2012-03-28_annual report

Avcorp announces 2011 Annual Financial Results

2011 Annual Report
March 28, 2012

VANCOUVER: Avcorp Industries Inc. (TSX: AVP) (the “Company” or “Avcorp”) today announced its financial results for the year ended December 31, 2011. 

During the year ended December 31, 2011, the Company recorded a positive EBITDA of $3,847,000 on $86,018,000 revenue, as compared to a negative EBITDA of $1,617,000 on $77,258,000 revenue for the preceding year; and a net loss for the current year of $2,452,000 as compared to a net loss of $7,402,000 for the year ended December 31, 2010. 

Current year revenues have increased by 11% from the immediately preceding year; a three year sales high. Year‐on‐year the Company’s revenues increased by $8,760,000, primarily from strong Boeing programs demand, start‐up and commencement of production deliveries for the BAE Systems F35 program, as well as increased demand for non‐original equipment manufacturer’s products and services. 

A combination of sales growth, improvements in both operating efficiencies and production quality levels, as well as continued stringent cost controls have reduced net losses by $4,950,000 in 2011 relative to 2010. 

Cash flows from operating activities during the year ended December 31, 2011 utilized $1,520,000 of cash due to funding working capital growth in support of pending new program deliveries; as compared to utilizing $1,971,000 of cash during the year ended December 31, 2010. The Company has a working capital surplus of $14,663,000 as at December 31, 2011 (December 31, 2010: $6,275,000 deficit) arising from growth in accounts receivable and inventories as well as a replacement of current bank debt (operating line of credit) with long term debt. On December 31, 2011, the ratio of the Company’s current assets to current liabilities was 1.66:1 (December 31, 2010: 0.80:1). 

Net cash flows from financing activities provided $7,263,000 of cash during the current year (December 31, 2010: $4,689,000). The December 31, 2010 $8,158,000 operating line of credit indebtedness was repaid in full during 2011; the Company has $3,778,000 cash in bank as at December 31, 2011.

During the course of the Company’s 2011 year‐end financial audit it was determined that, as a result of specific differences between the application of Canadian GAAP (EIC‐70) and IFRS (IAS 32), the Company’s preferred shares should have been classified as a liability on the January 1, 2010 IFRS transition date. Application of the presentation and measurement principles of IAS 32 – Financial Instruments is complex, particularly in evaluating instruments that have multiple characteristics such as these preferred shares. 

The impact of this difference, applied on a comparative basis, for the first three quarters of 2011 has been disclosed in the financial statements for the year ended December 31, 2011. The preferred share reclassification results in a $7,622,000 reduction in equity with a corresponding increase in liabilities. This is first quantified in the January 1, 2010 opening IFRS transitional balance sheet. On a quarterly basis, commencing on March 31, 2010 through to December 31, 2011, the preferred share dividends accrued and charged to retained earnings are recorded as finance costs thereby reducing net income by $189,000 per quarter.

About Avcorp
Avcorp designs and builds major airframe structures for some of the world’s leading aircraft companies, including BAE Systems, Boeing, Bombardier, and Cessna. With more than 50 years of experience, over 500 skilled employees and 354,000 square feet of facilities in Delta BC and Burlington ON, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower‐cost, light weight, strong, reliable structures. Our Burlington location also offers composite repairs for commercial aircraft. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).

Sandi DiPrimo, Investor Relations Contact | 604-587-4938
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