ENVOY COMMUNICATIONS GROUP INC. ANNOUNCES FISCAL 2005
THIRD QUARTER RESULTS
Envoy Earns $0.17 per Share, Revenue up 21%
TORONTO, ON — August 09, 2005— Envoy Communications Group Inc. (NASDAQ;ECGI, TSX:ECG) today announced its financial results for its third quarter and nine months ended June 30, 2005.
Revenue for the quarter increased 21% to $12.0 million compared to $10.0 million for the third quarter of 2004. Revenue for this quarter compared to the second quarter increased by 18%. Net earnings for this quarter (including the $1.9 million gain from the sale of John Street) was $3.6 million compared to $1.2 million for the same period last year. The earnings per share was $0.17 per common share, compared to $0.06 per common share for the same period last year.
For the nine months ended June 30, 2005, revenues increased 12% to $31.3 million, versus revenues of $27.9 million for the same period last year. Net earnings were $5.1 million or $0.23 per common share, compared to a net loss of ($2.8) million or ($0.19) per common share for the same period last year.
“As a result of the sale of John Street we are increasing our earnings guidance for 2005 fiscal year from $0.20 per share to $0.28 per share.” said Geoffrey Genovese, CEO of Envoy Communications Group Inc. Envoy’s Watt International had a better than expected quarter in North America and Parker Williams also performed well in the UK. Although revenues remain strong, Gilchrist UK’s margins have decreased, due to increased price pressure. We believe that our proprietary software “ODIN” will allow Gilchrist to gain additional efficiencies in the near future, thus improving its profitability.
During the nine months ended June 30, 2005, Envoy repurchased 1,816,237 shares under its normal course issuer bid program. This resulted in a total of 21,637,030 shares outstanding as of June 30, 2005.
About Envoy
Envoy Communications Group (NASDAQ: ECGI / TSX:ECG) is an international consumer and retail branding company with offices throughout North America and Europe. For more information on Envoy visitwww.envoy.to.
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’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’s services, changes in competition, the ability of Envoy 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 that Envoy’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.
For further information, please call: Envoy Communications Group Inc. Contact: Geoffrey Genovese Tel: (416) 593-1212
Or contact our investor relations department at:info@envoy.to
Financial Highlights
Consolidated Statements of Operations
Unaudited — Prepared by Management
(Expressed In Canadian dollars)
For the nine months ended: | June 30 | June 30 | ||||||
2005 | 2004 | |||||||
Net revenue | $ | 31,260,366 | $ | 27,890,765 | ||||
Operating expenses: | ||||||||
Salaries and benefits | 20,492,955 | 18,298,300 | ||||||
General and administrative | 5,362,970 | 4,615,946 | ||||||
Occupancy costs | 2,351,624 | 1,931,317 | ||||||
28,207,549 | 24,845,563 | |||||||
Depreciation | 1,839,500 | 1,746,667 | ||||||
Investment earnings | (2,043,389 | ) | (137,313 | ) | ||||
Accreted interest imputed on warrants and debentures | — | 2,552,991 | ||||||
Interest expense (income) and financing costs | (87,217 | ) | 1,002,124 | |||||
27,916,443 | 30,010,032 | |||||||
Earnings (loss) before income taxes, minority interest and discontinued operations | 3,343,923 | (2,119,267 | ) | |||||
Income tax expense | — | 302,577 | ||||||
Earnings (loss) before minority interest and discontinued operations | 3,343,923 | (2,421,844 | ) | |||||
Minority interest | 88,238 | — | ||||||
Earnings (loss) from continuing operations | 3,255,685 | (2,421,844 | ) | |||||
Income from discontinued operations, net of income taxes | 1,801,507 | (385,309 | ) | |||||
Net earnings (loss) | $ | 5,057,192 | $ | (2,807,153 | ) | |||
Earnings (loss) per share | ||||||||
Basic | $ | 0.23 | $ | (0.19 | ) | |||
Diluted | 0.23 | (0.19 | ) | |||||
Weighted average number of common shares outstanding | 22,383,610 | 14,863,255 |
Consolidated Statements of Deficit
Unaudited — Prepared by Management
(Expressed In Canadian dollars)
For the nine months ended: | June 30 | June 30 | ||||||
2005 | 2004 | |||||||
Deficit, beginning of period | $ | (48,344,277 | ) | $ | (45,237,473 | ) | ||
Net earnings (loss) | 5,057,192 | (2,807,153 | ) | |||||
Deficit, end of period | $ | (43,287,085 | ) | $ | (48,044,626 | ) | ||
Envoy Communications Group Inc.
Consolidated Balance Sheet highlights
Unaudited — Prepared by Management
(Expressed In Canadian dollars)
As at: | June 30 | September 30 | ||||||
2005 | 2004 | |||||||
Current assets | $ | 41,053,129 | $ | 59,432,456 | ||||
Long-term assets | 42,349,646 | 30,823,554 | ||||||
83,402,775 | 90,256,010 | |||||||
Current liabilities | 6,944,215 | 13,003,281 | ||||||
Long-term liabilities | 265,365 | 361,230 | ||||||
7,209,580 | 13,364,511 | |||||||
Minority interest | 250,465 | — | ||||||
Shareholders’ equity | 75,942,730 | 76,891,499 | ||||||
$ | 83,402,775 | $ | 90,256,010 | |||||
Envoy Communications Group Inc.
Consolidated Statements of Operations
Unaudited — Prepared by Management
(Expressed In Canadian dollars)
For the three months ended: | June 30 | June 30 | ||||||
2005 | 2004 | |||||||
Net revenue | $ | 12,001,603 | $ | 9,953,860 | ||||
Operating expenses: | ||||||||
Salaries and benefits | 7,925,936 | 6,264,606 | ||||||
General and administrative | 1,669,901 | 1,316,244 | ||||||
Occupancy costs | 526,377 | 656,289 | ||||||
10,122,214 | 8,237,139 | |||||||
Depreciation | 664,054 | 589,704 | ||||||
Investment Earnings | (540,834 | ) | (87,848 | ) | ||||
Interest (income) expense and financing costs | (31,620 | ) | 11,024 | |||||
10,213,814 | 8,750,019 | |||||||
Earnings before income taxes, minority interest and discontinued operations | 1,787,789 | 1,203,841 | ||||||
Income taxes | — | 69,136 | ||||||
Earnings before minority interest and discontinued operations | 1,787,789 | 1,134,705 | ||||||
Minority interest | 80,226 | — | ||||||
Earnings before discontinued operations | 1,707,563 | 1,134,705 | ||||||
Earnings from discontinued operations, net of income taxes | 1,890,880 | 109,725 | ||||||
Net earnings | $ | 3,598,443 | $ | 1,244,430 | ||||
Earnings per share | ||||||||
Basic | $ | 0.17 | $ | 0.06 | ||||
Diluted | 0.17 | 0.06 | ||||||
Weighted average number of common shares outstanding | 21,737,927 | 21,383,348 |
Consolidated Statements of Deficit
Unaudited — Prepared by Management
(Expressed In Canadian dollars)
For the three months ended: | June 30 | June 30 | ||||||
2005 | 2004 | |||||||
Deficit, beginning of period | $ | (46,885,528 | ) | $ | (49,141,916 | ) | ||
Net earnings | 3,598,443 | 1,244,430 | ||||||
Deficit, end of period | $ | (43,287,085 | ) | $ | (47,897,486 | ) | ||