WINNIPEG, MANITOBA - (Marketwire - Sept. 5, 2008) - Gendis Inc. (TSX:GDS) today announced its financial results for the 2nd quarter ended July 31, 2008 of the fiscal year ending January 31, 2009.
Revenue for the 2nd quarter was $0.8-million compared to $1.0-million last year. The 2nd quarter change in the market value of investments that were held for trading, net of gains on sale of investments, was a loss of $1.6-million compared to a loss of $0.7-million for the prior year comparative period. The net loss for the 2nd quarter was $1.9-million ($0.13 per share) compared to a net loss of $0.7-million ($0.05 per share) last year.
The decrease in revenue in the 2nd quarter is primarily attributable to decreased investment income from the Company's investment in Fort Chicago. The decline in earnings in the 2nd quarter is due to the decline in investment revenue and unfavourable market value changes in its investments, primarily FNX Mining, Yellow Pages, Opti Canada and Ember Resources.
Revenue year-to-date was $1.7-million compared to $1.4-million last year. The year-to-date change in the market value of investments that were held for trading, net of gains on sale of investments was a loss of $0.3-million compared to a loss of $0.7-million for the prior year comparative period. The net loss year-to-date was $0.7-million ($0.05 per share) compared to a net loss of $1.5-million ($0.10 per share) last year.
Gendis owns 2.0-million shares of OSUM, a private oil sands company. In August 2008, OSUM closed a substantial private equity financing at a price of $10.50 per OSUM share which compares favourably to Gendis' $2.42 per OSUM share average cost base. Based on this recent financing, Gendis would have an unrealized gain of $16.6-million or $1.17 per Gendis share, before income taxes. The recent $10.50 per OSUM share financing price should only be used as a proxy for fair value at this point in time.
Gendis Inc.
Consolidated Balance Sheet
Jul. 31 Jan. 31
(unaudited - in thousands of dollars) 2008 2008
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Assets
Cash 107 203
Receivables 351 259
Prepaid expenses 625 270
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1,083 732
Investments (note 2)
at fair value 33,155 34,028
at carrying value 4,821 4,821
Property and equipment 12,108 10,658
Future tax asset 2,597 2,597
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53,764 52,836
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Commitments and Contingencies (note 5)
Liabilities
Credit facilities 19,947 18,778
Payables and accrued liabilities 1,114 970
Taxes payable 5 67
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21,066 19,815
Shareholders' equity 32,698 33,021
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53,764 52,836
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Gendis Inc.
Consolidated Statement of Operations
quarter ended year-to-date
(unaudited - Jul. 31 Jul. 31 Jul. 31 Jul. 31
in thousands of dollars, except per share) 2008 2007 2008 2007
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Revenue
Investment 380 596 974 591
Real estate lease rental 383 374 764 760
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763 970 1,738 1,351
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Expenses
Property and administrative expenses 634 686 1,428 1,443
Amortization of property and equipment 87 87 175 175
Interest and finance expenses 236 235 485 441
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957 1,008 2,088 2,059
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Loss before the undernoted (194) (38) (350) (708)
Change in fair value of investments
held-for-trading (1,779) (1,060) (715) (1,105)
Gain (loss) on sale of investments:
Held-for-trading 185 361 422 641
Available-for-sale - 45 - (283)
Gain on sale of real estate properties (3) - 95 -
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Loss before taxes (1,791) (692) (548) (1,455)
Provision for income taxes 78 30 161 48
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Net loss from operations for the period (1,869) (722) (709) (1,503)
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Loss from operations per share (0.13) (0.05) (0.05) (0.10)
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Gendis Inc.
Consolidated Statement of Comprehensive Income (Loss)
quarter ended year-to-date
(unaudited - Jul. 31 Jul. 31 Jul. 31 Jul. 31
in thousands of dollars 2008 2007 2008 2007
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Other comprehensive income
Change in fair value of investments
available-for-sale (547) (1,370) 639 (483)
Gain (loss) on sale of investments - 45 - (283)
(Gain) loss on sale of investments
transferred to net earnings
from operations - (45) - 283
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Other comprehensive income (loss) (547) (1,370) 639 (483)
Net loss from operations (1,869) (722) (709) (1,503)
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Comprehensive loss (2,416) (2,092) (70) (1,986)
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Consolidated Statement of Shareholders' Equity
For the Quarters Ended
Share
(unaudited - Capital Retained
in thousands of dollars) (note 3) Earnings AOCI Total
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Balance - February 1, 2008 14,995 15,809 2,217 33,021
Net earnings for the period - 1,160 1,186 2,346
Shares purchased for cancellation (100) (86) - (186)
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Balance - quarter ended April 30, 2008 14,895 16,883 3,403 35,181
Net loss for the period - (1,869) (547) (2,416)
Shares purchased for cancellation (34) (33) - (67)
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Balance - quarter ended July 31, 2008 14,861 14,981 2,856 32,698
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Balance - February 1, 2007 15,736 21,740 3,008 40,484
Net earnings (loss) for the period - (781) 887 106
Shares purchased for cancellation (180) (172) - (352)
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Balance - quarter ended April 30, 2007 15,556 20,787 3,895 40,238
Net loss for the period - (722) (1,370) (2,092)
Shares purchased for cancellation (124) (130) - (254)
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Balance - quarter ended July 31, 2007 15,432 19,935 2,525 37,892
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AOCI refers to Accumulated Other Comprehensive Income
Gendis Inc.
Consolidated Statement of Cash Flows
quarter ended year-to-date
(unaudited - Jul. 31 Jul. 31 Jul. 31 Jul. 31
in thousands of dollars 2008 2007 2008 2007
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By operations:
Net loss from operations for the period (1,869) (722) (709) (1,503)
add (deduct) items not affecting cash:
Amortization of property and equipment 87 87 175 175
Gain (loss) on sale of properties 3 - (95) -
Gain on sale of investments (185) (406) (422) (358)
Change in fair value of investments
held-for-trading 1,779 1,060 715 1,105
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Cash flow from earnings (185) 19 (336) (581)
Change in working capital (470) (227) (287) (2)
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(655) (208) (623) (583)
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By investing activities:
Proceeds on sale of investments 3,325 3,115 4,652 4,877
Return of capital 242 124 264 884
Investments acquired (1,807) (3,675) (3,697) (4,382)
Proceeds from property sales - - 346 -
Additions to property and equipment (1,392) (10) (1,876) (31)
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368 (446) (311) 1,348)
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By financing activities:
Advance from (reduction in) credit
facilities (11) 917 1,169 114
Purchase and cancellation of
share capital (67) (254) (253) (606)
Refundable dividend tax - - (78) (195)
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(78) 663 838 (687)
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Increase (decrease) in cash (365) 9 (96) 78
Cash - beginning of period 472 264 203 195
Cash - end of period 107 273 107 273
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Supplementary information:
Taxes paid 78 30 239 243
Interest paid 247 211 497 420
Gendis Inc.
Notes to Consolidated Interim Financial Statements - unaudited
July 31, 2008
1. Significant Accounting Policies and Basis of Presentation
(a) These unaudited consolidated interim financial statements are prepared in accordance with accounting principles generally accepted in Canada.
However, these interim financial statements do not contain all the disclosures that would be required under generally accepted accounting principles for annual financial statements. These interim financial statements follow the same accounting policies and methods of application as the audited annual consolidated financial statements at January 31, 2008. Certain disclosures required for annual financial statements have been condensed or omitted in these interim financial statements. Accordingly, these interim financial statements should be read in conjunction with the annual consolidated financial statements and notes thereto as presented in the Company's Annual Report for the fiscal year ended January 31, 2008. The following notes to the interim financial statements are supplemental to the notes to the annual consolidated financial statements.
(b) The Accounting Standards Board of Canada plans to converge Canadian Generally Accepted Accounting Principles for publicly accountable enterprises with International Financial Reporting Standards effective for fiscal periods commencing on or after January 1, 2011. The Company is currently assessing the impact of these new standards on its future consolidated financial statements.
2. Investments
Number
of shares/units Fair value
# $
Jul. 31 Jan. 31 Jul. 31 Jan. 31
(in thousands) 2008 2008 2008 2008
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Exchange-traded investments:
Available-for-sale:
Flow-through entities:
Fort Chicago 2,190 2,190 23,323 22,644
Yellow Pages 175 - 1,580 -
Held-for-trading:
Flow-through entities:
Fort Chicago 12 154 127 1,595
Other equity investments:
Alberta Clipper 700 700 1,876 1,540
Ember Resources 655 673 904 941
FNX Mining 91 110 1,630 2,920
INV 500 500 360 435
Opti Canada 71 105 1,380 1,722
Royal Bank 19 15 874 760
Scotiabank 9 15 425 723
Starbucks 20 25 301 474
Other equity investments 375 274
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33,155 34,028
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Number of shares Carrying value
Jul. 31 Jan. 31 Jul. 31 Jan. 31
2008 2008 2008 2008
(in thousands) # # $ $
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Private investments, available-for-sale:
OSUM - shares 1,948 1,948 4,821 4,821
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3. Capital Stock
Number of shares quarter ended year-to-date
(unaudited - Jul. 31 Jul. 31 Jul. 31 Jul. 31
in thousands) 2008 2007 2008 2007
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Balance - beginning of period 14,169 14,799 14,265 14,970
Shares purchased for cancellation (31) (118) (127) (289)
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Balance - end of period 14,138 14,681 14,138 14,681
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4. Segment Information
quarter
(in thousands of ended Realty Corporate Inter- Total
dollars) July 31 segment
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Revenue 2008 399 529 (165) 763
2007 390 637 (57) 970
Expenses 2008 290 390 (46) 634
2007 314 418 (46) 686
Amortization 2008 83 4 - 87
2007 85 2 - 87
Interest 2008 119 236 (119) 236
2007 11 235 (11) 235
Investment - gain (loss)
on sale, provision
for loss and changes
in fair value 2008 - (1,594) - (1,594)
held-for-trading 2007 - (654) - (654)
Loss on sale of
property and 2008 (3) - - (3)
equipment 2007 - - - -
Provision for
(recovery of) 2008 (33) 111 - 78
income taxes 2007 (7) 37 - 30
Net loss from 2008 (63) (1,806) - (1,869)
operations 2007 (13) (709) - (722)
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Additions to property 2008 1,392 - - 1,392
and equipment 2007 - 10 - 10
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Year-to-date
(in thousands ended Realty Corporate Inter- Total
of dollars) July 31 segment
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Revenue 2008 795 1,275 (332) 1,738
2007 791 674 (114) 1,351
Expenses 2008 701 818 (91) 1,428
2007 694 840 (91) 1,443
Amortization 2008 166 9 - 175
2007 167 8 - 175
Interest 2008 241 485 (241) 485
2007 23 441 (23) 441
Investment - gain (loss)
on sale, provision
for loss and changes
in fair value 2008 - (293) - (293)
held-for-trading 2007 - (747) - (747)
Gain on sale of
property and 2008 95 - - 95
equipment 2007 - - - -
Provision for
(recovery of) 2008 (76) 237 - 161
income taxes 2007 (32) 80 - 48
Net loss from 2008 (142) (567) - (709)
operations 2007 (61) (1,442) - (1,503)
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Additions to property 2008 1,860 16 - 1,876
and equipment 2007 21 10 - 31
Total Assets 2008 13,571 50,204 (10,011) 53,764
2007 11,179 43,512 (806) 53,885
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5. Commitments & Contingencies
There have been no material developments in the lawsuits that were disclosed in the annual financial statements for the year ended January 31, 2008.
The Company was a participant in Saan's employee benefit program that includes participating in a group life insurance policy for retired employees of the Company and the Company's former subsidiaries who retired prior to December 10, 2004. On August 15, 2008, Saan was placed into bankruptcy and accordingly Saan's group employee benefit program ceased. There is uncertainty whether Gendis has an obligation to provide death benefit coverage in the absence of a group life insurance policy, the volume of which is estimated at $1.5 -million, $5,000 per retired employee. The present value of this volume of benefit after applying mortality factors and a 5.4% discount interest rate could be $0.8 -million.
6. Subsequent Event
On August 15, 2008, Saan, a tenant in six of Gendis' real estate locations, was placed into bankruptcy. The Receiver for Saan has determined that the best method of realization of value for Saan's creditors is an asset sale that includes a sale of Saan's leases through an assignment to other retail entities. The Receiver for Saan intends to assign all of Gendis' six leases to other retail entities. The assignment includes a settlement of unpaid rent and recoverable costs to Gendis.
Website: www.gendis.ca
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