TORONTO, ONTARIO--(Marketwire - Aug. 13, 2012) - C.A. Bancorp Inc. ("C.A. Bancorp" or the "Company") (TSX:BKP) today announced its consolidated financial results for the three and six months ended June 30, 2012.
In connection with the advancement of the Company's Realization Strategy 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.
Second Quarter 2012 Financial Highlights
For the three months ended June 30, 2012, the Company reported:
• Revenues of $0.4 million compared to $0.5 million in the second quarter of 2011;
• Net gain from results of investments of $1.3 million compared to a net gain from results of investments of $34,000 in the second quarter of 2011; and
• Net earnings of $1.0 million or $0.08 per share compared to a net loss of $0.3 million or $0.02 per share in the second quarter of 2011.
For the six months ended June 30, 2012, the Company reported:
• Revenues of $0.9 million compared to $1.1 million in the same period of 2011;
• Net gain from results of investments of $1.3 million compared to a net gain from results of investments of $3.0 million in the same period of 2011; and
• Net earnings of $1.1 million or $0.09 per share compared to net earnings of $2.7 million or $0.22 per share in the same period of 2011.
As at June 30, 2012, the Company's:
• Cash and working capital was $14.4 million or $1.18 per share;
• Investments in private entities were fair valued at $27.6 million or $2.25 per share;
• Accrued liquidation costs were $1.0 million or $0.08 per share; and
• Net book value was $41.1 million or $3.35 per share.
Financial Results Discussion
| Statement of Operations and Earnings Highlights | ||||||||||||
| Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||
| In C$ millions except per share amounts | 2012 | 2011 | 2012 | 2011 | ||||||||
| Revenue | $ | 0.4 | $ | 0.5 | $ | 0.9 | $ | 1.1 | ||||
| Net results of investments | 1.3 | 0.0 | 1.3 | 3.0 | ||||||||
| Expenses, taxes and non-controlling interest | (0.7 | ) | (0.8 | ) | (1.1 | ) | (1.4 | ) | ||||
| Net earnings (loss) | $ | 1.0 | $ | (0.3 | ) | $ | 1.1 | $ | 2.7 | |||
| Net earnings (loss) per share | $ | 0.08 | $ | (0.02 | ) | $ | 0.09 | $ | 0.22 | |||
Consolidated revenues declined modestly for the three months ended June 30, 2012 compared to the same period in 2011. The decrease was driven by a decline in asset management fees as the Company terminated its asset management and advisory agreements in connection with the sale of its interest in NorRock Realty Finance Corporation (formerly C.A. Bancorp Canadian Realty Finance Corporation) in the second quarter of 2011. This decrease was partially offset by an increase in interest income related to the Company's investment in Digital Payment Technologies Corp. ("DPT").
Consolidated net results of investments yielded a gain of $1.3 million due to an unrealized gain in the Company's investment in DPT. The net unrealized gain in the first six months of 2011 was as a result of an unrealized gain related to the Company's investment in High Fidelity HDTV Inc. ("High Fidelity").
The Company's operating expenses decreased by $0.1 million for the three months ended June 30, 2012, compared to the same period in 2011. The decrease in operating expenses was the result of a decrease in total headcount and operating expenses being reduced or eliminated as the Company continues to execute the Realization Strategy.
Balance Sheet Highlights
| In C$ millions except per share amounts | June 30, 2012 | December 31, 2011 | ||||
| Cash and liquid assets | $ | 14.7 | $ | 13.4 | ||
| Investments in private entities and loans receivable | 27.6 | 27.8 | ||||
| Other assets | 0.1 | 0.1 | ||||
| Total Assets | $ | 42.4 | $ | 41.31 | ||
| Total Liabilities | (1.3 | ) | (1.3)1 | |||
| Total Shareholders' Equity | $ | 41.1 | $ | 39.91 | ||
| Number of shares outstanding (millions) | 12.3 | 12.3 | ||||
| Net book value per share | $ | 3.35 | $ | 3.26 | ||
| Closing market price per share | $ | 2.91 | $ | 2.25 | ||
| Market price discount to net book value | 13 | % | 31 | % |
| 1Rounding. |
As at June 30, 2012, the Company had cash of approximately $14.3 million, no debt and total accrued liquidation 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 as 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 June 30, 2012
On August 1, 2012, the Company, together with other shareholders of High Fidelity completed the second stage closing of the sale of High Fidelity to Blue Ant Media Inc. ("Blue Ant"). At the second closing, the Company received $9.5 million in cash and $1.9 million in Blue Ant common shares. In aggregate, for the sale of all of the Company's interests in High Fidelity, C.A. Bancorp received $14.3 million in cash and $1.9 million in Blue Ant common shares for total consideration of $16.2 million.
Outlook
As at June 30, 2012, the Company had cash of approximately $14.3 million and adequate working capital to fund the expected remaining operations of the Company. Subsequent to June 30, 2012, the Company received an additional $9.5 million in cash from the completion of the realization of its interest in High Fidelity.
The Company continues to manage its investments in DPT, Salbro Bottle, and its minority interest in Blue Ant by meeting and working with the management teams of each investee company and influencing the strategic direction of those companies by participating as nominee directors on their respective boards of directors. The Company continues to consider discussions, which are at various stages of advancement, with third parties concerning further monetization of assets. In each instance, the Company's interests may be better served by (i) realizing on a given asset through a process on or about its scheduled realization date; or (ii) continuing to maintain an interest if the Company believes additional financial value can be realized in the future. Management continuously evaluates the benefits and costs of maintaining each of its interests.
At the Company's 2012 Annual and Special Meeting ("ASM"), shareholders approved a special resolution authorizing a reduction in stated capital, which facilitates the ability of the Company to make a distribution of cash to shareholders in conjunction with the Realization Strategy. Since the ASM, the Company has re-initiated discussions with the tax authorities on a tax ruling, which if obtained and followed, should permit the Company to make cash distributions to shareholders on a tax efficient basis. In parallel, the Company will continue to develop and evaluate alternatives to cash distributions to shareholders that may achieve and deliver similar or superior value to the Company and its shareholders. Depending on the outcome of the Company's evaluation of alternatives, the Company may determine it is in the best interests of the Company and its shareholders to pursue strategies other than the Realization Strategy. The outlook for the Company is dependent on the strategies it implements from time to time and its ability to secure any requisite approvals.
Management and the Board of Directors are committed to managing the Company through the Realization Strategy in a manner that is intended to maximize value for shareholders.
Financial Information
For a comprehensive review of the Company's results, shareholders are encouraged to read (i) the Company's second quarter 2012 unaudited consolidated financial statements and accompanying Interim Management's Discussion and Analysis and (ii) the Company's 2011 audited consolidated financial statements and accompanying Annual 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 three and six months ended June 30, 2012 and 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.
| C.A. Bancorp Inc. |
| 401 Bay Street, Suite 1600 |
| Toronto, Ontario M5H 2Y4 |
| Telephone: (416) 214-5985 |
| Fax: (416) 861-8166 |
Contact Information:
Kurt Brands
Chief Executive Officer
1-866-388-5985
416-861-8166 (FAX)
info@cabancorp.com
www.cabancorp.com