CALGARY, ALBERTA--(Marketwire - Aug. 11, 2011) - Foremost Income Fund announces the financial results for the three and six months ended June 30, 2011.
Condensed Consolidated Interim Statements of Comprehensive Income |
Unaudited |
Three months ended June 30 | , | Six months ended June 30 | , | ||||||||||
(000's), except per Trust Unit amounts | 2011 | 2010 | 2011 | 2010 | |||||||||
Revenue | $ | 65,856 | $ | 39,258 | $ | 122,254 | $ | 82,142 | |||||
Cost of sales | 52,307 | 28,903 | 98,387 | 63,403 | |||||||||
Gross profit | 13,549 | 10,355 | 23,867 | 18,739 | |||||||||
Administrative expenses | 5,516 | 4,433 | 10,148 | 8,492 | |||||||||
Depreciation and amortization | 1,060 | 993 | 1,997 | 1,993 | |||||||||
Other income | (563 | ) | (10 | ) | (555 | ) | (11 | ) | |||||
Income from operating activities | 7,536 | 4,939 | 12,277 | 8,265 | |||||||||
Net financing cost | |||||||||||||
Interest expense (income) | 27 | (25 | ) | 38 | (45 | ) | |||||||
Foreign exchange loss (gain) | 64 | (148 | ) | 77 | 9 | ||||||||
Income before income tax | 7,445 | 5,112 | 12,162 | 8,301 | |||||||||
Income tax recovery | |||||||||||||
Net income and comprehensive income for the period | $ | 7,445 | $ | 5,112 | $ | 12,162 | $ | 8,301 | |||||
Basic and diluted earnings per Trust Unit | $ | 0.36 | $ | 0.24 | $ | 0.58 | $ | 0.39 |
The June 30, 2011 financial statements are prepared in accordance with IFRSs and IFRS 1 First-time Adoption of International Financial Reporting Standards has been applied. The effects of the business conditions and operational responses by the Fund are found by comparing the 2011 and 2010 adjusted statements of income. The cumulative results of the steps undertaken by the Fund are found by comparing the June 30, 2011 and December 31, 2010 statements of financial position. The key elements from Q2 are:
The key financial elements for the year to date are: |
Condensed Consolidated Interim Statement of Financial Position |
Unaudited |
June 30 | , | December 31 | , | ||||
(000's) | 2011 | 2010 | |||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 7,019 | $ | 21,766 | |||
Trade and other receivables | 43,155 | 37,686 | |||||
Inventories | 59,973 | 41,275 | |||||
Prepaid expenses | 1,506 | 749 | |||||
111,653 | 101,476 | ||||||
Property, plant and equipment | 50,710 | 44,813 | |||||
Deferred tax assets | 30,010 | 30,010 | |||||
Goodwill | 3,154 | 3,154 | |||||
Intangibles and other assets | 1,521 | 1,628 | |||||
$ | 197,048 | $ | 181,081 | ||||
Liabilities and Unitholders' Equity | |||||||
Current liabilities | |||||||
Trade and other payables | $ | 23,083 | $ | 15,560 | |||
Warranty provisions | 919 | 835 | |||||
Deferred revenue | 13,309 | 10,747 | |||||
Trust unit options | 254 | 188 | |||||
37,565 | 27,330 | ||||||
Unitholders' equity | |||||||
Unitholders' capital | 60,230 | 62,195 | |||||
Accumulated earnings | 99,253 | 91,556 | |||||
159,483 | 153,751 | ||||||
$ | 197,048 | $ | 181,081 |
ACQUISITION OF ASSETS:
The Fund is pleased to announce that effective July 29, 2011, through its subsidiary Foremost Universal LP, it has acquired a manufacturing facility and equipment located in Stettler, Alberta from Enerflex Ltd. This synergistic group of assets including the 83,000 square foot facility will boost Foremost Universals' production capacity for separator and compression equipment. The facility is strategically located and will help to ensure timely and cost effective deliveries to our customers. Foremosts' management team will operate the business with an attention to outstanding product quality, customer service and improved efficiency. Acquisition costs, to be financed by the Fund's current cash position, will be in the range of approximately $4.9 million in cash, subject to closing adjustments.
TRUST UNIT REDEMPTIONS:
For the six month period ending June 30, 2011 the Fund redeemed 676,751 Trust Units at $6.40 per unit, of which $4.3 million were paid in cash and $37,000 being paid in the subsequent month. Due to the continued strong financial performance of the Fund, the Trustees have determined that, as of the date of August 12, 2011 the Fund will redeem tendered Trust Units at tangible book value + 10% or $6.80 per unit.
TRUST UNIT DISTRIBUTIONS:
The Fund has recently concluded an acquisition to expand its business and is continuing to evaluate other strategic expenditures. In addition, the June 6, 2011 Federal Budget introduced a tax change that may require the Fund to fundamentally change its capital structure. Efforts are underway to more fully understand the proposed tax changes; the accounting, legal and investment communities are providing feedback to the Department of Finance, hoping to have the provisions, which in many cases are difficult to understand or apply, at least clarified and hopefully amended. It should be noted that these proposed changes in rules do not relate to the Fund's decision to delist from the Toronto Stock Exchange in December of 2010.
As a result of these proposed tax changes, and to conserve the Fund's financial flexibility, the Trustees have determined it is prudent to forego its September 30, 2011 distribution. A more definitive course of action will likely be decided before the end of the 2011 fiscal year. To the extent a distribution is not paid, the cash will continue to strengthen the balance sheet and is taken into account in determining future redemption prices.
The Fund is an unincorporated open end mutual fund trust conducting its business through Foremost Universal LP ("Universal") and Foremost Industries LP ("Foremost"). The Fund derives its operational income from both Universal and Foremost. Universal's overall business is focused on the oil and gas industry and contains the business units of:
Foremost is comprised of the business unit of Foremost Industries, a manufacturer of custom equipment used for the oil and gas, construction, water-well and mining industries.
On behalf of the Trustees
Foremost Income Fund
James T. Grenon, Trustee
FORWARD-LOOKING STATEMENT
Certain statements in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this news release. These forward-looking statements involve a number of risks and uncertainties, including: the impact of general economic conditions, industry conditions, changes in laws and regulations, increased competition, fluctuations in commodity prices and foreign exchange, and interest rates.
Contact Information: