Record consolidated revenue of $5.3 million, of which $3.8 million in medical equipment sales
Filtration sales up by 44% and net loss down by 47%
MONTREAL, Feb. 14, 2012 /CNW Telbec/ - Noveko International Inc. (TSX: EKO) (the "Company") today announces the results for its second quarter ended December 31, 2011.
"We are pleased to report record quarterly sales of $5.3 million, an increase of 6%, and a significant reduction in the loss, which declined by 47% for the quarter and six-month period. We benefited from the contribution of our medical equipment segment, whose efforts were rewarded by an unprecedented sales level of $3.8 million for this quarter, as well as our air filtration products, whose sales grew by 44%, attesting to the advances in this growth sector. The Group's negative EBITDA of $0.4 million represents a 79% improvement and reflects the positive impact of the cost-tightening measures taken since the previous fiscal year. Thus, although we have not yet achieved our profitability objectives, we are getting closer and are stepping our efforts to do so," indicated Mr. André Leroux, Chairman of the Board and Chief Executive Officer of the Company.
Operating Highlights
- Filtration segment: sales up by 44% for the quarter and by 49% for the six-month period, reflecting the advances in the commercial and institutional markets, as well as the orders obtained from the Quebec swine industry;
- Medical equipment segment: record sales of $3.8 million and EBITDA of $0.7 million for the quarter, reflecting the improvement in ultrasound scanner sales after a more difficult first quarter of 2012, as well as the delivery by Noveko Algérie of most of the orders to the NOEAHP;
- Delivery of the order worth more than $0.2 million of Microban® hand sanitizers and Noveko™ antimicrobial masks to the healthcare market;
- In order to reduce costs and optimize operations, the head office and Noveko's activities will move from downtown Montreal to new offices located in Boucherville, Quebec, near Noveko Filtration's premises.
- Sale of BLI: Subsequent to the offer received by the Company in September 2011, the closing of the sale of the shares it held in BLI is scheduled for no later than February 24, 2012, for a consideration of $1. The terms of the transaction also include the assumption of BLI's guaranteed debts, thereby releasing the Company from its surety bonds and guarantees toward BLI's creditors.
Financial Highlights
For the second quarter and first six months of the current fiscal year, and in comparison with the corresponding periods of the previous year:
- Record consolidated revenue up by 6% to $5.3 million, and up by 6% to $8.3 million;
- Gross margin up to 46.5 % (vs. 38.7 %) and to 42.7 % (vs. 40.8 %);
- Operating loss before amortization, net financial expenses and income taxes (EBITDA(1)) down by 79% to $0.4 million, and down by 61% to $1.7 million;
- Net loss from continuing operations down by $1.3 million (47%) to $1.5 million, and down by $2.5 million (44%) to $3.1 million;
- Net loss down by $1.3 million (47%) to $1.5 million, and down by $2.7 million (47%) to $3.1 million.
_______________________________________________________________________________________________________________________
1) EBITDA is not a measure established in accordance with IFRS. This measure is used because it enables management to assess the Company's operational performance. This measure is a widely accepted financial indicator of a company's ability to repay and assume its debt. Investors should not regard it as an alternative to revenues from continuing operations or net earnings, an indicator of operating results or cash flows, or a measure of liquidity. As this measure is not established in accordance with IFRS, it might not be comparable to those of other companies.
Selected Consolidated Information
Statement of Earnings Data (in thousands of $, except per-share amounts)
| Periods Ended December 31 | Three Months | Six Months | |||||||
| (unaudited) | 2011(1) | 2010 | 2011(1) | 2010 | |||||
| Revenue | 5,322 | 5,026 | 8,270 | 7,772 | |||||
| Gross profit | 2,475 | 1,946 | 3,533 | 3,172 | |||||
| Operating profit before amortization, net financial expenses and income taxes (2) (3) |
(375) | (1,805) | (1,696) | (4,301) | |||||
| Net earnings from continuing operations | (1,472) | (2,760) | (3,142) | (5,654) | |||||
| Net earnings from discontinued operations(4) | (52) | (101) | 32 | (188) | |||||
| Net earnings | (1,525) | (2,861) | (3,111) | (5,842) | |||||
| Earnings per Class A share (basic and diluted) | |||||||||
| From continuing operations | $ | (0.02) | $ | (0.03) | $ | (0.03) | $ | (0.07) | |
| From discontinued operations(4) | $ | (0.00) | $ | (0.00) | $ | (0.00) | $ | (0.00) | |
| Total | $ | (0.02) | $ | (0.03) | $ | (0.03) | $ | (0.07) | |
| Weighted average number of outstanding Class A shares, basic and diluted (in thousands) |
|
91,946 |
|
84,369 |
|
91,946 |
|
80,188 |
|
Statement of Financial Position Data (in thousands of $)
| December 30 2011 |
June 30 2011 |
||
| Total assets | 35,564 | 35,744 | |
| Equity | 23,475 | 26,392 | |
| Total interest-bearing debt(5) | 5,031 | 714 | |
| Cash, cash equivalents, cash in trust | 2,473 | 1,830 |
| (1) | The consolidated financial statements include the accounts of the Company and its subsidiaries. |
| (2) | Operating profit (loss) before amortization, net financial expenses and income taxes (EBITDA) is not a measure established in accordance with IFRS. Unless otherwise indicated, the financial information presented in this press release, including tabular amounts, is prepared in accordance with IFRS. This measure is used because it enables management to assess the Company's operational performance. This measure is a widely accepted financial indicator of a company's ability to repay and assume its debt. Investors should not regard it as an alternative to revenues from continuing operations or net earnings, an indicator of operating results or cash flows, or a measure of liquidity. As this measure is not established in accordance with IFRS, it might not be comparable to those of other companies. |
| (3) | Including stock-based compensation of $52,181, $139,283, 16,238 $ and 447,199 $ for the respective periods of fiscal 2012 and fiscal 2011, which have no impact on the cash balance. |
| (4) | Related to BLI's operations. |
| (5) | Including long-term debt and its current portion, bank loans, the term note and secured convertible debentures; excluding the data related to BLI. |
___________________________________________________________________________________________________________
In this press release, unless otherwise indicated or required by the context, "Noveko International", "the Company", "we", "us", "our", "our Company", "the Group" and "our Group" designate, as the case may be, Noveko International Inc. or Noveko International Inc. and its subsidiaries, and "Noveko" designates Noveko Inc., a subsidiary of the Company. The Company's other subsidiaries are designated as follows: "ECM" for S.A.S. E.C.M., "Epurair" for Epurair Inc., "Noveko Algérie" for SARL Noveko Algérie, "Noveko Beijing" for Noveko (Beijing) Hi-Tech Development Limited, "Noveko Taiwan" for Noveko Taiwan Co., Ltd., "Noveko Trading" for Noveko Trading 2008 LLC, "Purer Life" for Purer Life Technology Co., Ltd. and "BLI" for Bolduc Leroux Inc. Also, the second quarter and the six-month period ended December 31, 2011, as well as the corresponding periods ended December 31, 2010, are sometimes designated by the terms "second quarter of 2012" and "first six-month of fiscal 2012", as well as "first quarter of 2011" and "first six-month of fiscal 2011", whereas the fiscal year ending June 30, 2012 and those ended June 30 of prior years are sometimes designated by the terms "fiscal 2012", "fiscal 2011" and so on.
_______________________________________________________________________________________________________
The changeover to International Financial Reporting Standards ("IFRS") was implemented for the periods beginning July 1st, 2011. The Company's consolidated financial statements for the year ended June 30, 2012 will be the first annual IFRS consolidated financial statements, whereas previously the financial statements and accompanying notes were prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). Comparative data for the quarterly and annual financial statements for fiscal 2011, as well as for the opening statement of financial position as at July 1st, 2010, have been restated to reflect the retrospective adoption of IFRS effective July 1st, 2010.
| Analysis of Operating Results |
Second Quarter of 2012 Compared with the Second Quarter of 2011 (Unaudited)
Our segmented information is reported based on the following business segments: medical equipment ("medical equipment"), sanitizers ("sanitizers"), antimicrobial surgical masks and respirators ("masks") and filtration products ("filtration"). The item "other" has been added to make a reconciliation between the information relating to the various business segments and the information appearing in our consolidated financial statements. This item consists primarily of the activities of the parent company, Noveko International, and of Noveko Trading ("other"). Furthermore, the results of operations of BLI have been withdrawn from continuing operations to be treated as discontinued operations in the Company's financial statements. The assets and liabilities related to BLI have been reclassified as assets and liabilities held for sale.
| Consolidated and Segmented Revenue | ||||||||
| Periods Ended December 31 | Three Months | Six Months | ||||||
| 2011 | 2010 | 2011 | 2010 | |||||
| Medical equipment | $ | 3,775,927 | $ | 3,658,272 | $ | 5,755,420 | $ | 5,933,252 |
| Sanitizers | 296,395 | 716,743 | 354,106 | 588,820 | ||||
| Masks | 310,446 | 74 | 320,130 | 14,677 | ||||
| Filtration | 939,168 | 650,462 | 1,840,086 | 1,235,730 | ||||
| Total | $ | 5,321,936 | $ | 5,025,551 | $ | 8,269,742 | $ | 7,772,479 |
Consolidated revenue for the second quarter of 2012 rose to an all-time high of $5.3 million, up by $0.3 million (6%) over the second quarter of 2011 when sales had also reached a record level due mainly to a significant increase in the medical equipment segment's business. The growth during the second quarter of 2012 came in part from the $0.3 million (44%) increase in the filtration segment's sales resulting from the advances in the institutional and commercial markets, for which the revenue recognition generally extends over the term of the leasing agreements, as well as the sales to the swine industry. The masks segment's sales also grew by $0.3 million due notably to the orders obtained at the end of the last quarter from Dufort & Lavigne. The medical equipment segment's sales reached an unprecedented level of $3.8 million as a result of our subsidiaries' commercialization efforts, an increase of $0.1 million (3%) over the second quarter of 2011 when the activity level had also been very high, as previously mentioned. Sales of ultrasound scanners for use in veterinary medicine in the North American market were particularly noteworthy for this quarter. For its part, Noveko Algérie delivered most of the orders obtained last September from the NOEAHP. Finally, the sanitizers segment recorded sales of $0.3 million, reflecting a distinct improvement over previous quarters and attesting to the gains achieved by our distributors in the healthcare market. However, that represents a $0.4 million (59%) decline from the second quarter of 2011 when Noveko had won a major one-time order of more than $0.6 million from a major chain of grocery stores.
Revenue for the first six months grew by $0.5 million (6%). This growth reflects the $0.6 million increase (49%) in the filtration segment's revenue, coupled with the $0.3 million increase in the masks segment's revenue, for the previously explained reasons. Conversely, the sanitizers segment's revenue decreased by $0.2 million for the period, as did the revenue of medical equipment segment, whose record second-quarter sales did not compensate for the weak first quarter of 2012.
The gross margin for the second quarter of 2012 stood at 46.5%, compared with 38.7% for the second quarter of 2011. This advance reflects a context of generally higher sales as well as an improvement in both the medical equipment segment's and the filtration segment's margins. The loss on slow-turnover inventories recognized in the fourth quarter of 2011 also contributed to the enhanced margins in the masks and sanitizers segments. For the same reasons, the gross margin for the first six months improved slightly to 42.7%.
Selling and administrative expenses (excluding amortization) for the second quarter and first six months declined by $0.7 million (21%) and $1.5 million (23%), respectively, to $2.7 million and $5.0 million. This reduction reflects the cumulative cost-control measures taken since the beginning of fiscal 2011, which notably involved the restructuring of certain teams.
Stock-based compensation for the second quarter and first six months, which has no impact on the Company's cash balance, decreased by $0.1 million and $0.4 million, respectively, to $52,181 and $16,238. These variances are due primarily to the cancellation, during the first quarter of 2012, of the unvested options of employees who are no longer with the Company and the adjustment of the previously recognized charge in their regard. The variances can also be explained, although to a lesser extent, by the smaller number of options granted in recent quarters, a lower exercise price for the options issued more recently, and the gradual recognition of the compensation charge.
Research and development expenses less tax credits for the second quarter and first six months decreased by $55,677 and $0.2 million, respectively, to $0.2 million and $0.3 million, due mainly to a reduction in the development costs associated with the masks segment. In addition, lower-than-expected research and development expenses in the medical equipment segment entailed downward adjustments to tax credits.
| Operating Profit (Loss) before Amortization, Net Financial Expenses and Income Taxes | ||||||||
| Periods Ended December 31 | Three Months | Six Months | ||||||
| 2011 | 2010 | 2011 | 2010 | |||||
| Medical equipment | $ | 738,942 | $ | 513,651 | $ | 668,589 | $ | 946,970 |
| Sanitizers | 19,636 | (402,798) | (158,976) | (1,214,664) | ||||
| Masks | 37,771 | (201,387) | (1,751) | (437,261) | ||||
| Filtration | (61,795) | (624,895) | (343,986) | (1,247,634) | ||||
| Other | (1,109,700) | (1,089,272) | (1,859,764) | (2,348,909) | ||||
| Total | $ | (375,146) | $ | (1,804,701) | $ | (1,695,888) | $ | (4,301,498) |
In light mainly of the aforementioned factors, the loss before amortization, net financial expenses and income taxes was reduced significantly. It amounted to $0.4 million for the second quarter of 2012, down by $1.4 million (79%) from the corresponding quarter of the previous year. For the first six months, it totalled $1.7 million, down by $2.6 million (61%). This definite improvement is due primarily to the following factors:
- overall, it reflects the positive impact of the cost-tightening efforts, including the decrease in total payroll resulting from the aforementioned restructuring of teams, as well as, in particular for the six-month period, the reduction in the stock-based compensation charge of the parent company Noveko International (under "Other");
- a reduction in the filtration segment's loss of $0.6 million for the second quarter of 2012 and of $0.9 million for the first six months, notably reflecting an increase in margins and a decrease in selling and administrative expenses; also, the allowances for inventory obsolescence related to the frames of our former filter model for hog farms that were recognized during fiscal 2011 had a negative impact on margins;
- the medical equipment segment posted a profit before amortization, net financial expenses and income taxes of $0.7 million in the second quarter of 2012, an increase of $0.2 million. For the first six months, this profit also amounted to $0.7 million, down by $0.3 million from the first half of the previous year due to more difficult market conditions in the first quarter of 2012; and
- for the second quarter of 2012 and first six months, an improvement totalling $0.7 million and $1.5 million, respectively, in the masks segment - due notably to a reduction in research and development expenses - and the sanitizers segment.
Amortization for the second quarter and first six months decreased by $0.2 million and $0.4 million, respectively, to $0.5 million and $1.0 million, reflecting the major write-off of intangible assets recognized in the fourth quarter of 2011.
Financial expenses less financial income and foreign exchange gain (loss) increased by $0.4 million to approximately $0.7 million in second quarter of 2012. This higher amount is primarily attributable to the financial expenses associated with the $6 million financing agreement consisting of a credit facility and convertible debentures arranged in September 2011 and the more significant foreign exchange loss. For the same reasons, expenses for the first six months increased by $0.7 million. Also, a $0.2 million foreign exchange gain had been recognized for the corresponding period of fiscal 2011.
| Net Earnings (Loss) from Continuing Operations | ||||||||
| Periods Ended December 31 | Three Months | Six Months | ||||||
| 2011 | 2010 | 2011 | 2010 | |||||
| Medical equipment | $ | 404,958 | $ | 257,885 | $ | 26,678 | $ | 423,934 |
| Sanitizers | 2,082 | (577,981) | (194,342) | (1,520,812) | ||||
| Masks | 12,762 | (240,468) | (52,108) | (434,493) | ||||
| Filtration | (87,164) | (606,342) | (405,789) | (1,243,082) | ||||
| Other | (1,805,117) | (1,593,444) | (2,516,905) | (2,879,315) | ||||
| Total | $ | (1,472,479) | $ | (2,760,350) | $ | (3,142,466) | $ | (5,653,768) |
In light mainly of the aforementioned factors, the net loss from continuing operations for the second quarter of 2012 and first six months was down significantly from the corresponding periods of the previous year, by $1.3 million (47%) and $2.5 million (44%), respectively, to stand at $1.5 million and $3.1 million.
A loss of $52,364 from discontinued operations (BLI) was recognized, compared with a loss of $0.1 million for the corresponding period of the previous year. For the first six months, a profit of $31,792 from discontinued operations (BLI) was recognized, as opposed to a loss of $0.2 million for the first half of the previous year.
Consequently, the net loss of the Company for the second quarter of 2012 amounted to $1.5 million, down from $2.9 million for the second quarter of 2011, a major reduction of $1.3 million (47%). For the first six months, the net loss totalled $3.1 million, compared with $5.8 million for the first half of the previous year, a major reduction of $2.7 million (47%).
The loss from continuing operations and total loss per Class A share (basic and diluted) for the quarter both represented losses of $0.02 on a weighted average of 91,946,144 outstanding shares, compared with losses of $0.03 per share on a weighted average of 84,369,390 shares for the corresponding period of the previous year. For the first six months, the loss from continuing operations and total loss per Class A share (basic and diluted) both represented losses of $0.03 on a weighted average of 91,946,144 outstanding shares, compared with losses of $0.07 per share on a weighted average of 80,187,869 shares for the first half of the previous year. The increased weighted average number of outstanding shares is due primarily to the Class A share issues related to the fiscal 2011 private placements, as detailed in note 20 accompanying the second-quarter financial statements.
| Principal Quarterly Financial Information(1) | ||||||||
| (in thousands of $, except per-share amounts) | ||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| Fiscal 2012 | ||||||||
| Revenue | 2,948 | 5,322 | ||||||
| Net earnings from continuing operations | (1,670) | (1,472) | ||||||
| Total comprehensive income | (1,629) | (1,678) | ||||||
| Earnings per Class A share from continuing operations (basic and diluted) | $ | (0.02) | $ | (0.02) | ||||
| Fiscal 2011 | ||||||||
| Revenue | 2,747 | 5,026 | 3,415 | 3,109 | ||||
| Net earnings from continuing operations | (2,893) | (2,760) | (2,679) | (6,330) | ||||
| Total comprehensive income | (2,709) | (3,237) | (2,420) | (7,390) | ||||
| Earnings per Class A share from continuing operations (basic and diluted) | $ | (0.04) | $ | (0.03) | $ | (0.04) | $ | (0.08) |
| Fiscal 2010 | ||||||||
| Revenue | 4,388 | 4,899 | 2,927 | 2,896 | ||||
| Net earnings from continuing operations | (3,503) | (4,798) | (4,678) | (7,737) | ||||
| Total comprehensive income | (4,417) | (5,449) | (5,858) | (9,612) | ||||
| Earnings per Class A share from continuing operations (basic and diluted) | $ | (0.05) | $ | (0.06) | $ | (0.07) | $ | (0.10) |
| (1) | The Company adopted IFRS effective July 1st, 2011. Consequently, comparative quarterly data for fiscal 2011 have been restated to reflect the adoption of IFRS. However, quarterly data for fiscal 2010 are presented in accordance with GAAP. |
| Statement of Financial Position |
As at December 31, 2011, total assets amounted to $35.6 million, down by $0.2 million from June 30, 2011. Working capital stood at $13.9 million for a current ratio of 3.1:1, compared with $11.4 million for a 2.4:1 ratio as at June 30, 2011. Shareholders' equity totalled $23.5 million as at December 31, 2011, compared with $26.4 million as at June 30, 2011. Total interest-bearing debt amounted to $5.0 million as at December 31, 2011, an increase of $4.3 million over June 30, 2011. This increase is due primarily to the financing consisting of a credit facility and convertible debentures closed on September 28, 2011. According to the covenants of the credit facility and the debentures, the Company must maintain a minimum EBITDA. As at December 31, 2011, the Company did not meet the EBITDA covenant. However, the lenders and their agent Third Eye Corporation, have signed waivers in this regard.
| Profile |
Noveko International Inc. offers innovative solutions in the environmental and medical fields worldwide. Through its subsidiaries, the Company specializes primarily in the following business segments: the development, manufacturing and marketing of derivative products from its patented antimicrobial filtration technologies, mainly air filters, surgical masks and respirators, as well as other products with antibacterial properties such as hand sanitizers - and the development, manufacturing and marketing of medical equipment, including portable real-time 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 Company 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 our securities, to carefully consider the complete statement of the risk factors and uncertainties described in the Management's Report for the second quarter of 2012 as well as in the Management's Report and Annual Information Form for fiscal 2011, notably with respect to the financial position of the Company and its sources and requirements of funds.
| The Management's Report, consolidated financial statements and accompanying notes for the second quarter of 2012 will be filed on SEDAR (www.sedar.com) and available in the Investor Relations section of the Company's website (www.noveko.com). |
NOVEKO INTERNATIONAL INC.
Consolidated Statement of Financial Position
(Unaudited, in Canadian dollars)
| December 31, 2011 |
June 30, 2011 |
July 1, 2010 |
|||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 1,466,763 | $ | 683,562 | $ | 639,543 | |
| Cash in trust | - | - | 87,787 | ||||
| Short-term investments | 1,005,842 | 1,146,201 | 2,145,631 | ||||
| Trade and other receivables | 5,310,130 | 4,136,099 | 3,026,436 | ||||
| Inventories | 8,581,762 | 9,222,372 | 11,259,316 | ||||
| Prepaid expenses | 484,371 | 663,299 | 627,644 | ||||
| Assets held for sale | 3,538,257 | 3,845,435 | 7,128,515 | ||||
| Total current assets | 20,387,125 | 19,696,968 | 24,914,872 | ||||
| Non-current assets | |||||||
| Property, plant and equipment | 2,216,784 | 2,389,250 | 1,675,321 | ||||
| Intangible assets | 5,738,303 | 6,292,676 | 8,655,859 | ||||
| Goodwill | 6,921,614 | 7,166,395 | 7,420,012 | ||||
| Deferred tax asset | 300,032 | 198,246 | 19,424 | ||||
| Total non-current assets | 15,176,733 | 16,046,567 | 17,770,616 | ||||
| Total assets | $ | 35,563,858 | $ | 35,743,535 | $ | 42,685,488 | |
| Liabilities and equity | |||||||
| Current liabilities | |||||||
| Bank loans | $ | - | $ | - | $ | 167,011 | |
| Term note | - | 90,000 | - | ||||
| Trade and other payables | 3,352,266 | 4,514,015 | 3,801,984 | ||||
| Current portion of long-term debt | 119,428 | 350,345 | 475,432 | ||||
| Liabilities held for sale | 3,025,576 | 3,374,547 | 3,533,735 | ||||
| Total current liabilities | 6,497,270 | 8,328,907 | 7,978,162 | ||||
| Non-current liabilities | |||||||
| Long-term debt | 3,178,258 | 273,741 | 803,647 | ||||
| Secured convertible debentures | 1,733,497 | - | - | ||||
| Deferred tax liability | 679,011 | 748,798 | 830,291 | ||||
| Non-current liabilities | 5,590,766 | 1,022,539 | 1,633,938 | ||||
| Total liabilities | 12,088,036 | 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 | 23,894,122 | 23,874,177 | 23,139,334 | ||||
| Accumulated other comprehensive income | 57,070 | 253,309 | - | ||||
| Deficit | (108,070,363) | (105,153,566) | (89,034,478) | ||||
| Equity attributable to the shareholders of Noveko International Inc. | 23,505,433 | 26,392,089 | 33,073,388 | ||||
| Non-controlling interests | (29,611) | - | - | ||||
| Total equity | 23,475,822 | 26,392,089 | 33,073,388 | ||||
| Total liabilities and equity | $ | 35,563,858 | $ | 35,743,535 | $ | 42,685,488 | |
Consolidated Statement of Earnings
For the three and six-month periods ended December 31, 2011 and 2010
(Unaudited, in Canadian dollars)
| Three months | Six months | ||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||
| Revenue | $ | 5,321,936 | $ | 5,025,551 | $ | 8,269,742 | $ | 7,772,479 | |
| Cost of sales (excluding amortization) | (2,847,214) | (3,080,037) | (4,736,281) | (4,600,627) | |||||
| Gross profit | 2,474,722 | 1,945,514 | 3,533,461 | 3,171,852 | |||||
| Administrative and selling (excluding amortization) | (2,671,256) | (3,390,202) | (5,027,475) | (6,547,472) | |||||
| Stock-based compensation | (52,181) | (139,283) | (16,238) | (447,199) | |||||
| Other revenue | 38,622 | - | 86,614 | - | |||||
| Research and development | (200,003) | (365,116) | (396,351) | (701,058) | |||||
| Research and development tax credit | 34,950 | 144,386 | 124,101 | 222,379 | |||||
| (2,849,868) | (3,750,215) | (5,229,349) | (7,473,350) | ||||||
| Operating profit before amortization, net financial expenses, and income taxes | (375,146) | (1,804,701) | (1,695,888) | (4,301,498) | |||||
| Amortization | (455,787) | (678,609) | (960,064) | (1,375,270) | |||||
| Operating profit | (830,933) | (2,483,310) | (2,655,952) | (5,676,768) | |||||
| Financial expenses | (356,835) | (41,911) | (414,276) | (93,373) | |||||
| Financial income | - | 5,334 | - | 7,993 | |||||
| Foreign exchange gain (loss) | (302,793) | (211,789) | (222,718) | 183,870 | |||||
| Goodwill impairment charge adjustment | - | (24,902) | - | (24,902) | |||||
| (659,628) | (273,268) | (636,994) | 73,588 | ||||||
| Earnings before income taxes and discontinued operations | (1,490,561) | (2,756,578) | (3,292,946) | (5,603,180) | |||||
| Income taxes: | |||||||||
| Current | (73,006) | (28,188) | (31,141) | (71,218) | |||||
| Deferred | 91,088 | 24,416 | 181,621 | 20,630 | |||||
| 18,082 | (3,772) | 150,480 | (50,588) | ||||||
| Net earnings from continuing operations | (1,472,479) | (2,760,350) | (3,142,466) | (5,653,768) | |||||
| Net earnings from discontinued operations | (52,364) | (100,773) | 31,792 | (188,357) | |||||
| Net earnings | $ | (1,524,843) | $ | (2,861,123) | $ | (3,110,674) | $ | (5,842,125) | |
| Net earnings attributable to Class A shareholders of Noveko International Inc. | $ | (1,469,964) | $ | (2,861,123) | $ | (3,054,301) | $ | (5,842,125) | |
| Net earnings attributable to non-controlling interests | (54,879) | - | (56,373) | - | |||||
| $ | (1,524,843) | $ | (2,861,123) | $ | (3,110,674) | $ | (5,842,125) | ||
| Basic and diluted earnings per share: | |||||||||
| Continuing operations | $ | (0.02) | $ | (0.03) | $ | (0.03) | $ | (0.07) | |
| Discontinued operations | $ | (0.00) | $ | (0.00) | $ | (0.00) | $ | (0.00) | |
| Total | $ | (0.02) | $ | (0.03) | $ | (0.03) | $ | (0.07) | |
| Weighted average number of outstanding shares, basic and diluted | 91,946,144 | 84,369,390 | 91,946,144 | 80,187,869 | |||||
Consolidated Statement of Comprehensive Income
For the three and six-month periods ended December 31, 2011 and 2010
(Unaudited, in Canadian dollars)
| Three months | Six months | |||||||
| 2011 | 2010 | 2011 | 2010 | |||||
| Net earnings for the period | $ | (1,524,843) | $ | (2,861,123) | $ | (3,110,674) | $ | (5,842,125) |
| Other comprehensive income, net of income taxes: | ||||||||
| Change in unrealized exchange gain or loss on the translation of the financial statements of foreign operations | (152,672) | (167,282) | (196,239) | 104,304 | ||||
| Total comprehensive income for the period | $ | (1,677,515) | $ | (3,028,405) | $ | (3,306,913) | $ | (5,737,821) |
| Total comprehensive income attributable to non-controlling interests | $ | (57,098) | $ | - | $ | (51,397) | $ | - |
| Total comprehensive income attributable to shareholders of Noveko International Inc. | (1,620,417) | (3,028,405) | (3,255,516) | (5,737,821) | ||||
| $ | (1,677,515) | $ | (3,028,405) | $ | (3,306,913) | $ | (5,737,821) | |
Consolidated Statements of Cash Flows
For the three and six-month periods ended December 31, 2011 and 2010
(Unaudited, in Canadian dollars)
| Three months | Six months | ||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||
| Cash flows from operating activities: | |||||||||||||||
| Net earnings | $ | (1,524,843) | $ | (2,861,123) | $ | (3,110,674) | $ | (5,842,125) | |||||||
| Adjustments for: | |||||||||||||||
| Deferred taxes | (91,088) | (24,416) | (181,621) | (20,630) | |||||||||||
| Imputed interest on secured convertible debentures and credit facility | 338,920 | - | 357,301 | - | |||||||||||
| Share-based payments | 52,181 | 139,283 | 16,238 | 447,199 | |||||||||||
| Loss (gain) on disposal of property, plant and equipment | 4,681 | 90,552 | 2,424 | 91,275 | |||||||||||
| Amortization | 455,787 | 678,609 | 960,064 | 1,371,742 | |||||||||||
| Goodwill impairment charge adjustment | - | 24,902 | - | 24,902 | |||||||||||
| Foreign exchange loss (gain) | 7,135 | (300) | (1,031) | (635) | |||||||||||
| Cash flows on discontinued operations | 221,754 | 293,279 | 188,780 | 333,800 | |||||||||||
| (535,473) | (1,659,214) | (1,768,519) | (3,594,472) | ||||||||||||
| Change in non-cash working capital items | (1,668,531) | (2,089,072) | (1,516,241) | (819,333) | |||||||||||
| (2,204,004) | (3,748,286) | (3,284,760) | (4,413,805) | ||||||||||||
| Cash flows from investing activities: | |||||||||||||||
| Receipts on short-term investments | - | 1,500,000 | 140,000 | 2,590,000 | |||||||||||
| Acquisition of short-term investments | - | - | - | (1,590,000) | |||||||||||
| Acquisition of property, plant and equipment | (104,993) | (464,060) | (138,787) | (599,930) | |||||||||||
| Proceeds of disposal of property, plant and equipment | (174) | 22,642 | 5,829 | 22,642 | |||||||||||
| Acquisition of intangible assets | (10,695) | (16,798) | (32,280) | (158,557) | |||||||||||
| Cash in trust | - | (287) | - | - | |||||||||||
| Receipt on partial disposal of a subsidiary | - | - | 179,550 | - | |||||||||||
| Deferred development costs, net of research and development tax credits received | (56,892) | (84,219) | (115,563) | (171,384) | |||||||||||
| Cash flows on discontinued operations | (2,611) | - | (2,611) | (3,200) | |||||||||||
| (175,365) | 957,278 | 36,138 | 89,571 | ||||||||||||
| Cash flows from financing activities: | |||||||||||||||
| Net change in bank loans | - | (129) | - | 2,497 | |||||||||||
| Repayment of long-term debt capital | (48,910) | (93,584) | (548,894) | (191,179) | |||||||||||
| Interest paid on secured convertible debentures and credit facility | (182,313) | - | (197,071) | - | |||||||||||
| New long-term debt net of financing expenses | 500,000 | - | 3,107,440 | - | |||||||||||
| Issuance of convertible debentures net of financing expenses | - | - | 2,473,701 | - | |||||||||||
| Repayment of convertible debentures | - | - | (670,000) | - | |||||||||||
| Issuance of Class A shares and warrants | - | 900,000 | - | 5,340,000 | |||||||||||
| Share issuance expenses | - | (11,008) | - | (16,258) | |||||||||||
| Cash flows on discontinued operations | (117,095) | (177,878) | (157,707) | (110,418) | |||||||||||
| 151,682 | 617,401 | 4,007,469 | 5,024,642 | ||||||||||||
| Net increase in cash and cash equivalents | (2,227,687) | (2,173,607) | 758,847 | 700,408 | |||||||||||
| Cash and cash equivalents, beginning of period | 3,620,431 | 3,382,093 | 683,562 | 639,543 | |||||||||||
| Foreign exchange rate change | 74,019 | (10,877) | (24,354) | (142,342) | |||||||||||
| Cash and cash equivalents, end of period | $ | 1,466,763 | $ | 1,197,609 | $ | 1,466,763 | $ | 1,197,609 | |||||||
Cash flows from continuing operations include interest paid in the amount of $253,201 ($81,148 as at December 31, 2010) and income taxes paid of $272,724 (paid of $15,103 as at December 31, 2010).
Chantal Vennat, Director,
Investor Relations and Corporate Communications
Noveko International Inc.
Tel: (514) 875-0606
http://www.noveko.com
Share this article