Roctest reports 2006 fourth quarter and year-end results

    ST-LAMBERT, Qc, March 29 /CNW Telbec/ - Roctest Ltd (TSX: RTT), a leading
manufacturer of high precision sensors and measurement instruments for
demanding applications in the civil engineering, healthcare, energy and
industrial control sectors released its 2006 fourth quarter and year-end
results today.
    Revenues for the fourth quarter ended December 29, 2006, amounted to
$5.05 million compared to $5.28 million for the same quarter in 2005,
representing a 4.5% decrease. Roctest's fourth quarter net loss stood at
$2.33 million or $0.42 per share compared to a net profit of $0.12 million or
$0.03 per share for the same period in 2005. This important loss includes
unusual items for an amount of $1.44 million, or $0.26 per share, and are
detailed below.
    For the year ended on December 29, 2006, the Company's revenues decreased
by 4.4 %, totalling $19.94 million compared to revenues of $20.87 million for
the fiscal year ended December 30, 2005. The Company's net loss reached
$3.59 million or $0.66 per share compared to net profits of $0.2 million or
$0.05 per share for the previous year. This important loss includes unusual
items, taken in the fourth quarter, for an amount of $1.44 million, or $0.26
per share, and are detailed below.
    The decrease in revenues for the year ended December 29, 2006, is
attributed mainly to lower sales from both sectors of the Company. However,
the decrease in the civil engineering sector was particularly significant.
Prior to including the revenues from new subsidiary Smartec SA, acquired in
May 2006, revenues of this sector had declined by $2.4 million when compared
with the preceding year. Revenues from the new subsidiary, since its
acquisition, have reached $1.8 million. The decrease in the industrial sector
using fiber optic sensors was less severe being $0.33 million or 6%. Hence,
the Company recorded a significant loss, attributable to the following

    A decline in prices in both sectors of the Company, in light of increased
competition, resulted in margin erosion.

    The strength of the Canadian dollar against the American and Euro
currencies, when compared with the previous year, resulted in a reduction of
sales and margin for the Company of $1 M.

    When taking into account the amount of losses, particularly the loss of
the fourth quarter, as well as the amount of R&D expenses carry forward for
tax purposes, a charge to reduce the value of the future income tax assets was
recorded for an amount of $1.2 million as at December 29, 2006. Moreover, non
refundable R&D tax credits were not recorded for an amount of $0,48 million,
as opposed to previous years. These charges reflect a conservative valuation
of the timing of realizing these tax benefits over the coming years.

    Sales and administrative expenses increased by $0.8 million. This
increase is mainly attributable to expenses incurred by the new subsidiary for
an amount of $0.28 million, increased expenses related to hirings made towards
the end of the preceding year and for which a full year of expenses was
recorded in 2006, expenses related to a cost reduction program amounting to
$0.18 million and an additional provision for bad debts of $0.25 million, of
which $0.15 million was recorded in the fourth quarter.

    The Company's two sectors showed a very disappointing performance
compared to the previous year. The civil engineering sector had performance
well below expectations in markets which have traditionally been important
such as: Canada, China, France and the Middle-East. Competition from emerging
countries has been felt on prices on international contracts. For the
Industrial sector, increased competition resulted in an important decline in
prices; delays with some OEM (Original Equipment Manufacturer) clients in the
commercialisation of their products in volume resulted in the postponement to
2007 of these OEM revenues anticipated in 2006.
    "Despite a particularly difficult year and some challenges which will
remain for a few quarters, certain achievements in 2006 are encouraging for
the future. FISO started, in 2005, a development program to position itself in
the control process market to supply sensors for the semiconductor market to
world leading customers in this market. These developments generated the first
orders at the end of 2006. We are very confident that FISO will have a solid
growth in 2007 due to new OEM clients and the coming launch of a new
instrumentation platform" stated Roctest's President and CEO, Mr. François
    In May 2006, Roctest acquired Swiss based Smartec SA, a company
recognised for its structural monitoring expertise using distributed fiber
optic sensors. This acquisition allows Roctest to offer the widest array of
monitoring solutions in the market. In addition, Smartec's solutions are
opening new applications and markets for Roctest such as: bridge, overpass,
building, pipeline and other conduit monitoring. Mr. Cordeau added "Smartec's
solutions are now offered by Roctest's whole distribution network, we are
expecting solid growth from this activity in 2007"
    With regards to the traditional sector of Roctest, many challenges remain
with the arrival of emerging country competitors, pressure on prices and the
political instability in the Middle-East, a traditionally important region for
Roctest. "The situation is particularly difficult with Iran since the
imposition of sanctions by the UN. It is now difficult to maintain normal
business relationships with Iran, even though our local agent keeps
identifying tremendous opportunities for Roctest. These sanctions will have
significant negative impact on our financial performance in 2007. The cost
reduction program, implemented in the third quarter, will help offset some of
the loss revenues related to the sanctions. The cost reduction program
includes a reduction of personnel and recurring fixed costs of $1 million
annually for 2007, and an outsourcing program to local and low cost countries.
These activities will be accelerated in 2007 in order to increase Roctest's
competitive position" declared Roctest's President and CEO, Mr. François

    Financial Situation

    As of December 29, 2006, cash and cash-equivalents totalled
$1.33 million, less bank advances, compared to 4.18 million on December 30,
2005. The Company's assets increased to $25,657,060 compared to $24,401,305 in
2005. For the fiscal year 2006, Roctest's working capital decreased standing
at $3,808,100 compared to$9,734,270 for the previous year. This decrease is a
result of the current year loss and the reclassification within current
liabilities of an amount of $2,586,579 representing instalments on long-term
debts due after 2007, which were previously classified as long-term debt. As
the Company does not meet certain debt covenants these have been included in
the current liabilities. Finally, as of December 29, 2006, the long term debt
totalled $775,046 million compared to $1,635,927 in 2005.

    Forward-looking statement

    Except for historical information provided herein, the press release may
contain information and statements of a forward-looking nature concerning the
future performance of the Company. These statements are based on suppositions
and uncertainties as well as on management's best possible evaluation of
future events, and as such involve a number of risk factors. Such factors may
include, without excluding other considerations, risks related to foreign
exchange fluctuations, evolution in customer demand for the Company's products
and services, the impact of price pressure from competitors and general market
trends as well as economic and geopolitical changes. As a result, readers are
advised that actual results may differ from expected results. The Company is
not required to update or revise publicly its forward-looking statements.

    About Roctest

    Roctest designs, manufactures and markets sensors and high-precision
measuring instruments for challenging applications in the civil engineering,
energy, health and industrial control sectors. Its products are mainly sold
internationally. The Company has more than 140 employees and its shares are
listed on the Toronto Stock Exchange under the symbol RTT.

    Financial highlights
                                 Quarter ended          Fiscal year ended
                          December 29  December 30   December 29  December 30
                                 2006         2005          2006        2005
                                    $            $             $           $
    Revenues                5,051,262    5,286,512    19,941,173  20,873,960
    Operating profit
     (loss)                (1,603,345)     206,101    (3,556,501)     84,696
    EBITDA                   (974,843)     697,302    (1,864,730)  1,541,895
    Net profit (loss)      (2,331,313)     119,716    (3,590,465)    207,863
    Net profit (loss)
     per share diluted          (0.42)        0.03         (0.66)       0.05
                               number       number        number      number
    Weighted average
     diluted number of
     shares                 5,455,564    4,525,743     5,455,564   4,525,743

For further information:

For further information: François Cordeau, President and Chief Executive
Officer, Roctest Ltd., (450) 465-1113,,

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