TORONTO, ON--(Marketwired - August 11, 2016) - Difference Capital Financial Inc. ("DCF" or the "Company") (TSX: DCF) (TSX: DCF.DB), today reported its financial results for the second quarter ended June 30, 2016.
Q2 2016 Highlights
- Net asset value per share increased to $2.00 from $1.88 at March 31, 2016;
- Net gain on investments and marketable securities of $4.9 million during the quarter, primarily attributed to the sale of Quickplay Media Inc. ("Quickplay"), and write-up of the U.S. real estate investment;
- During the quarter, AT&T completed its acquisition of Quickplay. The Quickplay sale resulted in a gross multiple of invested capital of 1.7 times;
- The Company marked up its U.S. real estate investment by $4.5 million during the quarter based on valuations obtained from third-party experts. As previously disclosed, the Company indirectly owns 52% of a 40% tenants-in-common interest in a 635 acre parcel of undeveloped land in the City of Rancho Mirage, California, immediately to the southeast of Palm Springs (the "Property"). An impediment to the sale of the Property has now been resolved, permitting the Company to actively consider its liquidity options for this investment;
- The Company repurchased $2.9 million principal amount of its 8% July 31, 2018 convertible debentures at an average purchase price of $926 per $1,000 principal amount through its normal course issuer bid; and
- Cash on hand at the end of June 30, 2016 was $15.8 million.
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|(figures are in $'000 except per share amounts and shares outstanding)|| ||Q2 2016|| ||Q1 2016|| ||Q2 2015|
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|Net realized gain (loss) on investments and marketable securities|| ||(8,655)|| ||(2,445)|| ||346|
|Net unrealized gain (loss) on investments and marketable securities|| ||13,582|| ||310|| ||(1,925)|
|Net gain (loss) on investments and marketable securities|| ||4,927|| ||(2,135)|| ||(1,579)|
|Other income|| ||465|| ||336|| ||709|
|Total expenses|| ||(1,768)|| ||(2,204)|| ||(4,361)|
|Net income (loss)|| ||3,624|| ||(4,003)|| ||(5,231)|
|Basic and fully diluted earnings per share|| ||$0.12|| ||($0.14)|| ||($0.14)|
|Total assets|| ||90,561|| ||89,025|| ||107,692|
|Total liabilities|| ||31,788|| ||33,844|| ||45,698|
|Net asset value|| ||58,773|| ||55,181|| ||61,994|
|Shares outstanding|| ||29,361,984|| ||29,361,984|| ||35,940,934|
|Net asset value per share|| ||$2.00|| ||$1.88|| ||$1.72|
|Share price|| ||$1.02|| ||$1.20|| ||$0.82|
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Second Quarter Financial Results
Net income for the quarter ended June 30, 2016 was $3.6 million, or $0.12 per share compared to a net loss of $5.2 million, or $0.14 per share for the quarter ended June 30, 2015 and a net loss of $4.0 million, or $0.14 per share for the quarter ended March 31, 2016.
During the quarter ended June 30, 2016, the Company recorded $4.9 million overall net gain on investments and marketable securities, compared to a net loss of $1.6 million during the quarter ended June 30, 2015. The net gain was primarily attributed to the sale of Quickplay and the write-up of the Rancho Mirage Property investment.
Other income decreased from $0.7 million for the three months ended June 30, 2015 to $0.5 million for the three months ended June 30, 2016, primarily due to lower interest and dividend income generated from a smaller portfolio of convertible debentures and debentures.
Total expenses during the quarter ended June 30, 2016 were $1.8 million compared to $4.4 million during the quarter ended June 30, 2015. The significant components of expenses were as follows:
- Compensation expense for the three months ended June 30, 2016 was $0.6 million versus $0.1 million during the same period in 2015. Effective June 1, 2015, the management agreement ("Management Agreement") with Difference Capital Management Inc. ("DCM") was terminated in connection with the internalization acquisition (the "Internalization Acquisition") of Difference Capital Inc. ("DCI") and all DCM and DCI employees became employees of the Company.
- Financing costs were $0.9 million compared to $1.2 million during the same period in 2015, as the Company took steps in 2015 to reduce its outstanding convertible debentures through its normal course issuer bid and a substantial issuer bid.
- Included in transaction costs during the quarter ended June 30 2015 were $2.4 million associated with the Internalization Acquisition of DCI.
"This quarter we saw the benefits of our late stage focus and a good M&A market with the exits of Quickplay, BTI and Embotics. While IPO conditions remain muted, we continue to believe that many of our portfolio companies are scaling well and will reward us with solid returns in the future," adds Tom Astle, Chief Investment Officer.
Please refer to the section regarding forward-looking statements which form an integral part of this release. These results, along with the unaudited 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.
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. Forward-looking statements may be identified by words such as "plans", "proposes", "anticipates", "estimates", "intends", "expects", "believes", "may", "will", "potential", "eventual", "explore", "could", "should", "seek", "within" or words of a similar nature. Forward looking statements in this press release include statements relating to future financial results of the Company, potential liquidity events of portfolio investment assets, the possible sale of the Property and the timing thereof. Factors that could cause actual results to differ materially include among others, equity market regulatory risks, risk inherent in foreign operations, competition, real estate market risks, macro-economic risk, and whether or not the Property is sold. 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.