Cyberplex Inc.
TSX : CX

Cyberplex Inc.

March 30, 2012 06:00 ET

Cyberplex Reports Fourth Quarter and 2011 Results

Rebuilding progresses well for core divisions; Tsavo challenges remain.

TORONTO, ONTARIO--(Marketwire - March 30, 2012) - Cyberplex Inc. (TSX:CX) a leader in online publishing and customer acquisition strategies today announced its financial results for the fiscal year and fourth quarter-ended December 31, 2011. Total revenue for the year was $55.5 million a decrease from the $106.9 million recorded in 2010, and the adjusted EBITDA for the year was $1.1 million as compared to $4.7 million for the prior year.

"Our financial results reported today and the financial update provided last month reflect continued difficulties associated with the Tsavo Media division. While Tsavo continued to work hard to innovate and adapt to the rapidly changing Yahoo! - Bing marketplace, traffic sources and traffic quality became a concern for Yahoo! in the fourth quarter and resulted in lower revenues and ultimately the previously announced Yahoo! charge," said Geoffrey Rotstein, Chief Executive Officer of Cyberplex. "During this same period, we saw significant progress out of our interactive, performance marketing and media buying divisions, with both operational and financial improvements across these divisions. While these improvements may not be readily apparent in light of the Tsavo situation, they are significant to the overall progress of Cyberplex and our ability to generate meaningful returns in the coming quarters."

Results for the Fourth Quarter ended December 31, 2011

  • The Company generated revenue of $9.9 million, a 40% decline from the $16.6 million recorded in the previous quarter;
  • Non-Tsavo divisions produced their second consecutive quarter of sequential growth, increasing revenues in the fourth quarter by 29%.
  • Adjusted EBITDA loss for the quarter was $1.8 million, as compared to $2.0 million of income generated in the previous quarter;
  • Net loss for the quarter was $4.6 million compared to a net income of $1.0 million in the previous quarter; and
  • Cash flow from operations generated $5.0 million in cash for the twelve months ended December 31, 2011, as compared to $7.3 million for the same period in 2010.

The Company noted that as a result of the retroactive Yahoo! charge against the Tsavo division previously reported by the Company on February 6, 2012, and the diminished performance by Tsavo in the fourth quarter which continued into 2012, Tsavo will likely not remain in compliance with all of the financial covenants set out in the credit facility with American Capital as at the March 31, 2012 measurement date. The Special Committee of the Board of Directors of Cyberplex that was formed to evaluate strategic alternatives for Tsavo, as announced in the Company's material change report and press release of February 6, 2012, has been in contact with American Capital and is considering, as part of its mandate, possible courses of action to address this issue for the benefit of Cyberplex shareholders. The Special Committee's review of the status of Tsavo and the strategic alternatives available to Cyberplex to create shareholder value out of that division and its recommendation to the Board of Directors in relation to its mandate has not yet been concluded.

"While difficulties at Tsavo and with American Capital, Tsavo's lender, have overshadowed many of the accomplishments within the organization in the past, we do not intend to allow this to continue to define Cyberplex and our prospects for growth and success." said Geoffrey Rotstein. "Cyberplex is a leader in our industry, and competes favourably against much larger, less agile media organizations. While our fourth quarter set-backs are not yet resolved to our satisfaction, we are committed to generating significant shareholder value in 2012 from both the investments we have made in our traffic acquisition platforms, and a favourable resolution of the ongoing strategic review of Tsavo."

Non-IFRS Financial Measures

This press release includes a discussion of "Adjusted EBITDA," which is a non-IFRS financial measure. The Company defines Adjusted EBITDA as net loss from operations before; (a) depreciation of property and equipment and amortization of intangible assets; (b) stock-based compensation expense, (c) restructuring and acquisition costs, (d) Impairments of goodwill and intangible assets and other items, net. Management uses Adjusted EBITDA as a measure of the Company's operating performance because it provides information related to the Company's ability to provide operating cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.
The non-IFRS financial measure is used in addition to and in conjunction with results presented in accordance with the Company's consolidated financial statements prepared in accordance with IFRS and should not be relied upon to the exclusion of IFRS financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-IFRS financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-IFRS adjustments described above, and exclusion of these items from the Company's non-IFRS measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

The table below reconciles net loss from operations and Adjusted EBITDA for the periods presented:

Three months ended
December 31,
Twelve months ended
December 31,
(In thousands of Canadian dollars) 2011 2010 2011 2010
Net loss from operations $ (8,621 ) $ (62,006 ) $ (13,827 ) $ (64,358 )
Add:
Depreciation of property and equipment 280 433 1,322 1,290
Amortization of intangible assets 1,430 3,949 7,994 9,304
Impairment of goodwill and intangible 4,854 53,790 4,854 53,790
Restructuring and acquisition expenses 200 (68 ) 463 1,442
Stock based compensation 58 135 334 549
Other items, net - 2,732 - 2,732
Adjusted EBITDA $ (1,799 ) $ (1,035 ) $ 1,140 $ 4,749

About Cyberplex

Cyberplex Inc. (www.cyberplex.com) is a North American leader in online publishing and customer acquisition strategies. The Company, through its subsidiaries, connects advertisers to their most relevant online customers and prospects. Cyberplex delivers targeted, high quality results through online, mobile and social initiatives that improve advertiser ROI, monetize the value of online properties, and build loyal online audiences.

Forward-Looking Statements

This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Cyberplex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

Cyberplex Inc.
Unaudited Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
December
31, 2011
December
31, 2010
January
1, 2010
Assets
Current assets:
Cash and cash equivalents $ 4,050 $ 5,192 $ 10,222
Short-term investments - 1,551 11,270
Restricted cash - 2,310 -
Accounts receivable 8,769 13,879 9,930
Income taxes recoverable 31 632 -
Other current assets 6,907 2,461 3,300
19,757 26,025 34,722
Non-current assets:
Restricted cash 2,357 1,749 -
Property and equipment 1,998 2,921 845
Intangible assets 22,069 29,158 756
Goodwill 365 4,813 14,616
Deferred tax assets - - 583
26,789 38,641 16,800
Total assets $ 46,546 $ 64,666 $ 51,522
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 13,707 $ 10,177 $ 3,694
Current portion of provisions - 590 576
Current portion of loans and borrowings 4,697 9,402 -
Current portion of deferred lease inducements 71 115 107
Deferred revenue 498 665 668
Income taxes payable 348 1,729 631
19,321 22,678 5,676
Non-current liabilities:
Loans and borrowings 20,836 23,583 -
Provisions - 2,756 -
Deferred lease inducements 114 185 156
Deferred tax liabilities 603 1,100 -
Total non-current liabilities 21,553 27,624 156
Shareholders' Equity 5,672 14,364 45,690
Total liabilities and Shareholders' equity $ 46,546 $ 64,666 $ 51,522
Cyberplex Inc.
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars, except per share amounts)
Three Months
Period Ended
Years
Ended
December
31, 2011
December
31, 2010
December
31, 2011
December
31, 2010
Revenue $ 9,902 $ 31,633 $ 55,546 $ 106,863
Expenses:
Publishing and advertising costs 6,922 20,615 33,951 73,426
Employee compensation and benefits 2,478 4,214 13,160 13,652
Other operating expenses 2,359 7,974 7,629 15,585
Depreciation of property and equipment 280 433 1,322 1,290
Amortization of intangible assets 1,430 3,949 7,994 9,304
Impairment of goodwill and intangible assets 4,854 53,790 4,854 53,790
Acquisition and restructuring costs 200 (68 ) 463 1,442
Other charges - 2,732 - 2,732
18,523 93,639 69,373 171,221
Loss from operations (8,621 ) (62,006 ) (13,827 ) (64,358 )
Finance income (cost), net 2,605 (719 ) 2,842 (1,307 )
Loss before income taxes (6,016 ) (62,725 ) (10,985 ) (65,665 )
Income tax recovery (expense) 1,458 4,029 1,848 4,496
Net Loss (4,558 ) (58,696 ) (9,137 ) (61,169 )
Other comprehensive income (loss):
Net change in fair value of available-for-sale financial assets - (24 ) 761 (127 )
Amount reclassified to income - - (753 ) -
Foreign currency translation adjustments to equity (193 ) (1,022 ) 103 (2,620 )
Other comprehensive income (loss) for the period, net of tax (193 ) (1,046 ) 111 (2,747 )
Total comprehensive loss $ (4,751 ) $ (59,742 ) $ (9,026 ) $ (63,916 )
Loss per share:
Basic $ (0.03 ) (0.44 ) $ (0.07 ) $ (0.62 )
Diluted $ (0.03 ) (0.44 ) (0.07 ) (0.62 )
Cyberplex Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
Years ended December 31, 2011 and 2010
2011 2010
Cash flows from operating activities:
Loss for the year $ (9,137 ) $ (61,169 )
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation of property and equipment 1,322 1,290
Amortization of intangible assets 7,994 9,304
Amortization of deferred lease inducements (115 ) (44 )
Share-based payments 334 549
Foreign exchange (gain) loss (4 ) 493
Finance cost (income), net (3,246 ) 749
Current income tax (recovery) expense (1,351 ) 1,500
Deferred tax liabilities (497 ) (5,996 )
Impairment of goodwill and intangible assets 4,854 53,790
Transaction expenses 200 -
Loss on disposal of assets - 21
Change in non-cash operating working capital 4,229 8,260
Cash generated from operating activities 4,583 8,747
Income taxes received 406 (1,460 )
Net cash from operating activities 4,989 7,287
Cash flows from financing activities:
Proceeds from term loans 800 -
Repayment of term loans (6,122 ) (1,935 )
Repayment of bridge loans - (9,218 )
Finance lease 200 -
Repayment of finance lease (33 ) -
Proceeds from exercise of stock options - 143
Proceeds from public offerings, net of issuance costs - 30,795
Interest paid (3,419 ) (1,544 )
Net cash from (used in) financing activities (8,574 ) 18,241
Cash flows from investing activities:
Sale of short-term investments 1,551 9,392
Interest income received 31 75
Purchase of available-for-sale investments (500 ) -
Net proceeds on sale of available-for-sale investments 901 -
Acquisition of EQ Advertising Group Ltd., net of cash acquired (100 ) (883 )
Acquisition of Tsavo, net of cash acquired - (36,562 )
Decrease (increase) in restricted cash 1,703 (414 )
Net proceeds from disposal of property and equipment - 126
Additions to property and equipment (364 ) (1,223 )
Additions to intangible assets (783 ) (576 )
Net cash from (used in) investing activities 2,439 (30,065 )
Foreign exchange gain (loss) on cash held in foreign currency 4 (493 )
Decrease in cash and cash equivalents (1,142 ) (5,030 )
Cash and cash equivalents, beginning of year 5,192 10,222
Cash and cash equivalents, end of year $ 4,050 $ 5,192

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