ESTEC Q2 Results(Ending December 31st 2015) Released February 29th 2016
Symbol: ESE.V
Price: $0.12c
Common Shares: 10,461,629
Insider/Institutional Holdings: 8,933,955 (85.4% as per Information Circular on Sedar)
***Only 1,527,674 retail shares***
website: estec.com
Financial Results
ASSETS
Cash: $592,583 - $0.056c a share
Receivables: $829,120
Inventory: $269,333
Tax Recoverable: $36,084
Prepaid Expenses: $59,326
Property & Equipment: $136,477
Intangible Assets: $311,380
Goodwill: $803,206
Total Assets: $3,037,509
Liabilities:
Bank Debt: $150,000
Payables: $557,097
Customer Deposits: $41,798
Callable Debt: $84,222
Remaining Debt: $985,738(Due by July 2026, see MD&A Highlights below)
Advances: $465,579
Total Liabilities: $2,284,434
Q2 Sales( 3 Months)
Revenue: $1,476,862
Net Income: $28,473
Q1-Q2 Sales( 6 Months)
Revenue: $2,775,501
Net Income: $114,673
2014 Total Sales
Revenue: $5,834,345
Net Income: $656,878
Over the last 6 quarters, ESE has maintained its sales with a total of $8,609,846(average of $1.43 million per quarter) and earned $771,551($0.073c) a share in cash.
MD&A Highlights
ESTec Systems Corp. is a holding company that owns Allan R. Nelson Engineering (1997) Inc. and Encore Electronics Inc. Allan R. Nelson Engineering (1997) Inc. (ARN) is a group of professional engineers and technologists who carry diverse skills and a variety of professional backgrounds. The company is located in Edmonton, Alberta. Encore Electronics Inc. is an electronics design and manufacturing business located in Saratoga Springs, New York. Its product line includes signal conditioners, strain gage amplifiers, vibration monitoring equipment and computer controlled signal conditioning instrumentation.
The second quarter shows the impact of the low price of oil. Engineering sales are down about 40% over last year this quarter. The electronics business has remained stable. There is a gain relative to last year in Canadian Dollars due to the drop in value of the Canadian Dollar. The engineering business is experiencing a small increase in the number of jobs being quoted, but that has not yet turned into an increase in the volume of work. We expect current economic conditions to continue through the fiscal year. Management will adjust the cost structure during the third and fourth quarters to reflect forecasted revenue. The Encore Electronics business continues to perform to expectations. Management of Encore is actively working on diversifying their customer base to reduce economic dependence on one customer.
Liquidity
The Company’s liquidity requirements are met through the cash generated from operations. Management monitors and manages its liquidity risk through regular review of its financial liabilities against the constraints of its available financial assets.
The company has positive working capital. Over the next year the company expects to meet all cash requirements from cash flow. While the Company has a significant amount of its receivables invested in a small number of clients, these funds are largely attributable to insurance clients and they have reserves allocated to pay these receivables.
A demand non-revolving term facility has been negotiated to cover the cash requirements to purchase Encore Electronics Inc. Debt repayment is scheduled over 15 years to July 2026 to be repaid from the operating profits of Encore Electronics Inc.
In the second quarter, the Allan R. Nelson Engineering subsidiary continued to suffer from low activity in the Oil & Gas industry due to the low price of oil. The Encore Electronics subsidiary continued to perform on an even basis relative to last year. Management has been reviewing the sales and marketing efforts to see if additional opportunities can be identified.
During the quarter no stock options were granted to employees and directors of the company. During the year, in the first quarter, 235,000 options expired.
Liquidity risk is the risk that the Company may not have cash to meet its financial liabilities as they come due. The Company has sufficient credit facilities to meet its current and long term financial needs. |
