MONTREAL, Sept. 28, 2012 /CNW Telbec/ - For the fiscal year ended June 30, 2012, Noveko International Inc. (TSX: EKO) (the "Corporation") announces a 3.3% increase in its consolidated revenue which totalled $11.9 million. This growth is due primarily to a 22.4% increase in sales of the filtration segment. The basic and diluted net loss per share from continuing operations amounted to $0.16 for fiscal 2012, compared with $0.18 for the previous year. The basic and diluted net loss per share amounted to $0.17, compared with $0.19 for the previous year and reflects an increase in the weighted average number of outstanding shares due notably to the share issues related to the private placements, representing an additional 7.5 million shares compared with fiscal 2011.
The results of the subsidiary BLI have been treated as discontinued operations up to March 1st, 2012, the date on which the subsidiary was sold. Those of the subsidiary Noveko Algérie, which is expected to be sold in October 2012, are also treated as discontinued operations in the financial statements for the fiscal years ended June 30, 2012 and 2011.
The Corporation has initiated a strategic plan, as set forth below, in order to refocus its operations on its strongest growth segment over the medium and long term, specifically filtration segment in which it has achieved significant breakthroughs in regard to product and market development.
"We remain confident that the strategic plan we are committed to rigorously implement, paves the way for our Corporation's growth over the medium and long term. The team that emerged from the streamlining of our operations is focusing most of its efforts on the filtration segment. We will now allocate most of our resources and investments to this segment in order to open up the best opportunities for our products which have reached their commercial maturity stage. By focusing on these activities and on the markets in which we have an in-depth knowledge of, such as the commercial buildings and transportation markets, the growth will be progressive, but we are confident it will be effective over the medium term," indicated Mr. André Leroux, Chairman of the Board and Chief Executive Officer of the Corporation.
Strategic Plan Summary: In recent quarters, the Corporation has carried on the measures initiated the previous year to improve its operational efficiency and costs control . Despite the progress and the advances in its strongest growth segments, the Corporation's results must still improve significantly. The Corporation has therefore initiated a strategic evaluation process with the objective of capitalizing on its most promising technologies, specifically its air filtration solutions, in order to optimize its value. The Corporation had already outlined this strategic evaluation process in its Management's Report of the third quarter of 2012. It has led to the elaboration of the following measures:
- enhancement of the cost-tightening measures;
- the decision to sell the Corporation's stake in Noveko Algerie in order to recover the advances granted thereto;
- the decision to sell ECM if the Corporation can obtain an attractive price considering its financial obligations but also the financial situation of ECM, which requires further capital investment;
- continuation of ECM's ultrasound scanner distribution activities;
- firm intention to sell the Corporation's significant inventories of masks, respirators and sanitizers as soon as possible and to grant exclusive distribution rights to third parties in order to withdraw from the distribution of these products;
- intensive search for financing for the Corporation, and
- refocus of all the Corporation's human and financial resources in order to facilitate the commercialization of air filtration solutions.
In this context, the Corporation has decided to divest its 70% interest in Noveko Algerie, in consideration for the repayment of all the advances granted thereto by the Corporation, in the amount of $1.4 million. The Corporation already received an amount of $0.4 million in August 2012. This transaction is expected to close in October 2012.
Furthermore, on August 6, 2012, the Corporation executed a Memorandum of Understanding with a French corporation, under which the latter intended to acquire all the shares of ECM, subject to the usual conditions in this type of transaction, including a due diligence of ECM to the satisfaction of the purchaser. The parties have agreed on September 27, 2012, to the final terms of the transaction, subject to the approval by the purchaser's Board of Directors that will be held at the beginning of October. If this transaction is approved, its closing will be held as soon as the pledge granted in favour of Third Eye Capital Corporation on ECM's shares will be cancelled.
The divestment of the Corporation's interests in ECM and Noveko Algerie will enable the Corporation to reduce its debt and to refocus its resources on air filtration. The Corporation will remain a distributor in Canada on an exclusive basis of the ECM ultrasound scanners commercialized under the trade names ImaGyne™, Exago™and Exagyne™, which will require minimal financial and human resources with a potentially attractive source of revenues.
| Analysis of Consolidated Operating Results for the Fiscal Year Ended June 30, 2012 Compared with Consolidated Results for the Fiscal Year Ended June 30, 2011 |
Consolidated revenue for fiscal 2012 was up by 3.3%, primarily reflecting:
- a $0.6 million (22.4%) growth in filtration product sales, which totalled $3,5 million;
- a decrease of approximately $0.2 million in sanitizer sales in relation to the fiscal year ended June 30, 2011. There was also a $0.3 million decrease in medical equipment sales due mainly to a decline in volume attributable to the probe procurement difficulties faced by ECM, an enduring difficult economic situation in the hog market, and the effect of exchange rate fluctuations as the Euro has lost strength in recent months; and
- finally, $0.1 million stemming from the reclassification of a royalty on a former mining investment was recognized for fiscal 2012.
The operating profit margin for fiscal 2012 stood at 36.2%, compared with 37.7% for fiscal 2011. This decline reflects the impact of the margins in the sanitizers and masks segments.
Selling and administrative expenses decreased respectively by $1.3 million (32.4%) and by $1.5 million (17.1%) to $2.8 million and $7.2 million respectively. This reduction partly reflects the cost-control measures implemented during fiscal 2012, notably the restructuring of certain teams.
The loss on slow-turnover inventories amounted to $3.1 million, compared with $2.5 million in 2011, and represented an additional allowance related to the weak turnover of the accumulated inventories of masks and sanitizers subsequent to the rapid end to the A (H1N1) influenza pandemic.
Stock-based compensation for fiscal 2012, which has no impact on the Corporation's cash balance, decreased by $0.5 million to $0.2 million. This reduction can be explained by the smaller number of options granted during the year, a lower exercise price for the options issued more recently, and the gradual recognition of the compensation charge.
Research and development expenses remained stable at $0.6 million.
The impairment of intangible assets amounted to $0.5 million for fiscal 2012, which impairment has no impact on the Corporation's cash balance. It represents the write-off of development expenditures of the medical equipment. For fiscal 2011, a loss of $1.5 million was registered in relation with the write-off of a contract of a commercial agent whose operations have been discontinued and a trademark that is no longer used.
The Corporation has assessed the recoverable value of goodwill and determined that the goodwill related to the CGU of the sanitizers was impaired by $2.3 million ($0.5 million for fiscal 2011). This impairment is attributable primarily to the market conditions in this segment as well as management's decision to withdraw from the distribution of sanitizers and to continue solely as a producer by outsourcing its manufacturing activities.
Operating Profit (Loss) before Amortization, Net Financial Expenses, Income Taxes and Discontinued Operations
In light mainly of the aforementioned factors, the loss before amortization, net financial expenses, income taxes and discontinued operations was reduced by $1.4 million (10.0%), compared to the previous year, to $12.2 million for fiscal 2012, despite a slight revenue growth of 3.3% for the year, a $3.1 million loss on slow-turnover inventories and a $2.3 million impairment of goodwill and a $0.6 million impairment of intangible assets as previously mentioned. Were it not for these non-recurring items in 2012, the loss would have been reduced by a total of $2.8 million. This improvement is due mainly to the following factors:
- overall, it reflects the positive impact of the cost-tightening measures, including the decrease in total payroll resulting from the aforementioned restructuring of teams, as well as the reduction in the stock-based compensation charge of the parent company Noveko International;
- the loss attributable to the sanitizers segment remained relatively stable, reflecting the positive impact of the cost-tightening measures, which offset the aforementioned loss on inventories allocated thereto in the amount of $1.3 million;
- the masks segment's loss decreased by $0.9 million, primarily reflecting the loss on inventories allocated thereto in the amount of $1.4 million; and
- finally, the filtration segment's loss decreased by $0.7 million during fiscal 2012.
Amortization for fiscal 2012 totalled $1.6 million, compared with $2.3 million for the previous year, a decrease of $0.7 million, representing the major write-off of intangible assets recognized in the fourth quarter of 2011.
Net Financial Expenses increased by $1.3 million to $1.4 million. This is primarily attributable to the financial expenses associated with the financing closed in September 2011 and consisting of a credit facility and convertible debentures (for further details, the reader is referred to the section titled Financial Position - Sources and Requirements of Fundsof the Management's Report for fiscal 2012).
Net Earnings (Loss) from Continuing Operations
In light mainly of the aforementioned factors, including non-recurring items such as the $3.1 million loss on slow-turnover inventories, the $0.5 million impairment of intangible assets and the $2.3 million impairment of goodwill attributable to the sanitizers segment, the net loss from continuing operations amounted to $15 million for fiscal 2012, a reduction of $0.3 million (1.8%).
For the fiscal year ended June 30, 2012, a loss of $0.7 million from discontinued operations was recognized, which includes a loss on disposal of BLI of $0.5 million and of $0.2 million from the discontinued operations of Noveko Algérie, compared with a loss of $0.8 million for the previous year. The discontinued operations consist of BLI's accounts up to March 1st, 2012, the date on which the subsidiary was sold, as well as the discontinued operations of Noveko Algérie, the sale of which is scheduled to close in October 2012.
Considering a net change in unrealized foreign exchange gains on translation of the financial statements of self-sustaining foreign operations, which amounted to $0.1 million for fiscal 2012, compared with a net change in unrealized foreign exchange losses of $0.3 million for the previous year, a net loss of $15.8 million represented the comprehensive loss for fiscal 2012.
The loss from continuing operations and net loss per Class A share (basic and diluted) for fiscal 2012 amounted to $0.16 and $0.17, respectively, on a weighted average of 91,946,144 outstanding shares, compared with a loss from continuing operations and a net loss of $0.18 and $0.19 per share, respectively, on a weighted average of 84,472,421 shares for fiscal 2011.The increased weighted average number of outstanding shares is due primarily to the Class A share issues related to the fiscal 2011 private placements.
| Analysis of Consolidated and Segmented Operating Results for the Fourth Quarter of 2012 Compared with the Fourth Quarter of 2011 |
Consolidated revenue for the fourth quarter of 2012 decreased by $0.6 million from the corresponding period of 2011. This variation is due primarily to the following factors:
- a $0.5 million decrease in revenue in the medical equipment segment stemming from a decline in the sales volume attributable to the probe procurement difficulties faced by ECM, the difficult economic context in several markets, as well as the effect of exchange rate fluctuations as the Euro continued to lose strength during the quarter. Furthermore, there was a negative variation of $0.3 million in the masks segment due notably to a $0.2 million adjustment reflecting a second-quarter sales amount not recovered, which did not meet revenue criteria for in accordance with IFRS; and
- sales of filtration products were up by approximately $0.2 million for the fourth quarter over the corresponding quarter of 2011, standing at $1.0 million.
The operating profit margin stood at 8.9% for the fourth quarter of 2012, compared with 27.1% for the fourth quarter of 2011. This decline is due primarily to an adjustment of inventories of $0.3 million in the fourth quarter of 2011 and the pressure on the profit margin of the medical equipment.
Selling expenses decreased by $0.2 million to $0.6 million for the fourth quarter of 2012 and administrative expenses remained stable at $2.3 million. The selling expense reduction reflects primarily the cost-control measures and the implementation of the Strategic Plan.
The loss on slow-turnover inventories amounted to $3.3 million, compared with $2.5 million for the fourth quarter of 2011, and represented an allowance related to the weak turnover of the accumulated inventories related to the masks and sanitizers segments subsequent to the rapid end to the A (H1N1) influenza epidemic, as previously explained.
Stock-based compensation, which has no impact on the Corporation's cash balance, declined by $41,340 for the fourth quarter of 2012, for the aforementioned reasons.
The impairment of intangible assets recognized in the fourth quarter of 2012 primarily reflects the write-off of development expenditures of $0.5 million. This impairment has no impact on the Corporation's cash balance. For fiscal 2011, a loss of $1.5 million was registered in relation with the write-off of a contract of a commercial agent whose operations have been discontinued and a trademark that is no longer used.
The impairment of goodwill recognized in the fourth quarter of 2012 and attributable to the sanitizers segment amounted to $2.3 million, compared with $0.5 million in the fourth quarter of 2011. This impairment has no impact on the Corporation's cash balance.
Operating Profit (Loss) before Amortization, Net Financial Expenses, Income Taxes and Discontinued Operations
In light mainly of the aforementioned factors, notably a $3.3 million loss on slow-turnover inventories, the impairment of intangible assets and the impairment of goodwill, the loss before amortization, net financial expenses, income taxes and discontinued operations totalled $9.0 million for the fourth quarter of 2012, an increase of $2.2 million (32.7%) over the corresponding quarter of the previous year, which was due primarily to an increase in the loss on slow-turnover inventories of $0.7 million and an increase in the impairment of goodwill of $1.9 million. Were it not for the loss on slow-turnover inventories recognized in the fourth quarter of 2012, the impairment of intangible assets and the impairment of goodwill, the loss would have increased by $0.5 million or 22.6%. Segmented changes reflect the following factors:
- a decline in volume due partly to the probe supply problem faced by ECM, the effect of exchange rates for the Euro, as well as the loss pertaining to intangible assets in the medical equipment segment which overall incurred a loss before amortization, net financial expenses income taxes and discontinued operations of $0.9 million in the fourth quarter of 2012, a variance of $0.9 million from the fourth quarter of 2011;
- a $0.1 million loss increase in the filtration segment's reflecting the inventory adjustment in the fourth quarter of 2011;
- the loss attributable to the sanitizers segment totalled $4.4 million, an increase of $1.2 million reflecting the aforementioned allowance for loss on inventories in the amount of $0.8 million, which offset the positive effects of the cost-tightening measures in the segment; and
- the $1.7 million loss in the masks segment, reflecting the allowance for loss on inventories allocated thereto in the amount of $1.5 million.
Amortization expenses remained relatively stable, amounting to $0.3 million for the fourth quarter of 2012.
Net Financial Expenses amounted to $0.6 million for the fourth quarter of 2012, compared with expenses of $34,966 for the fourth quarter of 2011. This increase is primarily attributable to the financial expenses associated with the financing closed in September 2011 and consisting of a credit facility and convertible debentures (for further details, the reader is referred to the section titled Financial Position - Sources and Requirements of Funds of the Management's Report for fiscal 2012).
Net Earnings (Loss) from Continuing Operations
The net loss from continuing operations amounted to $9.6 million for the fourth quarter of 2012, compared with $6.6 million for the corresponding quarter of the previous year, in light mainly of the aforementioned factors, including items such as the loss on slow-turnover inventories of $3.3 million and the impairment of intangible assets of $0.5 million recognized in the fourth quarter of 2012, as well as the goodwill impairment charge attributable to the sanitizers segment for an amount of $2.3 million also recognized in the fourth quarter of 2012, compared with an amount of $0.4 million for the fourth quarter of 2011.
A loss of $0.1 million from discontinued operations consisting primarily of an amount for loss on eventual disposal, as previously described, was recognized in fourth-quarter results, compared with a loss of $0.8 million for the corresponding quarter of the previous year. Consequently, the fourth-quarter net loss amounted to $9.7 million, compared with $7.4 million for the same quarter a year earlier.
Considering a net change in unrealized gains on translation of the financial statements of self-sustaining foreign operations of $23,203 for the quarter, compared with a net change in unrealized gains of $10,457 for the corresponding quarter of the previous year, a net loss of $9.7 million represented the comprehensive loss for the fourth quarter, compared with $7.4 million for the corresponding quarter of the previous year.
The fourth-quarter net loss from continuing operations and net loss per Class A share (basic and diluted) amounted to $0.10 and $0.11, respectively, on a weighted average of 91,946,144 outstanding shares, compared with a loss from continuing operations and a net loss of $0.07 and $0.08 per share, respectively, on a weighted average of 91,946,144 shares for the same quarter a year earlier.
| Financial Position |
For fiscal 2012, operating activities after net change in non-cash working capital items related to continuing operations used cash flows of $3.6 million, compared with a cash outflow of $8.3 million for the previous year, a decrease of $4.7 million. Change in non-cash working capital items for fiscal 2012 represented a cash inflow of $4.6 million, compared with a cash inflow of $2.0 million for the previous year. This change is due primarily to the $2.0 million decrease in inventories, combined with a $0.5 million decrease in accounts receivable and other receivables.
For the fourth quarter of 2012, operating activities after net change in non-cash working capital items related to continuing operations generated cash flows of $0.5 million, compared with a cash outflow of $1.5 million for the corresponding quarter of the previous year. Change in non-cash working capital items represented a cash inflow of $5.5 million, compared with $2.3 million for the fourth quarter of 2011. This change is due primarily to the decrease in inventories, including the loss on slow-turnover inventories, and a decrease in accounts receivable and other receivables.
Financing activities for fiscal 2012 provided cash flows of $3.9 million, compared with $7.3 million for the previous year, a decrease of $3.4 million. This change reflects primarily the difference between the net proceeds of $8.4 million from the Class A share issues related to the fiscal 2011 private placements, less the repayments of bank loans and principal on the long-term debt of $1.2 million, and the cumulative net proceeds of $6.4 million in connection with the credit facility and issue of the secured convertible debentures related to the September 2011 financing, less the repayment of long-term debt and convertible debentures as well as the related interest payments, for a total of $2.4 million.
Financing activities for the fourth quarter ended June 30, 2012 provided cash flows of approximately $2.6 million, whereas they had provided cash flows of $0.6 million for the fourth quarter of 2011, an increase of $2.0 million. This change reflects primarily the net proceeds of $0.6 million from the Class A share issues related to the private placements completed during the fourth quarter of 2011 and the discontinued operations of BLI.
Investing activities for fiscal 2012 provided cash flows of $0.8 million, whereas they had provided cash flows of $1.0 million during the previous year. This change of $0.2 million is due primarily to a decrease in acquisitions of assets during fiscal 2012 compared with 2011, as well as the cash flows related to discontinued operations of $1.7 million on the disposal of some of BLI's assets in 2011.
Investing activities for the fourth quarter of 2012 used cash flows of $2.6 million, whereas they had provided cash flows of $0.8 million for the corresponding period of the previous year. This change is due primarily to the cash flows related to discontinued operations of $1.8 million on the disposal of some of BLI's assets, compared with $55,269 for Noveko Algérie in the fourth quarter of 2012.
Consequently, aggregate cash inflows and outflows for fiscal 2012 provided net cash flows of $1.1 million, whereas they had provided net cash flows of $52,476 for the previous year. The Corporation closed the period with cash and cash equivalents of $1.7 million, of which $1.3 million is presented in assets held for sale, compared with $0.7 million as at June 30, 2011.
Analysis of Statement of Financial Position as at June 30, 2012
The changes in the Corporation's financial position between June 30, 2011 and June 30, 2012 reflect notably the period's results, including the decrease in accounts receivable, the loss on slow-turnover inventories, the impairment and write-off of intangible assets, the receipt of short-term investments and the disposal of two buildings, as previously explained.
As at June 30, 2012, total assets amounted to $22.3 million, down by $13.5 million from June 30, 2011. The changes in the Corporation's financial position between June 30, 2011 and June 30, 2012 notably reflect the period's results, the increase in long-term debt and the secured convertible debentures in connection with the September 28, 2011 financing and the sale of the subsidiary BLI.
Equity totalled $11.1 million as at June 30, 2012, compared with $26.4 million as at June 30, 2010, resulting primarily from the $0.2 million increase related to the equity component of the secured convertible debentures issued in connection with the September 28, 2011 financing, the $0.2 million increase in contributed surplus reflecting the stock-based compensation charge, less a $15.5 million increase in the deficit and the $0.2 million decrease in accumulated other comprehensive income.
Total interest-bearing debt amounted to $5.2 million as at June 30, 2012, an increase of $4.5 million over June 30, 2011. This increase primarily reflects the aforementioned use of the credit facility and the issue of convertible debentures.
Share Capital Information
The Corporation did not issue any Class A shares during fiscal 2012. The Corporation's share capital has therefore not changed since June 30, 2011 and consisted of 91,946,144 Class A shares, as well as at the date of this Management's Report.
Profile of the Corporation
The Corporation specializes in the air filtration segment by providing its clientele with innovative and eco-energetic filtration solutions. As such, through its subsidiaries, the Corporation designs, develops, manufactures and markets air filters incorporating its patented air filtration technologies, which filters are cleanable and recyclable, and have a much longer life span than conventional air filters. These filters are used in farm buildings, in institutional, commercial, industrial and residential buildings, and in the ground and aeronautics transport industry.
Through distributors, the Corporation furthermore continues to commercialize antimicrobial masks and respirators, hands sanitizers and ultrasound scanners for use in human and veterinary medicine.
Certain statements set forth in this press release constitute forward-looking statements. In some cases, these statements are identified by the use of terms such as "may", "could", "might", "intend", "should", "expect", "project", "plan", "believe", "estimate" or other comparable variants. These statements are based on the information available at the time they are written, on assumptions made by management and on the expectations of management, acting in good faith, regarding future events, including those relating to economic conditions, fluctuations in exchange rates and operating expenses, and the absence of unusual events entailing supplementary expenditures. Although management considers these assumptions and expectations reasonable based on the information available at the time they are written, they could prove inaccurate. Forward-looking statements are also subject, by their very nature, to known and unknown risks and uncertainties such as those related to the industry, acquisitions, labor relations, credit, key officers, supply and product liability. The actual results of Noveko International Inc. could differ materially from those indicated or underlying these forward-looking statements. The reader is therefore recommended not to unduly rely on these forward-looking statements. Forward-looking statements do not reflect the potential impact of special items, any business combination or any other transaction that may be announced or occur subsequent to the date hereof. Unless otherwise required under securities laws, the Corporation does not intend and undertakes no obligation to update or revise the forward-looking statements.
The reader is furthermore recommended,before making any decision to purchase or to sell any of the Corporation's securities, to carefully consider the complete statement of the risk factors and uncertainties described in the Management's Report for fiscal 2012 as well as in the Annual Information Form for fiscal 2012, notably with respect to the Corporation's financial position and its sources and requirements of funds.
| The Management's Report, consolidated financial statements and accompanying notes for the fourth quarterand fiscal year ended June 30, 2012 will be filed on SEDAR (www.sedar.com) and available in the Investor Relations section of the Corporation's website (www.noveko.com). |
NOVEKO INTERNATIONAL INC.
Consolidated Statement of Financial Position
June 30, 2012 and 2011 and July 1, 2010
(in Canadian dollars)
| June 30, 2012 |
June 30, 2011 |
July 1, 2010 |
|||||
| Assets | |||||||
| Current assets | |||||||
| Cash | 384,674 | $ | 683,562 | $ | 639,543 | $ | |
| Cash in trust | - | - | 87,787 | ||||
| Short-term investments | 5,881 | 1,146,201 | 2,145,631 | ||||
| Trade and other receivables | 2,676,543 | 4,031,924 | 3,021,793 | ||||
| Current income tax assets | 813 | 104,175 | 4,643 | ||||
| Inventories | 4,388,666 | 9,222,372 | 11,259,316 | ||||
| Prepaid expenses | 512,189 | 663,299 | 627,644 | ||||
| Assets held for sale | 3,119,074 | 3,845,435 | 7,128,515 | ||||
| Total current assets | 11,087,840 | 19,696,968 | 24,914,872 | ||||
| Non-current assets | |||||||
| Property, plant and equipment | 1,421,250 | 2,389,250 | 1,675,321 | ||||
| Intangible assets | 4,902,218 | 6,292,676 | 8,655,859 | ||||
| Goodwill | 4,381,195 | 7,166,395 | 7,420,012 | ||||
| Deferred tax asset | 481,856 | 198,246 | 19,424 | ||||
| Total assets | 22,274,359 | $ | 35,743,535 | $ | 42,685,488 | $ | |
| Liabilities and equity | |||||||
| Current liabilities | |||||||
| Bank loans | - | $ | - | $ | 167,011 | $ | |
| Term note | - | 90,000 | - | ||||
| Trade and other payables | 4,793,685 | 4,514,015 | 3,801,984 | ||||
| Current portion of provisions | 67,946 | - | - | ||||
| Current portion of long-term debt | 3,215,488 | 350,345 | 475,432 | ||||
| Secured convertible debentures | 2,005,641 | - | - | ||||
| Liabilities held for sale | 260,772 | 3,374,547 | 3,533,735 | ||||
| Total current liabilities | 10,343,532 | 8,328,907 | 7,978,162 | ||||
| Non-current liabilities | |||||||
| Long-term debt | - | 273,741 | 803,647 | ||||
| Provisions | 150,044 | - | - | ||||
| Deferred tax liability | 627,839 | 748,798 | 830,291 | ||||
| Total liabilities | 11,121,425 | 9,351,446 | 9,612,100 | ||||
| Equity | |||||||
| Share capital | 103,540,806 | 103,540,806 | 95,620,532 | ||||
| Equity component of secured convertible debentures | 206,435 | - | - | ||||
| Warrants | 3,877,363 | 3,877,363 | 3,348,000 | ||||
| Contributed surplus | 24,062,376 | 23,874,177 | 23,139,334 | ||||
| Accumulated other comprehensive income | 118,398 | 253,309 | - | ||||
| Deficit | (120,616,572) | (105,153,566) | (89,034,478) | ||||
| Equity attributable to the shareholders of Noveko International Inc. | 11,188,806 | 26,392,089 | 33,073,388 | ||||
| Non-controlling interests | (35,872) | - | - | ||||
| Total equity | 11,152,934 | 26,392,089 | 33,073,388 | ||||
| Total liabilities and equity | 22,274,359 | $ | 35,743,535 | $ | 42,685,488 | $ | |
NOVEKO INTERNATIONAL INC.
Consolidated Statement of Earnings
Years ended June 30, 2012 and 2011
(in Canadian dollars)
| June 30, 2012 |
June 30, 2011 |
||||||
| Revenue | 11,936,923 | $ | 11,553,290 | $ | |||
| Cost of sales | 7,610,274 | 7,200,299 | |||||
| Gross profit | 4,326,649 | 4,352,991 | |||||
| Selling expenses | 2,809,284 | 4,157,711 | |||||
| Administrative expenses | 7,187,803 | 8,675,439 | |||||
| Provision for slow-moving inventories | 3,050,681 | 2,520,411 | |||||
| Research and development, net of tax credit | 632,046 | 637,883 | |||||
| Intangible assets impairment charge and write-off | 535,867 | 1,458,113 | |||||
| Goodwill impairment charge | 2,329,357 | 492,202 | |||||
| Other revenue | - | (19,392) | |||||
| 16,545,038 | 17,922,367 | ||||||
| Operating loss before amortization, net financial expenses, income taxes and discontinued operations | (12,218,389) | (13,569,376) | |||||
| Amortization | 1,639,390 | 2,263,988 | |||||
| Operating loss | (13,857,779) | (15,833,364) | |||||
| Financial expenses | 1,427,711 | 168,526 | |||||
| Financial income | (822) | (2,555) | |||||
| Foreign exchange loss (gain) | 96,234 | (431,206) | |||||
| 1,523,123 | (265,235) | ||||||
| Loss before income taxes and discontinued operations | (15,380,902) | (15,568,129) | |||||
| Income taxes: | |||||||
| Current | - | (1,865) | |||||
| Deferred | (397,792) | (313,283) | |||||
| (397,792) | (315,148) | ||||||
| Net loss from continuing operations | (14,983,110) | (15,252,981) | |||||
| Net loss from discontinued operations | (681,808) | (756,481) | |||||
| Net loss | (15,664,918) | $ | (16,009,462) | $ | |||
| Net loss attributable to shareholders of Noveko International Inc. | |||||||
| Resulting from continuing operations | (14,983,110) | (15,252,981) | |||||
| Resulting from discontinued operations | (617,405) | (756,481) | |||||
| Net loss attributable to non-controlling interests | |||||||
| Resulting from discontinued operations | (64,403) | - | |||||
| (15,664,918) | $ | (16,009,462) | $ | ||||
| Basic and diluted earnings per share: | |||||||
| Continuing operations | (0.16) | $ | (0.18) | $ | |||
| Discontinued operations | (0.01) | (0.01) | |||||
| Total | (0.17) | $ | (0.19) | $ | |||
| Weighted average number of outstanding shares, basic and diluted | 91,946,144 | 84,472,421 | |||||
| NOVEKO INTERNATIONAL INC. Consolidated Statement of Comprehensive Income |
|||||||
| June 30, 2012 |
June 30, 2011 |
||||||
| Net loss for the year | (15,664,918) | $ | (16,009,462) | $ | |||
| Other comprehensive income (loss): | |||||||
| Net change in unrealized gains (losses) on the translation of foreign operations | (134,911) | 253,309 | |||||
| Total comprehensive income (loss) for the year | (15,799,824) | $ | (15,756,153) | $ | |||
| Total comprehensive income attributable to shareholders of Noveko International Inc. | (15,751,233) | $ | (15,756,153) | $ | |||
| Total comprehensive income attributable to non-controlling interests | (48,591) | - | |||||
| (15,799,824) | $ | (15,756,153) | $ | ||||
| NOVEKO INTERNATIONAL INC. Consolidated Statement of Cash Flows |
|||||||
| June 30, 2012 |
June 30, 2011 |
||||||
| Cash flows from operating activities: | |||||||
| Net earnings | (15,664,918) | $ | (16,009,462) | $ | |||
| Net earnings from discontinued operations | (681,808) | (756,481) | |||||
| Net earnings from continuing operations | (14.983,110) | (15,252,981) | |||||
| Adjustments for: | |||||||
| Depreciation of property, plant and equipment | 498,858 | 460,982 | |||||
| Amortization of intangible assets | 1,140,532 | 1,803,006 | |||||
| Loss on disposal of property, plant and equipment | 475,398 | 191,699 | |||||
| Intangible asset impairment charge and write-off | 535,867 | 1,458,113 | |||||
| Goodwill impairment charge | 2,329,357 | 492,202 | |||||
| Income taxes | (397,792) | (315,148) | |||||
| Financial expenses | 911,086 | 168,526 | |||||
| Share-based payment | 184,575 | 694,741 | |||||
| Gain on short-term investments | - | (148) | |||||
| Imputed interest on secured convertible debentures and credit facility | 516,625 | - | |||||
| Foreign exchange loss (gain) | 164,758 | (767) | |||||
| (8,623,846) | (10,299,775) | ||||||
| Change in non-cash working capital items | 4,598,739 | 2,045,693 | |||||
| (4,025,107) | (8,254,082) | ||||||
| Interest paid | (467,701) | (175,110) | |||||
| Income taxes received (paid) | (53,167) | 6,135 | |||||
| (4,545,975) | (8,423,057) | ||||||
| Cash flows on discontinued operations | 983,265 | 119,432 | |||||
| (3,562,710) | (8,303,625) | ||||||
| Cash flows from investing activities: | |||||||
| Receipts on short-term investments | 1,140,000 | 2,590,000 | |||||
| Acquisition of short-term investments | - | (1,590,000) | |||||
| Receipt on disposal of a subsidiary | 179,550 | - | |||||
| Acquisition of property, plant and equipment | (243,636) | (1,196,535) | |||||
| Proceeds of disposal of property, plant and equipment | 13,094 | 24,259 | |||||
| Acquisition of intangible assets | (340,887) | (550,553) | |||||
| Cash flows on discontinued operations | 24,584 | 1,740,299 | |||||
| 772,705 | 1,017,470 | ||||||
| Cash flows from financing activities: | |||||||
| Net change in bank loans | - | (179,439) | |||||
| Net change in term note | (90,000) | 90,000 | |||||
| Repayment of long-term debt capital | (1,594,550) | (984,602) | |||||
| New long-term debt, net of financing expenses | 4,057,440 | 200,000 | |||||
| Issuance of secured convertible debentures, net of financing expenses | 2,493,961 | - | |||||
| Repayment of convertible debentures | (670,000) | - | |||||
| Issuance of Class A shares and warrants | - | 8,449,638 | |||||
| Share and secured convertible debentures issuance expenses | (20,260) | (91,496) | |||||
| Cash flows on discontinued operations | (310,502) | (144,518) | |||||
| 3,866,089 | 7,339,583 | ||||||
| Net increase (decrease) in cash | 1,076,084 | 53,428 | |||||
| Cash, beginning of year | 683,562 | 639,543 | |||||
| Translation difference in cash | (41,473) | (9,409) | |||||
| Cash, end of year | 1,718,173 | $ | 683,562 | $ | |||
SOURCE: NOVEKO INTERNATIONAL INC.
Andre Leroux
Chairman of the Board and Chief Executive Officer
Tel: (514) 875-0606
http://www.noveko.com
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