Advantex Marketing International Inc. (CSE:ADX) ("Advantex" or the "Company"), a
leading specialist in the marketing services industry, today announced its
results for three and six months ended December 31, 2013. All currency amounts
are in Canadian dollars unless otherwise noted.
"The value proposition of our marketing services programs, the 2,000 merchants
participating in our programs, and the diverse revenue streams enabled us to
deliver a profit in a volatile business environment," said Kelly Ambrose,
Advantex President and Chief Executive Officer.
The Company validated the attractiveness of its credit card partnership -
loyalty point accelerator programs when it signed a new agreement with Canadian
Imperial Bank of Commerce ("CIBC") for a three year term expiring September 30,
2016, and is expected to benefit from the growth in CIBC's Aventura program,
even as the Company expects slippage as a significant part of CIBC's Aeroplan
credit card portfolio migrates to The Toronto-Dominion Bank ("TD"), as publicly
disclosed. Furthermore, in October 2013 the Company entered discussions with TD
to operate a rewards accelerator program for their credit card portfolio. A
successful outcome will fuel the future growth of Advantex, and counter the
significant effect on revenues in the aftermath of the decision by CIBC
respecting its credit card portfolio, and the intensifying competition amongst
Canadian banks for credit card business.
The refinancing of December 30, 2013 significantly improved the capital
structure by reducing the fully diluted common shares by 24.5% from 197.9
million to 149.5 million, a reduction of 48.4 million common shares.
"Advantex is in the final stages of discussions with Aimia for a multi-year
renewal of their existing agreement. The revenue from this program helped to
increase revenues and protect profitability, and I have great expectations of
future growth of this program. I am pleased to inform of our entry into the USA.
In November 2013 we launched a pilot rewards accelerator program in a test
market for Caesars Entertainment Corporation and its Total Rewards loyalty
program," said Mr. Ambrose.
Financial Highlights:
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Three months ended Six months ended
December 31 December 31
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2013 2012 2013 2012
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Revenues
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Program in partnership with
CIBC $3,843,000 $4,099,000 $7,868,000 $8,308,000
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Program in partnership with
Aimia 766,000 288,000 1,289,000 470,000
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Misc. - 41,000 - 53,000
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$4,609,000 $4,428,000 $9,157,000 $8,831,000
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Net Income $ 75,000 $ 124,000 $ 131,000 $ 398,000
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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 Securities Excahnge 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 on its
business from changes in CIBC's credit card portfolio; expectation of a
successful outcome, and it's timing, from the discussions with TD; expectation
of future prospects on its business from a relationship with TD; expectation of
a multi-year renewal of its existing agreement with Aimia, and the future
prospects from this relationship on its business; 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 months ended December 31, 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)
December 31, 2013 June 30, 2013
Assets
Current assets
Cash and cash equivalents $ 848,604 $ 1,773,672
Accounts receivable 1,395,512 599,339
Transaction credits 12,096,949 13,632,654
Inventory (note 5) 112,224 139,985
Prepaid expenses and sundry assets 306,998 273,519
$ 14,760,287 $ 16,419,169
Non-current assets
Property, plant and equipment (note
6a) $ 275,085 $ 299,528
Intangible assets (note 6b) 454,476 539,545
$ 729,561 $ 839,073
Total assets $ 15,489,848 $ 17,258,242
Liabilities
Current liabilities
Loan payable (note 7) $ 7,153,617 $ 7,099,371
Accounts payable and accrued
liabilities 4,249,260 3,420,130
14% Non-convertible debentures
payable (note 8) - 1,736,298
12% Non-convertible debentures
payable (note 9) - 6,055,336
$ 11,402,877 $ 18,311,135
Non-current Liabilities
12% Non-convertible debentures
payable (note 9) $ 4,588,541 $ -
Total Liabilities $ 15,991,418 $ 18,311,135
Shareholders' deficiency
Share capital (note 10) $ 24,530,555 $ 24,110,096
Contributed surplus (note 11) 4,090,382 808,167
Equity portion of debentures (note
9/11) - 2,114,341
Warrants (note 8/9/11) - 1,167,874
Deficit (29,122,507) (29,253,371)
Total deficiency $ (501,570) $ (1,052,893)
Total liabilities and deficiency $ 15,489,848 $ 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: William Polley
Director: Kelly Ambrose
Advantex Marketing International Inc.
Consolidated Statements of Income and Comprehensive Income
For the three and six months ended December 31, 2013 and December 31, 2012 -
(unaudited)
(expressed in Canadian dollars)
Three months ended Six months ended
December 31 December 31
2013 2012 2013 2012
$ $ $ $
Revenues 4,608,874 4,427,976 9,157,041 8,831,393
Direct expenses 1,735,907 1,415,995 3,340,003 2,792,024
----------------------------------------
2,872,967 3,011,981 5,817,038 6,039,369
Operating Expenses
Selling and marketing 920,469 977,914 1,897,447 1,887,751
General and administrative 1,218,605 1,007,794 2,362,008 2,085,642
----------------------------------------
Earnings from operations before
depreciation, amortization and
interest 733,893 1,026,273 1,557,583 2,065,976
Interest expense:
Stated interest expense - loan
payable, and debentures 514,383 514,079 1,027,648 1,030,675
Non-cash interest expense on
debentures - 149,991 104,333 291,280
----------------------------------------
219,510 362,203 425,602 744,021
Write-off of investment 100,000 100,000
Depreciation of property, plant and
equipment, and amortization of
intangible assets 144,527 138,206 294,738 246,120
----------------------------------------
Net income and Comprehensive income $74,983 $123,997 $130,864 $397,901
Earnings per share
Basic and Diluted (note 14) $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, 2013 and December 31, 2012 -
(unaudited)
(expressed in Canadian dollars)
Class A Equity
preference Common Contributed portion of
shares shares surplus debentures
$ $ $ $
Balance - July 1, 2012 3,815 24,106,281 793,198 2,114,341
Net income and
comprehensive income for
the period
Partial early prepayment of
debentures (notes 8 and 9)
Balance - December 31, 2012 3,815 24,106,281 793,198 2,114,341
Balance - July 1, 2013 3,815 24,106,281 808,167 2,114,341
Net income and
comprehensive income for
the period
Transfer to Contributed
surplus (notes 8,9, and
11) 3,282,215 (2,114,341)
Issue of common shares as
part of refinancing of
debentures (notes 9 and
10) 420,459
Balance - December 31, 2013 3,815 24,526,740 4,090,382 -
Advantex Marketing International Inc.
Consolidated Statements of Changes in Deficiency
For the six months ended December 31, 2013 and December 31, 2012
- (unaudited)
(expressed in Canadian dollars)
Warrants Deficit Total
$ $ $
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
Partial early prepayment of
debentures (notes 8 and 9) (28,139) (28,139)
Balance - December 31, 2012 1,167,874 (28,891,723) (706,214)
Balance - July 1, 2013 1,167,874 (29,253,371) (1,052,893)
Net income and
comprehensive income for
the period 130,864 130,864
Transfer to Contributed
surplus (notes 8,9, and
11) (1,167,874) -
Issue of common shares as
part of refinancing of
debentures (notes 9 and
10) 420,459
Balance - December 31, 2013 - (29,122,507) (501,570)
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, 2013 and December 31, 2012 -
(unaudited)
(expressed in Canadian dollars)
31-12-2013 31-12-2012
$ $
Cash flow provided by (used in)
Operating activities
Net income for the period $ 130,864 $ 397,901
Adjustments for:
Write-off of investment - 100,000
Depreciation of property, plant & equipment, and
amortization of intangible assets 294,738 246,120
Accretion charge for debentures 104,333 291,280
--------------------------
529,935 1,035,301
Changes in items of working capital
Accounts receivable (796,173) (197,817)
Transaction credits 1,535,705 (611,176)
Inventory 27,761 86,690
Prepaid expenses and sundry assets (33,479) (273,408)
Accounts payable and accrued liabilities 829,130 (396,003)
--------------------------
1,562,944 (1,391,714)
Net cash provided by (used in) operating
activities 2,092,879 (356,413)
Investing activities
Purchase of property, plant and equipment, and
intangible assets (185,226) (380,191)
--------------------------
Net cash (used in) investing activities (185,226) (380,191)
Financing activities
Proceeds from loan payable 54,246 (185,800)
Partial early prepayment of debentures (notes 8
and 9) - (376,033)
Payments on maturity / retirement of debentures
(notes 8 and 9) (7,895,967)
Proceeds from refinancing debentures (note 9) 5,159,000 -
Transaction costs to close debenture refinancing
(note 9) (150,000) -
Debenture early prepayment / renewal - additional
transaction costs - (8,700)
--------------------------
Net cash (used in) generated from financing
activities (2,832,721) (570,533)
Increase (decrease) in cash and cash equivalents
during the period $ (925,068) $(1,307,137)
--------------------------
From continuing operations (782,414) (1,235,168)
From discontinued operations (note 16) (142,654) (71,969)
--------------------------
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 $ (925,068) $(1,307,137)
Cash and cash equivalents - Beginning of period 1,773,672 1,084,773
Cash and cash equivalents - End of period 848,604 (222,364)
Additional Information
--------------------------------------------------
Interest paid $ 699,401 $ 1,041,584
--------------------------------------------------
For purposes of the cash flow statement, cash
comprises:
--------------------------------------------------
Cash / (Bank indebtedness) $ 843,604 $ (227,364)
Term deposits $ 5,000 $ 5,000
--------------------------
$ 848,604 $ (222,364)
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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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