CALGARY, ALBERTA--(Marketwire - Oct. 30, 2009) - Beaumont Select Corporations Inc. ("Beaumont") (TSX VENTURE:BMN.A) reported today its financial results for the fiscal year ended June 30, 2009.
The past year has seen substantial volatility in the financial and capital markets worldwide, with corresponding substantial declines in economic activity including in Canada. These external events had a major negative impact on the Corporation's Investment Division. The Investment Division has enjoyed some recovery in its portfolio since the end of the 2008-9 fiscal year though the volatility and unpredictability in the capital markets remains very high.
In the Food Division, world economic and financial events have reintroduced strong pressure from its customers to reduce prices, especially in the latter part of the recently completed fiscal year. As part of its ongoing efforts to introduce new products to the marketplace, the Food Division was successful in persuading some key customers to list new products which may present additional sales for the division in the coming year.
Highlights for the Corporation's financial results for the fiscal year ended June 30, 2009 included the following:
- The Investment Division activities generated a loss of $8.283 million
during the 2008-9 fiscal year ($1.014 million gain during the fourth
quarter). This contrasts with a loss of $1.04 million for 2007-8 ($5.87
million gain for the fourth quarter of that year). Dividends and income
trust distributions continued to exceed margin interest costs, but
realized losses resulted in a negative result overall. Dividends and
income trust distributions yielded $0.897 million, down from $2.0
million during the previous fiscal year.
- The book value of the Corporation's portfolio of equity securities
decreased from $29.9 million to $9.28 million while the Corporation's
equity in its portfolio of equity securities decreased by $8.304 million
or 63% to $4.937 million from $13.242 million at the beginning of the
fiscal year. The decrease was due to dramatic changes in the stock
markets world wide, with the most dramatic swings in the second and
third quarter. A significant portion of the decline in total portfolio
value relates to actual sales of securities during the fiscal year. The
corresponding margin loans took a sharp decrease as well, to $4.343
million, with a margin ratio of 46.8%, from $16.695 million, with a
margin ratio of 55.8%, at the start of the year.
- The Corporation sold its second Calgary Building during the third
quarter for $3.9 million, realizing $3.22 million excluding cleanup
costs. The proceeds were used to retire debt from the Real Estate
Division as well as corporate indebtedness. Combined with last year's
other Calgary building sale long term debt (including current portion)
to equity has declined to 11% at June 30, 2009 compared to 30% at the
prior fiscal year end, even after the current year net loss. Interest
expense and bank charges were also reduced to $265 thousand in fiscal
2008-9 from $1.011 million in the prior fiscal year.
- Operating margin (derived principally from the Food Division) increased
to $1.702 million (8.4% of sales) from $1.203 million (6.4% of sales)
helped by a 7.4% increase in sales. Margins also improved as the
division made well timed purchases of key raw materials during the year
that helped contain otherwise rising input costs.
- Somerset Properties Ltd. experienced similar negative returns to the
Corporation as it also has a majority of its liquid assets invested in
the equity capital markets. Due to the size of these losses, the
Corporation wrote down its investment in Somerset Properties by $600
thousand during the third quarter. A portion of Somerset Properties'
investment losses have since been recovered through normal investment
activity, but no change in the carrying value of the Somerset Properties
investment has been made by the Corporation.
- Somerset Properties declared $273 thousand in dividends payable to the
Corporation during the 2008-9 fiscal year (included in the total
dividends and distributions reported above), of which $65 thousand
- Assets and liabilities of discontinued operations declined materially
due to increased valuation allowances of future tax assets and
completion of the wind down of the Bakery Unit. The net amount of assets
and liabilities of discontinued operations at the end of the 2008-9
fiscal year were reduced to a net asset of $223 thousand compared to
$3.553 million at the end of the prior fiscal year.
- Net income from continuing operations before income taxes and
non-controlling interest declined by $8.316 million from net income of
$2.022 million to a net loss of $6.294 million in the 2008-9 fiscal
year. Net income (including taxes, discontinued operations and
non-controlling interest) declined by $1.677 million (38%) to a net loss
of $6.041 million (negative $0.36 per share) compared to a net loss of
$4.364 million (negative $0.26 per share) in the prior fiscal year.
Fourth quarter ending Fiscal year ending
30-Jun-09 30-Jun-08 30-Jun-09 30-Jun-08
Net Sales 4,425 4,388 $20,276 18,878
Operating Income (Loss) (135) 410 (446) (1,766)
Net Income (Loss) 343 4,705 (6,041) (4,364)
Net Income (Loss) per share - basic 0.02 0.28 (0.36) (0.26)
Funds from (used in) operations 315 687 917 (115)
per share - basic 0.02 0.01 0.06 (0.01)
EBITDA (1,425) 3,266 (7,330) (2,991)
per share - basic (0.09) 0.19 (0.44) (0.18)
EBITDA before one-time items
and discontinued operations 659 10,962 (5,124) 5,086
per share - basic 0.04 0.65 (0.31) 0.30
Total Assets 26,665 53,805
Total long-term financial liabilities 841 5,257
Shareholder's equity 15,655 21,779
Shares outstanding, end of period 16,672,097 16,820,597
The Chief Operating Officer of the Corporation has tendered his resignation, effective November 3, 2009, to pursue other alternatives. The Corporation has retained a senior executive with strong accounting and business experience as chief accounting officer to assist the CEO with tasks previously handled by the current Chief Operating Officer.
The Corporation's Food Division continues to face a very competitive environment with limited ability in the short term to increase sales volume and contributions. The Food Division is somewhat more optimistic than in prior years that it will be able to generate new customer opportunities principally in Canada though margins will be difficult to maintain.
The Canadian dollar exchange rate also continues to put pressure on margins and adversely affecting US sales for the Food Division, however there has been some relief in fuel and raw materials prices. The volatile economic and financial conditions preclude the Corporation from providing any specific guidance on anticipated operating income, funds flow from operations or other financial indicators for 2009-10.
Those same market factors are even more prominent when considering future prospects for the Investment Division. Focus on capital preservation will be the key for the Investment Division in the near term, with an eye to growth returning to the Investment markets in the medium term.
The Annual Report, Proxy and Information Circular are expected to be mailed to shareholders on or about November 20, 2009. The Annual Meeting is scheduled for December 15, 2009. The complete Annual Report, including the audited financial statements and Management's Discussion and Analysis will be available, and the audited financial statements for the 2008-9 fiscal year and related management's discussion and analysis are already available, together with other information on the Corporation at www.sedar.com.
Beaumont Select Corporations Inc. is a management and investment corporation, which has investments in a portfolio of equity securities and the food processing and real estate industries. Beaumont charges fees and interest on its investments to its subsidiary companies.The TSX Venture Exchange Does Not Accept Responsibility for the Adequacy or Accuracy of This Release.