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Advantex Marketing International Inc. - Net Profit caps year of operational and financial accomplishments


News provided by

Advantex Marketing International Inc.

Oct 29, 2018, 20:24 ET

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  • Gross margin up 4.7% to 68.7%
  • Earnings from operations before depreciation, amortization and interest up 185.3% to $917,915
  • Loss before non-recurring item down 52.7% to $570,805
  • Net profit of $1,224,298 compared to Net loss of $1,206,347

TORONTO, Oct. 29, 2018 /CNW/ - Advantex Marketing International Inc. (CSE: ADX), a specialist in marketing loyalty-reward programs, announced its results for the twelve months ended June 30, 2018.

Operational and Financial Accomplishments

  • In December 2017 completed a successful financial restructuring with the support of its financial partners and staff. The resulting financial stability was the outcome of softer financial terms including forgiveness of unpaid debentures interest and penalty, additional working capital and multi-year terms. The re-financed $5.6 m debentures and $8.5 m line of credit facility terms expire December 2021.
  • In March 2018 able to extend the term of its agreement with TD to March 2020.
  • In July 2018, in response to its 2013 notice, received response from CRA confirming the appropriateness of its treatment of GST/HST subsequent to fiscal year 2007. This removed a financial uncertainty.
  • In August 2018 the staff salary reductions, implemented a year earlier, were completely rolled back.
  • All severance liabilities resulting from rightsizing the organization were fully settled.
  • Payment plans were agreed with key suppliers including with affinity partners CIBC, TD and Aimia and were either completed or are running per the agreed terms.
  • Since January 2018 the task of building a sales organization and refreshing the product is progressing quite well and this is expected to result initially in stability and then growth in merchant participation during the next fiscal year.

Improved Financial Performance


Fiscal 2018


Fiscal 2017


Change


Change


$


$


$


%

Revenues

$

7,586,757


$

9,150,012


$

(1,563,255)


-17.1%

Direct expenses












Cost of cardholder rewards and marketing in connection with merchant based loyalty programs

$

2,085,541


$

2,545,735


$

(460,194)


-18.1%


Expense for provision against delinquent accounts

$

289,429


$

603,339


$

(313,910)


-52.0%

Gross profit

$

5,211,787


$

6,000,938


$

(789,151)


-13.2%

Selling and General & Administrative expenses

$

4,293,872


$

5,679,180


$

(1,385,308)


-24.4%

Earnings from operations before depreciation, amortization and interest

$

917,915


$

321,758


$

596,157


185.3%

Stated interest expense - loan payable, and debentures

$

1,183,185


$

1,304,971


$

(121,786)


-9.3%

(Loss) from operations before depreciation, amortization and non-cash interest

$

(265,270)


$

(983,213)


$

717,943


-73.0%

Depreciation, amortization and non-cash interest expense

$

305,535


$

223,134


$

82,401



(Loss) and comprehensive (loss) before non-recurring item

$

(570,805)


$

(1,206,347)


$

635,542


-52.7%

Non-recurring item - gain on debt restructuring

$

1,795,103


$

-


$

1,795,103



Net profit/(loss) and comprehensive profit/(loss)

$

1,224,298


$

(1,206,347)


$

2,430,645


201.5%












Fuller details available in the Consolidated Financial Statements and MD&A available under Advantex's profile on www.sedar.com

The above tabulation is a non-GAAP presentation and is provided to assist readers in understanding Advantex's financial performance. The information is extracted from consolidated financial statements for the year ended June 30, 2018.

Outlook

"We have a great product valuable for small merchants and credit card customers of our affinity partners. The recent bid for Aimia's Aeroplan business by Air Canada led consortium which includes CIBC, TD and Visa demonstrates the importance of reward currency to credit card issuers. Our product gives merchants (i) access to data driven targeted marketing to CIBC/TD credit card customers, (ii) ability to seamlessly issue reward currencies to their customers, and (iii) access to unsecured working capital, supported by proprietary IT system that meets the exacting standards of our affinity partners. We build merchants coalitions in neighbourhoods across Canada.  Our existing merchant portfolio, multi-year relationships with affinity and financial partners, dedicated staff and financial stability are our strengths.  As we continue to re-build our sales organization and refresh our product I expect the growth in merchant portfolio to gradually pick up pace during the next fiscal year," said Kelly Ambrose, President and CEO of Advantex.

About Advantex:

Advantex provides specialized marketing programs that enable members of affinity groups to earn frequent-flyer miles and other loyalty rewards through purchases at participating merchants.

Through partnerships with Aeroplan, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Caesars Entertainment, Advantex has contractual access to millions of consumers with above-average personal and household income. Advantex also has partnerships with about 950 merchants in Canada and the US.

Advantex shares trade on the Canadian Securities Exchange under the symbol ADX. For more information, go to www.advantex.com

Forward-Looking Information

This news release contains "forward-looking statements" within the meaning of applicable securities laws relating to the future business and operations of Advantex, including expectations of stability and growth in merchant participation during next fiscal year. Actual results and developments may differ materially from those contemplated by these statements. The business and operations of Advantex described herein is dependent on a number of factors and is subject to a number of risks and uncertainties. Factors that could cause actual results to differ materially include those listed under "Working Capital and Liquidity Management", "General Risks and Uncertainties" and "Economic Dependence" in Advantex's Management's Discussion and Analysis for the twelve months ended June 30, 2018.

The statements in this news release are made as of the date of this release. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and Advantex undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.

Advantex Marketing International Inc.
Consolidated Statements of Financial Position
(expressed in Canadian dollars)


Note

June 30, 

2018


June 30, 

2017



$


$

Assets







Current assets







Cash and cash equivalents


$

635,836


$

367,357

Accounts receivable

12 a


112,322



180,517

Transaction credits 

12 a


5,592,426



5,549,712

Inventory

5


-



35,038

Prepaid expenses and sundry assets



79,349



82,413



$

6,419,933


$

6,215,037








Non-current assets







Property, plant and equipment

6 a

$

43,969


$

72,142

Intangible assets

6 b


-



921



$

43,969


$

73,063








Total assets


$

6,463,902


$

6,288,100








Liabilities







Current liabilities







Loan payable 

7

$

4,427,390


$

4,476,421

Accounts payable and accrued liabilities



2,843,718



3,232,134

12% Non-convertible  debentures payable 

8


-



5,159,000



$

7,271,108


$

12,867,555








Non-current liabilities







9% Non-convertibles debentures payable

8

$

4,547,951


$

-



$

4,547,951


$

-








Total liabilities


$

11,819,059


$

12,867,555








Shareholders' deficiency







Share capital 

9

$

24,530,555


$

24,530,555

Contributed surplus

10 b


4,090,382



4,090,382

Accumulated other comprehensive loss



(47,383)



(47,383)

Deficit



(33,928,711)



(35,153,009)

Total deficiency


$

(5,355,157)


$

(6,579,455)








Total liabilities and deficiency


$

6,463,902


$

6,288,100

Economic and Financial dependence (note 2) and 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 Ambrose

Advantex Marketing International Inc.
Consolidated Statements of Profit/(Loss) and Comprehensive Profit/(Loss)
For the years ended June 30, 2018 and 2017
(expressed in Canadian dollars)


Note

2018


2017



$


$








Revenues

18

$

7,586,757


$

9,150,012

Direct expenses

17/18


2,374,970



3,149,074




5,211,787



6,000,938

Operating expenses







Selling and marketing

17/18


1,881,386



1,974,282

General and administrative

17/18


2,412,486



3,704,898

Earnings from operations before depreciation,

amortization and interest



917,915



321,758








Interest expense:







Stated interest expense - loan payable, and debentures

7/8


1,183,185



1,304,971

Non-cash interest expense (accretion charges) and

restructuring bonus related to debentures

8


272,562



60,227




(537,832)



(1,043,440)

Depreciation of property, plant and equipment, and

amortization of intangible assets

6 a/b


32,973



162,907

(Loss) and comprehensive (loss) before non-recurring

item


$

(570,805)


$

(1,206,347)

Gain on debt restructuring

8

$

1,795,103


$

-

Net profit/(loss) and comprehensive profit/(loss)


$

1,224,298


$

(1,206,347)








Profit/(Loss) per share







Basic and Diluted

16

$

0.00


$

(0.01)

The accompanying notes are an integral part of these consolidated financial statements

Advantex Marketing International Inc.
Consolidated Statements of Changes in Shareholders' Deficiency
For the years ended June 30, 2018 and June 30, 2017
(expressed in Canadian dollars)



Class A

preference

shares



Common

shares



Contributed

surplus



Accumulated

other comprehen -

sive loss



Deficit



Total



$



$



$



$



$



$



















Balance - July 1, 2016

$

3,815


$

24,526,740


$

4,090,382


$

(47,383)


$

(33,946,662)


$

(5,373,108)

Net loss and comprehensive loss


-



-



-



-



(1,206,347)



(1,206,347)

Balance - June 30, 2017

$

3,815


$

24,526,740


$

4,090,382


$

(47,383)


$

(35,153,009)


$

(6,579,455)





































Balance - July 1, 2017

$

3,815


$

24,526,740


$

4,090,382


$

(47,383)


$

(35,153,009)


$

(6,579,455)

Net profit and comprehensive profit


-



-



-



-



1,224,298



1,224,298

Balance - June 30, 2018

$

3,815


$

24,526,740


$

4,090,382


$

(47,383)


$

(33,928,711)


$

(5,355,157)

The accompanying notes are an integral part of these consolidated financial statements

Advantex Marketing International Inc.
Consolidated Statements of Cash Flow
For the years ended June 30, 2018 and 2017
(expressed in Canadian dollars)


Note

June 30, 2018


June 30, 2017



$


$

Operational activities







Net profit/(loss) for the year


$

1,224,298


$

(1,206,347)

Adjustments for:







Depreciation of property, plant and equipment, and

amortization of intangible assets

6 a/b


32,973



162,907

Accretion charge for debentures

8


142,638



60,227

Restructuring bonus for debentures

8


129,924



-

Non-cash portion of gain on debt restructuring

8


(1,283,611)



-




246,222



(983,213)

Changes in items of working capital








Accounts receivable



68,195



244,885


Transaction credits 



(42,714)



1,802,550


Inventory



35,038



4,876


Prepaid expenses and sundry assets



3,064



21,271


Accounts payable and accrued liabilities



(388,416)



(324,844)




(324,833)



1,748,738

Net cash (used in)/provided by operating activities


$

(78,611)


$

765,525








Investing activities







Purchase of property, plant and equipment, and intangible

assets


$

(3,879)


$

-

Net cash (used in) investing activities


$

(3,879)


$

-








Financing activities







Proceeds - 9% Non-convertibles debentures

8

$

400,000


$

-

Repayment of loan payable

7

$

(49,031)


$

(1,056,846)

Net cash generated from/(used in) financing activities


$

350,969


$

(1,056,846)








Increase/(Decrease) in cash and cash equivalents during

the year


$

268,479


$

(291,321)

Cash and cash equivalents at beginning of the year



367,357



658,678

Cash and cash equivalents at end of the year


$

635,836


$

367,357








Additional information







Interest paid 


$

859,720


$

1,023,348








Cash


$

635,836


$

367,357

The accompanying notes are an integral part of these consolidated financial statements

SOURCE Advantex Marketing International Inc.

Mukesh Sabharwal, Vice-President and Chief Financial Officer, Tel: 905-470-9558 ext. 249, Email: [email protected]

Related Links

http://www.advantex.com

Modal title

Organization Profile

Advantex Marketing International Inc.

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