Gendis Inc.
TSX : GDS

Gendis Inc.

September 10, 2010 18:13 ET

Gendis Inc. Announces Second Quarter Results

WINNIPEG, MANITOBA--(Marketwire - Sept. 10, 2010) - Gendis Inc. (TSX:GDS) today announced its financial results for the 2nd quarter ended July 31, 2010 of the fiscal year ending January 31, 2011.

Revenue for the 2nd quarter was $1,185,000 compared to $1,206,000 last year. Net loss from operations for the 2nd quarter was $2,740,000 ($0.20 per share) compared to net earnings of $389,000 ($0.03 per share) last year. The decline in net earnings from operations quarter over quarter is primarily attributable to the decline in the market value of investments held-for-trading, the provision for settlement of claims against the Company and a decline in investment income from Fort Chicago.

Other comprehensive income was $442,000 compared to income of $2,661,000 last year. Other comprehensive income is the change in market value of the Company's investments that are available-for-sale, primarily its flow-through entity investment in Fort Chicago. In the 2nd quarter last year, there was a substantial recovery in the market value of Fort Chicago compared to the market meltdown for most exchange-traded securities that occurred in the 2nd quarter of the prior year.

Revenue year-to-date was $2,268,000 compared to $2,151,000 last year. Net loss from operations was $2,505,000 ($0.18 per share) compared to net earnings of $497,000 ($0.04 per share) last year. Other comprehensive income was $1,123,000 compared to income of $2,292,000 last year.

Gendis Inc.

Notice – Review of Interim Financial Statements

The unaudited interim financial statements for the quarter and year-to-date ended July 31, 2010 have been reviewed and approved by the Audit Committee of Gendis Inc. The unaudited interim financial statements for the quarter and year-to-date ended July 31, 2010 have not been reviewed by the Auditors of Gendis Inc.

Gendis Inc.      
Consolidated Balance Sheet      
  Jul. 31 Jan. 31 Jul. 31
(unaudited – in thousands of dollars) 2010 2010 2009
 
Assets      
  Cash 35 261 76
  Receivables 321 263 279
  Income and capital taxes recoverable 1 2
  Prepaid expenses 223 40 170
 
  580 566 525
  Investments (note 2)      
    at fair value 20,950 20,542 16,901
    at carrying value 4,946 4,946 4,946
  Property and equipment 11,936 12,125 12,366
  Future tax asset 3,172 3,172 2,732
 
  41,584 41,351 37,470
 
Liabilities      
  Credit facilities (note 3) 9,997 11,398 12,243
  Payables and accrued liabilities 3,905 879 1,018
  Income and capital taxes payable 26
 
  13,902 12,277 13,287
       
Post employment benefit obligations 862 872 696
 
Shareholders' equity 26,820 28,202 23,487
 
  41,584 41,351 37,470
 
Commitments and Contingencies (note 6)
       
       
       
Gendis Inc.      
Consolidated Statement of Operations      
For the periods ended July 31      
 
  quarter year-to-date
(unaudited - in thousands of dollars, except per share) 2010   2009 2010   2009
 
Revenue            
 Real estate lease rental 919   872 1,833   1,636
 Investment 266   334 435   515
 
  1,185   1,206 2,268   2,151
Expenses            
 Property and administrative expenses 802   754 1,501   1,484
 Amortization of property and equipment 128   130 263   261
 Interest and finance expenses 73   49 144   114
 
  1,003   933 1,908   1,859
 
Earnings before the undernoted 182   273 360   292
 
Provision for settlement of legal claims (note 5) (2,750 ) (2,750 )
Change in fair value of investments held-for-trading (172 ) 105 (106 ) 158
Gain (loss) on sale of investments:            
 Held-for-trading   (9 )
 Available-for-sale   25  
Gain on sale of real estate properties     79
 
Earnings (loss) before taxes (2,740 ) 403 (2,505 ) 529
 
Provision for income taxes   14   32
 
Net earnings (loss) from operations (2,740 ) 389 (2,505 ) 497
 
Net earnings (loss) from operations per share (0.20 ) 0.03 (0.18 ) 0.04
 

 

 
 
Consolidated Statement of Comprehensive Income (Loss)
For the periods ended July 31
  quarter   year-to-date
(unaudited - in thousands of dollars) 2010   2009   2010   2009
 
Other comprehensive income              
  Investments available-for-sale:              
    Change in fair value 442   2,661   1,123   2,292
    Loss on sale   25    
    Transfer loss on sale to the Statement of Operations   (25 )  
 
Other comprehensive income 442   2,661   1,123   2,292
 
Net earnings (loss) from operations (2,740 ) 389   (2,505 ) 497
 
Comprehensive earnings (loss) (2,298 ) 3,050   (1,382 ) 2,789

 

Gendis Inc.  
Consolidated Statement of Shareholders' Equity  
For the periods ended July 31  
   
  Share Retained          
(unaudited - in thousands of dollars) Capital Earnings   AOCI   Total  
   
Balance – January 31, 2010 14,650   9,296   4,256   28,202  
Net earnings for the quarter   235   681   916  
   
Balance – April 30, 2010 14,650   9,531   4,937   29,118  
Net earnings (loss) for the quarter   (2,740 ) 442   (2,298 )
   
Balance – July 31, 2010 14,650   6,791   5,379   26,820  
   
   
Balance – January 31, 2009 14,796   8,414   (2,447 ) 20,763  
Net earnings (loss) for the quarter   108   (369 ) (261 )
Shares purchased for cancellation (28 ) 8     (20 )
   
Balance – April 30, 2009 14,768   8,530   (2,816 ) 20,482  
Net earnings for the quarter   389   2,661   3,050  
Shares purchased for cancellation (55 ) 10     (45 )
   
Balance – July 31, 2009 14,713   8,929   (155 ) 23,487  
   
   
"AOCI" refers to Accumulated Other Comprehensive Income  
   
   
   
Gendis Inc.  
Consolidated Statement of Cash Flows  
For the periods ended July 31  
  quarter   year-to-date  
(unaudited - in thousands of dollars) 2010   2009   2010   2009  
   
By operations:                
  Net earnings (loss) from operations (2,740 ) 389   (2,505 ) 497  
  add (deduct) items not affecting cash:                
    Provision for settlement of legal claims 2,750     2,750    
    Amortization of property and equipment 128   130   263   261  
    (Gain) loss on sale of properties       (79
    (Gain) loss on sale of investments   (25 ) 9    
    Change in fair value of investments held-for-trading 172   (105 ) 106   (158
   
  Cash flow from earnings 310   389   623   521  
  Change in working capital (81 ) (384 ) 36   (163
   
  229   5   659   358  
   
By investing activities:                
  Proceeds on sale of investments   482   55   1,041  
  Reduction to the cost of investments from a return of capital 224   167   545   487  
  Proceeds from property sales       339  
  Expenditures for property and equipment (33 )   (74 ) (5
   
  191   649   526   1,862  
   
By financing activities:                
  Reduction to credit facilities (501 ) (648 ) (1,401 ) (2,248
  Purchase and cancellation of share capital   (45 )   (65
  Payments for post retirement benefit obligations (10 ) (10 ) (10 ) (10
  Refundable dividend tax       (20
   
  (511 ) (703 ) (1,411 ) (2,343
   
Decrease in cash (91 ) (49 ) (226 ) (123
   
Cash - beginning of period 126   125   261   199  
   
Cash - end of period 35   76   35   76  
   
Supplementary information:                
  Taxes paid   14     52  
  Interest paid 74   48   145   108  
 
Gendis Inc.
Notes to Consolidated Interim Financial Statements July 31, 2010
(unaudited - tabular amounts in thousands of dollars unless otherwise stated)

1. Significant Accounting Policies and Basis of Presentation

These unaudited consolidated interim financial statements are prepared in accordance with accounting principles generally accepted in Canada. However, these interim financial statements do not contain all the disclosures that would be required under generally accepted accounting principles for annual financial statements. These interim financial statements follow the same accounting policies and methods of application as the audited annual consolidated financial statements at January 31, 2010. Certain disclosures required for annual financial statements have been condensed or omitted in these interim financial statements. Accordingly, these interim financial statements should be read in conjunction with the annual consolidated financial statements and notes thereto as presented in the Company's Annual Report for the fiscal year ended January 31, 2010. The following notes to the interim financial statements are supplemental to the notes to the annual consolidated financial statements.

2. Investments

  Fair value
  Jul. 31 Jan. 31
(# of shares in thousands) 2010 2010
 
Exchange-traded investments:    
  Available-for-sale:    
    Flow-through entities:    
      Fort Chicago – 1,915 shares 20,489 19,915
      Other investments 56 53
  Held-for-trading:    
    Other equity investments 405 574
 
  20,950 20,542
 
    Cost
  Jul. 31 Jan. 31
(# of shares in thousands) 2010 2010
 
Private investments, available-for-sale:    
  OSUM – 2,047 shares 4,946 4,946

Investments are referenced as follows - "Fort Chicago" refers to Fort Chicago Energy Partners LP; "OSUM" refers to OSUM Oil Sands Corp.

3. Credit facilities

             
      Remaining    
  Borrowing borrowing Carrying value
  balance availability of collateral
 
Jul. 31 Jan. 31 Jul. 31 Jan. 31 Jul. 31 Jan. 31
  2010 2010 2010 2010 2010 2010
 
Banker's acceptances 9,997 10,998        
Bank demand loan 400        
 
  9,997 11,398 2,000 600 19,815 19,260
Broker margin account 409 465 1,135 1,282
 
  9,997 11,398 2,409 1,065 20,950 20,542

The available borrowing capacity for bank borrowings is determined by 70% of the market value of marketable securities, namely Fort Chicago, lodged as collateral.

4. Segment Information

                 
  quarter              
  ended Realty Corporate   Inter-   Total  
  July 31       segment      
   
Revenue 2010 935 352   (102 ) 1,185  
  2009 888 426   (108 ) 1,206  
   
Expenses 2010 422 426   (46 ) 802  
  2009 435 365   (46 ) 754  
   
Amortization 2010 125 3     128  
  2009 126 4     130  
   
Interest 2010 56 73   (56 ) 73  
  2009 62 49   (62 ) 49  
   
Gain (loss) & fair value change 2010 (172 )   (172 )
  2009 130     130  
   
Provision for settlement of 2010 (2,750 )   (2,750 )
  legal claims 2009      
   
Provision for (recovery of) 2010 116 (116 )    
  income taxes 2009 93 (79 )   14  
   
Net earnings (loss) 2010 216 (2,956 )   (2,740 )
  from operations 2009 172 217     389  
   
Expenditure for property 2010 32 1     33  
  and equipment 2009      

 

Year-to-date              
  ended Realty Corporate   Inter-   Total  
  July 31       segment      
   
Revenue 2010 1,864 608   (204 ) 2,268  
  2009 1,667 709   (225 ) 2,151  
   
Expenses 2010 811 781   (91 ) 1,501  
  2009 795 780   (91 ) 1,484  
   
Amortization 2010 255 8     263  
  2009 253 8     261  
   
Interest 2010 113 144   (113 ) 144  
  2009 134 114   (134 ) 114  
   
Gain (loss) & fair value change 2010 (115 )   (115 )
  2009 79 158     237  
   
Provision for settlements 2010 (2,750 )   (2,750 )
  of legal claim 2009      
   
Provision for (recovery of) 2010 240 (240 )    
  income taxes 2009 198 (166 )   32  
   
Net earnings (loss) 2010 445 (2,950 )   (2,505 )
  from operations 2009 366 131     497  
   
Expenditure for property 2010 65 9     74  
  and equipment 2009 5     5  
   
Total Assets 2010 12,804 36,908   (8,128 ) 41,584  
  2009 13,214 33,349   (9,093 ) 37,470  

"Gain (loss) & fair value change" includes a gain (loss) on sale of investments, provision for loss on investments, changes in fair value of investments held-for-trading for the Corporate segment and gain on sale of properties for the Realty segment.

5. Settlement of legal claims

In July 2010, the Company agreed to a release of claims against the Company and some of its Directors by two suppliers and a buying agent and importer to a former subsidiary of the Company, without admission of any liability for such claims. These claims are the claims that are disclosed in the Company's annual financial statement for the year ended January 31, 2010. In consideration for the release, the Company has agreed to pay the claimants $1.5-million in August 2010 and $1.25-million in July 2011. Recovery amounts from the Company's insurer have yet to be determined and will be recognized in a future period once amounts can be determined.

6. Commitments & Contingencies

Except for the release of claims against the Company and some of its Directors by two suppliers and a buying agent and importer to a former subsidiary of the Company as described in note 4 above, there have not been any material changes to commitments and contingencies as disclosed in the annual financial statements at January 31, 2010. 

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