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 and six months ended December 31, 2012. All
currency amounts are in Canadian dollars unless otherwise noted.
"We are pleased to report a net income under difficult economic conditions more
severe than we have seen in sometime thereby affecting consumer spending. In
addition, the NHL strike was also another factor that negatively affected the
restaurant sector. Over half of merchants participating in our programs operate
restaurants. This is reflected in our results. While revenues were ahead of
corresponding periods previous year they were not what we expected, and this
affected our profitability, said Kelly Ambrose, Advantex President and Chief
Executive Officer.
I am excited by the recent acquisition which added about 700 merchants to our
portfolio. This gives us an opportunity to expand the program as a re-seller of
aeroplan miles across the small merchant market, and in time has the potential
to strengthen the Company's relationship with Aeroplan and add to the Company's
profitability," said Mr. Ambrose.
Financial Highlights:
----------------------------------------------------------------------------
Three months ended Six months ended
December 31 December 31
----------------------------------------------------------------------------
2012 2011 Inc./ 2012 2011 Inc./
(Dec) (Dec)
----------------------------------------------------------------------------
$ $ $ $
----------------------------------------------------------------------------
Revenues 4,428,000 4,234,000 4.6% 8,831,000 8,069,000 9.4%
----------------------------------------------------------------------------
Earnings from
operations
before
amortization
and interest
("EBITDA" (i)) 1,026,000 1,000,000 2.6% 2,066,000 1,977,000 4.5%
----------------------------------------------------------------------------
Net Income 124,000 247,000 (49.8)% 398,000 508,000 (21.7)%
----------------------------------------------------------------------------
(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 per consolidated
financial statements for three and six months ended December 31, 2012,
earnings from operations before amortization and interest is the nearest
equivalent to EBITDA.
"The Company's agreements with its affinity partners - Canadian Imperial Bank of
Commerce ("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 and/or extension 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
just under 1,300 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
the impact of the acquisition on its relationship with Aeroplan, and its
profitability; expectation with regards to the renewal, including the timing and
the terms of such renewal, of its agreements with its affinity and financial
partners; 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 and six month periods ended December 31, 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)
----------------------------------------------------------------------------
December 31, 2012 June 30, 2012
----------------------------------------------------------------------------
Assets
----------------------------------------------------------------------------
Current assets
----------------------------------------------------------------------------
Cash and cash equivalents 5,000 1,084,773
----------------------------------------------------------------------------
Accounts receivable 1,164,254 966,437
----------------------------------------------------------------------------
Transaction credits 14,706,549 14,095,373
----------------------------------------------------------------------------
Inventory (note 5) 117,665 204,355
----------------------------------------------------------------------------
Prepaid expenses and sundry assets 588,862 315,454
----------------------------------------------------------------------------
$16,582,330 $16,666,392
----------------------------------------------------------------------------
Non-current assets
----------------------------------------------------------------------------
Investment (note 6) - 100,000
----------------------------------------------------------------------------
Property, plant and equipment
(note 7a) 265,569 222,132
----------------------------------------------------------------------------
Intangibles (note 7b) 420,652 330,018
----------------------------------------------------------------------------
686,221 652,150
----------------------------------------------------------------------------
Total assets $17,268,551 $17,318,542
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
----------------------------------------------------------------------------
Current liabilities
----------------------------------------------------------------------------
Bank indebtedness 227,364 -
----------------------------------------------------------------------------
Loan payable (note 8) 6,529,891 6,715,691
----------------------------------------------------------------------------
Accounts payable and accrued
liabilities 3,732,261 4,128,264
----------------------------------------------------------------------------
14% Non-convertible debentures
payable (note 9) 1,719,712 -
----------------------------------------------------------------------------
12% Non-convertible debentures
payable (note 10) 5,765,537 -
----------------------------------------------------------------------------
$17,974,765 $10,843,955
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
Total Liabilities $17,974,765 $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 (28,891,723) (29,289,624)
----------------------------------------------------------------------------
Total deficiency $(706,214) $(1,075,976)
----------------------------------------------------------------------------
Total liabilities and deficiency $17,268,551 $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 and six months ended December 31, 2012 and December 31, 2011 -
(unaudited)
(expressed in Canadian dollars)
For the three months For the six months
ended December 31 ended December 31
----------------------------------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------------------------------
$ $ $ $
----------------------------------------------------------------------------
Revenues 4,427,976 4,234,322 8,831,393 8,069,429
----------------------------------------------------------------------------
Direct expenses 1,415,995 1,168,283 2,792,024 2,212,476
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Expenses
----------------------------------------------------------------------------
Selling and marketing 977,914 925,084 1,887,751 1,701,413
----------------------------------------------------------------------------
General and
administrative 1,007,794 1,140,546 2,085,642 2,178,638
----------------------------------------------------------------------------
Earnings from operations
before amortization and
interest 1,026,273 1,000,409 2,065,976 1,976,902
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Write-off of investment 100,000 - 100,000 -
----------------------------------------------------------------------------
Depreciation of
property, plant and
equipment, and
intangibles 138,206 102,001 246,120 194,403
----------------------------------------------------------------------------
Interest expense:
----------------------------------------------------------------------------
Stated interest expense
- loan payable, and
debentures 514,079 517,890 1,030,675 1,008,724
----------------------------------------------------------------------------
Non-cash interest
expense on loan
payable, and debentures 149,991 133,658 291,280 265,662
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income and
Comprehensive income 123,997 246,860 397,901 508,113
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share
----------------------------------------------------------------------------
Basic and Diluted
(note 15) 0.00 0.00 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 six months ended December 31, 2012 and December 31, 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 2,555
----------------------------------------------------------------------------
Balance - December 31,
2011 3,815 24,106,281 729,350 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 prepayment of
debentures (notes 9 and
10)
----------------------------------------------------------------------------
Balance - December 31,
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 508,113 508,113
------------------------------------------------------------------
Employee share options:
------------------------------------------------------------------
Value of services
recognized 2,555
------------------------------------------------------------------
Balance - December 31,
2011 1,196,013 (29,008,154) (858,354)
------------------------------------------------------------------
------------------------------------------------------------------
Balance - July 1, 2012 1,196,013 (29,289,624) (1,075,976)
------------------------------------------------------------------
Net income and
comprehensive income
for the period 397,901 397,901
------------------------------------------------------------------
Employee share options:
------------------------------------------------------------------
Value of services
recognized -
------------------------------------------------------------------
Partial prepayment of
debentures (notes 9 and
10) (28,139) (28,139)
------------------------------------------------------------------
Balance - December 31,
2012 1,167,874 (28,891,723) (706,214)
------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
Advantex Marketing International Inc.
Consolidated Statements of Cash Flow
For the six months ended December 31, 2012 and December 31, 2011 -
(unaudited)
(expressed in Canadian dollars)
----------------------------------------------------------------------------
31-12-2012 31-12-2011
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
Cash flow provided by (used in)
----------------------------------------------------------------------------
Operating activities
----------------------------------------------------------------------------
Net income for the period $397,901 $508,113
----------------------------------------------------------------------------
Adjustments for:
----------------------------------------------------------------------------
Write-off of investment 100,000 -
----------------------------------------------------------------------------
Depreciation of property, plant and
equipment, and intangibles 246,120 194,403
----------------------------------------------------------------------------
Stock-based compensation - 2,555
----------------------------------------------------------------------------
Accretion charge for debentures 291,280 265,662
----------------------------------------------------------------------------
1,035,301 970,733
----------------------------------------------------------------------------
Changes in items of working capital
----------------------------------------------------------------------------
Accounts receivable (197,817) (221,717)
----------------------------------------------------------------------------
Transaction credits (611,176) (692,454)
----------------------------------------------------------------------------
Inventory 86,690 66,451
----------------------------------------------------------------------------
Prepaid expenses and sundry assets (273,408) (27,724)
----------------------------------------------------------------------------
Accounts payable and accrued liabilities (396,003) 473,249
----------------------------------------------------------------------------
(1,391,714) (402,195)
----------------------------------------------------------------------------
Net cash provided by (used in) operating
activities (356,413) 568,538
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Investing activities
----------------------------------------------------------------------------
Purchase of property, plant and equipment,
and intangibles (380,191) (136,169)
----------------------------------------------------------------------------
Net cash used in investing activities (380,191) (136,169)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financing activities
----------------------------------------------------------------------------
(Repayment of)/proceeds from loan payable (185,800) 994,788
----------------------------------------------------------------------------
Partial prepayment of debentures (376,033) -
----------------------------------------------------------------------------
Debenture partial prepayment / renewal -
additional transaction costs (8,700) (37,088)
----------------------------------------------------------------------------
Net cash (used in) generated from financing
activities (570,533) 957,700
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents during the period $(1,307,137) $1,390,069
----------------------------------------------------------------------------
- From continuing operations (1,235,168) 1,427,323
----------------------------------------------------------------------------
- From discontinued operations (note 17) (71,969) (37,254)
----------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents during the period $(1,307,137) $1,390,069
----------------------------------------------------------------------------
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 (222,364) 1,311,807
----------------------------------------------------------------------------
Additional Information
--------------------------------------------
Interest paid $1,041,584 $892,103
For purposes of the cash flow statement,
cash comprises:
Cash / (Bank indebtedness) $(227,364) $1,306,807
Term deposits $ 5,000 $5,000
--------------------------------
$(222,364) $1,311,807
--------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Advantex Marketing International Inc.
Kelly Ambrose
President and Chief Executive Officer
905-470-9558 ext. 280
kelly.ambrose@advantex.com
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