ENVOY ANNOUNCES RECORD YEAR END RESULTS
Toronto, December 11, 2000 - Geoffrey Genovese, President and CEO of Envoy
Communications Group (NASDAQ: ECGI / TSE: ECG) today announced the
Company's financial results for the fiscal year ending September 30, 2000.
Through both strong organic growth and strategic international
acquisitions, Envoy's EBITDA increased 39% to $10 million and Net Revenue
rose by 40% to $58.6 million. Over the course of the last year, Envoy's
results have been driven by solid organic growth rates as well as through
international, strategic acquisitions in each of its core disciplines -
Design, Marketing and Technology. Envoy's focus on an expanded global
presence, commitment to "best of breed" services, and efforts to integrate
and cross sell its services are all directed at further improving the
Company's organic growth rates.
"2000 was yet another year of solid growth for Envoy," said Genovese. "
This year Envoy achieved several impressive milestones: we hit our target
of $10 million in EBITDA and exceeded our projection of a $100 million net
revenue run rate for the business. Last year, we also stated our intent to
expand geographically, specifically into the U.K. and Europe. This was
accomplished through the addition of offices in London, Stockholm, Rome,
Paris, Hamburg, and Leeds.
In 2000, Envoy's Design Company, Watt International, continued its
impressive track record of organic growth and expanded its international
reach with new offices in San Francisco, Leeds, London, Paris, and
Stockholm, now employing over 280 people.
From its operations in New York and Toronto, Envoy's marketing discipline
grew in 2000 and will be substantially enhanced with the recently announced
acquisition of UK-based Leagas Delaney, one of the world's top-five
creative agencies. With offices in London, Hamburg, Rome, Paris and
San Francisco, Leagas Delaney brings a number of marquee, international
clients and leading edge creative services to Envoy's marketing group and
expands our staff compliment to over 475 people. The Leagas Delaney
acquisition is scheduled to close by March 30, 2001.
Envoy's technology discipline also experienced strong growth in 2000.
Strong organic growth rates at its Devlin Design / Sage Consultants
operation were a key indicator of the markets acceptance for our
front-end and back-end e-business solutions. Envoys technology business
now operates offices in Toronto and New York, employing over
100 professionals.
Financial highlights (CDN $'000's)
Effective with this year end report for fiscal 2000, Envoy now reports its
net revenue (previously gross margin) as its first line item on its Income
Statement and has removed gross revenue. This will enable analysts and our
shareholders to better compare our company performance measures to our
comparable competitors in the US market.
As of September 30, 2000 2000 1999 % Change
Net Revenue $58,606 $41,787 40%
EBITDA $10,151 $7,280 39%
Income Before Goodwill
Amortization $4,504 $3,487 29%
EBITDA / share FD $0.53 $0.49 8%
Income / share before Goodwill
Amortization $0.24 $0.24 NC
Envoy (www.envoy.to) is an international company, committed to building
"best-of-breed" services in each of its core disciplines: design, marketing
and technology. Through the convergence of its core disciplines, the Envoy
Communications Group of companies provides innovative business building
solutions for marquis, international clients that include adidas-Salomon,
BASF, CIBC, Castrol, CDNOW, FedEx, Hewlett Packard, Honda, Panasonic,
Pizza Hut, Prudential (USA), Safeway, SalomonSmithBarney, Sprint Canada,
Steelcase, TD Waterhouse (USA) and Wal-Mart. Envoy operates offices in
New York, London, Paris, San Francisco, Rome, Hamburg, Stockholm, Leeds,
and Toronto.
Corporate Investor Relations: Jason Mandel
(416) 599-2256, [email protected]
Media Relations: Darren Karasiuk
(416) 593-4181 Ext. 405 [email protected]
Envoy Communications Group Inc.
Consolidated Balance Sheets
(Unaudited - Prepared by management)
September 30 September 30
As at 2000 1999
Assets
Current assets:
Cash $7,105,418 $15,300,454
Accounts receivable 34,234,974 27,910,032
Prepaid expenses 1,732,212 1,310,608
43,072,604 44,521,094
Restricted cash 832,337 545,982
Capital assets 10,448,625 7,869,486
Goodwill and other
assets 46,987,707 22,186,265
Deferred income taxes 966,715 625,587
$102,307,988 $75,748,414
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities $24,247,075 $27,713,688
Income taxes payable 1,190,313 1,698,638
Deferred revenue 1,044,873 -
Amounts collected in excess of
pass-through costs incurred 2,307,047 1,745,814
Current portion of
long-term debt 2,848,430 1,827,086
31,637,738 32,985,226
Long-term debt 7,983,449 2,151,185
Shareholders' equity:
Share capital 54,597,762 35,613,907
Retained earnings 8,403,367 5,492,940
Cummulative translation
adjustment (314,328) (494,844)
62,686,801 40,612,003
$102,307,988 $75,748,414
Envoy Communications Group Inc.
Consolidated Statements of Operations and Retained Earnings
(Unaudited - Prepared by Management)
For the years
ended September 30 2000 1999
Net revenue $58,606,235 $41,787,125
Operating expenses:
Salaries and benefits 35,132,814 25,710,153
General and administrative 10,769,853 6,918,465
Occupancy costs 2,552,854 1,878,090
48,455,521 34,506,708
Earnings before interest expense,
income taxes, depreciation and
goodwill amortization 10,150,714 7,280,417
Depreciation 1,986,691 1,444,110
Interest expense 407,473 346,515
Earnings before income taxes
and goodwill amortization 7,756,550 5,489,792
Income taxes 3,252,354 2,002,995
Earnings before goodwill
amortization 4,504,196 3,486,797
Goodwill amortization, net of
income taxes of $24,000
(1999-$11,000) 1,593,769 610,034
Net earnings $2,910,427 $2,876,763
Retained earnings,
beginning of period 5,492,940 2,682,142
Less loss on redemption
of shares - 65,965
Retained earnings,
end of period $8,403,367 $5,492,940
Net earnings per share
- basic $0.15 $0.20
Net earnings per share
- fully diluted 0.15 0.20
Earnings per share before
goodwill amortization - basic 0.24 0.24
Earnings per share before goodwill
amortization - fully diluted 0.24 0.24
Envoy Communications Group Inc.
Consolidated Statement of Cash Flows
(Unaudited-Prepared by management)
For the years ended September 30 2000 1999
Cash flows from operating activities:
Net earnings $2,910,427 $2,876,763
Items not involving cash:
Deferred income taxes (285,344) 76,000
Depreciation 1,986,691 1,444,110
Goodwill amortization 1,617,769 621,034
Net changes in non-cash working capital balances:
Accounts receivable 1,823,856 (1,395,987)
Prepaid expenses 17,385 (397,950)
Accounts payable and accrued
liabilities (10,519,909) 229,132
Income taxes payable (787,622) 1,794,028
Deferred revenue 1,044,873 -
Amounts collected in excess of
pass-through costs incurred 518,410 (3,656,333)
Other (9,783) 46,284
Net cash provided by (used in)
operating activities (1,683,247) 1,637,081
Cash flows from financing activities:
Long-term debt 5,198,442 5,000,000
Long-term debt repayments (5,497,140) (1,410,467)
Issuance of common shares for
cash 10,939,807 1,361,172
Redemption of common shares - (65,965)
Reduction (Increase) in
restricted cash (277,330) 187,718
Net proceeds from special warrant
issue - 16,192,731
Net cash provided by financing
activities 10,363,779 21,265,189
Cash flows from investing activities:
Acquisition of subsidiaries (net of
cash acquired (bank indebtedness
assumed) of ($941,385); 1999
- $5,919,627) (14,640,994) (8,416,977)
Purchase of capital assets (2,428,228) (2,017,796)
Increase in other assets (67,356) (20,000)
Net cash used in investing
activities (17,136,578) (10,454,773)
Change in cash balance due to
foreign exchange 261,010 (267,201)
(Decrease)/Increase in cash (8,195,036) 12,180,296
Cash, beginning of period 15,300,454 3,120,158
Cash, end of period $7,105,418 $15,300,454
Cash flow from operations per share:
Basic $0.33 $0.34
Fully Diluted 0.33 0.34
Supplemental cash flow information:
Interest paid $407,474 $334,229
Income taxes paid 3,489,185 68,774
Shares issued for non-cash
consideration 6,850,311 3,691,800
Envoy Communications Group Inc.
Consolidated Statements of Operations and Retained Earnings
(Unaudited - Prepared by Management)
September 30 September 30
For the three months ended 2000 1999
Net revenue $19,247,267 $13,865,725
Operating expenses:
Salaries and benefits 11,607,999 8,363,645
General and administrative 3,579,383 2,172,379
Occupancy costs 912,044 890,173
16,099,426 11,426,197
Earnings before interest expense,
income taxes, depreciation and
goodwill amortization 3,147,841 2,439,528
Depreciation 716,790 483,654
Interest expense 161,507 80,385
Earnings before income taxes
and goodwill amortization 2,269,544 1,875,489
Income taxes 877,361 743,183
Earnings before goodwill
amortization 1,392,183 1,132,306
Goodwill amortization, net
of income taxes of $6,000
(1999-$11,000) 683,953 219,343
Net earnings $708,230 $912,963
Net earnings per share - basic $0.03 $0.06
Net earnings per share
- fully diluted 0.03 0.06
Earnings per share before
goodwill amortization - basic 0.07 0.07
Earnings per share before goodwill
amortization - fully diluted 0.07 0.07
Envoy Communications Group Inc.
Consolidated Statement of Cash Flows
(Unaudited-Prepared by management)
September 30 September 30
For the three months ended 2000 1999
Cash flows from operating activities:
Net earnings $708,230 $912,963
Items not involving cash:
Deferred income taxes (286,376) 588,910
Depreciation 716,790 483,654
Goodwill amortization 689,953 230,343
Net changes in non-cash working capital balances:
Accounts receivable (2,699,210) 6,187,703
Prepaid expenses 644,045 (613,119)
Accounts payable and accrued
liabilities (5,148,624) (6,328,231)
Income taxes payable 107,642 658,757
Deferred revenue 709,821 -
Amounts collected in excess of
pass-through costs incurred (1,162,254) (5,582,019)
Other (9,783) 46,284
Net cash used in operating
activities (5,729,766) (3,414,755)
Cash flows from financing activities:
Long-term debt 1,806,686 -
Long-term debt repayments (3,717,510) 14,773
Issuance of common shares for
cash 460,999 383,050
Reduction (Increase) in
restricted cash 23,524 (178,032)
Net proceeds from special warrant
issue - 8,942,731
Net cash provided by (used in)
financing activities (1,426,301) 9,162,522
Cash flows from investing activities:
Acquisition of subsidiaries (net of cash
acquired (bank indebtedness assumed)
of ($75,354); 1999 - nil) (12,435,102) 259,417
Purchase of capital assets (663,208) (1,187,750)
Increase in other assets (67,356) (20,000)
Net cash used in investing
activities (13,165,666) (948,333)
Change in cash balance due to
foreign exchange 182,570 46,209
(Decrease)/Increase in cash (20,139,163) 4,845,643
Cash, beginning of period 27,244,581 10,454,811
Cash, end of period $7,105,418 $15,300,454
Cash flow from operations per share:
Basic $0.08 $0.15
Fully Diluted 0.08 0.15
Supplemental cash flow information:
Interest paid $188,583 $73,181
Income taxes paid 585,341 267
Shares issued for non-cash
consideration 2,138 -
