United Protection Security Group Inc. - Year end results for 2009
(TSX - V: UZZ)
EDMONTON, May 3 /CNW/ - S. Jorstad, Chairman, President and Chief Executive Officer of United Protection Security Group Inc. ("the Company"), a Canadian based company, trading on the TSX Venture Exchange, under the symbol (TSX-V: UZZ) reports that the Company has released its consolidated financial statements for the year ended December 31, 2009 and the related management's discussion and analysis of financial position and results of operations ("MD&A").
F.Ramsoondar, Chief Financial Officer and Executive Vice President reports that the Company reports its financial results in accordance with Canadian Generally Accepted Accounting Principles ("Canadian GAAP"). However, the Company has included certain non-GAAP financial measures and ratios in this press release that the Company believes will provide useful information in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by Canadian GAAP and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to the other financial measures determined in accordance with Canadian GAAP.
REVENUE
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Year ended December 31
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2009 2008 Change % Change
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Revenue $31,371,201 $28,260,670 $3,110,531 11.01%
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2009 to 2008 comparison
The increase in revenue is attributed the growth the Company experienced in Alberta from the acquisition of the International Airport contract in Edmonton. The Company has engaged a professional marketing and growth specialist to develop and deploy an aggressive marketing and growth strategy in an attempt become one of the dominant specialized security providers in Western Canada.
GROSS PROFIT
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Year ended December 31
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2009 2008 Change % Change
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Gross margin 6,020,433 6,605,665 $(585,232) (8.86%)
% of revenue 19.19% 23.37%
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2009 to 2008 comparison
The decrease in gross profit is attributed to the British Columbia operations which realized a lower that normal gross profit percentage and the loss of some high gross profit yielding accounts in Alberta directly related to the construction industry which experienced a significant slow-down in 2009. The Company is working towards improving the gross profit margin by targeting a specific client base that has been identified in the Company's Marketing and Growth Strategies development process and expects this program to produce results in the second quarter of 2010 and beyond. The Company has also made significant changes to the management of its British Columbia operations which is expected to return the operation to normal levels of profitability.
ADJUSTMENTS TO NET INCOME
As a result of the economic recession in North America that caused a reduction security requirements in 2009 and a number of industry-related developments and risks described under Risks and Uncertainties in the Company's Management Discussion and Analysis dated April 1, 2010 for the fiscal year ended December 31, 2009, and the continued rationalization of the Company's operations, the Company recorded an unusual item during the first and fourth quarters of 2009 and the whole of the financial year ended December 31, 2009. The Company believes that it is useful to set out in detail these unusual and other items as they are non-recurring and thus the Company's financial results for the years ended December 31, 2009 and December 31, 2008 may not be indicative of future results.
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Year ended December 31
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2009 2008 Change
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NET INCOME (LOSS)
(PER CANADIAN GAAP) $(1,450,158) $378,600 $(1,828,758)
Add back - Unusual Items:
Goodwill Impairment 1,045,984 1,045,984
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ADJUSTED NET EARNINGS (LOSS)
(NON-CANADIAN GAAP) $(404,174) $378,600 $(782,774)
Weighted average number of
Shares Outstanding 63,432,134 61,182,753
Adjusted Basic Earnings (Loss)
Per Share $(0.01) $0.01
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Goodwill Impairment
During the first and fourth quarters of 2009, as part of the annual goodwill impairment assessment, the Company determined that the carrying value of goodwill was impaired as a result of significant and sustained decline in the market capitalization of the Company and the loss of revenue in the British Columbia region. The majority of goodwill as stated on the balance sheets had resulted from three acquisitions made by the Company between 2005 and 2008, when market valuations were higher than the fourth quarter of 2009.
The assessment involved using a combination of valuation approaches including a market capitalization approach, a multiples approach and a discounted cash flow approach. The market capitalization approach uses the Company's publicly traded stock price to determine the fair value. The multiples approach uses comparable market multiples to arrive at a fair value and the discounted cash flow method uses revenue and expense projections and risk- adjusted discount rates. The process of determining fair value is subjective and requires management to exercise a significant amount of judgment in determining future growth rates, discount rates and other factors. Management concluded that impairment had occurred, and consequently the Company wrote off a portion of the carrying value of goodwill through a charge to the consolidated statements of income (loss) and comprehensive income (loss) in the amount of $1,045,984. The goodwill impairment charge is non-cash in nature and does not affect the Company's liquidity, cash flows from operating activities, compliance with the debt covenant and is not reflective of the Company's ability to generate future profits and cash flows.
About United Protection Security Group Inc.
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United Protection Security Group Inc. is an established security protection company; focused on high impact, high visibility, and high risk security situations, coupled with one of the broadest ranges of traditional private security services in the industry.
Copies of the consolidated interim financial statements, related MD&A, CEO and CFO 52-109FV1 certification forms can be found on SEDAR at www.SEDAR.com.
Statements in this press release other than purely historical information, including statements relating to the Company's future plans and objectives or expected results, are forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks related to business development and retention, and risks related to the current economic and credit conditions. As a result, actual results may vary materially from those described in the forward-looking statements.
The TSX Venture Exchange has neither approved nor disapproved the information contained herein.
%SEDAR: 00010325E
For further information: pertaining to this press release contact: F.Ramsoondar, CFO and Executive Vice President, (780) 465-8101
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