Carmanah Joins the Big League

January 27, 2006
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All that’s left to do is ring the bell.

Representatives from Victoria-based Carmanah Technologies travel to Toronto next week to make official the company’s leap to the Toronto Stock Exchange from the TSX Venture Exchange.

Carmanah chief executive Art Aylesworth confirmed Wednesday the high-tech firm which designs and manufactures solar-powered lighting and illumination technology, has been approved to make the jump, which is akin to a coming out party.

“This is in our best interests to open up our potential audience,” said Aylesworth, noting many institutional investors who look for companies on the rise will only park their money when they hit the senior exchanges.”Some will just not deal with junior exchanges.”

The move is also to keep other institutional investors happy — those who bought in last year when Carmanah raised $15 million in December on the understanding the company intended to make the move.

Aylesworth said Carmanah also felt the time was right, as it had grown significantly in 2005 with the acquisition of Soltek Powersource Ltd., a Saanichton company which designs and manufactures solar panels and power systems and has enjoyed majority share in that sector in Canada for some time.

“We actually qualified `for the jump` a year and a half ago,” Aylesworth said.

To list as what the TSX calls a “profitable company,” firms are required, among other criteria, to post net assets of $2 million and pre-tax earnings of $200,000.

But Aylesworth said Carmanah was actually able to qualify as a “senior company.” The criteria there includes net assets of $7.5 million and pre-tax earnings of $300,000.

“`At the time` we had all the assets in place but we had not been as focused on making money because we were so busy developing the next market we were after,” Aylesworth said, adding the money making started to increase as development projects started to create revenue.

Though the company is just now finalizing its 2005 financial statements, Carmanah reported revenues of nearly $24 million through the first three quarters of 2005 and net earnings of $873,000 through that period. Its net assets are reported at just under $40 million.

Aylesworth is expecting another strong year in 2006, the first year it will have the combined revenues of both Carmanah and Soltek.

The company’s stock price (TSXV: CMH) closed up 10 cents at $3.75 on Thursday, but Aylesworth said it’s probably set at the right place for the moment.

“If you look at some of the other solar-type companies it can make you a little drunk,” he said. “But my own feeling is you can get ahead of yourself too far. Everyone is impatient for the stock to be $50. It remains to be seen what the impact will be of reporting a full year of the combined growth of the two companies.”

Carmanah is moving its manufacturing, shipping and receiving for both companies to a new facility in three weeks as it opens a 25,000 square-foot facility on Enterprise Crescent in Saanich. Previously manufacturing was cramped into less than 10,000 square feet at the 23,000 square-foot labyrinthine Harbour Road facility near Point Hope Shipyard which will still be home to sales, marketing, engineering and administration.

The company expects the streamlined production facility, which is undergoing $750,000 in lease-hold improvements, should save it money in the long run.

“We were getting into volumes where things are tricky,” Aylesworth said. “We are also looking at this as an opportunity to look at systems and processes we knew we wanted to improve, and it didn’t make sense to make big changes `at Harbour Road`.”