DELSON, QUEBEC–(Marketwired – Nov. 29, 2016) – Goodfellow Inc. (TSX:GDL) announced today the completion of its review of accounts undertaken in connection with the discovery of certain discrepancies which led to the announcement on October 13, 2016 of the delay in the filing of its interim financial report, interim management discussion and analysis and interim certificates for the quarter ended August 31, 2016. As a result, the Company restated the consolidated statement of financial position as of May 31, 2016, the Consolidated Statement of Comprehensive Income, Cash Flows and Statement of Change in Shareholders’ Equity and Comprehensive Income for the three and six-month periods ended May 31, 2016. The restated interim consolidated financial statements at May 31, 2016 includes adjustments mainly in the inventory valuation following an extensive review process of its new Enterprise Resource Planning (ERP), controls and procedures. The net impact on the statement of financial position was a reduction of $1.1 million in assets, a reduction of $0.2 million in currents liabilities and a reduction of $0.9 million in Shareholders’ Equity. The net impact of the adjustments was a reduction of net income from $3.4 million to $2.5 million for the three months ended May 31, 2016. Net income for the six months ended May 31, 2016 decreased from $2.5 million to $1.6 million.
“We are disappointed that inaccuracies impacted our Q2 results. All measures are taken to assure the ongoing accuracy of our reported results. We are assisted by a team from Deloitte to complete this process quickly” said Denis Fraser, President and Chief Executive Officer. “Our results nevertheless, were less than expected. The combination of increased cost related to the implementation of the ERP system and softer margins impacted our profitability.”
Goodfellow Inc. is one of eastern Canada’s largest independent re-manufacturers and distributors of lumber and hardwood flooring products. Goodfellow shares trade on the Toronto Stock Exchange under the symbol GDL.
| GOODFELLOW INC. |
| Consolidated Statement of Comprehensive Income (Unaudited) |
| For the three months and six months ended May 31, 2016 and 2015 |
| (in thousands of dollars, except per share amounts) |
| For the three months ended |
For the six months ended |
||||
| May 31 2016 Restated |
May 31 2015 |
May 31 2016 Restated |
May 31 2015 |
||
| $ | $ | $ | $ | ||
| Sales | 166,623 | 153,975 | 275,282 | 252,072 | |
| Expenses | |||||
| Cost of goods sold | 138,729 | 125,653 | 226,708 | 203,341 | |
| Selling, administrative and general expenses | 23,810 | 23,034 | 45,113 | 43,412 | |
| Net financial costs | 824 | 713 | 1,459 | 1,247 | |
| 163,363 | 149,400 | 273,280 | 248,000 | ||
| Earnings before income taxes | 3,260 | 4,575 | 2,002 | 4,072 | |
| Income taxes | 787 | 1,327 | 435 | 1,181 | |
| Net earnings | 2,473 | 3,248 | 1,567 | 2,891 | |
| Net earnings per share – Basic and diluted | 0.29 | 0.38 | 0.18 | 0.34 | |
| GOODFELLOW INC. |
| Consolidated Statement of Financial Position (Unaudited) |
| (in thousands of dollars) |
| As at May 31 2016 Restated |
As at November 30 2015 |
As at May 31 2015 |
||
| $ | $ | $ | ||
| Assets | ||||
| Current Assets | ||||
| Cash | 1,396 | 965 | 494 | |
| Trade and other receivables | 122,316 | 65,670 | 98,708 | |
| Income taxes receivable | 721 | – | – | |
| Inventories | 138,901 | 97,665 | 107,384 | |
| Prepaid expenses | 4,842 | 4,156 | 2,852 | |
| Total Current Assets | 268,176 | 168,456 | 209,438 | |
| Non-Current Assets | ||||
| Property, plant and equipment | 39,343 | 36,146 | 36,626 | |
| Intangible assets | 3,614 | 2,667 | – | |
| Defined benefit plan asset | 4,991 | 4,812 | 1,832 | |
| Investment in a joint venture | 3,444 | – | – | |
| Total Non-Current Assets | 51,392 | 43,625 | 38,458 | |
| Total Assets | 319,568 | 212,081 | 247,896 | |
| Liabilities | ||||
| Current liabilities | ||||
| Bank indebtedness | 102,107 | 46,781 | 66,227 | |
| Trade and other payables | 82,367 | 29,762 | 52,876 | |
| Income taxes payable | – | 1,595 | 679 | |
| Provision | 1,111 | 1,112 | 941 | |
| Current portion of long-term debt | 183 | 113 | 50 | |
| Total Current Liabilities | 185,768 | 79,363 | 120,773 | |
| Non-Current Liabilities | ||||
| Provision | 503 | 477 | 499 | |
| Long-term debt | 188 | – | 37 | |
| Deferred income taxes | 4,718 | 4,141 | 2,535 | |
| Defined benefit plan obligation | – | – | 1,675 | |
| Total Non-Current Liabilities | 5,409 | 4,618 | 4,746 | |
| Total Liabilities | 191,177 | 83,981 | 125,519 | |
| Shareholders’ equity | ||||
| Share capital | 9,152 | 9,152 | 9,152 | |
| Retained earnings | 119,239 | 118,948 | 113,225 | |
| 128,391 | 128,100 | 122,377 | ||
| Total Liabilities and Shareholders’ Equity | 319,568 | 212,081 | 247,896 | |
| GOODFELLOW INC. |
| Consolidated Statement of Cash Flows (Unaudited) |
| For the three months and six months ended May 31, 2016 and 2015 |
| (in thousands of dollars) |
| For the three months ended |
For the six months ended |
|||||||||
| May 31 2016 Restated |
May 31 2015 |
May 31 2016 Restated |
May 31 2015 |
|||||||
| $ | $ | $ | $ | |||||||
| Operating Activities | ||||||||||
| Net Earnings | 2,473 | 3,248 | 1,567 | 2,891 | ||||||
| Adjustments for : | ||||||||||
| Depreciation | 938 | 746 | 1,736 | 1,477 | ||||||
| Accretion expense on provision | 13 | 3 | 26 | (11 | ) | |||||
| Income taxes | 787 | 1,327 | 435 | 1,181 | ||||||
| (Gain) Loss on disposal of property, plant and equipment | – | (21 | ) | – | 16 | |||||
| Interest expense | 529 | 463 | 963 | 807 | ||||||
| Funding in (excess) deficit of pension plan expense | (54 | ) | 56 | (179 | ) | 113 | ||||
| Share of the profits of the joint venture | (444 | ) | – | (444 | ) | – | ||||
| 4,242 | 5,822 | 4,104 | 6,474 | |||||||
| Changes in non-cash working capital items | (11,211 | ) | 4,134 | (46,725 | ) | (25,771 | ) | |||
| Interest paid | (508 | ) | (401 | ) | (1,164 | ) | (765 | ) | ||
| Income taxes paid | (2,505 | ) | (284 | ) | (3,058 | ) | (1,499 | ) | ||
| (14,224 | ) | 3,449 | (50,947 | ) | (28,035 | ) | ||||
| Net Cash Flows from Operating Activities | (9,982 | ) | 9,271 | (46,843 | ) | (21,561 | ) | |||
| Financing Activities | ||||||||||
| Net increase (decrease) in bank loans | 2,500 | (6,000 | ) | 15,500 | (1,500 | ) | ||||
| Increase in banker’s acceptances | 2,500 | 2,000 | 30,500 | 22,000 | ||||||
| Increase in long-term debt | 560 | – | 1,050 | – | ||||||
| Reimbursement of long-term debt | (56 | ) | (847 | ) | (792 | ) | (833 | ) | ||
| Dividends paid | (1,276 | ) | – | (1,276 | ) | – | ||||
| 4,228 | (4,847 | ) | 44,982 | 19,667 | ||||||
| Investing Activities | ||||||||||
| Acquisition of property, plant and equipment | (568 | ) | (611 | ) | (934 | ) | (1,117 | ) | ||
| Increase in intangible assets | (622 | ) | – | (1,305 | ) | – | ||||
| Proceeds on disposal of property, plant and equipment | – | 3 | – | 17 | ||||||
| Business acquisitions, net of cash acquired | (587 | ) | – | (4,795 | ) | – | ||||
| (1,777 | ) | (608 | ) | (7,034 | ) | (1,100 | ) | |||
| Net cash (outflow) inflow | (7,531 | ) | 3,816 | (8,895 | ) | (2,994 | ) | |||
| Cash position, beginning of period | (3,180 | ) | (10,549 | ) | (1,816 | ) | (3,739 | ) | ||
| Cash position, end of period | (10,711 | ) | (6,733 | ) | (10,711 | ) | (6,733 | ) | ||
| Cash position is comprised of : | ||||||||||
| Cash and cash equivalents | 1,396 | 494 | 1,396 | 494 | ||||||
| Bank overdraft | (12,107 | ) | (7,227 | ) | (12,107 | ) | (7,227 | ) | ||
| (10,711 | ) | (6,733 | ) | (10,711 | ) | (6,733 | ) | |||
| GOODFELLOW INC. |
| Consolidated Statement of Change in Shareholders’ Equity (Unaudited) |
| For the six months ended May 31, 2016 and 2015 |
| (in thousands of dollars) |
| Share Capital |
Retained Earnings Restated |
Total Restated |
||||
| $ | $ | $ | ||||
| Balance as at November 30, 2014 | 9,152 | 110,334 | 119,486 | |||
| Net earnings | – | 2,891 | 2,891 | |||
| Total comprehensive income | – | 2,891 | 2,891 | |||
| Balance as at May 31, 2015 | 9,152 | 113,225 | 122,377 | |||
| Balance as at November 30, 2015 | 9,152 | 118,948 | 128,100 | |||
| Net earnings | – | 1,567 | 1,567 | |||
| Total comprehensive income | – | 1,567 | 1,567 | |||
| Transactions with owners of the Company | ||||||
| Dividends | – | (1,276 | ) | (1,276 | ) | |
| Balance as at May 31, 2016 | 9,152 | 119,239 | 128,391 | |||
