C.A. Bancorp Inc.
TSX : BKP

C.A. Bancorp Inc.

February 29, 2012 13:43 ET

C.A. Bancorp Inc. Reports 2011 Financial Results

TORONTO, ONTARIO--(Marketwire - Feb. 29, 2012) - C.A. Bancorp Inc. ("C.A. Bancorp" or the "Company") (TSX:BKP) today announced its consolidated financial results for the year ended December 31, 2011.

In connection with the advancement of the Company's Realization Strategy (as previously defined) effective October 1, 2010, the Company, in preparing its financial statements (i) applied Accounting Guideline 18 - Investment Companies ("AcG-18") and (ii) adopted the liquidation basis of accounting. As an Investment Company under AcG-18, C.A. Bancorp has received exemptive relief from the requirement to adopt International Financial Reporting Standards ("IFRS") until January 1, 2013.

2011 Financial Highlights

For the year ended December 31, 2011, the Company reported:

  • Revenues of $1.9 million compared to $4.7 million in 2010;
  • Net gain from results of investments of $9.3 million compared to a net loss from results of investments of $0.7 million in 2010; and
  • Net earnings of $8.9 million or $0.72 per share compared to a net loss of $6.0 million or $0.23 per share in 2010.

As at December 31, 2011, the Company's:

  • Cash and working capital was $13.1 million or $1.07 per share;
  • Investments and loans receivable were fair valued at $27.8 million or $2.27 per share;
  • Accrued liquidation costs were $1.0 million or $0.09 per share; and
  • Shareholders' equity (or net book value(1)) was $39.9 million or $3.26 per share.

2011 Financial Results Discussion

Statement of Operations Highlights
In C$ millions except per share amounts Year Ended December 31,
2011 2010
Revenue $ 1.9 $ 4.7
Net results of investments 9.3 (0.7)
Expenses, taxes and non-controlling interest (2.3) (10.1)
Net earnings (loss) $ 8.9 $ (6.0)
Add back: one-time expenses 0.2 5.9
Net earnings (loss) excluding one-time expenses $ 9.1 $ (0.1)
Net earnings (loss) per share $ 0.72 $ (0.23)
Add back: one-time expenses per share - 0.23
Net earnings (loss) per share excluding one-time expenses $ 0.74 $ (0.01)

Consolidated revenues declined by $2.9 million for the year ended December 31, 2011 compared to the same period in 2010. The decrease was primarily driven by a decline in investment income of $1.8 million as the Company (i) exited a number of investments in 2010; and (ii) recognized approximately $0.6 million into interest income as a result of the Company's application of AcG-18 in the fourth quarter of 2010, related the Company's investments in Digital Payment Technologies Corp. and Salbro Bottle Group ("Salbro"). In addition, the Company's asset management fees declined as the Company terminated its asset management agreements in connection with the sale of its interests in NorRock Realty Finance Corporation (formerly C.A. Bancorp Canadian Realty Finance Corporation) in the second quarter of 2011.

Consolidated net results of investments yielded a gain of $9.3 million for the year ended December 31, 2011 compared to a loss of $0.7 million for the year ended December 31, 2010. In the fourth quarter of 2011, the Company entered into an agreement to sell all of its shares in High Fidelity HDTV Inc. ("High Fidelity") to Blue Ant Media Inc. for total consideration upon closing of both stages of the transaction of $16.2 million. The Company's proposed sale of its shares in High Fidelity resulted in the Company recognizing realized and unrealized gains of $10.1 million in 2011. This was offset by unrealized losses of $0.4 million in each of the Company's investments in Salbro and Xplornet Communications Inc.

The Company's operating expenses (excluding one-time expenses, income tax expense and non-controlling interests) decreased by $1.9 million for the year ended December 31, 2011, compared to the same period in 2010. The decrease in operating expenses was the result of a decrease in total headcount and operating expenses being reduced or eliminated as the Company continues to execute its Realization Strategy.

Balance Sheet Highlights
In C$ millions except per share amounts December 31, 2011 December 31, 2010
Cash and liquid assets $ 13.4 $ 8.8
Investments in private entities and loans receivable 27.8 27.2
Other assets 0.1 0.1
Total Assets $ 41.32 $ 36.1
Total Liabilities 1.32 5.0
Total Shareholders' Equity $ 39.92 $ 31.1
Number of shares outstanding (millions) 12.3 12.3
Net book value per share $ 3.26 $ 2.53
Closing market price per share $ 2.25 $ 1.94
Market price discount to net book value 31% 23%

The Company had cash and liquid assets of approximately $13.4 million ($13.1 million net of current liabilities) at December 31, 2011. The Company believes it has sufficient working capital to support the Company's operations.

As at December 31, 2011, the Company had no debt and total accrued liquation costs of $1.0 million. The Company is required to make significant estimates and exercise judgment in determining accrued liquidation costs. The Company reviewed contractual commitments such 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

On February 1, 2012, Green Tree Capital Management Corp. repaid approximately $0.5 million to the Company under the terms of a promissory note, representing half of the principal and accrued interest outstanding pursuant to the promissory note. The remaining principal balance owing under the promissory note of $0.5 million plus accrued interest is due to the Company on May 12, 2012.

Financial Information

For a comprehensive review of the Company's results, shareholders are encouraged to read the Company's 2011 audited consolidated financial statements and accompanying Management's Discussion and Analysis, copies of which will be available on the Company's 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 has historically 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 executing its Realization Strategy.

Caution Regarding Forward-Looking Information

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. 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, 2011 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, ability of the Company to execute the Realization Strategy or any alternative strategy; Company's success in preserving capital, managing debt, maintaining liquidity and managing operating costs; the receipt of any regulatory approvals or consents required to complete previously announced transactions. 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.

Cautionary Statement Regarding the Valuation of Investments in Private Entities

In the absence of an active market for its investments in private entities, fair values are determined by management using the appropriate valuation methodologies after considering the history and nature of the business, operating results and financial conditions, the outlook and prospects, the general economic, industry and market conditions, capital market and transaction market conditions, contractual rights relating to the investment, public market comparables, private market transactions multiples and, where applicable, other pertinent considerations. The process of valuing investments for which no active market exists is inevitably based on inherent uncertainties and the resulting values may differ from values that would have been used had an active market existed. The amounts at which the Company's investments in private entities could be disposed of may differ from the fair value assigned and the differences could be material. Estimated costs of disposition are not included in the fair value determination.

(1) Net book value per share is a non-GAAP financial measure and is calculated as total shareholders' equity under Canadian Generally Accepted Accounting Principles (Canadian GAAP) divided by the number of common shares outstanding at December 31, 2011. See the cautionary statement regarding use of Non-GAAP financial measures at the end of this release.

(2) Rounding.

C.A. Bancorp Inc.
401 Bay Street, Suite 1600
Toronto, Ontario M5H 2Y4
Telephone: (416) 214-5985
Fax: (416) 861-8166

Contact Information