In difficult market conditions BMTC Group Inc. was able to maintain it's revenues for its year ended December 31st, 2014

MONTREAL, Feb. 12, 2015 /CNW Telbec/ - For the fiscal year ended December 31, 2014, the Company's revenue (delivered sales) increased by $6,613,000 to $701,356,000, from the $694,743,000 recorded in the 2013 year. Same store revenues (delivered sales) decreased by 1.8% for the same period. Although, during the fiscal year ended December 31, 2014, client orders increased by $14,400,000 to $722,352,000 from the $707,952,000 recorded in 2013. This increase occurred during the last quarter of 2014 and was not entirely reflected in the Company's revenues for the fiscal year ended December 31, 2014. Same store client orders remained comparable to the fiscal year ended December 31, 2013.  Net income for the fiscal year ended December 31, 2014, stood at $48,647,000 compared with $57,254,000 for the previous fiscal year. Basic earnings per share decreased from $1.24 in 2013 to $1.08 in 2014.

The 0.70% decrease of gross margin for the fiscal year ended December 31, 2014, is primarily due to the sale of products with lower margins as well as the effect of foreign currency exchange rates on cost of sales.

Recognition of the cost of options in earnings had a minimal impact on basic net earnings per share in 2014 and 2013. The share repurchase program contributed to a decrease of $0.02 to basic earnings per share during the year.

During the fourth quarter of 2013, the Company re-evaluated the amortized cost of their Asset-backed commercial paper (MAV). The Company concluded that the market for MAV showed signs of a liquid market with indications of bids and offers varying between approximately 80% and 90% depending on the class of the papers. Based on this information, the Company recorded an impairment reversal of $5,400,000 before taxes ($4,674,000 net of taxes) or $0.10 basic earnings per share.

Excluding these effects, the variation of net earnings would have decreased by $3,583,000 or $0.08 basic earnings per share.

The $3,583,000 variation in net adjusted earnings in 2014 breaks down as follows:

 


(in thousands of $)

2014


2013

Net earnings

48 647


57 254

Impairment reversal MAV (net of taxes)

-


(4 674)

Change in option costs (net of taxes)

151


(199)

Adjusted net earnings

48 798


52 381

Minus: Adjusted net earnings for the 2013 period

52 381



Variation

(3 583)



 

This decrease in adjusted and after-tax operating income is allocated as follows:


(in thousands of $)


Increase
(decrease)
retail operations

Increase
(decrease)
Investment

Increase
(decrease)
adjusted operating
income





1st quarter 2014

(2 031)

(401)

(2 432)

2nd quarter 2014

(1 447)

1 861

414

3rd quarter 2014

2 133

401

2 534

4th quarter 2014

(3 924)

(175)

(4 099)


Total:

(5 269)

1 686

(3 583)

The decrease in retail operations of $7,208,000 before tax or $5,269,000 after tax can be explained by the decrease of gross margins and by the increase of certain expenses.

                                                                                                      


(in thousands $)


2014



Decrease in gross margin

2 301

Building maintenance

700

Amortization

1 407

Pension funds

1 257

Marketing expenses

1 400

Administrative expenses

143

Total :

7 208

 

Quarterly Results (unaudited)
(In thousands of $, except per share amounts)


   March 31

   June 30

    Sept. 30

  Dec. 31


2014

2013

2014

2013

2014

2013

2014

2013


$

$

$

$

$

$

$

$

Revenue

145 118

151 849

182 881

181 411

190 207

187 315

183 150

174 168

Net earnings

(1 468)

1 215

14 020

13 574

18 271

15 840

17 824

26 625

Net earnings per share










Basic

(0,03)

0,03

0,31

0,29

0,40

0,34

0,40

0,58


Diluted

(0,03)

0,03

0,31

0,29

0,40

0,34

0,40

0,58

 

For the three-month period ended December 31, 2014, revenue totaled $183,150,000, an increase of $8,982,000 from $174,168,000 for the corresponding period in 2013. For the three-month period ended December 31, 2014, net earnings amounted to $17,824,000, or $0.40 basic earnings per share, compared with  $26,625,000, or $0.58 basic earnings per share for the corresponding period in 2013.

For the three-month period ended December 31, 2014 and 2013 recognition in earnings of the change in the cost of options had a minimal effect on earnings per basic share.

During the fourth quarter of 2013, the Company re-evaluated the amortized cost of their Asset-backed commercial paper (MAV). The Company concluded that the market for MAV showed signs of a liquid market with indications of bids and offers varying between approximately 80% and 90% depending on the class of the papers. Based on this information, the Company recorded an impairment reversal of $5,400,000 before taxes ($4,674,000 net of taxes) or $0.10 basic earnings per share.

The share redemption program during the quarter resulted in a $0.01 decrease in basic earnings per share.

Excluding these effects, the variation in net earnings would have been $4,099,000 or $0.09 basic earnings share which breaks down as follows:

 


(in thousands of $)

2014


2013

Net earnings

17 824


26 625

Impairment reversal MAV (net of taxes)

-


(4 674)

Change in option costs (net of taxes)

4


(24)

Adjusted net earnings

17 828


21 927

Minus: Adjusted net earnings for the 2013 period

21 927



Variation

(4 099)



 

During the twelve-month period ended December 31, 2014, no options were exercised or granted. As at December 31, 2014, options for 251,850 Class "A" Subordinate Shares were outstanding, representing 0.58% of the Company's issued and outstanding shares, and 5,710,864 options, representing 13.21% of the Company's issued and outstanding shares, may still be granted pursuant to the Plan. The outstanding options may be exercised at a price of $17.85 per Class "A" Subordinate Shares.

The number of the Company's outstanding shares changed again during the 12-month period ended December 31, 2014, due to the share redemption program implemented on March 13th, 2014 and the conversion of Class "B" Multiple Voting Shares. Accordingly, 306,300 Class "A" Subordinate Shares were redeemed by the Company and cancelled, whereas 62,484 Class "B" Multiple Voting Shares were converted into the same number of Class "A" Subordinate Shares. As a result of these changes, as at December 31, 2014, there were 1,748,796 Class "B" Multiple Voting Shares and 43,212,904 Class "A" Subordinate Shares outstanding.

During the fiscal year, the Company paid eligible dividends of $0.24 per share to holders of Class "A" Subordinate Shares and Class "B" Multiple Voting Shares.

Operations

During 2014, the Company proceeded with a complete upgrade of all of its websites and plans to implement a distinct e-commerce platform for all of its banners. This upgrade commenced in 2014 and will continue throughout 2015. The Company has already established its e-commerce strategy as well as its web tactics with the help of external advisors and specialists. During the third quarter of 2014, the Company signed a contract and proceeded with the purchase of an e-commerce platform. The implementation of which has also started during this period. The Company has also reviewed its IT systems in order to standardise them throughout the banners, as well as to allow them to be more aligned with our e-commerce strategies. Following this evaluation, the Company has decided to invest in a new IT system for all of its banners. The integration and implementation has also begun and will continue over the next 18 months.

Brault & Martineau

During 2014, the Company proceeded with replacing all the existing signs on our stores for a total cost of approximately $3,500,000. Also, the Company is also presently evaluating the remodeling of all of its furniture and electronic departments. The strategy behind this remodeling is to offer our clients a unique experience in our store that will help allow us to differentiate ourselves from electronic commerce.

EconoMax

During the 2014 fiscal year, the Company proceeded with the opening of 2 stores, in LaSalle and in Joliette. The costs of these stores were incurred during the 2014 fiscal year. In April 2015 the Company intends to open a new store in Granby. The Company has purchased land in Drummondville, where the construction of the store will begin in the first quarter of 2015 for an eventual store opening in 2015. Following the opening in Drummondville, the banner will have 11 stores in the province of Quebec.

Tanguay

The Company proceeded with the purchase of a 200,000 square foot parcel of land in Trois-Rivières, the construction of the store has not yet been established. Finally, the Company closed, following the end of its lease, its electronic store in Place Laurier in Quebec City.

Management Discussion and Outlook for the Future of the Company

The Quebec economy remained under pressure throughout the year. During 2014, more than 100,000 jobs were lost in the province of Quebec alone. Also, the real-estate sector has experienced an important slowdown. This weakness in our economy translates to a significant decrease in consumer spending in our business sector. Even in these difficult market conditions, the Company was able to maintain its revenues in 2014 primarily due to effective leadership by management, a solid market and financial position and its aggressive marketing campaigns.

During the last quarter of 2014 the Company saw its revenues increase substantially compared with the corresponding period of 2013. Management believes that this trend in revenue growth will remain in 2015 due to the considerable decrease in gas prices and the additionnal decrease in interest rates. This should improve considerably consumer spending in 2015.

 


BMTC Group Inc.
Consolidated Comprehensive Income
Years ended December 31, 2014 and 2013
(Unaudited in thousands of Canadian dollars, except per share amounts)




2014


2013



$


$

Revenue


701 356


694 743

Cost of sales


(423 298)


(414 404)

 

Gross profit


278 058


280 339

Other income


631


679

Selling expenses


(185 992)


(183 397)

Administrative expenses


(36 333)


(35 167)

 

Operating profit


56 364


62 454

Realized and unrealized change in fair value of

financial assets, held at fair value


6 526


5 575

Investment income


2 142


7 483

 

Earnings before income tax expense


65 032


75 512

Income tax (recovery) expense


(16 385)


(18 258)

Net earnings


48 647


57 254






Other comprehensive income






Items that will not be reclassified to earnings







Re-measurements of defined benefit pension plans


33 184


(28 037)



Income tax (recovery) expense relating to items that will
not be reclassified


(8 927)


7 541






Other comprehensive income, net of tax


24 257


(20 496)

Total comprehensive income


72 904


36 758











Net earnings per share





Basic


1,08


1,24






Diluted


1,08


1,24


 

BMTC Group Inc.
Consolidated Changes in Equity
Years ended December 31, 2014 and 2013
(Unaudited in thousands of Canadian dollars)





Capital stock


Retained earnings


Total equity




$


$


$

Balance as at January 1, 2014



3 579


194 303


197 882









Share redemption



(27)


-


(27)

Share redemption premium



-


(4 526)


(4 526)

Dividends



-


(10 807)


(10 807)

Transactions with owners



(27)


(15 333)


(15 360)









Net earnings



-


48 647


48 647

Other comprehensive income



-


24 257


24 257

Comprehensive income



-


72 904


72 904

Balance as at December 31, 2014



3 552


251 874


255 426

















Balance as at January 1, 2013



3 730


194 089


197 819









Share redemption



(151)


-


(151)

Share redemption premium



-


(25 609)


(25 609)

Dividends



-


(10 935)


(10 935)

Transactions with owners



(151)


(36 544)


(36 695)









Net earnings



-


57 254


57 254

Other comprehensive income (loss)



-


(20 496)


(20 496)

Comprehensive income



-


36 758


36 758

Balance as at December 31, 2013



3 579


194 303


197 882


 

BMTC Group Inc.
Consolidated Cash Flows
Years ended December 31, 2014 and 2013
(Unaudited in thousands of Canadian dollars)





2014


2013




$


$

OPERATING ACTIVITIES






Earnings before income tax expense



65 032


75 512

Adjustments



(4 164)


(12 720)

Net changes in working capital



12 499


3 485

Taxes paid



(14 661)


(17 845)


Cash flow from operating activities



58 706


48 432







INVESTING ACTIVITIES






Acquisition of other financial assets



(59 120)


(25 320)

Proceeds from disposal of other financial assets



39 638


23 568

Purchase of property, plant and equipment



(9 665)


(7 992)

Proceeds from disposal of property, plant and equipment



90


137

Interest received



484


417

Dividends received



1 617


1 624


Cash flow from investing activities



(26 956)


(7 566)







FINANCING ACTIVITIES






Payments for share redemption



(4 553)


(25 760)

Dividends paid



(10 807)


(10 935)


Cash flow from financing activities



(15 360)


(36 695)







Net change in cash



16 390


4 171

Cash, beginning of year



17 105


12 934

Cash, end of year



33 495


17 105


 

BMTC Group Inc.
Consolidated Statements of Financial Position
As at December 31, 2014 and 2013
(Unaudited in thousands of Canadian dollars)





2014


2013




$


$

ASSETS






Current







Cash



33 495


17 105


Trade and other receivables



3 599


4 632


Current tax assets



165


639


Inventory



82 722


75 544


Prepaid expenses



1 171


940

Current assets



121 152


98 860

Non-current







Other financial assets



124 170


98 058


Property, plant and equipment



103 989


101 715


Defined benefit plan



13 039


-


Deferred tax assets



-


7 663

Total assets



362 350


306 296







LIABILITIES






Current







Trade and other payables



103 454


84 579


Share-based compensation liability



725


519

Current liabilities



104 179


85 098

Non-current







Defined benefit plan



-


22 931


Lease incentive



231


385


Differed tax liabilities



2 514


-

Total liabilities



106 924


108 414







SHAREHOLDERS' EQUITY






Capital stock



3 552


3 579

Retained earnings



251 874


194 303

Total shareholders' equity



255 426


197 882

Total liabilities and shareholders' equity



362 350


306 296


 

Caution regarding forward-looking statements

This Annual Management Report contains certain forward-looking statements with respect to the Company. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", expect", "intend", "may", "plan", "predict", "project", "will", "would", as well as the negative of these terms and similar terminology, including references to assumptions.

Forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons which the Company has identified in the 2014 Annual Information Form under "Narrative Description of the Business - Risk Factors", and other risks detailed from time to time in the Company's continuous disclosure documents.

The reader is cautioned that the factors to which we refer above are not exhaustive of the factors that may affect any of the Company's forward-looking statements. The reader is also cautioned to consider these and other factors carefully and not to put undue reliance on forward-looking statements.

The Company made a number of assumptions in making forward-looking statements in this Annual Management Report. The Company considers the assumptions on which these forward-looking statements are based to be reasonable.

These statements reflect current expectations regarding future events and operating performance and speak only as of the date of release of this Annual Management Report, and represent the Company's expectations as of that date. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.

Non International Financial Reporting Standards (IFRS) financial measures

The Company discloses adjusted net earnings, which includs or excluds certain amounts that are not considered representative of performance measures and financial recurrence of the Company. Management believes that this measure is useful in understanding and analysing the operational performance of the Company.

The Company discloses in this MD&A under the section "Results" a reconciliation between net earnings and adjusted net earnings.

Adjusted net earnings are not an earnings measure recognised by IFRS and does not have a standardised meaning prescribed by IFRS. Therefore, adjusted net earnings as discussed in this MD&A may not be compared to similar measures presented by other issuers. This measure of performance should not be considered as an alternative as an indicator of performance, but rather as additional information.

Same store revenues are not an earnings measure recognised by IFRS and does not have a standardised meaning prescribed by IFRS. Therefore, same store sales as discussed in this MD&A may not be compared to similar measures presented by other issuers.

BMTC Group Inc.'s Class A Subordinate Voting Shares are listed on the Toronto Stock Exchange and through its subsidiaries, ABTM Group Inc. and Ameublements Tanguay Inc., is a major retailer of furniture, electronic goods and household appliances operating in the province of Quebec.

 

SOURCE BMTC Group Inc.

For further information: Mr. Yves Des Groseillers, Chairman, President and Chief Executive Officer, BMTC Group inc., (514) 648-5757

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