Goodfellow Inc.
TSX : GDL

Goodfellow Inc.

November 29, 2016 22:38 ET

Goodfellow Reports its Restated Results for the Second Quarter Ended May 31, 2016

DELSON, QUEBEC--(Marketwired - Nov. 29, 2016) - Goodfellow Inc. (TSX:GDL) announced today the completion of its review of accounts undertaken in connection with the discovery of certain discrepancies which led to the announcement on October 13, 2016 of the delay in the filing of its interim financial report, interim management discussion and analysis and interim certificates for the quarter ended August 31, 2016. As a result, the Company restated the consolidated statement of financial position as of May 31, 2016, the Consolidated Statement of Comprehensive Income, Cash Flows and Statement of Change in Shareholders' Equity and Comprehensive Income for the three and six-month periods ended May 31, 2016. The restated interim consolidated financial statements at May 31, 2016 includes adjustments mainly in the inventory valuation following an extensive review process of its new Enterprise Resource Planning (ERP), controls and procedures. The net impact on the statement of financial position was a reduction of $1.1 million in assets, a reduction of $0.2 million in currents liabilities and a reduction of $0.9 million in Shareholders' Equity. The net impact of the adjustments was a reduction of net income from $3.4 million to $2.5 million for the three months ended May 31, 2016. Net income for the six months ended May 31, 2016 decreased from $2.5 million to $1.6 million.

"We are disappointed that inaccuracies impacted our Q2 results. All measures are taken to assure the ongoing accuracy of our reported results. We are assisted by a team from Deloitte to complete this process quickly" said Denis Fraser, President and Chief Executive Officer. "Our results nevertheless, were less than expected. The combination of increased cost related to the implementation of the ERP system and softer margins impacted our profitability."

Goodfellow Inc. is one of eastern Canada's largest independent re-manufacturers and distributors of lumber and hardwood flooring products. Goodfellow shares trade on the Toronto Stock Exchange under the symbol GDL.

GOODFELLOW INC.
Consolidated Statement of Comprehensive Income (Unaudited)
For the three months and six months ended May 31, 2016 and 2015
(in thousands of dollars, except per share amounts)
For the three months
ended
For the six months
ended
May 31
2016
Restated
May 31
2015
May 31
2016
Restated
May 31
2015
$ $ $ $
Sales 166,623 153,975 275,282 252,072
Expenses
Cost of goods sold 138,729 125,653 226,708 203,341
Selling, administrative and general expenses 23,810 23,034 45,113 43,412
Net financial costs 824 713 1,459 1,247
163,363 149,400 273,280 248,000
Earnings before income taxes 3,260 4,575 2,002 4,072
Income taxes 787 1,327 435 1,181
Net earnings 2,473 3,248 1,567 2,891
Net earnings per share - Basic and diluted 0.29 0.38 0.18 0.34
GOODFELLOW INC.
Consolidated Statement of Financial Position (Unaudited)
(in thousands of dollars)
As at
May 31
2016
Restated
As at
November 30
2015
As at
May 31
2015
$ $ $
Assets
Current Assets
Cash 1,396 965 494
Trade and other receivables 122,316 65,670 98,708
Income taxes receivable 721 - -
Inventories 138,901 97,665 107,384
Prepaid expenses 4,842 4,156 2,852
Total Current Assets 268,176 168,456 209,438
Non-Current Assets
Property, plant and equipment 39,343 36,146 36,626
Intangible assets 3,614 2,667 -
Defined benefit plan asset 4,991 4,812 1,832
Investment in a joint venture 3,444 - -
Total Non-Current Assets 51,392 43,625 38,458
Total Assets 319,568 212,081 247,896
Liabilities
Current liabilities
Bank indebtedness 102,107 46,781 66,227
Trade and other payables 82,367 29,762 52,876
Income taxes payable - 1,595 679
Provision 1,111 1,112 941
Current portion of long-term debt 183 113 50
Total Current Liabilities 185,768 79,363 120,773
Non-Current Liabilities
Provision 503 477 499
Long-term debt 188 - 37
Deferred income taxes 4,718 4,141 2,535
Defined benefit plan obligation - - 1,675
Total Non-Current Liabilities 5,409 4,618 4,746
Total Liabilities 191,177 83,981 125,519
Shareholders' equity
Share capital 9,152 9,152 9,152
Retained earnings 119,239 118,948 113,225
128,391 128,100 122,377
Total Liabilities and Shareholders' Equity 319,568 212,081 247,896
GOODFELLOW INC.
Consolidated Statement of Cash Flows (Unaudited)
For the three months and six months ended May 31, 2016 and 2015
(in thousands of dollars)
For the three months
ended
For the six months
ended
May 31
2016
Restated
May 31
2015
May 31
2016
Restated
May 31
2015
$ $ $ $
Operating Activities
Net Earnings 2,473 3,248 1,567 2,891
Adjustments for :
Depreciation 938 746 1,736 1,477
Accretion expense on provision 13 3 26 (11 )
Income taxes 787 1,327 435 1,181
(Gain) Loss on disposal of property, plant and equipment - (21 ) - 16
Interest expense 529 463 963 807
Funding in (excess) deficit of pension plan expense (54 ) 56 (179 ) 113
Share of the profits of the joint venture (444 ) - (444 ) -
4,242 5,822 4,104 6,474
Changes in non-cash working capital items (11,211 ) 4,134 (46,725 ) (25,771 )
Interest paid (508 ) (401 ) (1,164 ) (765 )
Income taxes paid (2,505 ) (284 ) (3,058 ) (1,499 )
(14,224 ) 3,449 (50,947 ) (28,035 )
Net Cash Flows from Operating Activities (9,982 ) 9,271 (46,843 ) (21,561 )
Financing Activities
Net increase (decrease) in bank loans 2,500 (6,000 ) 15,500 (1,500 )
Increase in banker's acceptances 2,500 2,000 30,500 22,000
Increase in long-term debt 560 - 1,050 -
Reimbursement of long-term debt (56 ) (847 ) (792 ) (833 )
Dividends paid (1,276 ) - (1,276 ) -
4,228 (4,847 ) 44,982 19,667
Investing Activities
Acquisition of property, plant and equipment (568 ) (611 ) (934 ) (1,117 )
Increase in intangible assets (622 ) - (1,305 ) -
Proceeds on disposal of property, plant and equipment - 3 - 17
Business acquisitions, net of cash acquired (587 ) - (4,795 ) -
(1,777 ) (608 ) (7,034 ) (1,100 )
Net cash (outflow) inflow (7,531 ) 3,816 (8,895 ) (2,994 )
Cash position, beginning of period (3,180 ) (10,549 ) (1,816 ) (3,739 )
Cash position, end of period (10,711 ) (6,733 ) (10,711 ) (6,733 )
Cash position is comprised of :
Cash and cash equivalents 1,396 494 1,396 494
Bank overdraft (12,107 ) (7,227 ) (12,107 ) (7,227 )
(10,711 ) (6,733 ) (10,711 ) (6,733 )
GOODFELLOW INC.
Consolidated Statement of Change in Shareholders' Equity (Unaudited)
For the six months ended May 31, 2016 and 2015
(in thousands of dollars)
Share
Capital
Retained
Earnings
Restated

Total
Restated
$ $ $
Balance as at November 30, 2014 9,152 110,334 119,486
Net earnings - 2,891 2,891
Total comprehensive income - 2,891 2,891
Balance as at May 31, 2015 9,152 113,225 122,377
Balance as at November 30, 2015 9,152 118,948 128,100
Net earnings - 1,567 1,567
Total comprehensive income - 1,567 1,567
Transactions with owners of the Company
Dividends - (1,276 ) (1,276 )
Balance as at May 31, 2016 9,152 119,239 128,391

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