Gendis Inc.
TSX : GDS

Gendis Inc.

December 08, 2006 16:51 ET

Gendis Inc. Announces Third Quarter Results for Fiscal 2007

WINNIPEG, MANITOBA--(CCNMatthews - Dec. 8, 2006) - Gendis Inc. (TSX:GDS) today announced its financial results for the 3rd quarter ended October 31, 2006 of the fiscal year ending January 31, 2007.

Revenue for the 3rd quarter was $1.1-million compared to $0.4-million for the comparable quarter last year. The net earnings for the 3rd quarter were $192,000 ($0.01 per share) compared to net earnings of $46,000 ($0.01 per share) last year. The increase in revenue is primarily attributable to Gendis' share of increased earnings of Fort Chicago Energy Partners L.P. ('Fort Chicago').

For the nine months ended October 31, 2006, revenue was $2.4-million, compared to $3.6-million last year. The net loss for the period was $290,000 ($0.02 per share) compared to a net earnings of $4.7-million ($0.31 per share) last year.

There were two unusual events that occurred in the 2nd quarter last year that affect the comparability of year-to-date revenue and earnings. The decline in revenue year-to-date is due to an unusual dilution gain recorded last year. Fort Chicago had significant capital transactions in the 2nd quarter last year at an average unit value substantially in excess of the unit carrying value of Gendis' investment in Fort Chicago. As Gendis did not participate in these capital transactions, the variance in unit values provided a dilution gain of $1.4-million as additional investment revenue and income to Gendis. The decline in earnings year-to-date is primarily attributable to the unusual dilution gain as well as the recording of a reduction to Future Tax Expense. On May 31, 2005, Mr. Albert D. Cohen obtained control of Gendis Inc. A change in control requires a re-valuation of the tax basis of Gendis' carryforward tax losses and capital property. Accordingly, Gendis recognized an overall net increase in tax basis resulting in an increase to its Future Tax Asset and a corresponding reduction in Future Tax Expense of $3.0-million.

At October 31, 2006, Gendis' investments had a fair market value of approximately $44.6-million, which is $6.2-million in excess of carrying value. This represents an unrealized appreciation of approximately $0.41 per share, before income taxes.

At December 7, 2006, Gendis' publicly traded investments had a fair market value of approximately $41.0-million, which is $3.4-million in excess of carrying value. This represents an unrealized appreciation of approximately $0.23 per share, before income taxes.



Gendis Inc.
Consolidated Balance Sheet

Oct. 31, Jan. 28,
(unaudited - in thousands of dollars) 2006 2006
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Assets
Cash 135 95
Receivables 380 265
Note receivable - current portion 444 382
Prepaid expenses 335 203
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1,294 945
Investments (note 2) 38,367 33,306
Note receivable 1,725 1,693
Deposit on income tax reassessment 28,361 28,361
Property and equipment 10,895 11,066
Future tax asset 2,647 2,847
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83,289 78,218
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Liabilities and Shareholders' Equity
Payables and accrued liabilities 824 1,039
Credit facilities 14,314 7,985
Income and capital taxes payable 28 333
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15,166 9,357
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Shareholders' equity
Capital stock 15,904 16,100
Retained earnings 52,219 52,761
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68,123 68,861
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83,289 78,218
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Gendis Inc.
Consolidated Statement of Earnings (Loss) and Retained Earnings

quarter ended year-to-date ended
(unaudited - Oct. 31, Oct. 29, Oct. 31, Oct. 29,
in thousands of dollars) 2006 2005 2006 2005
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Revenue
Investment (note 2) 852 334 1,785 2,884
Real estate rental 258 130 587 742
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1,110 464 2,372 3,626
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Expenses
Property and administrative
expenses 577 652 2,061 2,030
Amortization of property and
equipment 93 83 267 246
Interest and finance expenses 220 51 508 51
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890 786 2,836 2,327
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Earnings (loss) before the
undernoted 220 (322) (464) 1,299
Gain on sale of investments 29 407 477 498
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Earnings (loss) before taxes 249 85 13 1,797
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Provision for (recovery of)
income taxes:
Current 57 39 303 118
Future - - - (3,000)
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57 39 303 (2,882)
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Net earnings (loss) 192 46 (290) 4,679
Refundable dividend taxes - - (2) -
Purchase and cancellation of
share capital (119) - (250) -
Retained earnings - beginning
of period 52,146 53,024 52,761 48,391
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Retained earnings - end
of period 52,219 53,070 52,219 53,070
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Earnings (loss) per share
- basic and diluted 0.01 0.01 (0.02) 0.31



Gendis Inc.
Consolidated Statement of Cash Flows

quarters ended year-to-date ended
(unaudited - Oct. 31, Oct. 29, Oct. 31, Oct. 29,
in thousands of dollars) 2006 2005 2006 2005
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By operations:
Earnings (loss) 192 46 (290) 4,679
add (deduct) items not
affecting cash:
Amortization of property
and equipment 93 83 267 246
Gain on sale of investments (29) (407) (477) (498)
Future income tax - - 200 (3,000)
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Cash flow from earnings 256 (278) (300) 1,427
Change in working capital (94) (475) (525) 1,833
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162 (753) (825) 3,260
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By investing activities:
Proceeds on sale of
investments 494 1,328 2,846 1,772
Difference between
distributions and investment
income (33) 362 871 (1,010)
Investments acquired (1,987) (6,859) (8,301) (12,831)
Purchase of property and
equipment (37) (2) (96) (52)
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(1,563) (5,171) (4,680) (12,121)
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By financing activities:
Advance from credit
facilities 1,631 5,947 6,329 5,947
Purchase and cancellation
of share capital (216) - (446) -
Refundable dividend tax - - (338) -
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1,415 5,947 5,545 5,947
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Increase (decrease) in cash 14 23 40 (2,914)
Cash - beginning of period 121 298 95 3,235
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Cash - end of period 135 321 135 321
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Supplementary information:
Taxes paid (recovered) 57 (5) 441 76
Interest paid 194 52 496 52


Gendis Inc.

Basis of Presentation of unaudited interim consolidated financial statements

These unaudited interim consolidated financial statements are prepared in accordance with accounting principles generally accepted in Canada. However, these unaudited interim consolidated financial statements do not contain all the disclosures that would be required under generally accepted accounting principles for annual financial statements. These unaudited interim consolidated financial statements follow the same accounting policies and methods of application as the audited annual consolidated financial statements at January 28, 2006. Accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto as presented in the Company's Annual Report for the fiscal year ended January 28, 2006.

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