Xenos Earns $0.05 in F2009 Third Quarter



    TORONTO, Aug. 12 /CNW/ - Xenos Group Inc. (TSX:XNS) today reported
year-over-year increases in revenues and earnings for the fiscal 2009 third
quarter.
    For the three months ended June 30, 2009, Xenos revenues increased to
$4,434,000 as compared to revenues of $4,152,000 for the same period in 2008.
The third quarter of fiscal 2009 represents twelve consecutive quarters of
year-over-year revenue growth.
    Gross margin in the quarter increased to 84% as compared to 79% in the
same quarter of fiscal 2008. Gross margins benefited from an increase in Xenos
licensed product revenues in the quarter. Xenos Enterprise Server(TM) (ES),
released as a new product October 1, 2008, demonstrated its efficacy in a
variety of different markets during the third quarter.
    The breadth of industry applicability for Xenos ES(TM) solutions is
illustrated by sales during the quarter into several different verticals. In
addition to the previously announced sale to port operator Yusen Terminals
(Los Angeles), Xenos also completed an important sale through its new
distributor, Truenorth Corp., to the Caribbean operations of one of Spain's
largest financial institutions. Xenos recorded the sale of Xenos ES to a
regional healthcare cluster in Ontario, as well as several US-based financial
institutions.
    "Solutions built on the Xenos ES platform can deliver dramatic cost
savings in a variety of ways to enterprises in a wide range of vertical
markets," said Stu Butts, Chairman & CEO of Xenos Group Inc. "There are many
benefits to be derived from Xenos ES implementations such as improved
efficiency through straight-through processing and enhanced customer service
through web-based self-service. But in the current economic environment, our
focus on demonstrable operational cost savings speaks loudest to IT
departments in every vertical."
    Total expenses during the quarter increased to $3,274,000 as compared to
$3,015,000 for the same period one year ago. Sales and marketing expenses
increased 20% as a result of sales force expansion and increased marketing
expenses related to Xenos Enterprise Server, while general and administrative
expenses decreased by 9% under expense management and efficiency initiatives.
    Research and development expenses in the quarter increased 8%
year-over-year to $952,000 from $879,000.
    EBITDA for the period increased 38% to $678,000, as compared to $490,000
in the same period in 2008.
    Xenos reported net income of $547,000 or $0.05 per share, a 126% increase
as compared to net income of $242,000 or $0.02 per share in the third quarter
of fiscal 2008.
    For the nine months ended June 30, 2009, Xenos reported revenues of
$12,726,000, EBITDA of $1,698,000 and net income of $515,000 or $0.05 per
share, as compared to revenues of $12,106,000, EBITDA of $1,469,000 and net
income of $1,017,000 or $0.10 per share for the first nine months of fiscal
2008 respectively.
    Comparative results and revenues continue to be impacted by gyrations in
the value of the Canadian dollar against major trading currencies,
particularly the US dollar. Xenos incurred a foreign exchange loss of $583,000
for the first nine months compared to a gain of $188,000 in the same period
last year. The company currently holds forward contracts to sell US $6,000,000
at $1.15 CAD over the next four quarters. The Canadian dollar closed at 1.163
at June 30, 2009 and all outstanding contracts were marked to market in
accordance with GAAP on that date.
    At June 30, 2009, Xenos held cash of $9,696,000 or $0.97 per common
share, and does not hold significant long-term debt. This compares to
$8,115,000, or $0.81 per common share, at September 30, 2008.
    During the fiscal third quarter, Xenos released Xenos ePresentment(TM)
for IBM(R) Content Manager OnDemand (CMOD), the latest addition to the suite
of Xenos solutions that complement IBM Enterprise Content Management (ECM)
software. Xenos ePresentment provides a seamless interface to IBM CMOD that
expedites the load and retrieval of business-critical content - such as
customer bank, credit card or brokerage statements and insurance declaration
documents - generated in high-volume print stream and image formats.
    "Today, organizations are increasingly being driven to an on-line model
for customer interaction. This requires frictionless web access to accurate,
timely, and pertinent business information of relevance to the customer. Our
clients use Xenos' superior, high speed and scalable solutions to enhance
their customers' on-line experience. This leads to increased customer
retention, increased market share, and demonstrable competitive advantage,"
said Mr. Butts. "The fact that we deliver these forward-looking benefits while
reducing overheads and operating expenses and delivering green benefits allows
us to make good progress in very challenging market conditions."

    
    Financial Highlights - (complete statements are attached):

    -------------------------------------------------------------------------
                                              Three Months       Nine Months
    -------------------------------------------------------------------------
    Period Ended June 30,                    2009     2008     2009     2008
    (in CDN$000s except
     per share amounts)

    Sales                                   4,434    4,152   12,726   12,106
    Gross profit                            3,739    3,268   10,526    9,448
    EBITDA                                    678      490    1,698    1,469
    Net income                                547      242      515    1,017
    Net income per share                     0.05     0.02     0.05     0.10
    Cash & cash equivalents                 9,696    8,493
    Cash per Share                          $0.97    $0.85
    Common Shares Outstanding              10,005   10,005
    -------------------------------------------------------------------------

    See discussion of non-GAAP financial measures below.

    Conference Call Notice
    
    A conference call for shareholders, analysts and other members of the
investment community has been scheduled for August 12 at 10:00am (Eastern
Time). Stuart Butts, Chairman, President & CEO, and George Kypreos, CFO, will
discuss the financial results and provide updates on operations. To
participate, please dial 416-644-3435, or 1-800-594-3615 approximately 10
minutes before the conference call.
    The conference can also be heard over the Internet at www.xenos.com. A
recording of the conference call will be available through August 19. Please
dial 416-640-1917 or 1-877-289-8525 and enter the reservation number 21311854
followed by the number sign to listen to the rebroadcast. The call will also
be archived for 30 days on the Xenos web site at www.xenos.com.

    About Xenos Group Inc.

    Xenos (TSX:XNS) is the market-leading provider of high-performance
software solutions that deliver a superior Return on Information(TM) by
Streamlining Enterprise Information Supply Chains(TM). The company's
solutions, based on the scalable Xenos Enterprise Server(TM) and its
components, process, extract, transform, repurpose and personalize high
volumes of data and documents for storage, real-time access, ePresentment,
printing and delivery in numerous formats across multiple channels. By readily
repurposing, integrating with and extending the business value of existing
technology, infrastructure and business applications, Xenos solutions empower
organizations to adapt to changing market demands. They also improve
operational efficiency, enhance business processes, reduce risk for compliance
management and increase employee productivity with lowered total cost of
ownership both for the enterprise and for its customers. Xenos supports Green
IT initiatives by empowering organizations to "Reduce Reuse Recycle"
information resources.
    Xenos customers are among the largest organizations worldwide, spanning
numerous industries including financial services and insurance. Xenos has
offices in Canada, the United States, the United Kingdom and France and a
global partner network. For more information, visit www.xenos.com.

    Certain statements made in this press release are forward-looking within
the meaning of certain securities laws. Such forward-looking statements are
based on a number of assumptions and involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company or developments in the Company's business or
its industry to differ materially from the anticipated results, performance,
achievements or developments expressed or implied by such forward-looking
statements. The Company urges you not to place undue reliance on these
estimates, opinions and projections. The Company assumes no obligation to
update forward-looking statements if assumptions or these plans, estimates,
opinions or projections should change.
    The Company uses financial measures including, but not limited to,
"EBITDA" to supplement its consolidated financial statements, which are
presented in accordance with GAAP. EBITDA is not a recognized measure under
GAAP and should not be construed as an alternative to net income (loss).
Xenos' method of calculating EBITDA may differ from other companies and
accordingly may not be comparable to measures used by other companies.
    Cash per share is a non-GAAP measure and is calculated by dividing the
cash and cash equivalents by the number of common shares outstanding.

    (C)2009 All rights reserved. Xenos, the Xenos logo, Xenos Enterprise
Server, Xenos ES, Xenos Integrated Document Solution, Xenos IDS, Xenos Loader,
Xenos DSR, Xenos OnLine, Xenos ePresentment, Xenos d2e Vision, Xenos
terminalONE, Streamlining Enterprise Information Supply Chains, and Return on
Information are either registered Trademarks or Trademarks of Xenos Group Inc.
All other trademarks and trade names are the property of their respective
owners.



    
    Xenos Group Inc.
    Consolidated Statements of Operations and Deficit
    (Unaudited)


                         Three Months Ended            Nine Months Ended
                              June 30                       June 30
                        2009           2008           2009           2008
                  ----------------------------- -----------------------------

    Sales          $  4,433,876   $  4,151,593   $ 12,725,892   $ 12,105,546
    Cost of sales       694,563        883,589      2,199,473      2,657,511
                  -------------- -------------- -------------- --------------
    Gross profit      3,739,313      3,268,004     10,526,419      9,448,035
                  -------------- -------------- -------------- --------------
    Expenses
      Sales and
       marketing      1,560,042      1,296,695      4,423,155      3,715,480
      Research and
       development      951,764        878,689      2,790,335      2,479,719
      Administration
       and general      523,943        575,242      1,535,602      1,714,241
      Amortization      204,265        227,699        624,594        720,819
      Stock based
       compensation      25,551         27,195         79,040         69,633
      Interest and
       bank charges       8,091          9,444         27,014         32,379
                  -------------- -------------- -------------- --------------
                      3,273,656      3,014,964      9,479,740      8,732,271
                  -------------- -------------- -------------- --------------

    Income before
     undernoted
     items              465,657        253,040      1,046,679        715,764

    Interest and
     other               12,260         36,130         84,423        177,743
    Foreign
     exchange
     gain (loss)         70,426        (23,243)      (583,236)       188,455
                  -------------- -------------- -------------- --------------
                         82,686         12,887       (498,813)       366,198
                  -------------- -------------- -------------- --------------

    Income before
     income taxes       548,343        265,927        547,866      1,081,962

    Provision for
     income taxes           881         23,689         33,312         64,896
                  -------------- -------------- -------------- --------------

    Net income     $    547,462   $    242,238   $    514,554   $  1,017,066
                  -------------- -------------- -------------- --------------

    Net income per
     common share
      - Basic      $       0.05   $       0.02   $       0.05   $       0.10
      - Diluted    $       0.05   $       0.02   $       0.05   $       0.10

    Weighted
     average
     number of
     shares
      - Basic                                      10,005,444      9,992,267
      - Diluted                                    10,084,450     10,131,355


    -------------------------------------------------------------------------

    Deficit,
     beginning
     of year                                     $(35,710,117)  $(37,206,488)

    Net income                                        514,554      1,017,066
                                                -------------- --------------
    Deficit,
     end of
     period                                       (35,195,563)   (36,189,422)
                                                -------------- --------------



    Xenos Group Inc.
    Consolidated Balance Sheets
    (Unaudited)
                                                            As at
                                                    June 30      September 30
                                                      2009           2008
                                                -----------------------------
    ASSETS
      CURRENT
        Cash and cash equivalents                $  9,696,037   $  8,115,259
        Trade receivables                           2,488,573      2,471,700
        Other receivables                              15,078         23,767
        Non-hedging financial derivatives                   -         82,524
        Prepaids                                      719,642        597,052
        Income taxes recoverable                       94,642         26,766
                                                -------------- --------------
                                                   13,013,972     11,317,068
      LONG TERM
        Future income taxes                         1,207,039      1,193,086
        Capital assets                                943,350        998,436
        Intangibles and other assets                2,075,159      1,999,370
                                                -------------- --------------
                                                    4,225,548      4,190,892
                                                -------------- --------------

    TOTAL ASSETS                                 $ 17,239,520   $ 15,507,960
                                                -------------- --------------

    LIABILITIES
      CURRENT
        Payables and accruals                    $  2,020,284   $  2,259,583
        Income taxes payable                          107,750         97,921
        Deferred revenue                            4,438,687      3,099,644
        Non-hedging financial derivatives              55,772              -
        Current portion - capital lease                18,391         61,170
                                                -------------- --------------
                                                    6,640,884      5,518,318
      LONG TERM
        Capital lease obligations                           -          2,543
        Deferred revenue                               47,079         14,812
        Deferred lease inducements                    111,410        125,734
                                                -------------- --------------
                                                      158,489        143,089

    TOTAL LIABILITIES                               6,799,373      5,661,407

    SHAREHOLDERS' EQUITY
        Capital stock                              45,125,209     45,125,209
        Contributed surplus                           510,501        431,461
        Deficit                                   (35,195,563)   (35,710,117)

                                                -------------- --------------
    TOTAL SHAREHOLDERS' EQUITY                     10,440,147      9,846,553
                                                -------------- --------------

    TOTAL LIABILITIES & EQUITY                   $ 17,239,520   $ 15,507,960
                                                -------------- --------------



    Xenos Group Inc.
    Consolidated Statements of Cash Flows
    (Unaudited)

                         Three Months Ended            Nine Months Ended
                              June 30                       June 30
                        2009           2008           2009           2008
                  ----------------------------- -----------------------------
    Operating
     activities
      Net income   $    547,462   $    242,238   $    514,554   $  1,017,066
      Amortization      204,265        227,699        624,594        720,819
      Unrealized
       foreign
       exchange
       loss (gain)      140,929          3,322        (53,461)       (61,422)
      Unrealized
       (gain) loss
       on non-
       hedging
       financial
       derivatives     (489,639)             -        138,296              -
      Loss on
       disposal of
       capital
       assets               406         14,871            406         14,871
      Future
       income
       taxes             11,404          1,258        (13,953)        (4,471)
      Stock based
       compensation      25,551         27,195         79,040         69,633
      Change in non-
       cash working
       capital         (202,447)       (33,108)       928,866        (42,647)
                  -------------- -------------- -------------- --------------
                        237,931        483,475      2,218,342      1,713,849
                  -------------- -------------- -------------- --------------

    Financing
     activities
      Capital lease
       payments         (15,471)       (20,192)       (45,322)       (66,619)
      Proceeds on
       issue of
       shares                 -              -              -         93,480
                  -------------- -------------- -------------- --------------
                        (15,471)       (20,192)       (45,322)        26,861
                  -------------- -------------- -------------- --------------
    Investing
     activities
      Purchase of
       capital
       assets            (8,927)       (29,470)      (184,635)      (210,454)
      Proceeds on
       disposal of
       capital
       assets                 -            499              -            499
      Development
       costs
       incurred        (110,953)      (185,565)      (461,068)      (455,704)
                  -------------- -------------- -------------- --------------
                       (119,880)      (214,536)      (645,703)      (665,659)
                  -------------- -------------- -------------- --------------
    Effect of
     foreign
     exchange rate
     fluctuations
     on cash and
     cash
     equivalents       (140,929)        (3,322)        53,461         61,422
                  -------------- -------------- -------------- --------------
    Net (decrease)
     increase in
     cash and cash
     equivalents        (38,349)       245,425      1,580,778      1,136,473

    Cash and cash
     equivalents
      Beginning
       of period      9,734,386      8,247,856      8,115,259      7,356,808
                  -------------- -------------- -------------- --------------
      End of
       period      $  9,696,037   $  8,493,281   $  9,696,037   $  8,493,281
                  -------------- -------------- -------------- --------------
    






For further information:

For further information: Editorial Contact: George Kypreos, Xenos Group
Inc., (905) 709-1020, gkypreos@xenos.com; Investor Relations Contact: Cory
Pala, Xenos Group Inc., (416) 657-2400, cpala@xenos.com

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