TORONTO, Aug. 13, 2007 (PRIME NEWSWIRE) -- Envoy Capital Group Inc. (Nasdaq:ECGI) (TSX:ECG) today announced its financial results for its third quarter ended June 30, 2007. Highlights from the third quarter include:
* Revenue increased to $4.3 million, an improvement of $2.0 million or an 86% increase. * Net earnings of $198,000 or $.02 per fully diluted share (based on a fully diluted weighted average of 10.1 million shares outstanding during the quarter), an improvement of $1.3 million or $.07 per share over the same quarter last year. * Both the Branding and the Merchant Banking Segments contributed to profitability. * Our Branding business, Watt International, announced the opening of a new Shanghai office and signed a joint venture agreement with a Chinese developer. * The issued and outstanding shares as at June 30, 2007 totaled 9.9 million shares, a reduction of 374,000 shares during the quarter. * The net book value as at June 30, 2007 was $4.60 per share.
Envoy recorded net earnings for the nine months ended June 30, 2007 of $2.7 million or $.19 per fully diluted share, compared with a loss of ($2.7) million or ($.013) per fully diluted share for the same period last year. For the three months ended June 30, 2007 net earnings were $198,000 or $.02 per fully diluted share, compared with a loss of ($1.1) million or ($.07) per fully diluted share for the same three month period last year.
"The improvement in our year to date and third quarter earnings over the respective periods last year is a result of new business wins in our Branding business segment, improved returns on the Merchant Banking assets, overall expense reductions compared to last year and the reduction of issued and outstanding shares by way of our share buy back programs" said Geoff Genovese, President and CEO of Envoy.
Watt International, Envoy's Branding business, earned approximately $435,000 in the quarter on revenue of $3.5 million. "Watt is one of the world's leading retail brand strategy and design agencies" said Mr. Genovese. "On the strength and reputation of the Watt brand in the marketplace, we have been able to grow and expand the business domestically and internationally. Watt opened a branch office in Dubai earlier this year and just recently announced that it opened an office in Shanghai."
Merchant Banking investment income for the quarter totaled $766,000. Based on a capital base of approximately $33 million, this represents a return of approximately 2.5% on the Merchant Banking assets during the quarter. The return on Merchant Banking assets over the first nine months was 12.5%. Envoy's Merchant Banking business earned approximately $369,000 in the third quarter, bringing the nine month earnings for this business segment to $2.8 million. As this is the first year of operation for this business segment, there are no comparable earnings for the same period last year.
During the quarter Envoy increased its investment in Mosquito Consolidated Gold Mines Inc ("MSQ") through the purchase of 50,000 units. Each unit consists of 1 common share of MSQ priced at $1.50 and one warrant entitling the holder to purchase 1 additional common share at a price of $2.00 for a period of two years. Envoy's aggregate ownership in MSQ consists of 554,200 common shares and 382,000 warrants. MSQ trades under the symbol MSQ on the Toronto Venture Exchange. Additional information on MSQ can be obtained on Envoy's web site at www.envoy.to or by visiting MSQ's website at www.mosquitogold.com.
During the third quarter Envoy repurchased 374,000 of its common shares pursuant to a Normal Course Issuer Bid announce in the previous quarter. The total number of issued and outstanding common shares as at June 30, 2007 was 9.9 million. This results in a net book value of $4.60 per common share at that date.
Management's discussion and analysis, containing a full analysis of financial results, is available on EDGAR (www.sec.gov/edgar.shtml) and on SEDAR (www.sedar.com).
About Envoy Capital Group Inc.
Envoy Capital Group Inc. (Nasdaq:ECGI) (TSX:ECG) is a merchant banking organization that focuses on providing financial services as well as equity and debt capital, to small and mid-cap companies. For more information on Envoy Capital Group Inc., visit our website at www.envoy.to
The Envoy Capital Group Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3738
Cautionary Statement
Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of Section 21E (i) (1) of the United States Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Envoy Capital Group's actual results to be materially different from any future results expressed or implied by these statements. Such factors include the following: general economic and business conditions, changes in demand for Envoy Capital Group's services, changes in competition, the ability of Envoy Capital Group to integrate acquisitions or complete future acquisitions, interest rate fluctuations, currency exchange rate fluctuations, dependence upon and availability of qualified personnel and changes in government regulation. In light of these and other uncertainties, the forward-looking statements included in this press release should not be regarded as a representation by Envoy Capital Group that Envoy Capital Group's plans and objectives will be achieved. These forward-looking statements speak only as of the date of this press release, and we undertake no obligation to update or revise the statements.
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Envoy Capital Group Inc.
Consolidated Balance Sheet Highlights
Unaudited - Prepared by Management
(Expressed In Canadian dollars)
As at: June 30 September 30
2007 2006
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Current assets $ 36,971,203 $ 68,701,144
Long-term assets 12,145,149 12,572,510
---------------------------------
49,116,352 81,273,654
---------------------------------
Current liabilities 3,384,242 6,059,892
Long-term liabilities 91,858 167,173
---------------------------------
3,476,100 6,227,065
Shareholders' equity 45,640,252 75,046,589
---------------------------------
$ 49,116,352 $ 81,273,654
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Financial Highlights
Envoy Capital Group Inc.
Consolidated Statements of Operations
Unaudited - Prepared by Management
(Expressed In Canadian dollars)
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For the nine months ended: June 30 June 30
2007 2006
-----------------------------
Net revenue from consumer branding
business $ 8,987,580 $ 7,213,074
Net investment gains -- --
Net realized capital gains 1,838,963 --
Unrealized capital gains 1,654,197 --
Interest and dividend income 634,105 --
-----------------------------
13,114,845 7,213,074
-----------------------------
Operating expenses:
Salaries and benefits 7,800,538 8,418,465
General and administrative 1,951,729 2,163,463
Occupancy costs 455,020 753,013
-----------------------------
10,207,287 11,334,941
Depreciation 576,065 604,519
Investment earnings (386,404) (1,174,136)
Interest expense (income) and
financing costs 65,223 (16,829)
-----------------------------
10,462,171 10,748,495
-----------------------------
Earnings (loss) before restructuring
expense, income taxes and discontinued
operations 2,652,674 (3,535,421)
Restructuring expense -- (1,112,760)
-----------------------------
Earnings (loss) before income taxes
and discontinued operations 2,652,674 (4,648,181)
Income tax expense (recovery) -- (1,090,461)
-----------------------------
Earnings (loss) from continuing
operations 2,652,674 (3,557,720)
Earnings from discontinued operations,
net of income taxes -- 876,324
-----------------------------
Net earnings (loss) 2,652,674 (2,681,396)
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Earnings (loss) per share
Basic $ 0.19 $ (0.13)
Diluted $ 0.19 $ (0.13)
Earnings (loss) per share - continuing
operations
Basic $ 0.19 $ (0.17)
Diluted $ 0.19 $ (0.17)
Earnings per share - discontinued
operations
Basic $ -- $ 0.04
Diluted $ -- $ 0.04
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Weighted average number of common
shares outstanding - basic 14,295,732 20,791,146
Weighted average number of common
shares outstanding - fully diluted 14,304,299 20,804,755
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Envoy Capital Group Inc.
Consolidated Statements of Retained Earnings
Unaudited - Prepared by Management
(Expressed In Canadian dollars)
Deficit, beginning of period $(40,266,401) $(42,402,587)
Net earnings (loss) 2,652,674 (2,681,396)
Deficit reduction against share capital 40,266,401 --
-----------------------------
Retained earnings (deficit), end
of period $ 2,652,674 $(45,083,983)
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Financial Highlights
Envoy Capital Group Inc.
Consolidated Statements of Operations
Unaudited - Prepared by Management
(Expressed In Canadian dollars)
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For the three months ended: June 30 June 30
2007 2006
-----------------------------
Net revenue from consumer branding
business $ 3,492,560 $ 2,285,981
Net investment gains
Net realized capital gains 11,012 --
Unrealized capital gains 621,805 --
Interest and dividend income 132,894 --
-----------------------------
4,258,271 2,285,981
-----------------------------
Operating expenses:
Salaries and benefits 3,031,210 2,397,156
General and administrative 897,840 714,989
Occupancy costs 116,752 232,002
-----------------------------
4,045,802 3,344,147
Depreciation 191,221 188,703
Investment earnings -- 249,098
Interest expense (income) and financing
costs 28,085 (5,916)
-----------------------------
4,265,108 3,776,032
-----------------------------
Earnings (loss) before income taxes
and discontinued operations (6,837) (1,490,051)
Income tax recovery (205,150) 21,314
-----------------------------
Earnings (loss) from continuing
operations 198,313 (1,511,365)
-----------------------------
Earnings (loss) from discontinued
operations, net of income taxes -- 392,580
-----------------------------
Net earnings (loss) 198,313 (1,118,785)
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Earnings (loss) per share
Basic $ 0.02 $ (0.05)
Diluted $ 0.02 $ (0.05)
Earnings (loss) per share - continuing
operations
Basic $ 0.02 $ (0.07)
Diluted $ 0.02 $ (0.07)
Earnings per share - discontinued
operations
Basic $ -- $ 0.02
Diluted $ -- $ 0.02
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Weighted average number of common
shares outstanding - basic 10,090,507 20,366,095
Weighted average number of common
shares outstanding - fully diluted 10,099,074 20,379,704
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Envoy Capital Group Inc.
Consolidated Statements of Retained Earnings
Unaudited - Prepared by Management
(Expressed In Canadian dollars)
Deficit, beginning of period $ 2,454,361 $(43,965,198)
Net earnings (loss) 198,313 (1,118,785)
-----------------------------
Retained earnings (deficit), end of
period $ 2,652,674 $(45,083,983)
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