Difference Capital Financial Inc.

TSX : DCF
TSX : DCF.DB


Difference Capital Financial Inc.

March 27, 2014 16:06 ET

Difference Capital Reports Fiscal Fourth Quarter and Full Year 2013 Results

TORONTO, ONTARIO--(Marketwired - March 27, 2014) - Difference Capital Financial Inc. ("DCF") (TSX:DCF)(TSX:DCF.DB) today reported its financial results for the three months and twelve months ended December 31, 2013.

Fourth Quarter & Fiscal Year 2013 Highlights

Summary of Quarterly & Annual Financial Results (Figures are in $000 except per share)
Q4 2013 FY 2013 Q4 2012 FY 2012
Net realized gain (loss) on investments and marketable securities $ (731 ) $ 1,680 $ 2,535 $ 872
Net change in unrealized gain (loss) on investments and marketable securities (16,756 ) (19,113 ) 5,242 6,026
Other income 1,950 5,863 533 906
Total expenses 3,803 8,888 2,556 3,528
Net income (loss) (19,341 ) (20,458 ) 5,753 4,276
Basic and fully diluted earnings per share $ (0.49 ) $ (0.63 ) $ 0.23 $ 0.40
FY 2013 FY 2012
Total assets $ 168,380 $ 93,342
Total liabilities 53,282 3,487
Net asset value 115,098 89,855
Shares outstanding* 39,132,334 11,882,736
Net asset value per share $ 2.94 $ 3.29
Share price* $ 2.75 $ 3.40

* reflected post 10 for 1 share consolidation

Fiscal 2013 Operational Highlights

  • Received approval from the Toronto Stock Exchange ("TSX") to graduate to the TSX from the TSX Venture Exchange in October.
  • Attracted Tom Astle, Jamie Brown, Tom Liston & Dushan Batrovic to join its team of highly experienced investment professionals to assist in delivering value to shareholders.
  • Continued to build its portfolio of later stage private companies with new investments in Vision Critical, BuildDirect and BTI Systems.

"Our focus is executing on our strategy by continuing to make investments in private late-stage technology, media and healthcare growth companies. The markets are proving our investment thesis accurate. Less than two years since establishing Difference, the broader tech sector has increasingly attracted capital in the public markets," said Michael Wekerle, CEO of Difference Capital. Our experienced team of capital markets experts continues to attract high quality companies that require our advisory services in addition to catalytic growth capital as they approach inflection points in their business."

Full-Year 2013 Financial Results

For the year ended December 31, 2013, DCF reported net loss of $20.5 million, or ($0.63 per share) compared to $4.3 million of net income, or ($0.40 per share) for the same period in 2012. Net loss in 2013 was primarily attributed to unrealized depreciation on investments and marketable securities of $19.1 million compared to a net change in unrealized appreciation of $6.0 million in 2012. For the year ended December 31, 2013, DCF recognized approximately $18.1 million of write-downs in non-publicly held investments including investments in Virgin Gaming, Lignol Energy, Wasabi Energy, Crailar Technologies, Fem MED Formulas and SoMedia Networks. In addition, DCF recognized approximately $6.6 million in unrealized loss on publicly traded marketable securities being marked-to-market (including $2.7 million from one security that has recovered most of its value as at the date of this release). The total net change in unrealized depreciation was partially offset by appreciation of investments in InfraredX and Enterprise Group totalling $4.2 million as well as unrealized foreign exchange gain on foreign investments of $1.4 million.

DCF realized $1.7 million on dispositions of investments and marketable securities during the year ended December 31, 2013 compared with $0.9 million for the year ended December 31, 2012.

Other income for the year increased to $5.9 million compared to $0.9 million in the prior year. Included in other income were interest and dividend income from the investment portfolio totalling $4.7 million compared to $0.9 million in 2012. Also included in other income was the 40% revenue participation in Difference Capital Management's advisory revenue business of $1.2 million, compared to nil in 2012. DCF's share of the advisory revenue resulted in more than a 40% reduction in management fee expense incurred during the year.

Total expenses during the year ended December 31, 2013 were $8.9 million compared $3.5 million in 2012. For the year ended December 31, 2013, management fees were $2.8 million compared to $0.6 million for the year ended December 31, 2012. The increase was the result of a full year of management fees in 2013 compared with a partial year in 2012 as well as higher Net Asset Value upon which management fees are calculated. Finance expense of $2.8 million was recorded for the year ended December 31, 2013 compared to nil for the year ended December 31, 2012. The increase is the result of the interest and accretion expense on the $56.0 million of convertible debentures completed in July 2013.

As at December 31, 2013, total investable assets were $164.1 million, compared to $89.9 million in 2012. Cash and cash equivalents totalled $24.2 million, compared to $9.4 million in 2012. Net assets value was $115.1 million ($2.94 per share) compared to $89.9 million ($3.29 per share) in 2012.

DCF has made several strategic investments in mid-to-late stage companies in the technology, media and healthcare related industries since June 2013. These investments include:

  • $3.0 million in Baanto, a leading developer of innovative, high performance and scalable touch solutions.
  • $2.0 million in Aurinia Pharmaceuticals, a late stage biopharmaceutical company focused on the global nephrology market.
  • $1.9 million in BTI Systems, a leading provider of intelligent networking software and systems. BTI's solutions empower content providers and telecommunication carriers to capitalize on the demand for bandwidth driven by long-term trends in cloud services, mobility, and internet video.
  • $5.0 million in BuildDirect, a leader in online supply of home improvement products.
  • $2.0 million in Carta Worldwide, a leader in transaction processing and payments technology specializing in prepaid, mobile and emerging markets.
  • $3.0 million in iPowow, a leader in "Participation TV".
  • $3.0 million in Vena Solutions, the only corporate performance management solution that allows a Microsoft Excel front-end.
  • $3.5 million in Vision Critical, a leader in next generation market research.

Please refer to the section regarding forward-looking statements which form an integral part of this release. These results, along with the audited financial statements and the company's MD&A, are available on the company's website at www.differencecapital.com and on SEDAR at www.sedar.com.

Conference Call

DCF will host a conference call Friday, March 28, 2014, at 9:00 AM ET to discuss its results. Michael Wekerle, CEO, Neil Johnson, President and Henry Kneis, CFO will host the call. All interested parties can join the call by dialling (647) 427-7450 or (888) 231-8191. Please dial in 5-10 minutes prior to the call to secure a line. A live audio webcast of the conference call will also be available at www.differencecapital.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.

About Difference Capital Financial Inc.

Difference Capital Financial Inc. invests in and advises growth companies. We leverage our capital market expertise to help unlock the value in technology, media and healthcare companies as they approach important milestones in their business lifecycle. Difference Capital Financial Inc. is traded under the Toronto Stock Exchange under the symbol "DCF".

Caution Regarding Forward-Looking Statements

Included in this press release are matters that constitute "forward-looking" information. Such forward-looking statements may be identified by words such as "plans", "proposes", "estimates", "intends", "expects", "believes", "may" or words of a similar nature. There can be no assurance that such statements will prove to be accurate. Actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include among others, equity market regulatory risks, risk inherent in foreign operations and competition. These factors are largely outside the control of the Company. All subsequent forward-looking statements attributable to the Company or its agents are expressly qualified in their entirety by these cautionary comments. The Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.

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