Epicore BioNetworks Inc. Fiscal Year 2006 Results for the period ended 30 June 2006
[PRESS RELEASE] CALGARY, Oct. 27 - Epicore's business continued to grow in fiscal 2006 despite some large swings in regional market vitality and some very challenging market conditions. Revenues increased 7.5% on increased sales in Ecuador and Asia. Epicore exceeded the two million US dollar mark for the
first time. Our product sales strategy has given Epicore a high gross margin business (approximately 68% of sales). Operational expenses were held to a small 3.1% increase. Net income increased 11.8% as Epicore recorded a positive net income for the third year in a row.
Aquaculture remains the Company's most important market sector, with 98% of total sales. Epicore biotechnology and specialty feed technology offer answers to problems of pollution, disease and poor nutrition in aquaculture operations around the world. Market conditions remained weak during the year due to an over-supply of shrimp and low shrimp prices. Viral diseases in several markets forced producers to lower stocking densities, which decreased demand for hatchery post-larval shrimp.
As producers must adjust to changing conditions, so Epicore has adjusted. The new application method for our EPICIN biological aquaculture treatment provided producers with increased yields in low stocking density farms. As a result, Ecuador broke all Company sales records in fiscal 2006 and increased sales 70% over prior year. Distributors in Mexico, India and Indonesia made major contributions to fiscal 2006 results. New products, such as our new EPILITE range of liquid hatchery feeds that were launched to meet changing market demands made a significant contribution to 2006 sales.
Latin America remained our largest revenue generator as sales grew 12% in fiscal 2006. A rapidly growing shrimp aquaculture market and excellent distributor efforts made Mexico again our largest distributor market in fiscal 2006. Epicore's focus on the Asian market paid off in 2006 with a 32% increase in sales. Support from our technical manager in Thailand led Indonesia to become our fastest growing country.
Epicore gross margin increased by $0.1 million. The quality of business as measured by margin percentage was lower than prior year (68% versus 70%) due to product sales mix and discounted selling prices needed to meet market conditions. Operating expenses increased by 3.1% in fiscal 2006. Ecuadorian revenue growth resulted in higher income taxes. The Company generated a net
income of $0.11 million, an 11.8% increase over prior year. Basic net income per share was $0.005 versus prior year of $0.004.
(US$) 2006 2005
Sales 2,011,000 1,871,000
Gross Margin 1,377,000 1,316,000
Expenses (1,249,000) (1,212,000)
Other Income (Expense) 6,000 0
Income Taxes (25,000) (7,000)
Net Income (Loss) 108,000 97,000
Cash at the end of June was $0.4 million, an increase of 40% over prior year. With these funds, expected sales revenue growth and continued low operating costs, management expects there will be sufficient cash to meet the fiscal year's financial requirements and to fund expansion of aquaculture and environmental remediation marketing efforts.
