Advantex Marketing International Inc. (CNSX:ADX) ("Advantex" or the "Company"),
a leading specialist in the marketing services industry, today announced its
results for the fiscal fourth quarter and year ended June 30, 2013. All currency
amounts are in Canadian dollars unless otherwise noted.
"It is encouraging to report an increase in revenues, and a net income in a
challenging business environment," said Kelly Ambrose, Advantex President and
Chief Executive Officer.
Financial Highlights:
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Fiscal 2013 Fiscal 2012 Inc./(Dec)
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Revenues: Programs operated in
partnership with CIBC $15,033,000 $14,804,000 $229,000
---------------------------------------------------------------------------
Programs operated in
partnership with Aeroplan 1,395,000 965,000 430,000
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Other 482,000 127,000 355,000
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$16,910,000 $15,896,000 $1,014,000
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Earnings from operations before
depreciation, amortization and
interest (EBITDA (i)) $3,323,000 $3,214,000 $109,000
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Net Income $36,000 $227,000 $(191,000)
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(i) EBITDA is a non-GAAP financial measure which does not have any
standardized meaning prescribed by the issuer's GAAP and is unlikely to be
comparable to similar measures presented by other issuers. In case of the
Company, for Fiscal 2013 and Fiscal 2012, per consolidated financial
statements for year ended June 30, 2013, earnings from operations before
depreciation, amortization and interest is the nearest equivalent to EBITDA.
The Company's revenues from its programs with Canadian Imperial Bank of Commerce
("CIBC") and Aeroplan Canada Inc. ("Aeroplan") increased a solid 4.2%. The
Company earns revenues as consumers complete purchases at small independent
merchants participating in the programs. The uncertain economy affected consumer
spending at participating merchants. This is a significant reason that despite a
double digit percent increase in merchant participation during Fiscal 2013, the
revenues did not increase as expected. The Company acquired Futura Loyalty Group
Inc.'s Aeroplan channel marketing assets at the end of January, 2013. This has
augmented our merchant portfolio and our revenues and gross profit for Fiscal
2013.
While Fiscal 2013 selling, general & administrative costs were flat compared to
Fiscal 2012, the increase in direct costs eroded all the gains of revenue
growth. The Company increased its expense for delinquencies reflecting the
financial strain caused by the economic conditions on participating merchants.
"The Company recently announced renewal of its agreement with CIBC which was an
important event. The eighteen year relationship is still strong and provides
CIBC cardholders with significant value. Discussions with Aeroplan respecting a
multi-year renewal of the existing agreement expiring December 31, 2013 are
going well. Our financial partners are supportive. Accord Financial Inc. and the
Company have extended the term of the credit facility by a year to December 31,
2014. The term of the 14% and 12% debentures has been extended to December 31,
2013. The Company has announced that it has entered into a term sheet to
refinance between $5 million and $5.5 million of the 14% debentures and 12%
debentures. The Company expects to re-finance the debentures. I am cautiously
optimistic with the future prospects of Advantex," said Mr. Ambrose.
About Advantex Marketing International Inc.
Advantex is a specialist in the marketing services industry. Advantex partners
with CIBC, and Aeroplan. On a combined basis, Advantex has contractual marketing
access to more than five million Canadian consumers with above-average personal
and household income. Advantex's merchant partner base currently consists of
about 2,000 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; dry cleaners;
gift stores; home decor; automotive dealers, service centers; and tire
dealerships; 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: expectation from its
negotiations with Aeroplan; expectation of negotiating and finalizing a
refinancing of debentures on the terms set out in the term sheet; expectation of
its future prospects; 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.
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 those listed under "General Risks and
Uncertainties" and "Economic Dependence" in Management's Discussion and Analysis
for the fiscal year ended June 30, 2013.
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 Statements of Financial Position
(expressed in Canadian dollars)
---------------------------------------------------------------------------
June 30, June 30,
2013 2012
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Assets
---------------------------------------------------------------------------
Current assets
---------------------------------------------------------------------------
Cash and cash equivalents 1,773,672 1,084,773
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Accounts receivable (note 17) 599,339 966,437
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Transaction credits 13,632,654 14,095,373
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Inventory (note 5) 139,985 204,355
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Prepaid expenses and sundry assets 273,519 315,454
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$16,419,169 $16,666,392
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Non-current assets
---------------------------------------------------------------------------
Investment (note 6) - 100,000
---------------------------------------------------------------------------
Property, plant and equipment (note 7a) 299,528 222,132
---------------------------------------------------------------------------
Intangible assets (note 7b) 539,545 330,018
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839,073 652,150
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Total assets $17,258,242 $17,318,542
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Liabilities
---------------------------------------------------------------------------
Current liabilities
---------------------------------------------------------------------------
Loan payable (note 8) 7,099,371 6,715,691
---------------------------------------------------------------------------
Accounts payable and accrued liabilities 3,420,130 4,128,264
---------------------------------------------------------------------------
14% Non-convertible debentures payable (note 9) 1,736,298 -
---------------------------------------------------------------------------
12% Non-convertible debentures payable (note 10) 6,055,336 -
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$18,311,135 $10,843,955
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Non-current liabilities
---------------------------------------------------------------------------
14% Non-convertible debentures payable (note 9) - 1,770,606
---------------------------------------------------------------------------
12% Non-convertible debentures payable (note 10) - 5,779,957
---------------------------------------------------------------------------
$ - $7,550,563
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Total Liabilities $18,311,395 $18,394,518
---------------------------------------------------------------------------
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Shareholders' deficiency
---------------------------------------------------------------------------
Share capital (note 11) 24,110,096 24,110,096
---------------------------------------------------------------------------
Contributed surplus (note 12) 808,167 793,198
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Equity portion of debentures (note 10) 2,114,341 2,114,341
---------------------------------------------------------------------------
Warrants (note 9/10) 1,167,874 1,196,013
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Deficit (29,253,371) (29,289,624)
---------------------------------------------------------------------------
Total deficiency $(1,052,893) $(1,075,976)
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Total liabilities and deficiency $17,258,242 $17,318,542
Economic and Financial dependence (note 2), Commitments and contingencies
(note 17), and Subsequent events (note 20)
The accompanying notes are an integral part of these consolidated financial
statements.
Approved by the Board:
Director, William Polley
Director, Kelly E. Ambrose
Advantex Marketing International Inc.
Consolidated Statements of Income and Comprehensive Income
For the years ended June 30, 2013 and 2012
(expressed in Canadian dollars)
2013 2012
---------------------------------------------------------------------------
$ $
---------------------------------------------------------------------------
Revenues 16,909,808 15,895,402
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Direct expenses 5,549,977 4,427,082
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11,359,831 11,468,320
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Operating Expenses
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Selling and marketing 3,770,393 3,758,766
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General and administrative 4,266,296 4,496,048
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Earnings from operations before depreciation,
amortization and interest 3,323,142 3,213,506
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Interest expense:
---------------------------------------------------------------------------
Stated interest expense - loan payable, and
debentures 2,047,785 2,012,320
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Non-cash interest expense on debentures 597,665 539,662
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677,692 661,524
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Write-off of investment 100,000 -
---------------------------------------------------------------------------
Depreciation of property, plant and equipment,
and amortization of intangible assets 541,439 434,881
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net income and Comprehensive income 36,253 226,643
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Earnings per share:
---------------------------------------------------------------------------
Basic and Diluted (note 19) 0.00 0.00
---------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
Advantex Marketing International Inc.
Consolidated Statements of Changes in Deficiency
For the years ended June 30, 2013 and June 30, 2012
(expressed in Canadian dollars)
---------------------------------------------------------------------------
Class Equity
A portion
prefe- Contri- of
rence Common buted deben-
shares shares surplus tures Warrants Deficit Total
$ $ $ $ $ $ $
---------------------------------------------------------------------------
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
and
comprehensive
income
for
the
year 226,643 226,643
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Stock
based
compensation
---------------------------------------------------------------------------
Value
of
services
recognized 66,403 66,403
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Balance -
June
30,
2012 3,815 24,106,281 793,198 2,114,341 1,196,013 (29,289,624) (1,075,976)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Balance -
July
1,
2012 3,815 24,106,281 793,198 2,114,341 1,196,013 (29,289,624) (1,075,976)
---------------------------------------------------------------------------
Net
income
and
comprehensive
income
for
the
year 36,253 36,253
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Stock
based
compensation
---------------------------------------------------------------------------
Value
of
services
recognized 14,969 14,969
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Partial
repayment
of
debentures
(notes
9
and
10) (28,139) (28,139)
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Balance -
June
30,
2013 3,815 24,106,281 808,167 2,114,341 1,167,874 (29,253,371) (1,052,893)
The accompanying notes are an integral part of these consolidated financial
statements.
Advantex Marketing International Inc.
Consolidated Statements of Cash Flow
For the years ended June 30, 2013 and 2012
(expressed in Canadian dollars)
---------------------------------------------------------------------------
2013 2012
$ $
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Cash flow provided by / (used in)
---------------------------------------------------------------------------
Operating activities
---------------------------------------------------------------------------
Net income for the year $36,253 $226,643
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Adjustments for:
---------------------------------------------------------------------------
Write-off of investment 100,000 -
---------------------------------------------------------------------------
Depreciation of property, plant and equipment,
and amortization of intangible assets 541,439 434,881
---------------------------------------------------------------------------
Stock-based compensation 14,969 66,403
---------------------------------------------------------------------------
Accretion charge for debentures 597,665 539,662
---------------------------------------------------------------------------
1,290,326 1,267,589
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Changes in items of working capital
---------------------------------------------------------------------------
Accounts receivable 367,098 (124,188)
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Transaction credits 462,719 (1,687,313)
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Inventory 64,370 (137,904)
---------------------------------------------------------------------------
Prepaid expenses and sundry assets 41,935 (66,913)
---------------------------------------------------------------------------
Accounts payable and accrued liabilities (708,134) 376,461
---------------------------------------------------------------------------
227,988 (1,639,857)
---------------------------------------------------------------------------
Net cash provided by / (used in) operating
activities 1,518,314 (372,268)
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Investing activities
---------------------------------------------------------------------------
Purchase of property, plant and equipment, and
intangible assets (828,362) (225,854)
---------------------------------------------------------------------------
Net cash (used in) investing activities (828,362) (225,854)
---------------------------------------------------------------------------
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Financing activities
---------------------------------------------------------------------------
Proceeds from loan payable 383,680 1,798,245
---------------------------------------------------------------------------
Partial repayment of debentures (376,033) -
---------------------------------------------------------------------------
Debenture partial repayment / renewal -
additional transaction costs (8,700) (37,088)
---------------------------------------------------------------------------
Net cash generated from / (used in) financing
activities (1,053) 1,761,157
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Increase (decrease) in cash and cash equivalents
during the year $688,899 $1,163,035
---------------------------------------------------------------------------
From continuing operations 877,514 1,264,207
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From discontinued operations (note 16) (188,615) (101,172)
---------------------------------------------------------------------------
Increase in cash and cash equivalents Movement in
cash and cash equivalents during the period
Continuing Operations Discontinued Operations
(note 17) (25,077) Increase (decrease) in cash
and cash equivalents $688,899 $1,163,035
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Cash and cash equivalents, including bank
indebtedness - Beginning of year 1,084,773 (78,262)
---------------------------------------------------------------------------
Cash and cash equivalents - End of year 1,773,672 1,084,773
---------------------------------------------------------------------------
Additional Information
Interest paid $2,058,694 $1,893.320
For purposes of the cash flow statement, cash
comprises:
Cash $1,768,672 $1,079,773
Term deposits $5,000 $5,000
$1,773,672 $1,084,773
The accompanying notes are an integral part of these consolidated financial
statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Advantex Marketing International Inc.
Mukesh Sabharwal
Vice-President and Chief Financial Officer
905-470-9558 ext. 249
Mukesh.sabharwal@advantex.com
www.advantex.com
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