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Share Name | Share Symbol | Market | Type |
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TSXV:BMN.A | TSX Venture | Common Stock |
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Beaumont Select Corporations Inc.(TSX VENTURE:BMN.A) ("Beaumont") reported today its financial results for the fourth quarter and fiscal year ending June 30, 2008. The Corporation faced a very challenging period during the fiscal year ended June 30, 2008 in all three divisions which required the Corporation to make a number of difficult changes. Those changes included the ultimate closing of the Bakery Unit resulting in a substantial loss. The Corporation's Investment Division faced very volatile markets throughout the year resulting in the first net loss from the Division's activities, a material reduction in the net equity in the portfolio and a reduced ability to earn recurring distribution income going forward. As part of the wind down of the Bakery Unit, the Corporation also sold one of its commercial properties used by the Bakery Unit which assisted with the Corporation's funds flow in the fourth quarter. The Frozen Food Unit was not affected by the wind down of the Bakery Unit due to its independent operation. The Frozen Food Unit however also incurred a substantial reduction in net operating income due to the strong Canadian dollar and higher raw material and transportation costs with competition remaining very strong. FINANCIAL HIGHLIGHTS As a result of discontinuing the Bakery Unit operations, the assets and liabilities related to the Bakery Unit have been reclassified as assets or liabilities of discontinued operations on the Consolidated Balance Sheets. Operating results related to these operations have been included in net income from discontinued operations on the Consolidated Statements of Operations. Comparative figures of the previous year only have been reclassified to conform to the current year presentation. For the fourth quarter of 2007-8, the reclassification was only completed in respect of summary financial data for matters relating to the Consolidated Statement of Operations. Highlights for the Corporation's financial results for the fiscal year and three months ended June 30, 2008 compared to the same periods last year included the following: - The wind down of the Bakery Unit resulted in a net loss of approximately $5.7 million. The total loss of the discontinued operations of the Bakery Unit was approximately $6.8 million. - The book value of the Corporation's marketable securities portfolio decreased 29% to $29.9 million from the opening year balance. The increase from the beginning of the fourth quarter was 63%. Related margin loans decreased 42% for the fiscal year (55% increase for the fourth quarter) to $16.7 million, resulting in a slightly lower overall margin ratio of 55.8% compared to 68.2% at the beginning of the fiscal year. - The Investment Division activities generated a loss of $1.0 million during the 2007-8 fiscal year ($5.9 million gain during the fourth quarter). This contrasts with a gain of $3.7 million for 2006-7 ($1.0 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 $2.0 million, down from $2.3 million during the previous fiscal year. - As part of the wind down of the Bakery Unit, related operating credit lines were repaid together with a portion of the related long term debt (the balance of the long term debt being serviced in the ordinary course by the Corporation). Combined with changes in other working capital accounts, the Corporation's working capital ratio improved to 1.55 compared to 1.29 at the beginning of the 2007-8 fiscal year. Total long term debt has been reduced by 36% from the opening year balance to $6.4 million with most of the reduction occurring in the fourth quarter. - Operating income (derived principally from the Frozen Food Unit) declined by $409 thousand to a net operating loss of $1.8 million compared to an operating loss of $1.4 million in the prior year. - Income recorded by the Corporation for its equity investment in Somerset Properties Ltd. increased to $1.6 million compared to $508 thousand in the prior fiscal year most of which increase occurred in the fourth quarter. As part of the reorganization Somerset in the fourth quarter, the Corporation had a deemed disposition of its Somerset shares that resulted in a gain of $859 thousand. In addition the Corporation also had a $246 thousand gain on the repurchase of fractional Somerset shares from the Corporation. The Corporation's proportionate share of Somerset's income was $409 thousand. Somerset's strong operating income from its real estate subsidiary was largely offset by negative results from Somerset's own investment portfolio. - As part of the Somerset reorganization, a $3 million dividend was declared (of which the Corporation received its proportionate $1.2 million share), over $11 million of additional assets were acquired at fair market value by Somerset from its controlling shareholder paid for by the issuance of shares, and the Corporation repaid its indebtedness to Somerset, bringing the Corporation's investment in Somerset now to 19.4%. 2008 FINANCIAL HIGHLIGHTS (thousands of dollars except share and per share info) Three Months Ended Year Ended 30-Jun-08 30-Jun-07 30-Jun-08 30-Jun-07 Net Sales 4,388 4,005 18,878 18,862 Operating Income (Loss) 410 (146) (1,766) (1,357) Net Income (Loss) 4,705 (602) (4,364) (130) Net Income (Loss) per share - basic 0.28 (0.04) (0.26) (0.01) Funds from (used in) operations 687 (89) (115) 213 per share - basic 0.01 (0.01) (0.01) (0.01) EBITDA 3,266 1,057 (2,991) 5,771 per share - basic 0.19 0.06 (0.18) 0.34 EBITDA before one-time expenses and discontinued operations 10,962 874 5,086 6,249 per share - basic 0.65 0.05 0.30 0.37 Total Assets 53,805 73,511 Total long-term financial liabilities 5,257 8,706 Shareholder's equity 21,779 21,640 Shares outstanding, end of period 16,820,597 16,928,597 Outlook The first part of the 2008-9 fiscal year has not provided grounds for optimism for a different financial direction in the coming year. The opening months have further eroded the size and equity of the Corporation's portfolio in what may be unprecedented world-wide negative economic and financial market conditions. As of the close of October 14, 2008, the total size of the Corporation's marketable securities portfolio has been reduced to $6.4 million with a net equity position of $3.6 million, down 73% from the net equity position at the beginning of the current 2008-9 fiscal year. Like the Corporation's portfolio, the Somerset Properties Ltd. portfolio also suffered material declines since June 30, 2008. On a minor slightly positive note, the Frozen Food Unit has increased its sales revenue slightly in the opening months of 2008-9. From this current environment, the Corporation is modifying its investment and business strategies to enable the Corporation to steer through potential receding economic conditions for the balance of the year. The Annual Report, Proxy and Information Circular are expected to be mailed to shareholders on or about November 7, 2008. The Annual Meeting is scheduled for December 10, 2008. The complete Annual Report, including the audited financial statements and Management's Discussion and Analysis, together with other information on the Corporation, is available at www.sedar.com. Beaumont Select Corporations Inc. is a management and investment corporation, which has investments in a portfolio of marketable securities and the food processing and real estate industries. Beaumont charges fees and interest on its investments to its subsidiary companies.
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