Discovery Capital Corporation

Discovery Capital Corporation

November 22, 2006 15:28 ET

Discovery Capital Corporation Reports Third Quarter 2006 Results-Net Asset Value of $0.22 per share

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 22, 2006) - Discovery Capital Corporation ("Discovery Capital" or the "Company") (TSX VENTURE:DVY.Y) provides the following summary of its financial results for the nine months ended September 30, 2006.

Key points include the following:

- At September 30, 2006, net asset value ("NAV") per share was $0.22, unchanged from NAV per share of $0.22 at December 31, 2005.

- Total results of operations for the three and nine months ended September 30, 2006 were $(57,731) and $34,292, respectively. Results of operations for the quarter ended September 30, 2006 included a minor positive change of $3,367 in unrealized depreciation of investments; over the nine-month period, there was a positive change of $631,052. For the comparable three and nine-month periods in 2005, total results of operations were $(1,685,492) and $(8,663,053), respectively. Results for the nine-month period in 2005 included a negative change of $(8,164,982) in unrealized depreciation of investments resulting from significant decreases in the trading prices of certain of the publicly-traded investments in junior technology companies held by the Company and, in particular, in the Company's largest publicly-traded investment, TIR Systems Ltd. The value of the Company's investment in TIR has been relatively unchanged to date in 2006. Changes in the trading prices or the estimated fair values of the Company's investments can vary significantly from period to period, resulting in high volatility in total results of operations.

- During the current quarter, the Company completed the divestiture of its investment in publicly-traded portfolio company PhotoChannel Networks Inc., resulting in a small overall realized gain.

September 30, 2006 Financial Review

Selected financial data derived from the Company's consolidated financial statements is as follows:

As at As at
September 30, December 31,
2006 2005
(unaudited) (audited)
Statements of Financial Position
Net assets $11,038,295 $11,012,459
Unrealized depreciation of investments (11,350,213) (11,981,265)
Net Asset Value per share $ 0.22 $ 0.22

Three Three Nine Nine
months months months months
ended ended ended ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Statements of 2006 2005 2006 2005
Operations (unaudited) (unaudited) (unaudited) (unaudited)
Management fee and
other income $ 271,769 $ 195,526 $ 825,973 $ 622,212
Loss before change in
value of investments (76,166) (169,290) (232,567) (548,407)
Realized gains (losses)
on disposal of investments 15,068 144,459 (364,193) 50,336
Change in unrealized
depreciation of investments 3,367 (1,660,661) 631,052 (8,164,982)
Total results of operations (57,731) (1,685,492) 34,292 (8,663,053)
Total results of operations
per share $ (0.00) $ (0.03) $ 0.00 $ (0.17)

For the three and six months ended September 30, 2006, loss before change in value of investments declined as compared to the comparable periods in 2005 as a result of increased management fee and other income and lower overall expenses. The Company had working capital of $1,629,671 at September 30, 2006, up from working capital of $630,988 at December 31, 2005. Cash increased by a net amount of $1,080,904 during the nine months ended September 30, 2006 as net investing activities generated cash (primarily as a result of the disposal of shares of PhotoChannel Networks Inc.) whereas net investing activities consumed cash in the comparable period of 2005. Further, the Company was comparatively inactive with its normal course issuer bid in 2006, and consumed less cash for operating activities. All of these factors contributed to the year-to-date cash increase in 2006.

At September 30, 2006, the Company had Available for Sale Securities with an estimated fair value of $1,638,580. This is down from the estimated fair value of Available for Sale Securities of $2,665,546 at December 31, 2005, mainly due to the disposal of PhotoChannel shares, as noted above. The Company has identified securities as "Available for Sale Securities" when those securities have readily determinable fair values (based on quoted stock market prices) and are not restricted from re-sale.

A breakdown of the estimated fair value of the Company's investments, showing total cost and fair values at September 30, 2006 and December 31, 2005, is as follows:

September 30, 2006 December 31, 2005
(unaudited) (audited)
Fair Value Cost Fair Value Cost
----------- ----------- ----------- -----------
Available for Sale
Securities $ 1,638,580 $ 7,553,606 $ 2,665,546 $ 8,388,126
Other Public Investments 2,567,908 1,809,754 3,100,216 2,750,284
Private Investments 5,146,106 11,339,447 4,525,779 11,134,396
----------- ----------- ----------- -----------
Total Investments $ 9,352,594 $20,702,807 $10,291,541 $22,272,806
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

The Company has used Available for Sale Securities in the past several years to provide cash as needed for operating, financing and investing activities, and management continues to believe that the Company has the financial resources necessary to fund the Company's operations and any follow-on investment activity for the foreseeable future. Increasing management fee revenue over the past three years has resulted in the Company being less reliant on Available for Sale Securities for liquidity.

Full details of the Company's financial results for the three and nine months ended September 30, 2006 are found in the Company's financial statements and related Management's Discussion and Analysis filed on SEDAR at

About Discovery Capital:

With 20 years of venture capital experience in British Columbia, Discovery Capital, through its wholly owned subsidiary, Discovery Capital Management Corp., is a venture fund manager and venture capital investor specializing in: information technology, communications, health and life sciences, and other advanced technologies. We have proven expertise in strategic planning, management development, innovative financing strategies, corporate governance and positioning for liquidity. Discovery Capital Management Corp. is the manager of British Columbia Discovery Fund (VCC) Inc., a British Columbia venture capital fund that has raised approximately $37.0 million to date and has investment interests in eleven developing technology companies.

For more information about Discovery Capital Corporation, please visit

John McEwen, President and Co-Chief Executive Officer

Harry Jaako, Chairman and Co-Chief Executive Officer

This news release may include statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond its control. Future events and results may vary substantially from what the Company currently foresees.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Discovery Capital Corporation
    John McEwen
    President and Co-CEO
    (604) 683-3000 ext. 106
    Discovery Capital Corporation
    Harry Jaako
    Chairman and Co-CEO
    (604) 683-3000 ext. 105
    Discovery Capital Corporation
    Charles Cook
    (604) 683-3000 ext. 102
    (604) 662-3457 (FAX)