C.A. Bancorp Inc. Reports Q1 2010 Financial Results
May 14 2010 - 9:24AM
Marketwired Canada
C.A. Bancorp Inc. ("C.A. Bancorp" or the "Company") (TSX:BKP) today announced
its consolidated financial results for the first quarter ended March 31, 2010.
The Company reported a net loss of $1.1 million or $0.04 per share compared to
net earnings of $6.0 million or $0.22 per share in the first quarter of 2009.
Included in the first quarter 2010 financial results are one-time costs of $1.2
million or $0.04 per share related to the Company's hostile take-over bid
defense and strategic review process. Net earnings adjusted for one-time
expenses was $0.1 million.
At March 31, 2010, the Company maintained a strong balance sheet having
approximately $11.3 million of cash and other net liquid assets, long-term debt
of $1.8 million and a net book value of $2.49 per share. In addition, the
Company's portfolio of investments in private entities has carried a weighted
average implied internal rate of return (IRR) of approximately 20% since
inception.
Q1 2010 Operational Highlights
In January 2010, the Company announced that it closed a $1.2 million follow-on
mortgage commitment and investment in Kingswood Drive Kitchener Limited
Partnership ("Kingswood") bearing an interest rate of 10% and maturing in 2011.
The Company's $1.2 million investment is being matched on a proportionate basis
by Kingswood's other two limited partners ($0.3 million in aggregate). The total
proceeds of $1.5 million are being utilized by Kingswood to refinance existing
debt and to fund future property and unit upgrades. As at the date hereof, $0.6
million of the $1.2 million has been advanced to Kingswood.
In March 2010, BDO Canada Ltd. ("BDO"), in its capacity as court appointed
interim receiver completed the sale of substantially all of the assets and
business of Everus Communications Inc. ("Everus") to Barrett Xplore Inc.
("BXI"). The transaction represented the culmination of a marketing and sales
effort conducted by BDO of all the assets, undertakings and properties of
Everus. The Company, as senior secured creditor of Everus, received
approximately $1.1 million in consideration, subject to certain post-closing
adjustments. The majority of the consideration was satisfied by a promissory
note, convertible into BXI common shares within twelve months from the closing
of the transaction.
Operational Highlights Subsequent to Quarter-end
In April 2010, High Fidelity HDTV Inc. ("High Fidelity") fully repaid the
principal amount outstanding together with all interest owed under the original
debenture issued by High Fidelity to the Company in 2007. The Company continues
to hold a convertible debenture in the principal amount of $1.5 million and
warrants exercisable into common shares of High Fidelity.
On May 13, 2010, the Company announced that it has entered into a
pre-acquisition agreement with 1535633 Alberta Ltd., an affiliate of Century
Services Inc. (together, "Century"). Pursuant to the agreement Century has
agreed to make an offer to acquire all of the issued and outstanding shares of
the Company at an offer price of $1.50 per share. Please see the Company's news
release dated May 13, 2010 for further details.
Q1 2010 FinancialResults
Income Statement Highlights
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In Canadian $ millions except per share amounts Q1 2010 Q1 2009
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Revenue $ 1.2 $ 1.3
Net results of investments (incl. the gain on sale
of AgriFinancial) 0.5 6.6
Expenses, taxes and non-controlling interest (2.8) (2.0)
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Net earnings (loss) from continuing operations $ (1.1) $ 5.9
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Net earnings from discontinued operations 0.0 0.0
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Net earnings (loss) $ (1.1) $ 6.0
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Add back: One-time costs related to the strategic
review process 1.2 -
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Net income excluding one-time costs related to the
strategic review process $ 0.1 $ 6.0
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Net earnings (loss) per share $ (0.04) $ 0.22
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Add back: One-time costs related to the strategic
review process 0.04 -
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Net earnings per share adjusted for one-time costs $ 0.00 $ 0.22
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Key Balance Sheet Highlights
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March 31, December 31,
In Canadian $ millions except per share amounts 2010 2009
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Cash and other net liquid assets $ 11.3 $ 12.3
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Assets $ 70.2 $ 71.5
Liabilities 3.7 3.9
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Shareholders' equity $ 66.6 $ 67.6
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Number of shares outstanding (millions) 26.7 26.7
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Net book value per share $ 2.49 $ 2.53
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Closing market price per share $ 1.40 $ 1.33
Market price discount to net book value 44% 47%
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Financial Results Discussion
Revenues from continuing operations declined by $0.1 million in first quarter
2010 compared to the first quarter 2009. The decline in revenue is attributable
to a year-over-year reduction in asset management fees at Barlow Capital
Management Inc. ("Barlow"). The accounts of Barlow are consolidated into the
Company's financial statements. Revenue earned by the Company and the rest of
its subsidiaries was flat year-over-year as invested capital remained
substantially unchanged.
The Company also realized cash distributions of $0.4 million from its
investments in Charter REIT and C.A. Bancorp Canadian Realty Finance Corporation
("CRFC") in Q1 2010 that is not included in the Company's revenues as those
investments are accounted for under the equity method under Canadian GAAP.
Consolidated net results of investments resulted in a gain of $0.5 million for
the first quarter ended 2010 compared to a gain of $6.6 million for the first
quarter ended 2009. The gain was primarily driven by a change in unrealized gain
on investments in private entities of $0.6 million as the recognized specific
unrealized gains in its investments in High Fidelity and Bermingham Foundation
Solutions.
The Company's consolidated expenses, taxes and non-controlling interests
increased by $0.8 million for the first quarter ended 2010 compared to the same
period in 2009. For the first quarter ended 2010, the Company reported expenses
(including taxes and non-controlling interests) of $2.8 million compared to $2.0
million in the same period 2009. However, the Company incurred or accrued
one-time expenses of $1.2 million in the first quarter of 2010 related to the
hostile bid defense and strategic review process. After backing out the one-time
expenses, the Company and its subsidiaries (Barlow) actually decreased their
operating expenses by $0.3 million in the first quarter of 2010 compared to the
same period in 2009.
The Company believes it has sufficient working capital to support the Company's
normal operations. After normalizing for one-time expenses in the quarter, the
Company's working capital as at March 31, 2010 would have been unaffected when
compared to December 31, 2009. The Company is approximately break-even on an
adjusted cash flow from normal operations (including cash flow from operations
plus distributions from CRFC and Charter REIT and deducting one-time Expenses)
on a quarterly basis. Cash flow from operations could increase over time if the
Company invests its available capital.
Annual General Meeting
The Company's Annual General Meeting has been scheduled for June 28, 2010 at
11:00 a.m. at the Novotel Toronto North York Hotel at 3 Park Home Avenue,
Toronto, Ontario, M2N 6L3. The record date for the determination of shareholders
entitled to receive notice of and to vote at the meeting is at the close of
business on May 25, 2010.
Financial Information
C.A. Bancorp's Q1 2010 consolidated financial statements and Management's
Discussion and Analysis of the results will be available on its website at
www.cabancorp.com and on SEDAR at www.sedar.com.
C.A. Bancorp Inc.
C.A. Bancorp is a publicly traded Canadian merchant bank and alternative asset
manager that provides investors with access to a range of private equity and
other alternative asset class investment opportunities. C.A. Bancorp is focused
on investments in small- and middle- capitalization public and private
companies, with emphasis on the industrials, real estate, infrastructure and
financial services sectors.
This news release contains "forward-looking statements" that reflect the current
expectations of management regarding the Company's future growth, results of
operations, performance and business prospects and opportunities. Forward
looking statements are only predictions and are not guarantees of performance.
Wherever possible, words such as "may", "would", "could", "will", "anticipate",
"believe", "plan", "expect", "intend", "estimate", "aim", "endeavour" and
similar expressions have been used to identify these forward-looking statements.
These statements reflect management's beliefs with respect to future events and
are based on information currently available to management. Forward-looking
statements involve significant known and unknown risks, uncertainties and
assumptions. Important assumptions relating to the forward-looking statements
contained in this news release include competitive and economic conditions. Many
factors could cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements that
may be expressed or implied by such forward- looking statements, including,
without limitation, those listed in the "Risk Factors" section of the Company's
Annual Information Form, elsewhere in our Management's Discussion and Analysis
for the year ended December 31, 2009 and elsewhere in our filings with Canadian
securities regulators. Additional important factors that could cause actual
results to differ materially from expectations include, among other things, the
ability of the Company to make additional private investments, and general
economic and market factors, competition, interest rates, tax related matters,
loss of personnel, reliance on key personnel, ability of the Company to generate
positive future returns for investors, Company's success in preserving capital,
managing debt, maintaining liquidity, managing operating costs, the results of
the Century offer and the timing and location of the Annual General Meeting.
Should one or more of these risks or uncertainties materialize, or should
assumptions underlying the forward-looking statements prove incorrect, actual
results, performance or achievements could vary materially from those expressed
or implied by the forward-looking statements contained in this news release.
These factors should be considered carefully and prospective investors should
not place undue reliance on the forward-looking statements. Although the
forward-looking statements contained in this news release are based upon what
management currently believes to be reasonable assumptions, management cannot
assure prospective investors that actual results, performance or achievements
will be consistent with these forward-looking statements. The forward-looking
statements included in this news release are, unless otherwise indicated, made
as of the date hereof and are expressly qualified in their entirety by this
cautionary language. The Company does not intend, and does not assume any
obligation, to update or revise these forward-looking statements, except as
required by law. The Company does not undertake to update any forward- looking
statements, whether written or oral, that may be made from time to time, except
as required by law; such statements speak only as of the date made.
Forward-looking statements are based on a number of assumptions which may prove
to be incorrect. This news release makes reference to net results of investments
that are different than reported under Canadian GAAP. C.A. Bancorp has
reclassified its interest in AgriFinancial from Discontinued Operations to Net
Results of Operations. C.A. Bancorp believes that it is more appropriate to
classify AgriFinancial under Net Results of Operations because it is more akin
to a private equity investment and the capital gains from the sale of
AgriFinancial would normally fall in Net Results of Operations if it were a
non-consolidated private equity investment. C.A. Bancorp's method of classifying
AgriFinancial is a Non-GAAP financial measure that does not have any
standardized meaning prescribed by Canadian GAAP and therefore it is unlikely to
be comparable to similar measures presented by other issuers. This
classification is not a Canadian GAAP measure and should not be considered
either in isolation of, or as a substitute for, measures prepared in accordance
with Canadian GAAP. For a reconciliation of this Non-GAAP financial measure to
Canadian GAAP, please see the Company's MD&A. In addition, this news release
makes reference to the net book value per share which is a non-GAAP financial
measure. The Company calculates the net book value per share as it believes it
to be an important metric that shareholders use and frequently request and refer
to because shareholders often view the Company as an holding company of
investments in private entities. Net book value is a non-GGAP financial measure
that does not have any standardized meaning prescribed by Canadian GAAP and
therefore it is unlikely to be comparable to similar measures presented by other
issuers. This classification is not a Canadian GAAP measure and should not be
considered either in isolation of, or as a substitute for, measures prepared in
accordance with Canadian GAAP.
C.A. Bancorp Inc.
The Exchange Tower
130 King Street West, Suite 2810
Toronto, Ontario M5X 1A4
Telephone: (416) 214-5985
Fax: (416) 861-8166
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