TD Bank Group, Aimia Inc.and Canadian Imperial Bank of Commerce today completed the previously announced transaction under which TD acquired approximately 50% of the existing Aeroplan credit card portfolio from CIBC. The portion of CIBC’s Aeroplan credit card portfolio acquired by TD primarily includes accounts held by customers who do not have an existing retail banking relationship with CIBC. Also as previously announced, TD will become the primary issuer of Aeroplan Visa credit cards on January 1, 2014.
VersaPay Corporation, a provider of merchant credit and debit card payment processing and e-mail money transfer (EMT) solutions, today announced its financial and operational results for the year ended December 31, 2011. All amounts are in Canadian dollars unless otherwise noted. Fiscal 2011 Highlights Grew year over year revenues by 19% and grew recurring revenue…
VersaPay Corporation merchant credit, debit, gift and loyalty card payment processing solutions posted 1Q/10 increased total gross transaction value processed 83% to $132 million since the year ago quarter. Meanwhile throughout the quarter, monthly gross transaction value processed was $58 million for March 2010 and total revenue was $2.6 million, a 67% increase
from total revenue of $1.6 million in 1Q/09. The year-over-year improvement in VersaPay’s top line was driven primarily by growth in the Company’s transaction processing fees, which were $2.4 million, up from $1.4 million in 1Q/09 thanks to an expanding merchant customer base. POS product sales revenue was $0.1 million, and revenue from VersaCard and VersaEFT fees was $0.04 million, compared to 1Q/09 sales of $0.1 million and $0.06 million, respectively. Recurring revenue (Transaction processing fees + VersaCard/EFT fees) totaled $2.5
million, or 94% of total revenue, compared to Q1 2009 recurring revenue of $1.5 million, or 92% of total revenue while expenses totaled $3.5 million, compared to 1Q/09 expenses of $1.7 million.
Retailer Loblaw reported sales for the first quarter increased by 3.1% to $6,926 million compared
to $6,718 million in the first quarter of 2009. Gross profit increased by $106 million to $1,720 million in the first
quarter of 2010 compared to $1,614 million in 2009. Gross profit as a
percentage of sales was 24.8% in the first quarter of 2010 compared to
24.0% in 2009. The increase in gross profit and gross profit as a
percentage of sales was primarily attributable to buying synergies,
disciplined vendor management, a stronger Canadian dollar, improved
inventory management and control label profitability.
Aeroplan has reported an increase since last year reflecting growth
in consumer spending and credit and charge card usage translating
into increased volume from the credit and charge card accumulation
partners. Gross billing for 1Q07 was reported at $228.0 million, an
increase of $26.5 million since 1Q06. This increase is primarily
attributable to an increase of 1.9 billion, or 11.5%, Aeroplan Miles
sold as a result of higher sales to accumulation partners. Cost of
rewards amounted to $155.1 million for 1Q07, compared to $124.9
million in 1Q06, an increase of 24.2%. Aeroplan’s members
earn Aeroplan Miles with its network of more than 60 partners and
representing more than 100 brands in the financial, retail and travel
sectors. Miles earned may be redeemed for Aeroplan’s industry-leading
ClassicFlight Rewards, innovative ClassicPlus Flight Rewards and global
Star Alliance Flight Rewards, offering travel to more than 850 destinations
worldwide. In 2006 more than 1.4 million round-trip flight rewards were
issued. Aeroplan’s rewards include more than 400 specialty, merchandise
and experiential rewards, as well as hotel and car rental rewards.
USA ePay has released “Wireless ePay for Windows Mobile,” designed for pocket PC’s, smart phones and other mobile devices.
Revenue for Hudson Bays’s Financial Services division declined 6.5% in the first quarter to $76.4 million due to a reduction in
service charge revenue from lower credit card receivables. Credit card receivables dropped 23.8% over the past year from $443.8 million for 1Q/04 to $337.8 million in 1Q/05. The decrease in credit card receivables reflected the impact of lower store sales and higher customer payments, offset partly by a higher credit blend. The average balance per active customer account was down 9% to $417 but, the average volume per active customer account increased 2.2% to $183. As of April 30th, there were 2.9 million active Hbc customer accounts (1.6 million Bay cardholders and 1.3 million Zellers cardholders). For complete details on HBC’s first quarter performance visit CardData (www.carddata.com).
Toronto-based Hudson’s Bay Company reported that its credit card receivables declined for the second consecutive year. After peaking at C$559 million in 2002, HBC’s card portfolio has declined to C$427 million as of January 31st of this year, a 21% decline compared to one year ago. Revenue from HBC’s Financial Services division was C$317 million in 2004, compared with C$333 million in the prior year. For the fourth quarter, Financial Services revenue was C$78.0 million or 10.6% below the year ago quarter. The decrease in revenue reflected the reduction in store sales, the lower credit card blend at the Bay and Zellers and a higher level of customer payments. As of January 31st, there were 3.1 million active HBC customer accounts, including 1.7 million Bay cardholders and 1.4 million Zellers cardholders. Active accounts remained steady at 2.9 million. The average balance per active customer account was declined 4.9% to C$443 and the average volume per active customer account dropped 3.1% to C$844. For complete details on Hudson’s Bay performance, visit CardData (www.carddata.com).
CIBC reported that its credit card loans increased 3.2% in the latest quarter to C$11.547 billion. For the entire 2004 fiscal year, which ended October 31st, the nation’s largest bank credit card issuer posted an 8% increase in credit card revenues to C$1,384 million. Since 2001, CIBC credit card profits have increased nearly 23%. Recently, CIBC announced it completed an agreement to sell U.S.-based Juniper Financial Corp. to Barclays Bank. Barclays agreed to pay $293 million in cash for the $1.4 billion credit card portfolio from CIBC. The deal, which closed December 1st, represents a premium of 15.2%. CIBC acquired a 51% interest in Juniper Financial in 2001, and subsequently increased its ownership to 98%. The remaining 2% is owned by Juniper senior management. For complete details on CIBC’s latest results visit CardData (www.carddata.com).
Bank of Montreal says it plans to expand disclosure of results of
its U.S. operations next year. BMO noted that Harris Bank, registered as
Harris Bankcorp, Inc., will voluntarily forego its status as a registrant
of the U.S. SEC. Harris Bank has no publicly-held securities outstanding
SEC registration. Meanwhile for the quarter ending 10/31/02 BMO reported
net income of $1,417 million, down modestly from a year ago. Return on
equity of 13.4% was down from 13.8% in 2001.
Canadian Tire Financial Services reported its third quarter accounts
receivable were up 40.0% to $1.69 billion, compared to $1.20 billion in
2001, driven by its strategy to convert retail credit accounts to the
“Options MasterCard.” Gross operating revenue in CTFS for the third quarter
was $98.9 million, a 10.5% improvement from $89.5 million in 2001. Earnings
before taxes were $25.7 million for the quarter, down 19.0% from the $31.7
million recorded in 2001 due primarily to timing impacts from CTFS’s
securitization program. Excluding the impact of the securitization program,
CTFS’s earnings before income taxes for the quarter were $26.8 million, a
61.3% increase compared to the same period last year due to receivables
growth and continued expense management. Canadian Tire also announced its
decision to apply to establish a bank for CTFS to ensure that CTFS’s card
operations operate under a common regulatory framework with other issuers
in the bank card market. Canadian Tire also noted that establishing a bank
will result in a significant reduction in the complexity and costs
associated with the multi-jurisdictional regulations that CTFS’s card
operations currently operate under.
Hudson’s Bay Company announced that sales and revenue in the first quarter ended April 30, 2002, grew 1.1% to
$1.53 billion from $1.51 billion in the same period last year. Sales and
revenue at the Bay, including Home Outfitters increased 1.9% and at Zellers
increased 0.5%. Comparable store sales declined 2.2% at the Bay and increased
1.1% at Zellers.
Operating income for the quarter after excluding a gain on the transfer
of receivables of $2.3 million was $4.6 million compared to $0.3 million last
year. The loss per share (excluding the $0.02 gain on the transfer of
receivables) improved to $0.17 from $0.20 last year. The key contributors to
the increase in operating income were the significant improvement in the Bay’s
operating margin and lower interest costs. Zellers operating profit declined
due to lower apparel sales as a result of unseasonable weather, the calendar
shift of Easter and less clearance sales.
“We are generally pleased with the quarter and the numerous improvements
on several fronts,” said George Heller, President and CEO, Hudson’s Bay
Company. “The considerable improvements in operating margins at the Bay
coupled with significantly reduced inventory levels, especially in apparel,
are very encouraging. HBC in total saw sales increase, in-stock rise to over
95%, while inventory dropped by 9%. Cost reduction initiatives resulted in
lower operating costs than in the first quarter last year and the Company
successfully installed Retek at the Bay and a financial ERP system at Zellers.
Apparel sales in Zellers continued to be a challenge in the first quarter and
we are resolving the issues. Hardlines at Zellers continued to gain momentum
with a 7.3% comp store increase. We remain confident in our ability to achieve
our previously stated targets for the remainder of the year.”
The Company continued to strengthen its financial position and balance
sheet. Total debt including securitized receivables declined $231 million
(excluding future income taxes) from last year. Working capital usage for the
quarter improved by $192 million versus the comparable quarter last year.
Return on assets employed (12 month rolling average) increased to 5.9% from
5.7% at January 31, 2002.
The Company continues to anticipate normalized earnings per share of
$1.10 to $1.20 in fiscal 2002, the majority of the increase being realized in
the second half of the year. The Company also expects to generate
approximately $200 million in free cash flow this fiscal year.
MANAGEMENT’S DISCUSSION AND ANALYSIS – Q1 2002
On April 1, 2002, the Company’s 7.0% equity subordinated debentures and
6.25% series C debentures matured. The Company made an aggregate cash payment
of $199 million for the $196 million principal amount of 7.0% equity
subordinated debentures outstanding at maturity. The Company also paid $92
million for the 6.25% series C debentures. The net proceeds of $194 million
from the issuance in November 2001 of the 7.5% convertible unsecured
subordinated debentures and the funds realized from working capital
improvements were used to fund debenture redemptions.
Standard and Poor (S&P) and Dominion Bond Rating Service (DBRS) rate the
Company’s debt. During the first quarter of 2002, credit reviews were held
with both rating agencies. The credit ratings for the Company were lowered as
shown in the financing section of the Management’s Discussion and Analysis
Effective February 1, 2002, the Company adopted the new Canadian
Institute of Chartered Accountants accounting standards on Goodwill and Other
Intangible Items and on Stock-Based Compensation and Other Stock-Based
Payments. The only impact on the Company of adopting the two new accounting
standards is the absence of goodwill amortization for the first quarter of
2002 compared to $2.7 million (or $0.04 per share) of goodwill amortization in
Highlights of the consolidated results reported for the first quarter of
Sales and revenue in Q1 2002 of $1,530 million increased slightly over
1% from the Q1 2001 level of $1,513 million.
Earnings before interest expense and income taxes (EBIT) for the first
quarter of 2002 were $6.9 million or $6.6 million above EBIT in Q1
2001 of $0.3 million.
Net loss for the first quarter of 2002 was $6.1 million compared to a
net loss of $11.4 million in Q1 2001.
After deducting dividends for equity subordinated debentures and
convertible unsecured subordinated debentures, loss per share in Q1
2002 of $0.15 was $0.05 better than the Q1 2001 loss per share of
Operating results for the first quarter of 2002 were impacted by a net
gain of $2.3 million for securitized credit card receivables due to an
accounting change in July 2001 to comply with new rules issued by the Canadian
Institute of Chartered Accountants. To provide a more meaningful comparison of
Q1 2002 results to prior year’s results, all further discussions, including
the operating segment discussion, will be based on the Company’s operating
results excluding the net gain on sale of securitized credit card receivables.
Of the $2.3 million net gain, the Bay and Zellers recognized a loss of $0.1
million and a gain of $2.4 million, respectively.
Retail EBIT in Q1 2002 of $11.3 million improved $10.1 million from last
years’ EBIT of $1.2 million and is discussed under the Bay and Zellers
commentary sections. “Other” EBIT includes unallocated corporate expenses and
miscellaneous profits and losses from the various ongoing and non-recurring
secondary retail and other activities. Other EBIT in Q1 2002 was a loss of
$6.7 million or $5.8 million above the Q1 2001 loss of $0.9 million reflecting
mainly lower net revenues on rental properties, reduced pension credits, the
inclusion of costs related to the customer relationship management program,
and the absence of one-time credits recorded in Q1 2001.
Interest expense in the first quarter of 2002 of $12.5 million was $1.9
million below last year’s level of $14.4 million. The decrease in interest
expense reflected the impact of lower interest rates, lower debt levels and
improving working capital management.
In the first quarter of 2002, the Company’s effective income tax rate was
lower than the effective tax rate in the first quarter of 2001 reflecting the
benefit of federal and provincial income tax rate reductions.
Canadian Retail Environment
Department store sales continued to report high single-digit growth in
the first quarter of 2002. For the three months ended March 31, 2002,
DSS(Department Store Sales) increased 9.5%. Sales increases at the broader
group, DSTM stores (Department Store Type Merchandise) is expected to continue
reporting lower growth compared to the DSS group, and should end the first
quarter in the mid-single digits. Hbc expects that growth will slowly increase
throughout the year.
Review of Operations
The Bay (including Home Outfitters)
Sales and revenue in Q1 2002 increased 1.9% from last year’s level of
$539.8 million. EBIT in the first quarter of 2002 was $8.3 million compared to
an EBIT loss of $6.0 million reported in Q1 2001.
Sales and revenue in Q1 2002 increased 1.9% to $550.2 million compared to
$539.8 million in Q1 2001. The sales increase occurred mainly in major home
fashion and Home Outfitters offset partly by sales declines in most other
product groups, particularly apparel sales due partly to unseasonable spring
weather. Home Outfitters sales increase reflects mainly the opening of 16 new
stores in 2001.
EBIT in Q1 2002 of $8.3 million improved $14.3 million from last years’
EBIT loss of $6.0 million due mainly to increased gross margins reflecting the
impacts of more focused promotional activity and a reduced level of markdowns
resulting from inventory levels that are lower and more current. The improved
gross margin rate was offset partly by increased sales of the lower margin
home fashion business.
Operating Highlights for Q1 2002
During the first quarter, the Bay executed a number of key activities in
support of its strategy, including:
The continued expansion of Everyday priced programs (Bay Value,
Outline, Market Square), which deliver stylish products and strong
value for the customer.
The refinement of Home Outfitters’ operational model in anticipation
of opening up to 17 new stores by year-end.
The successful launch of the Retek merchandising system and the
enhancement of operational processes which will significantly improve
the Bay’s merchandising and inventory capabilities.
Enhancing the seasonal modeling of inventories, which allows improved
inventory and markdown planning.
Sales and revenue in the first quarter of 2002 of $960.3 million
increased 0.5% from Q1 2001 reflecting increased hardline and consumable
sales, offset partly by continued weakness in apparel sales. EBIT for Q1 2002
of $3.0 million was $4.2 million below the EBIT level in the same period of
Comparable store sales in Q1 2002 were up 1.1% compared to the
corresponding period in 2001. This marks the seventeenth consecutive quarter
of sales and revenue increases for Zellers. Retail sales increased 0.3% due
entirely to a 4.5% growth in hardlines, offset partly by a decline in
softlines. Hardline sales in Q1 2002 were up mainly in home entertainment,
pharmacy and consumables. Softline sales were down reflecting continued
weakness in most apparel groups due to unseasonable weather, an early Easter
in 2002, and lower clearance sales.
EBIT in Q1 2002 of $3.0 million decreased $4.2 million from EBIT in Q1
2001 of $7.2 million. Included in Q1 2002 were store closure costs of $1.4
million compared to $6.8 million in the first quarter of 2001. Due to a change
in the accounting policy for goodwill as mentioned in the new developments
section of the MD&A, Q1 2002 EBIT does not include goodwill amortization
compared to $2.7 million of goodwill amortization in Q1 2001. EBIT was
unfavourably impacted by a change in the blend of sales as lower margin
hardline sales increased, while the higher margin softline product sales
Operating Highlights for Q1 2002
During the first quarter, Zellers executed a number of key activities
supporting its strategy, including:
The implementation of everyday low pricing (EDLP) in the areas of
sporting goods, lawn and garden and stationery. More than half of
Zellers’ total merchandise offering is now EDLP.
Significantly lowering overall inventory levels while maintaining an
in-stock position exceeding 95%.
The closure of four underperforming stores and the expansion of two
stores to its new prototype format.
The launch of a new media advertising campaign “Better and better”,
communicating Zellers commitment to continual improvements in the
shopping experience offered to Canadian Moms.
Revenue and earnings of Hbc’s Financial Services division are included
with the results of the major retail divisions, the Bay and Zellers. Financial
Services’ revenue of $82.0 million in Q1 2002 improved by $6.4 million
compared to Q1 2001 of $75.6 million.
EBIT in the first quarter of 2002 increased to $43.9 million or $7.3
million above the earnings level in the same period of 2001 of $36.6 million.
The EBIT increase was due mainly to a growth in revenue and lower
Financial performance for the first quarters of 2002 and 2001 is shown in
the following table:
Sales on Hbc’s credit card in the first quarter of 2002 represented 27.5%
of total retail sales of the major retail divisions compared to 26.8% in Q1
2001. At April 30, 2002, there were 3.0 million active customer accounts in
the combined credit card portfolios for the Bay and Zellers, approximately 1.5
million Bay cardholders and 1.5 million Zellers cardholders. Credit card
receivables amounted to $392.4 million or 5.9% below April 30, 2001’s
receivable balance of $417.1 million. Excluding the adjustment to account for
the securitization of credit card receivables and the impact of securitizing
an additional $100 million of receivables during the second quarter of 2001,
the receivable balance at April 30, 2002 increased 5.8% from the April 30,
2001 level and decreased 23% from the 2001 year-end level.
The quality of the credit card portfolio at April 30, 2002 was similar to
the position at January 31, 2002 and April 30, 2001. 94.9% of the portfolio
was classified as 30 days past due or less which was slightly better than the
aging at April 30, 2001. Gross write-offs in the first quarter of 2002 of
$25.4 million were higher than Q1 2001 level by $2.4 million reflecting the
impact of the personal bankruptcy levels in the Canadian economy. Net bad debt
expense in Q1 2002 of $17.6 million was $2.1 million higher than the Q1 2001
level reflecting in part the continued shortfall in recoveries from collection
Operating Highlights for Q1 2002
In Q1 2002, Financial Services executed the following key initiatives
supporting its strategy:
Continued the roll-out of the Hudson’s Bay Company credit card,
promoting cross-shopping within the Hbc family of stores.
Implemented a collection agency auditing program resulting in improved
The following summary shows details of Hbc’s net assets as financed by
debt and equity for April 30, 2002 and 2001 and January 31, 2002:
Total net assets at April 30, 2002 of $3,181 million were 7.5% below last
year’s net asset level and higher than the January 2002 year-end level by $79
million. The net assets increase from January 31, 2002 reflected higher
inventories. Due to the seasonal nature of the retail business, it is normal
that inventories in April are higher than in January, which marks the end of
the holiday selling period. Compared to April 30, 2001, net assets at April
30, 2002 decreased by $257 million reflecting the impact of the increased
focus on working capital management. Inventories at April 30, 2002 decreased
from last year’s inventory level by $161 million due mainly to improved
inventory management processes.
Cash and cash equivalents at April 30, 2002 amounted to $20.0 million,
compared to $15.1 million at April 30, 2001. Cash and cash equivalents
represent short-term deposits.
The following table provides an analysis of Hbc’s cash flows for the
first quarters of 2002 and 2001:
Cash outflow before financing activities for Q1 2002 totalled $98 million
compared to a cash outflow of $351 million for Q1 2001. For the first quarter
of 2002, the cash outflow from operating activities of $127 million was $206
million better than the Q1 2001 cash outflow of $333 million. The improvement
in cash flow from operating activities was due largely to lower working
capital requirements reflecting mainly lower inventories of $161 million and
lower credit card receivables. Lower inventories reflect the impact of better
inventory management processes and the use of new technologies.
For the 2002 full year, capital expenditures, including software
expenditures, are forecasted to be about $165 million.
Cash and cash equivalents decreased by $312 million due mainly to $291
million paid to debenture holders upon the maturity on April 1, 2002 of the
7.0% equity subordinated debentures and the 6.25% series C debentures, a cash
outflow before financing activities of $98 million, and dividend payments in
Q1 2002 of $13 million. The cash reductions were offset partly by increased
bank borrowings of $90 million.
At April 30, 2002, the Company’s total debt of $756 million, after
deducting $52 million in investments and short-term deposits, was $331 million
below the debt level at April 30, 2001, and $299 million above the January 31,
2002 net debt level of $457 million. Included in the April 30, 2002 debt level
was $779 million of long-term debt, including $151 million due within one
Compared to January 31, 2002, the debt level at April 30, 2002 increased
due mainly to the normal seasonal change in inventory levels and the impact of
redeeming the 7.0% equity subordinated debentures. The debt level at April 30,
2002 was below last year’s debt level by $331 million reflecting mainly the
results of improved inventory management processes, and the $100 million of
credit card securitization financing executed in Q2 2001.
At April 30, 2002, the Company had drawn $90 million on its committed
$480 million (to August 2003) credit operating facility, compared to a $255
million utilization of the facility at April 30, 2001. The utilization of the
committed credit operating facility was lower during Q1 2002 compared to Q1
2001 reflecting the impact of improved inventory management processes and
credit card receivables securitization financing completed in 2001.
On April 1, 2002, the Company paid $199 million upon the maturity of the
7.0% equity subordinated debentures and $92 million for the 6.25% series C
Under the syndicated bank loan agreement, the Company must comply with
two financial ratios on a quarterly basis. The following table shows these
financial ratios for Hbc in the first quarter of 2002 which are better than
the required levels as indicated therein.
Foreign exchange and floating rate interest rate risks are managed by
forward hedges, swaps and caps under guidelines established and reviewed
periodically by the Board of Directors. At April 30, 2002, the Company had
U.S. $60 million of forward foreign exchange contracts and $150 million of
interest rate swaps.
The Company’s debt is rated by S&P and by DBRS. During the first quarter
of 2002, credit reviews were held with both rating agencies. S&P and DBRS have
issued new credit ratings which are lower than the previous credit ratings
resulting in the Company’s debt being classified as non-investment grade. A
summary of the Company’s ratings is provided in the following table: