Gendis Inc.
TSX : GDS

Gendis Inc.

December 09, 2011 16:24 ET

Gendis Inc. Announces Third Quarter Profit

WINNIPEG, MANITOBA--(Marketwire - Dec. 9, 2011) - Gendis Inc. (TSX:GDS) today announced its financial results for the 3rd quarter ended October 31, 2011 of the fiscal year ending January 31, 2012.

Gendis Inc. has applied International Financial Reporting Standards for the quarters ended October 31, 2011 and 2010, has retrospectively applied those standards to all prior year periods, and will apply those standards for its fiscal year ending January 31, 2012.

Applying those standards has resulted in an increase in volatility to reported earnings, primarily fair value changes to the Company's investments in equity securities and real estate. The Company reported net earnings of $3.0-million ($0.21 per share) in the current quarter compared to earnings of $9.5-million ($0.68 per share) in the prior year quarter.

Condensed summarized information is as follows:

quarter ended year-to-date
in millions of Canadian dollars except per share Oct 31 2011 Oct 31 2010 Oct 31 2011 Oct 31 2010
Lease rental revenue 0.9 0.8 3.0 2.6
Investment income 0.5 0.5 1.5 1.5
Fair value change:
Veresen 0.9 3.7 2.8 4.3
OSUM 0.5 5.8 (8.5 ) 6.9
Other investments (0.1 ) - (0.1 ) (0.1 )
Real estate 1.6 0.9 1.8 1.0
Expenses (0.9 ) (0.8 ) (2.9 ) (2.4 )
Settlement of legal claims - - - (2.8 )
Deferred tax recovery (expense) (0.4 ) (1.4 ) 1.7 (1.6 )
Net earnings (loss) 3.0 9.5 (0.7 ) 9.4
Earnings (loss) per share $ 0.21 $ 0.68 $ (0.05 ) $ 0.68
Fair value of investments:
Veresen 28.8 25.2
OSUM 19.4 27.7
Other investments 0.1 0.2
Real estate 26.9 25.6
Other assets 0.7 0.6
Debt & payables 12.7 14.9
Deferred tax payable 2.0 3.4
Shareholders equity 61.2 61.0
quarter ended year-to-date
in millions of Canadian dollars except per share Oct 31 2011 Oct 31 2010 Oct 31 2011 Oct 31 2010
Cash flow from:
Operations
Cash receipts 1.9 1.4 4.7 4.1
Cash disbursements (1.1 ) (0.8 ) (3.4 ) (2.1 )
Settlement of legal claims - (1.5 ) (1.3 ) (1.5 )
Investing
Proceeds on sales of investments - 0.3 - 0.4
Purchase of investments - (1.0 ) - (1.1 )
Financing
debt advance (reduction) (0.6 ) 1.6 0.4 0.2
dividend (0.3 ) - (0.3 ) -

Subsequent to the quarter ended October 31, 2011, the Company reached a settlement with the Canada Revenue Agency of its tax case involving the sale of the Company's shares in Sony of Canada Ltd. in 1995. The Company will receive approximately $11.2-million later this year or in early 2012. The settlement represents a refund of 25% of the tax and arrears interest paid in 2001 on re-assessment, plus interest from 2001 to the refund date.

GENDIS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
(thousands of Canadian dollars) note Oct 31 2011 Oct 31 2010 Jan 31 2011 Feb 01 2010
ASSETS
Cash 86 64 39 261
Receivables 574 485 454 305
Equity investments 2 48,280 53,082 54,150 41,366
Investment property 26,880 25,590 25,020 24,550
Furnishings and equipment 49 66 59 43
Total assets 75,869 79,287 79,722 66,525
LIABILITIES
Credit facilities 3 11,395 11,595 10,995 11,398
Payables 400 2,479 1,791 790
Provisions - - - 89
Current income tax payable - - 69 -
Post employment benefit obligation 855 842 890 872
Deferred income tax payable 1,980 3,367 3,719 1,811
14,630 18,283 17,464 14,960
SHAREHOLDERS' EQUITY 61,239 61,004 62,258 51,565
Total liabilities and shareholders' equity 75,869 79,287 79,722 66,525


GENDIS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODS ENDED OCTOBER 31
quarter year-to-date
(thousands of Canadian dollars except for share data) 2011 2010 2011 2010
Revenue
Investment property
Lease rentals 912 792 2,990 2,625
Fair value change 1,602 890 1,827 985
2,514 1,682 4,817 3,610
Equity investments
Dividends & distributions 507 505 1,527 1,485
Fair value change 1,233 9,484 (5,869 ) 11,094
1,740 9,989 (4,342 ) 12,579
Total revenue 4,254 11,671 475 16,189
Expenses
Property 396 321 1,456 1,075
Administration 348 372 1,140 1,132
Provision for settlement of legal claims - - - 2,750
Finance expense 104 93 289 237
848 786 2,885 5,194
Earnings (loss) before income tax 3,406 10,885 (2,410 ) 10,995
Deferred income tax (expense) recovery (391 ) (1,417 ) 1,739 (1,556 )
Net earnings (loss) from operations and comprehensive earnings 3,015 9,468 (671 ) 9,439
Net earnings (loss) from operations per share $ 0.21 $ 0.68 $ (0.05 ) $ 0.68


GENDIS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF SHAREHOLDERS' EQUITY
Share Capital Retained Earnings Total
(thousands - shares & Canadian dollars as applicable) # $ $ $
Balance - January 31, 2010 13,937 14,650 36,915 51,565
Comprehensive income for the period (29 ) (29 )
Balance - July 31, 2010 13,937 14,650 36,886 51,536
Comprehensive income for the period 9,468 9,468
Balance - October 31, 2010 13,937 14,650 46,354 61,004
Comprehensive income for the remainder of the year 1,328 1,328
Refundable dividend tax (74 ) (74 )
Balance - January 31, 2011 13,937 14,650 47,608 62,258
Comprehensive loss for the period (3,686 ) (3,686 )
Balance - July 31, 2011 13,937 14,650 43,922 58,572
Comprehensive income for the period 3,015 3,015
Dividend (348 ) (348 )
Balance - October 31, 2011 13,937 14,650 46,589 61,239


GENDIS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED OCTOBER 31
quarter year-to-date
(thousands of Canadian dollars) 2011 2010 2011 2010
Changes in cash position
By operations
Cash receipts 1,889 1,403 4,715 4,063
Cash disbursements (1,042 ) (687 ) (3,067 ) (2,008 )
Payment on settlement of legal claims - (1,500 ) (1,250 ) (1,500 )
Income taxes paid - - (74 ) -
Finance expense paid (102 ) (94 ) (290 ) (240 )
745 (878 ) 34 315
By investing activities
Proceeds from sale of equity investments - 290 - 345
Purchase of equity investments - (967 ) - (967 )
Expenditures on investment property (8 ) (1 ) (33 ) (56 )
Proceeds from sale of furnishings and equipment 3 - 3 -
Expenditures on furnishings and equipment (9 ) (13 ) (9 ) (31 )
(14 ) (691 ) (39 ) (709 )
By financing activities
Net advance (repayment) of credit facilities (587 ) 1,598 400 197
Dividend paid (348 ) - (348 ) -
(935 ) 1,598 52 197
Increase (decrease) in cash (204 ) 29 47 (197 )
Cash - beginning of period 290 35 39 261
Cash - end of period 86 64 86 64


Gendis Inc.
Notes to the unaudited Condensed Consolidated Interim Financial Statements
October 31, 2011
(All tabular amounts in thousands of Canadian dollars unless otherwise stated)

1. Significant Accounting Policies and Basis of Presentation

These unaudited condensed interim financial statements are prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board using the accounting standards expected to be effective at January 31, 2012. Accounting policies will only be finalized when the first annual financial statements are prepared under IFRS for the year ending January 31, 2012 and consequently, these condensed interim financial statements may be subject to change. These condensed interim financial statements do not contain all the disclosures that would be required under generally accepted accounting principles for a comprehensive set of financial statements.

These condensed interim financial statements are presented in Canadian dollars, which is the Company's functional and presentation currency. The condensed consolidated interim financial statements for the quarter ended October 31, 2011 have been reviewed and approved by the Company's Audit Committee on December 9, 2011. The condensed consolidated interim financial statements for the quarter ended October 31, 2011 have not been audited or reviewed by the Company's independent Auditors.

2. Investments

Oct 31 Jan 31
2011 2011
Veresen 28,800 25,980
OSUM 19,350 27,869
Other equity investments 130 301
48,280 54,150

3. Credit facilities

Borrowing Balance Remaining borrowing availability Carrying value
of collateral
Oct 31 Jan 31 Oct 31 Jan 31 Oct 31 Jan 31
2011 2011 2011 2011 2011 2011
Banker's acceptances 10,995 10,995
Bank demand loan 400 -
11,395 10,995 600 1,000 26,667 24,056
Broker's margin account - - 1,099 1,113 2,263 2,225
11,395 10,995 1,699 2,113 28,930 26,281

4. Operating segments

The segment information provided to the CEO for the reportable segments is as follows:

Quarter ended Oct 31 Realty Corporate Inter-segment Total
External revenue 2011 912 507 - 1,419
2010 792 505 - 1,297
Fair values changes 2011 1,602 1,233 - 2,835
2010 890 9,484 - 10,374
Intersegment revenue 2011 15 144 (159 ) -
2010 15 150 (165 ) -
Operating expenses 2011 426 363 (45 ) 744
2010 350 388 (45 ) 693
Finance expense 2011 114 104 (114 ) 104
2010 120 93 (120 ) 93
Income tax expense 2011 76 315 - 391
2010 128 1,289 - 1,417
Net earnings from operations & Comprehensive income 2011 1,913 1,102 - 3,015
2010 1,099 8,369 - 9,468
Year-to-date ended Oct 31 Realty Corporate Inter-segment Total
External revenue 2011 2,990 1,527 - 4,517
2010 2,625 1,485 - 4,110
Fair values changes 2011 1,827 (5,869 ) - (4,042 )
2010 985 11,094 - 12,079
Intersegment revenue 2011 46 430 (476 ) -
2010 46 420 (466 ) -
Operating expenses 2011 1,546 1,186 (136 ) 2,596
2010 1,165 1,178 (136 ) 2,207
Finance expense 2011 340 289 (340 ) 289
2010 330 237 (330 ) 237
Provision for lawsuit settlement 2011 - - - -
2010 - 2,750 - 2,750
Income tax (expense) recovery 2011 (343 ) 2,082 - 1,739
2010 (308 ) (1,248 ) - (1,556 )
Net earnings (loss) from operations & Comprehensive income (loss) 2011 2,634 (3,305 ) - (671 )
2010 1,853 7,586 - 9,439
Assets 2011 27,283 61,378 (12,792 ) 75,869
2010 26,070 67,543 (14,326 ) 79,287
Liabilities 2011 15,880 12,577 (13,827 ) 14,630
2010 17,543 18,855 (18,115 ) 18,283

5. Subsequent event

Subsequent to the quarter ended October 31, 2011, the Company reached a settlement with the Canada Revenue Agency of its tax case involving the sale of the Company's shares in Sony of Canada Ltd in 1995. The Company expects to receive approximately $11.2-million later this year or in early 2012. The settlement represents a refund of 25% of the tax and arrears interest paid in 2001 on re-assessment, plus interest from 2001 to the refund date. The settlement has not been recorded as at October 31, 2011. The settlement will be recorded when a re-assessment has been received.

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