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):
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Three months ended March 31
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2012 2011 Change
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Average # of participating merchants 1,184 763 55.2%
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Revenues $3,494,000 $2,876,000 $ 618,000
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Gross Profit $2,548,000 $1,887,000 $ 661,000
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Earnings from operations before
Amortization and Interest (EBITDA (i)) $ 387,000 $ 135,000 $ 252,000
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Cash Interest $ 486,000 $ 377,000 $(109,000)
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Earnings after Cash Interest (i) $ (99,000) $ (242,000) $ 143,000
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Amortization $ 119,000 $ 79,000 $ (40,000)
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Non cash interest - Accretion $ 136,000 $ 136,000 $ -
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Discontinued operations $ - $ 10,000 $ (10,000)
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Net Profit / (Loss) $ (354,000) $ (446,000) $ 92,000
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Financial Highlights (ii):
(CAD)
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Nine months ended March 31
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2012 2011 Change
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Average # of participating merchants 1,090 754 44.6%
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Revenues $11,563,000 $9,856,000 $1,707,000
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Gross Profit $ 8,405,000 $6,811,000 $1,594,000
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Earnings from operations before
Amortization and Interest (EBITDA (i)) $ 2,364,000 $1,769,000 $ 595,000
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Cash Interest $ 1,495,000 $1,162,000 $ (333,000)
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Earnings after Cash Interest (i) $ 869,000 $ 607,000 $ 262,000
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Amortization $ 313,000 $ 350,000 $ 37,000
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Non cash interest - Accretion $ 402,000 $ 478,000 $ 76,000
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Discontinued operations $ - $ (19,000) $ 19,000
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Net Profit / (Loss) $ 154,000 $ (240,000) $ 394,000
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(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)
----------------------------------------------------------------------------
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March 31, 2012 June 30, 2011
----------------------------------------------------------------------------
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Assets
----------------------------------------------------------------------------
Current assets
----------------------------------------------------------------------------
Cash and cash equivalents 539,879 5,000
----------------------------------------------------------------------------
Accounts receivable 835,094 842,249
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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
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Non-current assets
----------------------------------------------------------------------------
Other asset (note 5) 100,000 100,000
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Property, plant and equipment, and
intangibles 618,079 761,177
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718,079 861,177
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Total assets $ 16,493,921 $ 14,431,478
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----------------------------------------------------------------------------
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
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$ 10,229,517 $ 8,752,511
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Non-current liabilities
----------------------------------------------------------------------------
14% Non-convertible debentures payable
(note 7) 1,762,745 1,747,497
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12% Non-convertible debentures payable
(note 8) 5,649,815 5,300,492
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$ 7,412,560 $ 7,047,989
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Total Liabilities $ 17,642,077 $ 15,800,500
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Shareholders' equity
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Share capital (note 9) 24,110,096 24,110,096
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Contributed surplus (note 10) 793,198 726,795
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Equity portion of debentures (note 8) 2,114,341 2,114,341
----------------------------------------------------------------------------
Warrants (note 7/8) 1,196,013 1,196,013
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Deficit (29,361,804) (29,516,267)
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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)
----------------------------------------------------------------------------
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For the Three months For the nine months
ended 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
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Gross profit 2,547,716 1,887,431 8,404,669 6,811,406
----------------------------------------------------------------------------
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Operating Expenses
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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
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Advantex Marketing International Inc.
Consolidated Statements of Changes in Equity
(Unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Class A Equity
preference Common Contributed portion of
shares shares surplus debentures
$ $ $ $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance - July 1, 2010 3,815 24,106,281 645,879 2,114,341
----------------------------------------------------------------------------
Net (loss) for the period
----------------------------------------------------------------------------
Other comprehensive income
(net of tax):
----------------------------------------------------------------------------
Net (loss) and Comprehensive
(loss) for the period
----------------------------------------------------------------------------
Employee share options:
----------------------------------------------------------------------------
Value of services recognized 88,880
----------------------------------------------------------------------------
Balance - March 31, 2011 3,815 24,106,281 734,759 2,114,341
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance - July 1, 2011 3,815 24,106,281 726,795 2,114,341
----------------------------------------------------------------------------
Net income for the period
----------------------------------------------------------------------------
Other comprehensive income
(net of tax):
----------------------------------------------------------------------------
Net income and Comprehensive
income for the period
----------------------------------------------------------------------------
Employee share options:
----------------------------------------------------------------------------
Value of services recognized 66,403
----------------------------------------------------------------------------
Balance - March 31, 2012 3,815 24,106,281 793,198 2,114,341
Advantex Marketing International Inc.
Consolidated Statements of Changes in Equity
(Unaudited)
-----------------------------------------------------------------
-----------------------------------------------------------------
Warrants Deficit Total
$ $ $
-----------------------------------------------------------------
-----------------------------------------------------------------
Balance - July 1, 2010 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
-----------------------------------------------------------------
Balance - March 31, 2011 374,554 (29,263,841) (1,930,091)
-----------------------------------------------------------------
-----------------------------------------------------------------
Balance - July 1, 2011 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
-----------------------------------------------------------------
Balance - March 31, 2012 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)
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2012 2011
----------------------------------------------------------------------------
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$ $
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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)
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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
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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
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Cash and cash equivalents - End of period 539,879 49,312
Advantex Marketing (CSE:ADX)
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