C.A. Bancorp Inc.
TSX : BKP

C.A. Bancorp Inc.

March 24, 2011 17:39 ET

C.A. Bancorp Inc. Reports 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - March 24, 2011) - C.A. Bancorp Inc. ("C.A. Bancorp" or the "Company") (TSX:BKP) today announced its consolidated financial results for the year ended December 31, 2010.  As a result of the Company's adoption of the Realization Strategy (defined herein) and the progress made as at December 31, 2010, the Company adopted the liquidation basis of accounting effective October 1, 2010.  This basis of accounting is considered appropriate when, among other things, liquidation of a company is probable and net realizable values of assets are reasonably determinable.

2010 Financial Highlights  

For the year ended December 31, 2010, the Company reported:

  • Revenues of $4.7 million compared to $5.4 million in 2009;
  • A net loss from results of investments of $0.7 million compared to a net gain of $5.8(1) million in 2009;
  • A net loss of $6.0 million or $0.23 per share compared to net earnings in 2009 of $2.1 million or $0.08 per share;
  • One-time expenses related to the Company's Strategic Review Process (defined herein) and severance costs (One-time Expenses) of $3.5 million;
  • One-time expenses related to accrued liquidation costs (Accrued Liquidation Costs) of $2.4 million; and
  • A net loss of $0.1 million adjusted for One-time Expenses and Accrued Liquidation Costs.

As at December 31, 2010, the Company's:

  • Liquid net assets (working capital) were $7.4 million or $0.60 per share;
  • Investments were fair valued at $27.1 million or $2.21 per share;
  • Long-term debt and Accrued Liquidation Costs were $3.6 million or $0.29 per share; and
  • Net book value(2) was $31.1 million or $2.53 per share.

 

2010 Financial Results Discussion
Statement of Operations Highlights
In Canadian $ millions except per share amounts Year ended December 31,
2010 2009
Revenue $ 4.7 $ 5.4
Net results of investments (0.7) 5.8(3)
Expenses, taxes and non-controlling interest (10.1) (9.1)
Net earnings (loss) from continuing operations $ (6.0) $ 2.1
Net earnings from discontinued operations - 0.0
Net earnings (loss) $ (6.0) $ 2.1
Add back: one-time expenses and accrued liquidation costs (2010) 5.9 2.8
Net earnings (loss) excluding one-time expenses $ (0.1) $ 4.9
     
Net earnings (loss) per share $ (0.23) $ 0.08
Add back: one-time expenses per share 0.23 0.10
Net earnings (loss) per share excluding one-time expenses $ (0.01)(4) $ 0.18
1 The 2009 financial results include a gain on sale of AgriFinancial Canada Corp. (net of tax) reclassified from discontinued operations (as reported under GAAP). See the cautionary statement regarding use of Non-GAAP financial measures at the end of this press release.
2 Net book value per share is a non-GAAP financial measure and is calculated as total shareholders' equity under GAAP divided by the number of common shares outstanding at year-end. See the cautionary statement regarding use of Non-GAAP financial measures at the end of this press release.
3 Includes the gain on sale of AgriFinancial Canada Corp. (net of tax) which has been reclassified from discontinued operations (as reported under GAAP).
4 Rounding.

Consolidated revenues for the year ended December 31, 2010 were lower when compared to the same period in 2009.  The Company recorded higher interest and investment income as the Company amortized the remaining discounts related to the debentures issued by Salbro Bottling Group and Digital Payment Technologies Corp.  This was offset by a reduction in year-over-year income from the Company's investment in Bermingham Foundation Solutions, as that investment was sold in the third quarter of 2010.  The Company also recognized lower asset management fees in 2010 compared to 2009 as a result of the termination of the management agreement between Charter REIT (now Partners REIT) and the Company which occurred at the beginning of June 2010 and lower asset management fees earned by Aventine Management Group Inc. (formerly Barlow Capital Management Inc.).

The Company also generated cash flow of $1.1 million in 2010 from distributions received from its investments in C.A. Bancorp Canadian Realty Finance Corporation ("CRFC") and Charter REIT that are not classified as interest and investment income but as a return of capital for accounting purposes and therefore are not recognized as revenue.

Consolidated net results of investments resulted in a loss of $0.7 million for the year ended December 31, 2010 compared to a gain of $5.8 million for the same period in 2009.  The net loss in 2010 was primarily as a result of the $5.9 million change in unrealized gain on investments in private entities, $2.1 million gain on sale of its investment in Charter REIT offset by a $4.2 million realized loss on its investment in private entities (primarily related to the Company's investment in Everus Communications Inc.) and a net $4.2 million impairment loss on the Company's investment in CRFC and the intangible asset related to CRFC.  In 2009, the gain related primarily to the sale of AgriFinancial Canada Corp.

The Company's consolidated expenses, taxes and non-controlling interests increased by $1.1 million for the year ended December 31, 2010 compared to the same period in 2009.  After deducting One-time Expenses and Accrued Liquidation Costs, taxes and non-controlling interests, the Company decreased its operating expenses year-over-year by $1.8 million as total headcount declined throughout the year and other administration and corporate expenses have been reduced as the Company executes its Realization Strategy.

For the year ended 2010, the Company incurred One-time Expenses of $2.3 million related to the Strategic Review Process.  The Strategic Review Process came to its completion in the third quarter of 2010. 

Balance Sheet Highlights    
In Canadian $ millions except per share amounts December 31, 2010 December 31, 2009
Cash and liquid assets $ 8.8 $ 14.5
Investments in private entities and CRFC 27.2 46.6
Investment in Charter REIT - 7.5
Other assets 0.1 2.9
Total Assets $ 36.1 $ 71.5
     
Total Liabilities 5.0 3.9
Total Shareholders' Equity $ 31.1 $ 67.6
     
Number of shares outstanding (millions) 12.3 26.7
Net book value per share $ 2.53 $ 2.53
Closing market price per share $ 1.94 $ 1.33
Market price discount to net book value 23% 47%

The Company had cash and liquid assets of approximately $8.8 million ($7.4 million net of current liabilities) at December 31, 2010.  The Company believes it has sufficient working capital to support the Company's operations.  As the Company returns capital to shareholders, it will maintain sufficient financial resources to conduct any ongoing operations.

As at December 31, 2010, the Company has debt of $1.5 million (which is proposed to be assumed by Green Tree pursuant to the Proposed Transaction).  In addition, at December 31, 2010, the Company accrued $2.4 million of Accrued Liquation Costs. 

The Company is required to make significant estimates and exercise judgment in determining Accrued Liquidation Costs. The Company reviewed contractual commitments such as payroll and related expenses, lease termination costs, and professional fees to determine the estimated costs to be directly incurred through the Realization Strategy period.  The Company has not accrued the ongoing operating costs that are anticipated to be incurred through the Realization Strategy period such as payroll and related expenses, general and administration costs and other corporate expenses.

Subsequent to Year-end

The Company announced that it has entered into an agreement to sell all of its interests in CRFC to Green Tree Capital Management Corp. for an aggregate purchase price of $6.4 million (the "Proposed Transaction").  For more information on the Proposed Transaction, please refer to the Company's press release issued March 16, 2011 available on the Company's website at www.cabancorp.com and on SEDAR at www.sedar.com.

Financial Information

C.A. Bancorp's 2010 audited consolidated financial statements and related management's discussion and analysis 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.  The Company is currently implementing its Realization Strategy.

This release includes certain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue" or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Without limiting the generality of the foregoing, there can be no assurance of any kind that the realization strategy will yield a value equal or close to the net book value per Company common share. These forward-looking statements are subject to a number of risks and uncertainties.
Actual results could differ materially from those anticipated in these forward-looking statements. Reference should be made to the risk factors in the Company's Annual Information Form, in the Management's Discussion and Analysis for the year ended December 31, 2010 and in the Directors' Circular dated June 4, 2010 and in our other filings with Canadian securities regulators. Additional important factors that could cause actual results to differ materially from expectations include, among other things, 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 and managing operating costs. 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-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.

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