Avcorp announces 2011 Annual Financial Results

Common Stock Listed
Toronto
Trading Symbol: AVP

VANCOUVER, March 28, 2012 /PRNewswire/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its financial results for the year ended December 31, 2011.

During the year ended December 31, 2011, the Company recorded a positive EBITDA of $3,847,000 on $86,018,000 revenue, as compared to a negative EBITDA of $1,617,000 on $77,258,000 revenue for the preceding year; and a net loss for the current year of $2,452,000 as compared to a net loss of $7,402,000 for the year ended December 31, 2010.

Current year revenues have increased by 11% from the immediately preceding year; a three year sales high.  Year-on-year the Company's revenues increased by $8,760,000, primarily from strong Boeing programs demand, start-up and commencement of production deliveries for the BAE Systems F35 program, as well as increased demand for non-original equipment manufacturer's products and services.

A combination of sales growth, improvements in both operating efficiencies and production quality levels, as well as continued stringent cost controls have reduced net losses by $4,950,000 in 2011 relative to 2010.

Cash flows from operating activities during the year ended December 31, 2011 utilized $1,520,000 of cash due to funding working capital growth in support of pending new program deliveries; as compared to utilizing $1,971,000 of cash during the year ended December 31, 2010.  The Company has a working capital surplus of $14,663,000 as at December 31, 2011 (December 31, 2010: $6,275,000 deficit) arising from growth in accounts receivable and inventories as well as a replacement of current bank debt (operating line of credit) with long term debt.  On December 31, 2011, the ratio of the Company's current assets to current liabilities was 1.66:1 (December 31, 2010: 0.80:1).

Net cash flows from financing activities provided $7,263,000 of cash during the current year (December 31, 2010: $4,689,000).  The December 31, 2010 $8,158,000 operating line of credit indebtedness was repaid in full during 2011; the Company has $3,778,000 cash in bank as at December 31, 2011.

During the course of the Company's 2011 year-end financial audit it was determined that, as a result of specific differences between the application of Canadian GAAP (EIC-70) and IFRS (IAS 32),  the Company's preferred shares should have been classified as a liability on the January 1, 2010 IFRS transition date.  Application of the presentation and measurement principles of IAS 32 - Financial Instruments is complex, particularly in evaluating instruments that have multiple characteristics such as these preferred shares.

The impact of this difference, applied on a comparative basis, for the first three quarters of 2011 has been disclosed in the financial statements for the year ended December 31, 2011.  The preferred share reclassification results in a $7,622,000 reduction in equity with a corresponding increase in liabilities. This is first quantified in the January 1, 2010 opening IFRS transitional balance sheet. On a quarterly basis, commencing on March 31, 2010 through to December 31, 2011, the preferred share dividends accrued and charged to retained earnings are recorded as finance costs thereby reducing net income by $189,000 per quarter.

About Avcorp

Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing, Bombardier, and Cessna.  With more than 50 years of experience, over 500 skilled employees and 354,000 square feet of facilities, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light weight, strong, reliable structures.  Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).


"Signed"
MARK VAN ROOIJ
PRESIDENT and CHIEF EXECUTIVE OFFICER

Forward-Looking Statements

This release should be read in conjunction with the Company's unaudited financial statements contained in the Company's Annual Report and with the quarterly financial statements and accompanying notes filed with Sedar (www.sedar.com).

Certain statements in this release and other oral and written statements made by the Company from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or projected revenues, income, returns or other financial measures.  These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following:  (a) the extent to which the Company is able to achieve savings from its restructuring plans; (b) uncertainty in estimating the amount and timing of restructuring charges and related costs; (c) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (d) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (e) government funding and program approvals affecting products being developed or sold under government programs; (f) cost and delivery performance under various program and development contracts; (g) the adequacy of cost estimates for various customer care programs including servicing warranties; (h) the ability to control costs and successful implementation of various cost reduction programs; (i) the timing of certifications of new aircraft products; (j) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (k) changes in aircraft delivery schedules or cancellation of orders; (l) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (m) the availability and cost of insurance; (n) the Company's ability to maintain portfolio credit quality; (o) the Company's access to debt financing at competitive rates; and (p) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

FOR THE PERIOD ENDED DECEMBER 31 December 31
2011
    December 31
2010
    January 1
2010
ASSETS              
Current assets              
Cash $   3,778     $            -     $            -
Accounts receivable 12,160     8,869     6,689
Inventories 19,418     14,886     15,497
Prepayments and other assets 1,396     1,804     970
  36,752     25,559     23,156
Non-current assets              
Prepaid rent 146     146     146
Development costs 5,540     5,181     3,923
Property, plant and equipment 12,523     14,794     17,346
Warranty claim receivable -     -     1,637
Total assets 54,961     45,680     46,208
               
LIABILITIES AND EQUITY              
Current liabilities              
Bank indebtedness -     8,158     8,422
Accounts payable and accrued liabilities 10,694     9,122     6,996
Current portion of long-term debt 1,505     5,420     6,131
Preferred shares 9,890     9,134     8,378
  22,089     31,834     29,927
Non-current liabilities              
Deferred gain 311     358     405
Lease inducement 666     764     863
Deferred program revenues 18,671     6,804     3,116
Long-term debt 12,027     3,275     1,811
Warranty provisions 85     167     1,647
  53,849     43,202     37,769
Equity              
Capital stock 73,251     72,927     71,954
Equity component of convertible loan 453     453     -
Contributed surplus 3,424     2,662     2,647
Deficit (76,016)     (73,564)     (66,162)
  1,112     2,478     8,439
Total liabilities and equity 54,961     45,680     46,208

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares and per share amounts)

FOR THE PERIOD ENDED DECEMBER 31 2011     2010
Revenues $   86,018     $   77,258
Cost of sales 74,366     70,371
Gross profit 11,652     6,887
Administrative and general expenses 11,384     10,842
Office equipment depreciation 644     943
Other (gains) and losses - net (14)     (5)
Operating Income (loss) (362)     (4,893)
Foreign exchange (gain) loss (333)     43
Finance costs 2,423     2,117
Income (loss) before income tax and other items (2,452)     (7,053)
Write-down of equipment -     349
Income tax expense -     -
Loss and total comprehensive loss for the period (2,452)     (7,402)
Earnings (loss) per share:        
Basic earnings (loss) per common share (0.01)     (0.04)
Diluted earnings (loss) per common share (0.01)     (0.04)
Basic weighted average number of shares outstanding (000's) 197,959     192,632
Diluted weighted average number of shares outstanding (000's) 229,202     245,534

CONSOLIDATED STATEMENTS OF CASH FLOWS

(prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

FOR THE PERIOD ENDED DECEMBER 31 2011 2010
Cash flows from operating activities    
Profit (loss) before tax $   (2,452) $   (7,402)
  Adjustment for items not affecting cash:    
    Accretion on convertible loan 85 54
    Preferred share dividends accrued 756 756
    Accrued interest and government royalties 1,583 1,307
    Amortization and depreciation 3,494 3,425
    Deferred tooling revenue amortization and reclassification to revenue (2,421) (834)
    Development cost amortization 382 243
    Fair value of warrants amortization 88 -
    Provision for loss-making contracts (689) (202)
    Provision for obsolete inventory (226) (457)
    Stock based compensation 144 15
    Write-down of equipment - 349
    Other items (204) 118
    540 (2,628)
Changes in non-cash working capital    
  Accounts receivable (414) (1,714)
  Inventories (3,617) 1,270
  Prepayments 413 (830)
  Accounts payable and accrued liabilities 1,558 2,108
  Warranty provision - (177)
Net cash from operating activities (1,520) (1,971)
       
Cash flows from investing activities    
Purchase of equipment (1,224) (1,228)
Proceeds from disposal of property, plant and equipment - 11
Payments relating to development costs and tooling (741) (1,501)
Net cash from investing activities (1,965) (2,718)
       
Cash flows from financing activities    
(Decrease) increase in bank indebtedness (8,158) (264)
Payment of interest (1,128) (884)
Proceeds from customer funding of program introduction 11,412 4,057
Proceeds from current and long-term debt 6,000 1,771
Repayment of current and long-term debt (863) (964)
Issue of common shares - 977
Share issue expense - (4)
Net cash from financing activities 7,263 4,689
Net increase (decrease) in cash 3,778 -
Cash - Beginning of period - -
Cash - End of period 3,778 -

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares)

  Share capital Equity
component
convertible
loan
Contributed
surplus
Deficit Total
equity
  Shares Amount
Balance January 1, 2010 177,732,112 $ 71,954 $     - $  2,647 $ (66,162) $ 8,439
Issue of common shares 17,773,211 973 - - - 973
Equity component of convertible loan - - 453 - - 453
Stock-based compensation expense - - - 15 - 15
Loss for the period - - - - (7,402) (7,402)
Balance December 31, 2010 195,505,323 72,927 453 2,662 (73,564) 2,478
Balance December 31, 2010 195,505,323 72,927 453 2,662 (73,564) 2,478
Issue of common shares 6,488,790 324 - - - 324
Stock based compensation expense - - - 145 - 145
Fair value of warrants issued - - - 617 - 617
Loss for the period - - - - (2,452) (2,452)
Balance December 31, 2011 201,994,113 73,251 453 3,424 (76,016) 1,112

 

 

SOURCE Avcorp Industries Inc.



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