OTTAWA, Feb. 26 /CNW Telbec/ - Seprotech Systems Incorporated (SET-X; "Seprotech") announces the following audited results for the fourth quarter 2009 and fiscal year end.
Three Months Ended Year Ended
Aug 31 Aug 31
2009 2008 2009 2008
(audited) (audited) (audited) (audited)
$ 000 $ 000 $ 000 $ 000
----- ----- ----- -----
Revenue 1,850 2,302 8,358 7,605
Net Income (Loss) (2,473) (605) (3,110) (1,462)
Earnings (Loss) per share (0.07) (0.02) (0.07) (0.03)
"The Company operated in an extremely difficult recessionary environment throughout the 2009 fiscal year" said Martin J. Hauschild, President & CEO. "Our clients in the resource and land development sectors were hard hit, which resulted in many projects being put on hold."
The Company was in a fortunate position entering the year with a strong sales backlog," continued Mr. Hauschild. "This resulted in stable revenues with a 9% increase over the year prior. But our core Rotating Biological Contactor (RBC) sales dropped off considerably in the second half of the year, prompting us to undertake a complete review of our operations and to make adjustments which will be fully realized as we enter the new fiscal year."
Profitability was affected by the delay in seeing the impact of the Company's cost-cost cutting measures, and increased bad debt allowances due to some US clients who have been slow in making final payments. "The most significant component in the loss we are announcing today is the write-down of goodwill of approximately two million dollars," continued M. Hauschild. "Management concluded that the recession had impaired some of our intangible assets and that a major write-down of our goodwill was warranted."
Goodwill was assigned to the RBC products associated with the acquisition of CMS Group Inc. and the RBC business acquired from PJ Hannah Equipment Corp. Goodwill is assessed annually or more frequently if circumstances indicate that its value might be impaired. As a result of the drop in sales and the evolution of the RBC products, forecasted future revenues from the original RBC secondary treatment technology were reduced significantly in the fourth quarter of Fiscal 2009. The Company has therefore decided to reduce the carrying amount of goodwill related to RBC products to $Nil at Fiscal 2009 year-end, leading to a goodwill impairment charge of $2,002,737.
According to Seprotech's Chairman, Jordan Grant, "it should be noted that the future of the wastewater treatment equipment segment of the Company's business is based on Seprotech's improvements to the old RBC designs, including new media, new mechanical designs, and tertiary treatment add-ons such as the denitrification and phosphorous treatment processes that were the subject of recent US patent grants, as well as the Crystal Blue water recycle technology whose patent is still pending."
"Issues related to fee charges for the 2009 and the prior fiscal year with our Auditor, resulted in a delay in the commencement of the annual 2009 audit," said Mr. Hauschild. "In addition, the preparation of Financial Statements for the 2009 fiscal year were more complicated than in previous years due to major personnel changes in the finance department, changes in accounting requirements and the complex financial auditing requirements around the acquisition completed in December 2009 of Envirosearch Operations Inc. As a result, the Company applied for and received from its regulator, the Ontario Securities Commission, a Management Cease Trade Order under part 4 of National Policy 12-203."
"Although it was a difficult year, there were some bright spots," according to Hauschild. "The Company made progress towards its goals of generating 50% of its revenues from recurring sources within two years and at the end of the year this was approximately 35% which is up from 15% in the year prior." The contract with the Canadian Forces to repair and overhaul their inventory of ROWPU mobile water purification system continues, with a number of the ROWPUs having been deployed with the DART team in Haiti. "Moving forward, Management believes that the cost saving and financial restructuring measures taken in fiscal 2009 have positioned the Company to profit from a recovery in infrastructure spending as the economic climate improves and projects are reactivated," concluded Mr. Hauschild.
The TSX Venture Exchange has neither approved nor disapproved of the information contained herein. Some of the statements in this press release, including those relating to the Company's strategies and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates" or similar expressions, are forward-looking statements within the meaning of securities laws. Forward-looking statements include, without limitation, the information concerning possible or assumed future results of operations of the Company. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. The Company does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events, except as required by law.
SOURCE BluMetric Environmental Inc.
For further information: For further information: Mr. Matthew Anderson, Investor Relations, Tel: (613) 523-1641, Fax: (613) 731-0851