Montreal, April 30, 2001 -Cenosis Inc. (ME : CE) announced today its financial results for the third quarter and first nine months ended February 28, 2001. The Company also reaffirmed its expectations for strong internal growth and an improved financial performance for the 2001-2002 fiscal year.
For the third quarter ended February 28, 2001, Cenosis posted revenues of $3,157,757, compared to $84,134 for the same period in 2000. For the nine months ended February 28, 2001, revenues increased to $8,208,606 compared to $675,608 last year. The significant increase in both periods is due mainly to the acquired operations, StanMont and Leading Graphics, which now offer a much wider range of services thanks to the solutions deployed by Cenosis and its KangaCom subsidiary.
Gross margin for the third quarter is $432,042, compared to a negative margin of $58,313 for the corresponding period in 2000. The net loss is $1,582,915, or $0.12 per share for the three months ending February 28, 2001, versus a loss of $268,667, or $0.03 per share in the same period in 2000. This increase in the net loss is attributable to costs incurred in KangaCom's commercial launch activities, the new KangaXpress service available through the BellZinc.ca portal and costs associated with the integration of newly acquired subsidiaries.
Over the course of the first three quarters, the company capitalized $484,059 in costs related to the development of new software solutions which will be marketed over the coming months. In addition to the KangaXpress service, these solutions include an information system which manages workflows in graphic communications and editorial content production, allowing for, among other benefits, the customization of business practices, cost calculations and the integration of different production workflows through LANs and WANs.
"We are pleased with these results which were achieved despite a slowdown in the electronic business solutions market. Furthermore, the third quarter represents the slowest period of the year for the premedia industry," said Richard Corbo, President and Chief Executive Officer.
Cenosis expects revenues of $12 million for fiscal 2000-2001 ending May 31, 2001. For fiscal 2001-2002 beginning on June 1st, the Company forecasts revenues of over $20 million and positive cash flow which should allow it to reach break-even one year sooner than expected.
Revenue growth in fiscal 2001-2002 is expected to come mainly from its wholly owned subsidiary KangaCom Inc., following the award of major contracts by large customers for the organization of advertising content bound for traditional print distribution and Web publication.
Furthermore, the KangaCom subsidiary will launch digital file transport services in Europe towards the beginning of June 2001, in partnership with key players in that market. The subsidiaries supplying premedia services, StanMont and Leading Graphics, expect revenue growth of over 25% compared to fiscal 2000-2001. This growth will be generated mainly by new clients attracted by the synergy with the KangaCom subsidiary and use of advanced Cenosis software solutions.
These revenue projections do not take into account additional acquisitions which the Company may conclude over the course of fiscal 2001-2002.
"Our growth in fiscal 2001-2002 will be driven by the integration of our premedia operations with KangaCom's and Cenosis's state-of-the-art solutions for the publishing and graphic communications industries. While achieving our revenue target, we will focus on continuing improvements in our financial performance with the objective to attain break-even for the year as a whole," added Mr. Corbo.
Cenosis Pursues Business Plan
Cenosis pursued its business plan in the third quarter by launching KangaXpress, a new digital file transport service available through Bell ActiMedia's BellZinc.ca SME portal. The Company also announced the signing of major new contracts with half the daily newspapers in Quebec and with Bell ActiMedia. It also extended its business relationships with major accounts such as White Rose Home & Garden Centres, Nissan, Canadian Tire, Molson and most of Canada's large advertising agencies.
Signing of Annual Contracts with Half the Dailies in Quebec
On February 27, 2001, Cenosis announced that its KangaCom subsidiary had signed contracts with six dailies in Quebec for the use of KangaGraph service. Le Journal de Montréal, Le Droit, Le Quotidien, Le Devoir, Le Nouvelliste and The Record, which together represent half the daily newspaper market in Quebec, are now part of KangaGraph's subscriber base. KangaCom expects to finalize the interconnection of all Quebec dailies and thus ensure that its KangaGraph service will be used industry-wide for the transmission of advertising material.
Launch of KangaXpress
On January 18, 2001, Cenosis launched its KangaXpress service, the first of a suite of services available via Internet. Accessible through BellZinc.ca, KangaXpress is a service as user-friendly as e-mail, requiring no hardware or software investment, while being more economical than traditional couriers. Thanks to this service, a user can now easily transfer via Internet heavy digital files of up to 100 megabytes, such as proofs, multimedia documents, architectural drawings, videos, high resolution photos, etc.
$1.5 Million Private Financing and Acquisition of Leading Graphics
In December 2000, Cenosis completed a private financing admissible under the Quebec Stock Savings Plan (QSSP) for $1.5 million with two institutional funds. The Company issued 600,000 units at $2.50, each composed of one common share and one half warrant for a common share of Cenosis, exercisable at $3.00. The funds were used to finance the acquisition of a 55% majority stake in the Leading Graphics group of companies in Toronto, a transaction which closed on January 24, 2001.
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