Advantex Marketing International Inc. (CNSX:ADX) ("Advantex" or the "Company"),
a leading specialist in merchant funding and loyalty marketing programs, today
announced its results for the three months ended September 30, 2012. All
references to quarters or years are for the fiscal periods and all currency
amounts are in Canadian dollars unless otherwise noted.
"We are pleased to report continuing improvement in the Company's financial
performance. The growth of the Company's small merchant centric business model
is reflected in the better revenues, earnings from operations before
amortization and interest, and net income," said Kelly Ambrose, Advantex
President and Chief Executive Officer.
"The Company continues to seek new business partners where we can sell our
proprietary programs, as well as work with existing affinity partners on new
business opportunities. Recently, we received Canadian Imperial Bank of Commerce
("CIBC") approval to expand our existing programs into home decor, and from
January, 2013 we expect to expand our new relationship with Canadian Tire Group
("CTG"). Finally, we are attempting to improve the retention of participating
merchants in our programs by introducing new services that deliver additional
value to merchants such as digital marketing platforms," said Mr. Ambrose.
Financial Highlights:
----------------------------------------------------------------------------
Three months ended Three months ended
September 30, 2012 September 30, 2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenues $ 4,403,000 $ 3,835,000
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Earnings from operations before
amortization and interest (EBITDA
(i)) $ 1,040,000 $ 976,000
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Net Income $ 274,000 $ 261,000
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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. It is provided as
additional information to assist readers in understanding a component of the
Company's financial performance. In case of the Company, for three months
ended September 30, 2012 and 2011, per consolidated financial statements for
three months ended September 30, 2012, earnings from operations before
amortization and interest is the nearest equivalent to EBITDA.
"The Company's agreements with its affinity partners - CIBC, and Aeroplan Canada
Inc. ("Aeroplan") - and its financial partners - 14% and 12% debenture holders,
and provider of loan payable - come up for renewal between August and December,
2013. The Company expects to successfully negotiate renewal of the agreements,"
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. The Company's merchant partner base currently consists of
more than 1,350 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; and home decor; 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 respecting
enrolling new merchants; belief in its ability to influence the retention of
participating merchants; expectation with regards to the renewal, including the
timing and the terms of such renewal, of its agreements with its affinity and
financial partners; expectation with respect to expanding relationship with CTG;
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 three months ended September 30, 2012.
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 - (unaudited)
(expressed in Canadian dollars)
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September 30, 2012 June 30, 2012
----------------------------------------------------------------------------
Assets
----------------------------------------------------------------------------
Current assets
----------------------------------------------------------------------------
Cash and cash equivalents 617,532 1,084,773
----------------------------------------------------------------------------
Accounts receivable 1,044,566 966,437
----------------------------------------------------------------------------
Transaction credits 14,014,562 14,095,373
----------------------------------------------------------------------------
Inventory (note 5) 165,317 204,355
----------------------------------------------------------------------------
Prepaid expenses and sundry assets 421,412 315,454
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$ 16,263,389 $ 16,666,392
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Non-current assets
----------------------------------------------------------------------------
Investment (note 6) 100,000 100,000
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Property, plant and equipment (note 7a) 222,015 222,132
----------------------------------------------------------------------------
Intangibles (note 7b) 273,524 330,018
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595,539 652,150
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Total assets $ 16,858,928 $ 17,318,542
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
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Current liabilities
----------------------------------------------------------------------------
Loan payable (note 8) 6,540,205 6,715,691
----------------------------------------------------------------------------
Accounts payable and accrued
liabilities 3,813,676 4,128,264
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$ 10,353,881 $ 10,843,955
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Non-current liabilities
----------------------------------------------------------------------------
14% Non-convertible debentures payable
(note 9) 1,711,428 1,770,606
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12% Non-convertible debentures payable
(note 10) 5,623,830 5,779,957
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$ 7,335,258 $ 7,550,563
----------------------------------------------------------------------------
Total Liabilities $ 17,689,139 $ 18,394,518
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shareholders' deficiency
----------------------------------------------------------------------------
Share capital (note 11) 24,110,096 24,110,096
----------------------------------------------------------------------------
Contributed surplus (note 12) 793,198 793,198
----------------------------------------------------------------------------
Equity portion of debentures (note 10) 2,114,341 2,114,341
----------------------------------------------------------------------------
Warrants (note 9/10) 1,167,874 1,196,013
----------------------------------------------------------------------------
Deficit (29,015,720) (29,289,624)
----------------------------------------------------------------------------
Total deficiency $ (830,211) $ (1,075,976)
----------------------------------------------------------------------------
Total liabilities and deficiency $ 16,858,928 $ 17,318,542
Economic and Financial dependence (note 2)
Commitments and Contingencies (note 14)
The accompanying notes are an integral part of these consolidated financial
statements.
Approved by the
Board:
Director: Signed "William Polley" Director: Signed "Kelly Ambrose"
William Polley Kelly E. Ambrose
Advantex Marketing International Inc.
Consolidated Statements of Income and Comprehensive Income
For the three months ended September 30, 2012 and September 30, 2011 -
(unaudited)
(expressed in Canadian dollars)
September 30, 2012 September 30, 2011
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
Revenues 4,403,417 3,835,107
----------------------------------------------------------------------------
Direct expenses 1,376,029 1,044,193
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Expenses
----------------------------------------------------------------------------
Selling and marketing 909,837 776,330
----------------------------------------------------------------------------
General and administrative 1,077,848 1,038,091
----------------------------------------------------------------------------
Earnings from operations before
amortization and interest 1,039,703 976,493
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Depreciation of property, plant and
equipment, and intangibles 107,914 92,402
----------------------------------------------------------------------------
Interest expense:
----------------------------------------------------------------------------
Stated interest expense - loan
payable, and debentures 516,596 490,834
----------------------------------------------------------------------------
Non-cash interest expense on loan
payable, and debentures 141,289 132,004
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income and Comprehensive income 273,904 261,253
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share
----------------------------------------------------------------------------
Basic and Diluted (note 15) 0.00 0.00
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The accompanying notes are an integral part of these consolidated financial
statements.
Advantex Marketing International Inc.
Consolidated Statements of Changes in Deficiency
For the three months ended September 30, 2012 and September 30, 2011 -
(unaudited)
(expressed in Canadian dollars)
--------------------------------------------------------------------------
Class A Equity
preference Common Contributed portion of
shares shares surplus debentures
$ $ $ $
--------------------------------------------------------------------------
Balance - July 1, 2011 3,815 24,106,281 726,795 2,114,341
--------------------------------------------------------------------------
Net income and comprehensive
income for the period
--------------------------------------------------------------------------
Employee share options:
--------------------------------------------------------------------------
Value of services
recognized 6,000
--------------------------------------------------------------------------
Balance - September 30, 2011 3,815 24,106,281 732,795 2,114,341
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Balance - July 1, 2012 3,815 24,106,281 793,198 2,114,341
--------------------------------------------------------------------------
Net income and comprehensive
income for the period
--------------------------------------------------------------------------
Employee share options:
--------------------------------------------------------------------------
Value of services
recognized -
--------------------------------------------------------------------------
Partial early prepayment of
debentures (notes 9 and 10)
--------------------------------------------------------------------------
Balance - September 30, 2012 3,815 24,106,281 793,198 2,114,341
----------------------------------------------------------------------------
Warrants Deficit Total
$ $ $
----------------------------------------------------------------------------
Balance - July 1, 2011 1,196,013 (29,516,267) (1,369,022)
----------------------------------------------------------------------------
Net income and comprehensive
income for the period 261,253 261,253
----------------------------------------------------------------------------
Employee share options:
----------------------------------------------------------------------------
Value of services
recognized 6,000
----------------------------------------------------------------------------
Balance - September 30, 2011 1,196,013 (29,255,014) (1,101,769)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance - July 1, 2012 1,196,013 (29,289,624) (1,075,976)
----------------------------------------------------------------------------
Net income and comprehensive
income for the period 273,904 273,904
----------------------------------------------------------------------------
Employee share options:
----------------------------------------------------------------------------
Value of services
recognized -
----------------------------------------------------------------------------
Partial early prepayment of
debentures (notes 9 and 10) (28,139) (28,139)
----------------------------------------------------------------------------
Balance - September 30, 2012 1,167,874 (29,015,720) (830,211)
The accompanying notes are an integral part of these consolidated financial
statements.
Advantex Marketing International Inc.
Consolidated Statements of Cash Flow
For the three months ended September 30, 2012 and September 30, 2011 -
(unaudited)
(expressed in Canadian dollars)
----------------------------------------------------------------------------
30-09-2012 30-09-2011
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
Cash flow provided by (used in)
----------------------------------------------------------------------------
Operating activities
----------------------------------------------------------------------------
Net income for the period $ 273,904 $ 261,253
----------------------------------------------------------------------------
Adjustments for:
----------------------------------------------------------------------------
Depreciation of property, plant and
equipment, and intangibles 107,914 92,402
----------------------------------------------------------------------------
Stock-based compensation - 6,000
----------------------------------------------------------------------------
Accretion charge for debentures 141,289 132,004
----------------------------------------------------------------------------
523,107 491,659
----------------------------------------------------------------------------
Changes in items of working capital
----------------------------------------------------------------------------
Accounts receivable (78,129) (14,195)
----------------------------------------------------------------------------
Transaction credits 80,811 (908,265)
----------------------------------------------------------------------------
Inventory 39,038 66,451
----------------------------------------------------------------------------
Prepaid expenses and sundry assets (105,958) (72,280)
----------------------------------------------------------------------------
Accounts payable and accrued liabilities (314,588) (100,541)
----------------------------------------------------------------------------
(378,826) (1,028,830)
----------------------------------------------------------------------------
Net cash provided by (used in) operating
activities 144,281 (537,171)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Investing activities
----------------------------------------------------------------------------
Purchase of property, plant and equipment, and
intangibles (51,303) (67,655)
----------------------------------------------------------------------------
Net cash used in investing activities (51,303) (67,655)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financing activities
----------------------------------------------------------------------------
Proceeds from loan payable (175,486) 1,105,328
----------------------------------------------------------------------------
Partial early prepayment of debentures (376,033) -
----------------------------------------------------------------------------
Debenture early prepayment / renewal -
additional transaction costs (8,700) (28,573)
----------------------------------------------------------------------------
Net cash (used in) generated from financing
activities (560,219) 1,076,755
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents during the period $ (467,241) $ 471,929
----------------------------------------------------------------------------
From continuing operations (435,135) 497,006
----------------------------------------------------------------------------
From discontinued operations (note 17) (32,106) (25,077)
----------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents during the period $ (467,241) $ 471,929
----------------------------------------------------------------------------
Cash and cash equivalents, including bank
indebtedness - Beginning of period 1,084,773 (78,262)
----------------------------------------------------------------------------
Cash and cash equivalents, including bank
indebtedness - End of period 617,532 393,667
----------------------------------------------------------------------------
Additional Information
Interest paid $ 713,073 $ 569,666
For purposes of the cash flow statement, cash
comprises:
Cash $ 612,532 $ 388,667
Term deposits $ 5,000 $ 5,000
-------------- --------------
$ 617,532 $ 393,667
-------------- --------------
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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