||
Selling and marketing | 776,330 | 831,033 | ||
General and administrative | 1,038,091 | 999,719 | ||
Contribution from operations before amortization and interest | 976,493 | 874,537 | ||
Depreciation of property, plant and equipment | 92,402 | 153,152 | ||
Interest expense: | ||||
Stated interest expense - loan payable, debentures | 490,834 | 397,968 | ||
Non-cash interest expense on loan payable, and debentures | 132,004 | 173,084 | ||
Net income (loss) | 261,253 | 150,333 | ||
Comprehensive income (loss) | 261,253 | 150,333 | ||
Earnings per share: | ||||
Basic | 0.00 | 0.00 | ||
Diluted | 0.00 | 0.00 |
Advantex Marketing International Inc. |
Consolidated Statements of Changes in Equity |
(Unaudited) |
Class A preference shares |
Common shares |
Contributed surplus |
Equity portion of debentures |
Warrants | Deficit | Total | ||||
$ | $ | $ | $ | $ | $ | $ | ||||
Balance - July 1, 2010 | 3,815 | 24,106,281 | 645,879 | 2,114,341 | 374,554 | (29,023,988 | ) | (1,779,118 | ) | |
Net income (loss) for the period | 150,333 | 150,333 | ||||||||
Other comprehensive income (net of tax): | - | - | ||||||||
Comprehensive income (loss) for the period | 150,333 | 150,333 | ||||||||
Employee share options: | ||||||||||
Value of services recognized | 6,000 | 6,000 | ||||||||
Balance - September 30, 2010 | 3,815 | 24,106,281 | 651,879 | 2,114,341 | 374,554 | (28,873,655 | ) | (1,622,785 | ) | |
Balance - July 1, 2011 | 3,815 | 24,106,281 | 726,795 | 2,114,341 | 1,196,013 | (29,516,267 | ) | (1,369,022 | ) | |
Net income (loss) for the period | 261,253 | 261,253 | ||||||||
Other comprehensive income (net of tax): | - | - | ||||||||
Comprehensive income (loss) for the period | 261,253 | 261,253 | ||||||||
Employee share options: | ||||||||||
Value of services recognized | 6,000 | 6,000 | ||||||||
Balance - September 30, 2011 | 3,815 | 24,106,281 | 732,795 | 2,114,341 | 1,196,013 | (29,255,014 | ) | (1,101,769 | ) |
Advantex Marketing International Inc. |
Consolidated Statement of Cash Flow |
For the three months ended September 30, 2011 and 2010 - (Unaudited) |
2011 | 2010 | |||||
$ | $ | |||||
Cash flow provided by (used in) | ||||||
Operating activities | ||||||
Net income (loss) for the period | 261,253 | 150,333 | ||||
Adjustments for: | ||||||
Depreciation of property, plant and equipment, and intangibles | 92,402 | 153,152 | ||||
Stock-based compensation | 6,000 | 6,000 | ||||
Accretion charge for debentures | 132,004 | 173,084 | ||||
491,659 | 482,569 | |||||
Changes in items of working capital | ||||||
Accounts receivable | (14,195 | ) | (100,493 | ) | ||
Transaction credits | (908,265 | ) | (694,249 | ) | ||
Aeronotes | 66,451 | 30,058 | ||||
Prepaid expenses and sundry assets | (72,280 | ) | (22,239 | ) | ||
Accounts payable and accrued liabilities | (100,541 | ) | 88,097 | |||
(1,028,830 | ) | (698,826 | ) | |||
Net cash generated from operating activities | (537,171 | ) | (216,257 | ) | ||
Investing activities | ||||||
Purchase of property, plant and equipment | (67,655 | ) | (83,189 | ) | ||
Net cash generated from investing activities | (67,655 | ) | (83,189 | ) | ||
Financing activities | ||||||
Loan Payable | 1,105,328 | 765,020 | ||||
Debenture renewal Costs | (28,573 | ) | - | |||
Net cash generated in financing activities | 1,076,755 | 765,020 | ||||
Movement in cash and cash equivalents during the period | ||||||
- | From continuing operations | 497,006 | 465,574 | |||
- | From discontinued operations (note 17) | (25,077 | ) | - | ||
471,929 | 465,574 | |||||
Increase (decrease)in cash and cash equivalents | 471,929 | 465,574 | ||||
Cash and cash equivalents - Beginning of period | (78,262 | ) | 505,941 | |||
Cash and cash equivalents - End of period | 393,667 | 971,515 |
Contact Information:
Mukesh Sabharwal
Vice-President and Chief Financial Officer
905-470-9558 ext. 249
Mukesh.sabharwal@advantex.com