Advantex announces results for Q2 2007 and significant improvement in key performance indicators
1/4/2007 12:00:00 AM

NEWS RELEASE

ADVANTEX ANNOUNCES RESULTS FOR Q2 2007 AND SIGNIFICANT IMPROVEMENT IN KEY PERFORMANCE INDICATORS

TORONTO, Feb. 14, 2007 - Advantex Marketing International Inc. (TSX:ADX) today reported results for the three and six months ended December 31, 2006. All key performance indicators showed significant improvement year over year as follows: 

        -  Profit from continuing operations: $0.1 million for the quarter (see chart on Operating Results), an improvement of $0.4 million
           compared to corresponding period previous year, and $0.9 million improvement year-to-date

        -  Operating Profit: $0.3 million for the quarter (see chart on Operating Results), an improvement of $0.4 million; $0.9 million
           improvement year-to-date

        -  Gross Profit: up 36.0% to $ 2.2 million for the quarter; 29.2 % increase year-to-date

        -  Net Revenue: up 31.5 % to $ 3.4 million for the quarter; 25.7 % increase year-to-date

        -  Gross Revenue: up 29.6 % to $ 23.4 million for the quarter; 18.1 % increase year-to-date

        -  Transaction Credits (assets deployed to merchants): up $2.2 million from June 30, 2006 to $6.1 million

On December 5, 2006, G. Randall Munger stepped down from his roles as Chairman, Chief Executive Officer and director of the Company and Kelly E.
Ambrose was appointed President and Chief Executive Officer.

    "Q2 2007 was the first quarter in recent history in which we delivered an operating profit, a major accomplishment enabled by the growth of our Advance
Purchase Marketing Programs," said Mr. Ambrose. "It is very exciting to note that we have an established pipeline of merchants waiting to receive funding
and could quickly deploy several more million dollars into the market, generating an attractive rate of return."

    Operating Results

    The following chart* has been included to provide a more useful
    analysis to the reader.

    (In millions of dollars)                                                 Q2        Q2        YTD        YTD
                                                                                 F 2007   F 2006    F 2007   F 2006
                                                                                  ------     ------      ------      ------
    Net Revenue                                                          $ 3.4       $ 2.6        $ 5.7      $ 4.5
    Direct Expenses                                                       (1.3)       (1.0)         (2.0)      (1.6)
                                                                                  -----       -----        -----       -----
    Gross Profit                                                              2.2          1.6           3.7         2.9
    Ongoing selling, general & administrative expenses   (1.8)        (1.7)         (3.5)      (3.6)
                                                                                  -----       -----        -----      -----
    Operating Profit / (Loss) before restructuring            0.3         (0.1)          0.2       (0.7)
                                                                                  -----       -----        -----      -----
    Amortization and Interest                                        (0.3)        (0.3)         (0.5)     (0.5)
                                                                                 -----       -----         -----     -----
    Profit (Loss) before restructuring                            $ 0.1      $(0.4)       $(0.3)   $(1.2)
    Restructuring Costs                                                 (1.0)       (0.2)         (1.0)     (0.3)
                                                                                -----        -----          -----    -----
    Net Loss, continuing operations                            $(1.0)     $(0.6)        $(1.3)  $(1.6)
                                                                                -----        -----          -----    -----

    * Presentation is not a Canadian GAAP disclosure. Some numbers may not add due to rounding

Net Revenue (defined as Gross Revenue less the Cost of Purchasing Transaction Credits) for Q2 2007 was $3.4 million, an increase of 31.5% over the corresponding quarter in the previous year. This growth reflects the positive impact of the increase in assets deployed ($4.1 million compared to December 2005) in the Company's Advance Purchase Marketing Programs, leading to an increase in Net Revenue from the Company's CIBC programs of 48.9% over the corresponding quarter in the previous year.

Gross Profit was $2.2 million in the quarter compared to $1.6 million for the same quarter last year. This growth is principally the result of expanding the Advance Purchase Marketing program.

The reported Net Loss of $1.2 million ($0.01 per share) for Q2 2007 and the reported Net Loss of $0.6 million for the same period a year ago reflects the impact of restructuring costs in both periods. Excluding the impact of restructuring costs, the Company delivered a net profit from continuing operations of $0.1 million in Q2 2007 versus a net loss of $0.3 million in Q2 2006, a $0.4 million improvement.

For the six-month period ending December 31, 2006, Net Revenue was $5.7 million, an increase of $1.2 million or 25.7% over the same six-month period a year ago. Gross Profit was $3.7 million, an increase of $0.8 million or 29.2% over the same six-month period a year ago. The year to date Loss before Amortization and Interest was $0.8 million and Net Loss was $1.3 compared to $1.1 million and $1.5. However, excluding restructuring costs in both years and earnings from discontinued operations in 2005, the Company delivered year-to-date earnings of $0.2 million before amortization and interest and a year-to-date net loss of $0.3 million, improvements of $0.9 million and $0.9 million respectively from the same six-month period last year.

Working Capital was $3.7 million at the end of June 30, 2006 and $4.8 million at the end of December 31, 2006. During the three month period, the Company deployed available funds to support the growth of its Advance Purchase Marketing program, resulting in increased revenue for the period. This course of action is reflected on the Balance Sheet as a decrease in Cash and Cash Equivalents ($0.3 million at December 31, 2006 compared to $1.8 million at June 30, 2006), and an increase in Transaction Credits ($6.1 million at December 31, 2006 versus $3.9 million at June 30, 2006). Transaction Credits are a likely indicator of future profitability.

Based on current business levels, the Company expects to report results close to breakeven at the end of the fiscal year, excluding one-time restructuring costs. Quarterly results for the remainder of the fiscal year are expected to reflect the seasonality of consumer purchasing behaviour patterns.

About Advantex Marketing International Inc.

Advantex Marketing International Inc. is a leading marketing services company, specializing in Advance Purchase Marketing Programs for merchants, coalition loyalty rewards programs, and Online Shopping Malls. Advantex loyalty partners include CIBC, United Airlines, Delta Air Lines, The New York Times, and other major North American corporations, as well as a growing list of restaurants, retailers, golf courses, boutique hotels, inns, resorts and spas. 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 includes statements about expected future events and financial results that are forward-looking in nature and subject to risks and uncertainties. Advantex cautions that actual performance may be affected by a number of factors, many of which are beyond its control. Future events and results may vary substantially from what Advantex currently foresees. Discussion of the various factors that may affect future results is contained in Advantex's recent filings with Canadian securities regulatory authorities.