Advantex Marketing International Inc. (CNSX:ADX) ("Advantex" or the "Company"),
a leading specialist in the marketing services industry, today announced its
results for three months ended September 30, 2013. All currency amounts are in
Canadian dollars unless otherwise noted.
"Advantex is pleased to report a profit in a rapidly changing business
environment. We responded to the news of significant movements in our partner,
Canadian Imperial Bank of Commerce ("CIBC") and Aimia Inc. ("Aimia"), worlds by
investing in the value proposition of our programs in order to maintain
stability with our merchants. While the pace of bringing new merchants into our
programs has been slowed because of these changes, I am pleased to report
stability with our current customers and profitability for the quarter," said
Kelly Ambrose, Advantex President and Chief Executive Officer.
Advantex has many of the building blocks for its future in place, namely a
multi-year agreement through September 2016 with CIBC, and the renewal of our
line of credit facility with Accord Financial Inc., until December 2014, to
support the continued growth of our Advance Purchase Marketing program. In
October, Advantex signed a term sheet to refinance the existing debentures and
expects to close the transaction in December. Negotiations are continuing with
our partner Aimia for a multi-year renewal.
"We are actively exploring new revenue opportunities in Canada and the US, and I
will report our progress in future quarters. I remain cautiously optimistic of
Advantex's future prospects," said Mr. Ambrose.
Financial Highlights:
----------------------------------------------------------------------------
Three months Three months
ended September ended September
30, 2013 30, 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenues $ 4,548,000 $ 4,404,000
----------------------------------------------------------------------------
Earnings from operations before
depreciation, amortization and interest
(EBITDA (i)) $ 824,000 $ 1,040,000
----------------------------------------------------------------------------
Net Income $ 56,000 $ 274,000
----------------------------------------------------------------------------
(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, 2013 and 2012, per consolidated financial statements for three months ended
September 30, 2013, earnings from operations before depreciation, amortization
and interest is the nearest equivalent to EBITDA.
About Advantex Marketing International Inc.
Advantex is a specialist in the marketing services industry. Advantex partners
with CIBC, and Aeroplan Canada Inc. (subsidiary of Aimia). On a combined basis,
Advantex has contractual marketing access to about five million Canadian
consumers with above-average personal and household income. Advantex's merchant
partner base currently consists of about 2,000 merchants operating in several
business segments: 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: belief that it has
building blocks for its future in place; expectation of refinancing debentures
on the terms set out in the term sheet and the timing of the refinancing;
expectation of securing a multi-year renewal of its agreement with Aimia;
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 three months ended September 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 - (unaudited)
(expressed in Canadian dollars)
----------------------------------------------------------------------------
September 30,
2013 June 30, 2013
----------------------------------------------------------------------------
Assets
----------------------------------------------------------------------------
Current assets
----------------------------------------------------------------------------
Cash and cash equivalents 1,684,693 1,773,672
----------------------------------------------------------------------------
Accounts receivable 816,881 599,339
----------------------------------------------------------------------------
Transaction credits 13,262,336 13,632,654
----------------------------------------------------------------------------
Inventory (note 5) 165,699 139,985
----------------------------------------------------------------------------
Prepaid expenses and sundry assets 363,292 273,519
----------------------------------------------------------------------------
$ 16,292,901 $ 16,419,169
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Non-current assets
----------------------------------------------------------------------------
Property, plant and equipment (note 6a) 282,482 299,528
----------------------------------------------------------------------------
Intangible assets (note 6b) 520,617 539,545
----------------------------------------------------------------------------
803,099 839,073
----------------------------------------------------------------------------
Total assets $ 17,096,000 $ 17,258,242
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
----------------------------------------------------------------------------
Current liabilities
----------------------------------------------------------------------------
Loan payable (note 7) 6,648,712 7,099,371
----------------------------------------------------------------------------
Accounts payable and accrued liabilities 3,548,332 3,420,130
----------------------------------------------------------------------------
14% Non-convertible debentures payable
(note 8) 1,744,000 1,736,298
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12% Non-convertible debentures payable
(note 9) 6,151,967 6,055,336
----------------------------------------------------------------------------
Total Liabilities $ 18,093,011 $ 18,311,135
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----------------------------------------------------------------------------
Shareholders' deficiency
----------------------------------------------------------------------------
Share capital (note 10) 24,110,096 24,110,096
----------------------------------------------------------------------------
Contributed surplus (note 11) 808,167 808,167
----------------------------------------------------------------------------
Equity portion of debentures (note 9) 2,114,341 2,114,341
----------------------------------------------------------------------------
Warrants (note 8/9) 1,167,874 1,167,874
----------------------------------------------------------------------------
Deficit (29,197,489) (29,253,371)
----------------------------------------------------------------------------
Total deficiency $ (997,011) $ (1,052,893)
----------------------------------------------------------------------------
Total liabilities and deficiency $ 17,096,000 $ 17,258,242
Economic and Financial dependence (note 2)
Commitments and Contingencies (note 13)
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, 2013 and September 30, 2012 -
(unaudited)
(expressed in Canadian dollars)
September 30, September 30,
2013 2012
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
Revenues 4,548,212 4,403,417
----------------------------------------------------------------------------
Direct expenses 1,604,096 1,376,029
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2,944,116 3,027,388
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Operating Expenses
----------------------------------------------------------------------------
Selling and marketing 1,001,977 909,837
----------------------------------------------------------------------------
General and administrative 1,118,448 1,077,848
----------------------------------------------------------------------------
Earnings from operations before
depreciation, amortization and interest 823,691 1,039,703
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest expense:
----------------------------------------------------------------------------
Stated interest expense - loan payable,
and debentures 513,265 516,596
----------------------------------------------------------------------------
Non-cash interest expense on debentures 104,333 141,289
----------------------------------------------------------------------------
206,093 381,818
----------------------------------------------------------------------------
Depreciation of property, plant and
equipment, and amortization of intangible
assets 150,211 107,914
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income and Comprehensive income 55,882 273,904
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share
----------------------------------------------------------------------------
Basic and Diluted (note 14) 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 three months ended September 30, 2013 and September 30, 2012 -
(unaudited)
(expressed in Canadian dollars)
----------------------------------------------------------------------------
Class A
preference Contributed
shares Common shares surplus
$ $ $
----------------------------------------------------------------------------
Balance - July 1, 2012 3,815 24,106,281 793,198
----------------------------------------------------------------------------
Net income and comprehensive
income for the period
----------------------------------------------------------------------------
Stock based compensation
----------------------------------------------------------------------------
Value of services recognized -
----------------------------------------------------------------------------
Partial early prepayment of
debentures (notes 8 and 9)
----------------------------------------------------------------------------
Balance - September 30, 2012 3,815 24,106,281 793,198
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance - July 1, 2013 3,815 24,106,281 808,167
----------------------------------------------------------------------------
Net income and comprehensive
income for the period
----------------------------------------------------------------------------
Stock based compensation
----------------------------------------------------------------------------
Value of services recognized -
----------------------------------------------------------------------------
Balance - September 30, 2013 3,815 24,106,281 808,167
Advantex Marketing International Inc.
Consolidated Statements of Changes in Deficiency
For the three months ended September 30, 2013 and September 30, 2012 -
(unaudited)
(expressed in Canadian dollars)
----------------------------------------------------------------------------
Equity
portion of
debentures Warrants Deficit Total
$ $ $ $
----------------------------------------------------------------------------
Balance - July 1, 2012 2,114,341 1,196,013 (29,289,624) (1,075,976)
----------------------------------------------------------------------------
Net income and comprehensive
income for the period 273,904 273,904
----------------------------------------------------------------------------
Stock based compensation
----------------------------------------------------------------------------
Value of services recognized -
----------------------------------------------------------------------------
Partial early prepayment of
debentures (notes 8 and 9) (28,139) (28,139)
----------------------------------------------------------------------------
Balance - September 30, 2012 2,114,341 1,167,874 (29,015,720) (830,211)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance - July 1, 2013 2,114,341 1,167,874 (29,253,371) (1,052,893)
----------------------------------------------------------------------------
Net income and comprehensive
income for the period 55,882 55,882
----------------------------------------------------------------------------
Stock based compensation
----------------------------------------------------------------------------
Value of services recognized -
----------------------------------------------------------------------------
Balance - September 30, 2013 2,114,341 1,167,874 (29,197,489) (997,011)
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, 2013 and September 30, 2012 -
(unaudited)
(expressed in Canadian dollars)
----------------------------------------------------------------------------
30-09-2013 30-09-2012
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
Cash flow provided by (used in)
----------------------------------------------------------------------------
Operating activities
----------------------------------------------------------------------------
Net income for the period $ 55,882 $ 273,904
----------------------------------------------------------------------------
Adjustments for:
----------------------------------------------------------------------------
Depreciation of property, plant and
equipment, and amortization of
intangible assets 150,211 107,914
----------------------------------------------------------------------------
Accretion charge for debentures 104,333 141,289
--------------------------------------------------------- ------------------
310,426 523,107
----------------------------------------------------------------------------
Changes in items of working capital
----------------------------------------------------------------------------
Accounts receivable (217,542) (78,129)
----------------------------------------------------------------------------
Transaction credits 370,318 80,811
----------------------------------------------------------------------------
Inventory (25,714) 39,038
----------------------------------------------------------------------------
Prepaid expenses and sundry assets (89,773) (105,958)
----------------------------------------------------------------------------
Accounts payable and accrued
liabilities 128,202 (314,588)
--------------------------------------------------------- ------------------
165,491 (378,826)
----------------------------------------------------------------------------
Net cash provided by (used in)
operating activities 475,917 144,281
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Investing activities
----------------------------------------------------------------------------
Purchase of property, plant and
equipment, and intangible assets (114,237) (51,303)
--------------------------------------------------------- ------------------
Net cash used in investing activities (114,237) (51,303)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financing activities
----------------------------------------------------------------------------
Proceeds from loan payable (450,659) (175,486)
----------------------------------------------------------------------------
Partial early prepayment of debentures - (376,033)
----------------------------------------------------------------------------
Debenture early prepayment / renewal -
additional transaction costs - (8,700)
--------------------------------------------------------- ------------------
Net cash (used in) generated from
financing activities (450,659) (560,219)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents during the period $ (88,979) $ (467,241)
--------------------------------------------------------- ------------------
- From continuing operations (8,790) (435,135)
----------------------------------------------------------------------------
- From discontinued operations (note
16) (80,189) (32,106)
--------------------------------------------------------- ------------------
Increase (decrease) in cash and cash
equivalents during the period
Movement in cash and cash equivalents
during the period Continuing
Operations Discontinued Operations
(note 17) (25,077) Increase
(decrease) in cash and cash
equivalents $ (88,979) $ (467,241)
--------------------------------------------------------- ------------------
Cash and cash equivalents - Beginning
of period 1,773,672 1,084,773
----------------------------------------------------------------------------
Cash and cash equivalents - End of
period 1,684,693 617,532
----------------------------------------------------------------------------
Additional Information
Interest paid $ 699,401 $ 713,073
----------------- -----------------
For purposes of the cash flow
statement, cash comprises:
Cash $ 1,679,693 $ 612,532
Term deposits $ 5,000 $ 5,000
----------------- -----------------
$ 1,684,693 $ 617,532
----------------- -----------------
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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