Advantex Announces Net Income for Three Months Ended September 30, 2012

- Revenues up $568,000, to $4,403,000, compared with corresponding period previous year - Net Income up $13,000, to $274,000, compared with corresponding period previous year

Marketwired

TORONTO, ONTARIO--(Marketwire - Nov 26, 2012) - 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 décor, 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 September 30, 2012   Three months ended September 30, 2011
             
Revenues   $ 4,403,000   $ 3,835,000
Earnings from operations before amortization and interest (EBITDA (i))   $ 1,040,000   $ 976,000
Net Income   $ 274,000   $ 261,000
(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, 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)
    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  
    $ 16,263,389     $ 16,666,392  
Non-current assets                
Investment (note 6)     100,000       100,000  
Property, plant and equipment (note 7a)     222,015       222,132  
Intangibles (note 7b)     273,524       330,018  
      595,539       652,150  
Total assets   $ 16,858,928     $ 17,318,542  
                 
Liabilities                
Current liabilities                
Loan payable (note 8)     6,540,205       6,715,691  
Accounts payable and accrued liabilities     3,813,676       4,128,264  
    $ 10,353,881     $ 10,843,955  
Non-current liabilities                
14% Non-convertible debentures payable (note 9)     1,711,428       1,770,606  
12% Non-convertible debentures payable (note 10)     5,623,830       5,779,957  
    $ 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
         
         

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 preference shares
$
  Common shares
$
  Contributed surplus
$
  Equity portion of debentures
$
  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 period                         261,253     261,253  
Employee share options:                                  
  Value of services recognized           6,000                   6,000  
Balance - September 30, 2011   3,815   24,106,281   732,795   2,114,341   1,196,013     (29,255,014 )   (1,101,769 )
                                   
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 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   3,815   24,106,281   793,198   2,114,341   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.

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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