Shares outstanding: 36,615,615
TORONTO, Aug. 29 /CNW/ - Augen Capital Corp. ("Augen") (TSX-V: AUG) today announced its unaudited interim consolidated financial results for the second quarter and six month period ended June 30, 2008.
Note: The adoption of CICA Handbook Section 3855, which requires the reporting of unrealized fluctuations in the fair value of the Merchant Banking investment portfolio, has resulted in greater volatility in the net earnings of Augen since it was adopted in the first quarter of 2007. While these accounting standards provide insight into the current fair value of the Merchant Banking (MB) investment portfolio, they do not necessarily provide an accurate indication of the ultimate realized gain or loss, which will be different.
Second Quarter Results ----------------------
In the quarter ended June 30, 2008 Augen's income was $694,099, compared with $1.815 million in the same period of 2007. This variance was mainly the result of a realized gain of more than $1 million from the partial disposition of Energy Fuels Inc. and a complete disposition of Goldquest Mining Corp. in the MB segment, in the second quarter of 2007. Also contributing to the change in income was a decline in consulting and due diligence fees of approximately $167,000 in the Managed Products (MP) segment, in the second quarter of 2008.
Augen's MB segment generated quarterly earnings of $167,025, before income taxes, non-recurring charges, unrealized losses on investments, adjustment of the fair value of liabilities, and amortization, compared with earnings of $895,962 in the same period of 2007.
In the MP segment, the loss before income taxes, non-recurring charges and amortization was $271,088 compared with earnings of $153,142 in the second quarter of 2007.
The Company incurred a total of $503,712 in non-recurring charges in the quarter, 50% of which were allocated to each of the Company's operating segments. The non-recurring charges include expenses relating to the 2008 Annual and Special Meeting of Shareholders.
For the second quarter of 2008, net loss before income taxes was $1.258 million compared with a loss of $261,626 in the same quarter of 2007.
Net loss in the quarter was $958,814, compared with a net loss of $249,415 in the second quarter of 2007.
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Consolidated Statements of Earnings
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Managed Products Merchant Banking
For the three months
ended June 30, 2008 2007 2008 2007
$ $ $ $
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Income (loss) 235,176 399,484 458,923 1,415,926
Expenses 506,264 246,342 291,898 519,964
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Earnings (loss)
before undernoted
items (271,088) 153,142 167,025 895,962
Unrealized loss on
investments held
for trading - - 707,426 1,747,072
Non-recurring charges 251,856 - 251,856 -
Adjustment to fair
value of liabilities - - (60,769) (439,981)
Amortization 1,601 1,820 1,601 1,819
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Earnings (loss)
before income taxes (524,545) 151,322 (733,089) (412,948)
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Income taxes
Current
Future
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Net earnings (loss)
and comprehensive
earnings (loss)
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Consolidated Statements of Earnings
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Total
For the three months
ended June 30, 2008 2007
$ $
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Income (loss) 694,099 1,815,410
Expenses 798,162 766,306
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Earnings (loss)
before undernoted
items (104,063) 1,049,104
Unrealized loss on
investments held
for trading 707,426 1,747,072
Non-recurring charges 503,712 -
Adjustment to fair
value of liabilities (60,769) (439,981)
Amortization 3,202 3,639
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Earnings (loss)
before income taxes (1,257,634) (261,626)
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Income taxes
Current (204,939) 139,904
Future (93,881) (152,115)
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(298,820) (12,211)
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Net earnings (loss)
and comprehensive
earnings (loss) (958,814) (249,415)
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For the three months ended June 30, 2008, cash used in operations, excluding changes in non-cash working capital, was $610,300, compared with cash generated by operations of $199,600 in the same period of 2007. The variation was primarily the result of a decline in net earnings and comprehensive earnings of $709,400, an increase in income taxes of $81,700, and a reduction of $35,400 in net realized and unrealized losses on investments held for trading in 2008.
"The second quarter of 2008 saw continued fluctuations in the prices of metals. Concerns over the U.S. economy and a global credit crunch exacerbated the market volatility. Our business was affected by this, both in our Merchant Banking segment and our Managed Product segment," said J. David Mason, Chairman of the Board of Augen. "Facing a challenging operating environment, we continued to reduce normal operating expenses, and this was reflected by a 23% decrease in normal operating expenses in the first half of 2008, from the same period of 2007. Despite recent volatility, we expect the mining sector will eventually return to historical norms. We believe that the abrupt decline in the mining sector represents an investment opportunity for our two operating segments."
Year-to-Date Results --------------------
Augen's income in the first six months of 2008 was $901,614, compared with $2.483 million in the same period of 2007. Among other items, the variance was mainly the result of $1.4 million of realized gains on the sale of investments in the MB segment, which increased income in the first half of 2007.
In the first half of 2008, the Company's MB segment reported a loss of $191,626 before income taxes, non-recurring charges, unrealized losses on investments, adjustment of the fair value of liabilities, and amortization, compared with earnings of $762,156 in the first half of 2007. The loss in the first half of 2008 was mainly the result of the disposition of non-performing investments, which created additional liquidity in the portfolio. Augen intends to use this additional liquidity to pursue new merchant banking investment opportunities. Net realized gain on the sale of certain MB investments was $108,900 in the first half of 2008, compared with net realized gains of $1.442 million in the same period of 2007.
In the MP segment, the loss before income taxes, non-recurring charges and amortization was $532,970 in the first half of 2008, compared with a loss of $69,804 in the same period a year earlier.
Net loss, before income taxes, non-recurring charges and before the unrealized loss in the MB segment investment portfolio resulting from the adoption of the new accounting policy, was $469,537 compared to net earnings of $695,657 in the same period of 2007.
For the first half of 2008, net loss was $1,704,798, compared with $779,685 in the first half of 2007.
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Consolidated Statements of Earnings
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Managed Products Merchant Banking
For the six months
ended June 30, 2008 2007 2008 2007
$ $ $ $
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Income (loss) 455,324 903,843 446,290 1,578,774
Expenses 733,235 970,342 637,916 816,618
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Earnings (loss)
before undernoted
items (277,911) (66,499) (191,626) 762,156
Unrealized loss on
investments held
for trading - - 1,276,190 2,007,840
Non-recurring charges 251,856 - 251,856 -
Adjustment to fair
value of liabilities - - (87,481) (439,981)
Amortization 3,203 3,305 3,202 3,304
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Earnings (loss)
before income taxes (532,970) (69,804) (1,635,393) (809,007)
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Income taxes
Current
Future
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Net earnings (loss)
and comprehensive
earnings (loss)
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Consolidated Statements of Earnings
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Total
For the six months
ended June 30, 2008 2007
$ $
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Income (loss) 901,614 2,482,617
Expenses 1,371,151 1,786,960
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Earnings (loss)
before undernoted
items (469,537) 695,657
Unrealized loss on
investments held
for trading 1,276,190 2,007,840
Non-recurring charges 503,712 -
Adjustment to fair
value of liabilities (87,481) (439,981)
Amortization 6,405 6,609
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Earnings (loss)
before income taxes (2,168,363) (878,811)
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Income taxes
Current (259,390) 95,444
Future (204,175) (194,570)
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(463,565) (99,126)
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Net earnings (loss)
and comprehensive
earnings (loss) (1,704,798) (779,685)
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Cash used in operating activities, before changes in non-cash working capital, during the first half of 2008 was $677,800, compared with cash from operations, before changes in non-cash working capital of $2,300 for the same period of 2007. This was mainly the result of a decline in net earnings and comprehensive earnings, a decline in stock-based compensation and a change in income taxes.
Consolidated assets decreased by 16.4% to $9.436 million on June 30, 2008, from $11.284 million on December 31, 2007. Augen continues to maintain a solid balance sheet with more than $5 million in current assets and no long-term debt.
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Consolidated Assets
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Managed Products Merchant Banking
June 30, December 31, June 30, December 31,
As at, 2008 2007 2008 2007
$ $ $ $
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Total assets 595,886 733,415 8,839,706 10,550,270
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Shareholders' equity
per share ((x))
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(x) Defined as shareholders' equity per
financial statements, divided by common
shares outstanding
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Consolidated Assets
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Total
June 30, December 31,
As at, 2008 2007
$ $
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Total assets 9,435,592 11,283,685
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Shareholders' equity
per share ((x)) 0.25 0.29
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(x) Defined as shareholders' equity per
financial statements, divided by common
shares outstanding
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The full unaudited interim consolidated financial statements for the period ended June 30, 2008 are available at www.augencc.com or at www.sedar.com.
About Augen Capital -------------------
Augen Capital Corp. ("Augen") (TSX-V: AUG) is a Toronto-based public merchant bank specializing in the financing of and investment in emerging resource companies. Augen manages a merchant banking hard dollar portfolio of emerging resource stocks including private companies and is an industry performance leader in tax-advantaged flow-through investments in Canada's resource sector having raised over $58 million in flow-through limited partnership assets since inception. Augen currently has $40 million in flow-through investment consulting assets, including $17 million raised in 2008 by Augen and its sales and distribution partner. Augen holds over one hundred gold, base metals and uranium exploration and development public and private companies with direct holdings in its merchant banking portfolio and consulting assets in flow-through limited partnerships.
For more information on Augen Capital, visit our website at www.augencc.com.
The Company's public documents may be accessed at www.sedar.com.
The TSX Venture has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
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This news release contains forward-looking statements. These statements are based on certain factors and assumptions as set forth in this news release including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. A number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to results of exploration, project development, reclamation and capital costs of the companies in the merchant banking portfolios ("investee companies"), and the Company's financial condition and prospects, could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; changes in demand and prices for the minerals the investee companies expect to produce; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with the activities of the Company and investee companies. Additional risks and uncertainties can be found in our 2008 Management's Discussion and Analysis and in filings with the Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this news release and the Company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.