TORONTO, ONTARIO--(Marketwire - May 10, 2012) - Advantex Marketing International Inc. ("Advantex" or the "Company") (CNSX:ADX), a leading specialist in merchant funding and loyalty marketing programs, today announced its results for the three and nine months ended March 31, 2012.
"The January to March quarter is normally the low point in Advantex's business cycle and it reflects a slow-down in consumer spending, at merchants participating in the Company's programs, after the October - December high season. The Company has weathered this quarter much better compared with corresponding period previous year," said Kelly Ambrose, Advantex President and Chief Executive Officer.
"Typically from April through December consumer spending progressively increases. Furthermore, during this period merchants explore avenues to improve their business and this is an opportunity for the Company to sell its working capital and / or loyalty marketing programs thereby increasing merchant participation. We are confident in our ability to continue to grow merchant base and ensure growth in future revenues and profitability," said Mr. Ambrose.
| Financial Highlights (ii): | |||||||||||||||||||||||
| (CAD) | |||||||||||||||||||||||
| Three months ended March 31 | Nine months ended March 31 | ||||||||||||||||||||||
| 2012 | 2011 | Change | 2012 | 2011 | Change | ||||||||||||||||||
| Average # of participating merchants | 1,184 | 763 | 55.2 | % | 1,090 | 754 | 44.6 | % | |||||||||||||||
| Revenues | $ | 3,494,000 | $ | 2,876,000 | $ | 618,000 | $ | 11,563,000 | $ | 9,856,000 | $ | 1,707,000 | |||||||||||
| Gross Profit | $ | 2,548,000 | $ | 1,887,000 | $ | 661,000 | $ | 8,405,000 | $ | 6,811,000 | $ | 1,594,000 | |||||||||||
| Earnings from operations before Amortization and Interest (EBITDA (i)) | $ | 387,000 | $ | 135,000 | $ | 252,000 | $ | 2,364,000 | $ | 1,769,000 | $ | 595,000 | |||||||||||
| Cash Interest | $ | 486,000 | $ | 377,000 | $ | (109,000 | ) | $ | 1,495,000 | $ | 1,162,000 | $ | (333,000 | ) | |||||||||
| Earnings after Cash Interest (i) | $ | (99,000 | ) | $ | (242,000 | ) | $ | 143,000 | $ | 869,000 | $ | 607,000 | $ | 262,000 | |||||||||
| Amortization | $ | 119,000 | $ | 79,000 | $ | (40,000 | ) | $ | 313,000 | $ | 350,000 | $ | 37,000 | ||||||||||
| Non cash interest - Accretion | $ | 136,000 | $ | 136,000 | $ | - | $ | 402,000 | $ | 478,000 | $ | 76,000 | |||||||||||
| Discontinued operations | $ | - | $ | 10,000 | $ | (10,000 | ) | $ | - | $ | (19,000 | ) | $ | 19,000 | |||||||||
| Net Profit / (Loss) | $ | (354,000 | ) | $ | (446,000 | ) | $ | 92,000 | $ | 154,000 | $ | (240,000 | ) | $ | 394,000 | ||||||||
(i) EBITDA, and Earnings after cash interest, are non-GAAP financial measures which do not have any standardized meaning prescribed by the issuer's GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. For the Company, the most directly comparable measure to EBITDA is Earnings from operations before amortization and interest, and in case of Earnings after cash interest is Earnings from operations before amortization and interest less Stated interest expense and is presented to illustrate the Company's assessment of cash generated from its operating activities after reflecting stock based compensation expense but prior to changes in working capital items.
(ii) Some numbers in the presentation under Financial Highlights may not add due to rounding.
The increase in the Company's revenues and profitability is primarily a reflection of increase in the number of merchants participating in its programs.
The higher dollar cash interest cost is mainly a reflection of an increase in the utilization of the line of credit facility (Loan payable on the balance sheet) which the Company utilizes to expand its Advance Purchase Marketing (APM) program business. The APM program is the Company's premier product and source of revenue.
About Advantex Marketing International Inc.
Advantex is a specialist in the marketing services industry. Advantex partners with Canadian Imperial Bank of Commerce (CIBC), and Aeroplan Canada Inc. (Aeroplan). On a combined basis, Advantex has contractual marketing access to more than five million Canadian consumers with above-average personal and household income. The Company's merchant partner base currently consists of over 1,200 merchants operating restaurants, golf courses, independent inns, resorts and selected hotels, spas, retailers of men's and ladies fashion, footwear and accessories, retailers of sporting goods, florists and garden centres, book and newspaper stores, health and beauty centres, and gift stores, many of which are leaders in their respective categories. Advantex is traded on the Canadian National Stock Exchange under the symbol "ADX". For additional information on Advantex, please visit www.advantex.com.
Forward-Looking Information
This Press Release contains certain "forward-looking information". All information, other than information comprised of historical fact, that addresses activities, events or developments that the Company believes, expects or anticipates will or may occur in the future constitutes forward-looking information. Forward-looking information is typically identified by words such as: anticipate, believe, expect, goal, intend, plan, will, may, should, could and other similar expressions. Such forward-looking information relates to, without limitation, information regarding: the Company's belief that the April through December period provides an opportunity to increase merchant participation; the Company's belief in its ability to continue to grow its merchant base and ensure growth in future revenues and profitability; and other information regarding financial and business prospects and financial outlook is forward-looking information.
Forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company, including certain assumptions and expectations of Management. With respect to the forward-looking information contained in this Press Release, the Company has made assumptions regarding, continued affinity partner participation; continued support from providers of loan payable and non-convertible debentures; the size of the market for its programs and its ability to increase merchant participation; its ability to access future financing to expand its APM program; future business levels and the cost structure required to operate at those levels; and future interest rates.
Forward-looking information is subject to a number of risks, uncertainties and assumptions that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things, those listed under "General Risks and Uncertainties" and "Economic Dependence" in the Management's Discussion and Analysis for the three and nine month periods ended March 31, 2012 available on www.sedar.com.
All forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
| Advantex Marketing International Inc. | |||||||||
| Consolidated Statement of Financial Position | |||||||||
| As at March 31, 2012 and June 30, 2011- (Unaudited) | |||||||||
| March 31, 2012 | June 30, 2011 | ||||||||
| Assets | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | 539,879 | 5,000 | |||||||
| Accounts receivable | 835,094 | 842,249 | |||||||
| Transaction credits | 13,939,071 | 12,408,060 | |||||||
| Inventory (note 4) | 218,000 | 66,451 | |||||||
| Prepaid expenses and sundry assets | 243,798 | 248,541 | |||||||
| $ | 15,775,842 | $ | 13,570,301 | ||||||
| Non-current assets | |||||||||
| Other asset (note 5) | 100,000 | 100,000 | |||||||
| Property, plant and equipment, and intangibles | 618,079 | 761,177 | |||||||
| 718,079 | 861,177 | ||||||||
| Total assets | $ | 16,493,921 | $ | 14,431,478 | |||||
| Liabilities | |||||||||
| Current liabilities | |||||||||
| Bank Indebtedness | - | 83,262 | |||||||
| Loan payable (note 6) | 6,455,218 | 4,917,446 | |||||||
| Accounts payable and accrued liabilities | 3,449,652 | 3,319,363 | |||||||
| Liabilities of discontinued operations (note 12) | 324,647 | 432,440 | |||||||
| $ | 10,229,517 | $ | 8,752,511 | ||||||
| Non-current liabilities | |||||||||
| 14% Non-convertible debentures payable (note 7) | 1,762,745 | 1,747,497 | |||||||
| 12% Non-convertible debentures payable (note 8) | 5,649,815 | 5,300,492 | |||||||
| $ | 7,412,560 | $ | 7,047,989 | ||||||
| Total Liabilities | $ | 17,642,077 | $ | 15,800,500 | |||||
| Shareholders' equity | |||||||||
| Share capital (note 9) | 24,110,096 | 24,110,096 | |||||||
| Contributed surplus (note 10) | 793,198 | 726,795 | |||||||
| Equity portion of debentures (note 8) | 2,114,341 | 2,114,341 | |||||||
| Warrants (note 7/8) | 1,196,013 | 1,196,013 | |||||||
| Deficit | (29,361,804 | ) | (29,516,267 | ) | |||||
| Total equity | $ | (1,148,156 | ) | $ | (1,369,022 | ) | |||
| Total liabilities and equity | $ | 16,493,921 | $ | 14,431,478 | |||||
Commitments (note 13)
Approved by the Board:
| Director: | "William Polley" | Director: | "Kelly Ambrose" | |
| William Polley | Kelly E. Ambrose |
| Advantex Marketing International Inc. | ||||||||||||
| Consolidated Statement of Profit/ (Loss) | ||||||||||||
| For the three and nine months ended March 31, 2012 and 2011 - (Unaudited) | ||||||||||||
| For the Three months ended | For the nine months ended | |||||||||||
| March 31 |
March 31 |
|||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||
| $ | $ | $ | $ | |||||||||
| Revenues | 3,493,635 | 2,875,626 | 11,563,064 | 9,855,889 | ||||||||
| Direct expenses | 945,919 | 988,195 | 3,158,395 | 3,044,483 | ||||||||
| Gross profit | 2,547,716 | 1,887,431 | 8,404,669 | 6,811,406 | ||||||||
| Operating Expenses | ||||||||||||
| Selling and marketing | 1,015,805 | 731,756 | 2,717,218 | 2,045,588 | ||||||||
| General and administrative | 1,145,110 | 1,020,361 | 3,323,748 | 2,996,613 | ||||||||
| Earnings from operations before amortization and interest from continuing operations | 386,801 | 135,314 | 2,363,703 | 1,769,205 | ||||||||
| Depreciation of property, plant and equipment, and intangibles | 118,706 | 78,672 | 313,109 | 350,436 | ||||||||
| Interest expense: | ||||||||||||
| Stated interest expense - loan payable, debentures | 485,748 | 377,083 | 1,494,472 | 1,161,955 | ||||||||
| Non-cash interest expense on loan payable, and debentures | 135,997 | 136,073 | 401,659 | 477,781 | ||||||||
| Net income / (Loss) from continuing operations | (353,650 | ) | (456,514 | ) | 154,463 | (220,967 | ) | |||||
| Net income / (Loss) from discontinued operations | - | 10,069 | - | (18,886 | ) | |||||||
| Net income / (loss) and Comprehensive income / (loss) | (353,650 | ) | (446,445 | ) | 154,463 | (239,853 | ) | |||||
| Earnings per share: | ||||||||||||
| Basic and Diluted | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||
| Advantex Marketing International Inc. | |||||||||||||||||
| Consolidated Statements of Changes in Equity | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Class A preference shares | Common shares | Contributed surplus | Equity portion of debentures | Warrants | Deficit | Total | |||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||
| Balance - July 1, 2010 | 3,815 | 24,106,281 | 645,879 | 2,114,341 | 374,554 | (29,023,988 | ) | (1,779,118 | ) | ||||||||
| Net (loss) for the period | (239,853 | ) | (239,853 | ) | |||||||||||||
| Other comprehensive income (net of tax): | - | - | |||||||||||||||
| Net (loss) and Comprehensive (loss) for the period | (239,853 | ) | (239,853 | ) | |||||||||||||
| Employee share options: | |||||||||||||||||
| Value of services recognized | 88,880 | 88,880 | |||||||||||||||
| Balance - March 31, 2011 | 3,815 | 24,106,281 | 734,759 | 2,114,341 | 374,554 | (29,263,841 | ) | (1,930,091 | ) | ||||||||
| Balance - July 1, 2011 | 3,815 | 24,106,281 | 726,795 | 2,114,341 | 1,196,013 | (29,516,267 | ) | (1,369,022 | ) | ||||||||
| Net income for the period | 154,463 | 154,463 | |||||||||||||||
| Other comprehensive income (net of tax): | - | - | |||||||||||||||
| Net income and Comprehensive income for the period | 154,463 | 154,463 | |||||||||||||||
| Employee share options: | |||||||||||||||||
| Value of services recognized | 66,403 | 66,403 | |||||||||||||||
| Balance - March 31, 2012 | 3,815 | 24,106,281 | 793,198 | 2,114,341 | 1,196,013 | (29,361,804 | ) | (1,148,156 | ) | ||||||||
| Advantex Marketing International Inc. | ||||||||
| Consolidated Statement of Cash Flow | ||||||||
| For the nine months ended March 31, 2012 and 2011 - (Unaudited) | ||||||||
| 2012 | 2011 | |||||||
| $ | $ | |||||||
| Cash flow provided by (used in) | ||||||||
| Operating activities | ||||||||
| Net income / (loss) for the period - continuing operations | 154,463 | (220,967 | ) | |||||
| Adjustments for: | ||||||||
| Depreciation of property, plant and equipment, and intangibles | 313,109 | 350,436 | ||||||
| Stock-based compensation | 66,403 | 88,880 | ||||||
| Accretion charge for debentures | 401,659 | 477,781 | ||||||
| 935,634 | 696,130 | |||||||
| Changes in items of working capital | ||||||||
| Accounts receivable | 7,155 | (420,941 | ) | |||||
| Transaction credits | (1,531,011 | ) | (1,917,406 | ) | ||||
| Inventory | (151,549 | ) | 133,024 | |||||
| Prepaid expenses and sundry assets | 4,743 | (40,507 | ) | |||||
| Accounts payable and accrued liabilities | 130,289 | 484,404 | ||||||
| (1,540,373 | ) | (1,761,426 | ) | |||||
| Net cash generated from operating activities | (604,739 | ) | (1,065,296 | ) | ||||
| Investing activities | ||||||||
| Purchase of property, plant and equipment, and intangibles | (170,011 | ) | (218,842 | ) | ||||
| Investment in other asset | - | (100,000 | ) | |||||
| Net cash generated from investing activities | (170,011 | ) | (318,842 | ) | ||||
| Financing activities | ||||||||
| Loan Payable | 1,537,772 | 651,125 | ||||||
| Debenture renewal - additional transaction costs | (37,088 | ) | - | |||||
| Net cash generated in financing activities | 1,500,684 | 651,125 | ||||||
| Movement in cash and cash equivalents during the period | ||||||||
| - From continuing operations | 725,934 | (733,013 | ) | |||||
| - From discontinued operations (note 12) | (107,793 | ) | 276,384 | |||||
| 618,141 | (456,629 | ) | ||||||
| Increase (decrease) in cash and cash equivalents | 618,141 | (456,629 | ) | |||||
| Cash and cash equivalents - Beginning of period | (78,262 | ) | 505,941 | |||||
| Cash and cash equivalents - End of period | 539,879 | 49,312 | ||||||
Contact Information:
Mukesh Sabharwal
Vice-President and Chief Financial Officer
905-470-9558 ext. 249
Mukesh.sabharwal@advantex.com
www.advantex.com