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ADVANTEX REPORTS F2007 RESULTS; KEY ACCOMPLISHMENTS DRIVE YEAR-OVER-YEAR IMPROVEMENT
10/1/2007 12:00:00 AM ADVANTEX REPORTS F2007 RESULTS; KEY ACCOMPLISHMENTS DRIVE YEAR-OVER-YEAR IMPROVEMENT For Immediate Release ADX: TSX“Fiscal 2007 was an important transitional period for the company during which we underwent fundamental changes in senior management and operating methodology,” said Kelly E. Ambrose, Advantex’s new Chief Executive Officer and President. “We focused on strengthening our corporate structure, enhancing our technology backbone, and establishing a customer pipeline for future growth.. All of these initiatives enabled us to deliver substantially better operating performance than last year and set the stage for continued improvements going forward.” The following are highlights of the Company’s key accomplishments during Fiscal 2007: (1). In November, 2006 the Company successfully completed a convertible debenture financing. The term of the existing convertible debenture was extended to December, 2011 and an additional $2.0 million of convertible debenture was issued. (2). In December, 2006 G. (3). Expansion of the Advance Purchase Marketing product for merchants was accelerated. Under the program, Advantex purchases future credit card transactions at a discount from merchants, providing them with cash in advance along with marketing, customer incentives and business incentives. This expansion was rolled out using the Company’s proprietary pricing and risk management models. The program has significant growth potential and the Company currently has a backlog of merchants wishing to join this program. Financial Performance The positive impact of the initiatives implemented during fiscal 2006 and 2007 are reflected in the current year’s performance and are expected to continue to have a positive effect on future performance. As a consequence of the above actions, the Company surpassed the previous year’s performance:
Revenue for fiscal 2007 was $11.3 million compared with $8.6 million in fiscal 2006, an increase of $2.7 million or 31.5%. Growth in the CIBC Advantex program was driven by the expansion of the Advance Purchase Marketing Program which accounts for 76% of fiscal 2007 revenue. Transaction fee revenue from the Company’s Online Shopping Mall programs increased 22.4% in US dollars (17.6% in Canadian dollars) when compared with fiscal 2006. The Company earns its transaction fee revenue in US Dollars from its Online Shopping Malls which is reported in Canadian dollars on the consolidated financial statements. Gross Profit was $7.1 million in fiscal 2007 compared to $5.8 million in fiscal 2006. This improvement reflects the growth in revenue, partially offset by the increase in direct expenses. Contribution from operations in fiscal 2007 was a loss of $0.2 million compared to a loss of $1.5million in fiscal 2006, an improvement of $1.3 million, reflecting the revenue growth in profitable core activities. The Company’s Net Loss was $2.6 million ($0.03 per share) compared with a loss of $2.5 million ($0.04 per share) in fiscal 2006. Fiscal 2007 was impacted by restructuring costs of $1.1 million and Fiscal 2006 reflected earnings from discontinued operations of $0.1 million. After adjusting for the abovementioned factors, there was a year-over-year $1.1 million improvement in results from operations; adjusted $1.5 million loss from operations in fiscal 2007 compared to a $2.6 million loss in operations in fiscal 2006. The following presentation is not set out in accordance with Canadian generally accepted accounting principles (GAAP) , but has been included to provide additional analysis for the reader.
As at June 30, 2007, the Company had Cash and Cash Equivalents of $0.9 million compared to $1.8 million as at June 30, 2006. During fiscal 2007, the Company raised $1.6 million in net proceeds from issuing additional convertible debentures. The funds were used to accelerate the growth of its Advance Purchase Marketing program (deployed in Transaction Credits) A summary of fiscal 2007 cash flow is set out below:
The Company does not currently have a loan facility with a third party and does not participate in off-balance sheet financing arrangements. Outlook Fiscal 2007 was a transition year for the Company in its process of evolving into a stronger and more competitive company, with a clear focus on profitable growth in the programs and areas in which it enjoys a leadership position. The Company is experiencing strong demand for its Advance Purchase Marketing Programs in the dining, golf, ski, hospitality, and spa categories, as evidenced by a backlog of merchants wishing to join its programs. Management expects to continue expanding this area of its business and expects to raise a debt facility to support growth in this program. After delays during 2007 in finalizing the contract to allow the Company to offer its programs to retailers, Advantex now expects to have retail merchants participating in its Advance Purchase Marketing programs in calendar year 2008. There are approximately 100,000 retailers in the shopping categories that Advantex will be targeting (source: Statistics Canada). Revenue from the Company’s Online Shopping Malls is expected to continue its annual upward trend. A new management team with extensive experience in online marketing was put in place in Fiscal 2006, and is implementing improvements that have delivered results. Further growth is expected as the team builds momentum. Importantly, the company deems it a priority to maintain its competitive advantages and will continue investing in its technology systems to stay pace with partner and marketplace standards. About Advantex Marketing International Inc. Advantex is a specialist in the marketing services industry, managing white-labeled rewards accelerator programs for major affinity groups through which their members earn bonus frequent flyer miles and/or other rewards on purchases at participating merchants. Under the umbrella of each program, Advantex provides merchants with marketing, customer incentives, and secured future sales through its Advance Purchase Marketing model. Advantex partners include more than 700 restaurants, online retailers, golf courses, small inns and resorts, and major organizations including CIBC, United Airlines, Delta Air Lines, The New York Times, Alaska Airlines and Lufthansa Airlines. Advantex is a public company, traded on the Toronto Stock Exchange under the symbol "ADX". For additional information on Advantex, please visit www.advantex.com. This press release contains certain "forward-looking statements". All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding financial and business prospects and financial outlook) are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things, changes in general economic and market conditions, changes to regulations affecting the Company's activities , uncertainties relating to the availability and costs of financing needed in the future, and delays in finalizing retail contract. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. - 30 - For further information please contact:
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