C.A. Bancorp Inc. Reports Q2 2010 Financial Results
10 August 2010 - 10:00PM
Marketwired Canada
C.A. Bancorp Inc. ("C.A. Bancorp" or the "Company") (TSX:BKP) today announced
its consolidated financial results for the second quarter ended June 30, 2010.
The Company reported net earnings of $0.2 million or $0.01 per share compared to
a net loss of $1.8 million or $0.07 per share in the second quarter of 2009.
Included in the second quarter 2010 financial results are one-time expenses of
$2.3 million or $0.08 per share related to severance and the Company's strategic
review process. Second quarter 2010 net earnings adjusted for one-time expenses
were $2.5 million or $0.09 per share.
For the six months ended June 30, 2010, the Company reported a net loss of $0.8
million or $0.03 per share compared to net earnings of $4.2 million or $0.15 per
share in the same period of 2009. Included in the first six months of 2010
financial results are one-time expenses of $3.4 million or $0.13 per share
related to severance and the Company's strategic review process. Net earnings
for the first six months ended June 30, 2010 adjusted for one-time expenses were
$2.6 million or $0.10 per share.
At June 30, 2010, the Company maintained a strong balance sheet with
approximately $22.3 million of cash and other liquid assets, investments in
private entities and C.A. Bancorp Canadian Realty Finance Corporation ("CRFC")
totaling $45.6 million and debt of only $1.7 million. The Company's net book
value as at June 30, 2010 was $2.48 per share.
Operational Highlights - Second Quarter 2010 and to the Date hereof
In April 2010, High Fidelity HDTV Inc. ("High Fidelity") fully repaid the
principal amount outstanding, together with all interest owed, under the
original debenture issued by High Fidelity to the Company in 2007. The Company
continues to hold a convertible debenture in the principal amount of $1.5
million and warrants exercisable into common shares of High Fidelity.
On June 4, 2010, the Company completed the sale of its units of Charter REIT to
IGW Public Limited Partnership, an affiliate of League Assets Corp. at a price
of $1.45 per Unit. The sale yielded gross proceeds to C.A. Bancorp of
approximately $8.8 million and the Company reported a $2.1 million gain on the
sale in the second quarter 2010. In connection with the sale, the management
agreement dated March 27, 2007 between Charter REIT and one of the Company's
wholly-owned subsidiaries was terminated. C.A. Bancorp's severance cost in
connection with the termination of the management agreement was approximately
$0.7 million.
On August 5, 2010, the Company announced that it entered into a purchase
agreement with KS Kingswood Drive Holdings Limited Partnership ("KS") pursuant
to which KS will acquire C.A. Bancorp's interest in Kingswood Drive Kitchener
Limited Partnership ("Kingswood") comprised of an approximate 80% limited
partnership interest and a $0.6 million secured loan.
The aggregate purchase price is $6.7 million. The sale remains subject to
certain conditions, including, without limitation, completion of certain
transaction documents and deliveries and other customary closing conditions for
a transaction of this nature. It is expected that the transaction will close on
or about August 26, 2010. C.A. Bancorp has received a $1.0 million deposit in
trust from KS in partial satisfaction of the purchase price for the transaction
with the balance to be paid on closing.
Second Quarter 2010 Financial Results
Income Statement Highlights
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In Canadian $ millions 2nd quarter ended June Six months ended June
except per share amounts 30, 30,
2010 2009 2010 2009
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Revenue $ 1.3 $ 1.4 $ 2.5 $ 2.7
Net results of investments 2.0 (1.5) 2.5 5.1
Expenses, taxes and non-
controlling interest (3.1) (1.7) (5.8) (3.7)
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Net earnings (loss) from
continuing operations $ 0.2 $ (1.8) $ (0.8) $ 4.1
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Net earnings from
discontinued operations - - - 0.0
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Net earnings (loss) $ 0.2 $ (1.8) $ (0.8) $ 4.2
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Add back: one-time expenses
related to the strategic
review process (2010),
severance (2010) and the
Internalization (2009) 2.3 0.5 3.4 0.6
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Net earnings (loss)
excluding one-time expenses $ 2.5 $ (1.3) $ 2.6 $ 4.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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Net earnings (loss) per
share $ 0.01 $ (0.07) $ (0.03) $ 0.15
----------------------------------------------------------------------------
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Add back: one-time expenses 0.08 0.02 0.13 0.02(1)
----------------------------------------------------------------------------
Net earnings (loss) per
share excluding one-time
expenses $ 0.09 $ (0.05) $ 0.10 $ 0.18
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(1)Rounding.
Balance Sheet Highlights
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June 30, December 31,
In Canadian $ millions except per share amounts 2010 2009
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Cash and liquid assets $ 22.3 $ 14.5
Investments in private entities and CRFC 45.6 46.6
Investment in Charter REIT - 7.5
Other assets 2.5 2.9
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Total Assets $ 70.4 $ 71.5
Total Liabilities 4.0 3.9
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Total Shareholders' Equity $ 66.4 $ 67.6
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Number of shares outstanding (millions) 26.7 26.7
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Net book value per share $ 2.48 $ 2.53
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Closing market price per share $ 1.50 $ 1.33
Market price discount to net book value 40% 47%
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Financial Results Discussion
Consolidated revenues were essentially flat for the second quarter ended June
30, 2010 compared to the same period in 2009, however the Company recognized
lower asset management in the second quarter 2010 compared to the same period
2009 as a result of the termination of the Charter REIT management agreement.
Consolidated revenues were lower by $0.2 million for the six months ended June
30, 2010 compared to the same period in 2009 as a result of lower asset
management fees caused by the termination of the management agreement with
Charter REIT and a reduction in assets under management at Barlow Capital
Management Inc. ("Barlow").
Additionally, it should be noted that the Company also generated cash flow of
$0.3 million in the second quarter of 2010 (year-to-date $0.7 million) from
distributions received from its investments in Charter REIT and CRFC that are
not classified as interest and investment income but as a return of capital for
accounting purposes and therefore are not recognized as revenue.
Consolidated net results of investments resulted in a gain of $2.0 million for
the second quarter ended June 30, 2010 compared to a loss of $1.5 million for
the same quarter ended 2009. The gain was primarily driven by the gain on the
sale of the Company's interest in Charter REIT.
For the six month period ended June 30, 2010, the Company reported a $2.5
million gain on net results of investments compared to a gain of $5.1 million
for the same six month period ended 2009. The Company reported a $2.1 million
gain on the sale of Charter REIT, $0.6 million net unrealized gain on
investments in private entities and a $0.4 million loss on its equity
participation in Charter REIT for the five months of 2010 that the Company
maintained an interest in Charter REIT. In 2009, the Company reported a $6.9
million gain on the sale of AgriFinancial Canada Corp. offset by a $2.1 million
impairment loss on goodwill and intangible assets related to Barlow.
The Company's consolidated expenses, taxes and non-controlling interests
increased by $1.4 million for the quarter ended June 30, 2010 compared to the
same period in 2009. After deducting one-time expenses, the Company actually
decreased its operating expenses year-over-year. Similarly, for the six month
period ended June 30, 2010, the Company has reduced operating expenses as total
headcount have declined year-over-year and other expenses have been reduced.
This was primarily driven by an overall reduction in normal operating expenses
at C.A. Bancorp over the past six months and a restructuring of the Barlow cost
structure which took place in the second quarter 2009.
For the second quarter ended June 30, 2010, the Company incurred or accrued
one-time expenses of $2.3 million related to the strategic review process and
severance. One-time expenses for the six month period ended June 30, 2010
totaled $3.4 million. The Company has incurred additional expenses related to
the strategic review process up to and including the date hereof. Additional
one-time expenses may also be incurred in the future.
Realization Strategy
As previously disclosed, the Board of Directors (the "Board") of the Company has
determined that, following the expiry of the offer by a wholly-owned subsidiary
of Century Services LP to acquire all of the outstanding common shares of the
Company, C.A. Bancorp's interests would be best served through the realization
of the Company's assets and the distribution of the proceeds to the Company's
shareholders. C.A. Bancorp has contractual liquidity rights in respect of many
of its equity interests in private companies and its debt interests in those
entities have scheduled maturities. The Company intends to pursue opportunities
to accelerate the realization dates for its assets, where possible, and to
explore and develop further opportunities to do so. The Company has engaged, and
continues to engage, in discussions which are at various stages of advancement,
with third parties concerning possible dispositions of assets. Except as
otherwise disclosed, there are at present no unconditional binding agreements
between the Company and any party as to any such transactions.
As part of the realization strategy, the Company recently announced that the TSX
approved its notice of intention to make a normal course issuer bid for up to
1,816,450 of its common shares or approximately 6.8% of its issued and
outstanding common shares as at July 31, 2010. C.A. Bancorp believes that, from
time to time, the market price of its common shares may not reflect their
underlying value and that the purchase of common shares may represent an
appropriate and desirable use of funds. C.A. Bancorp intends to fund purchases
out of available cash. For more details, please see the Company's press release
dated August 6, 2010.
Financial Information
C.A. Bancorp's Q2 2010 consolidated financial statements and Management's
Discussion and Analysis of the results will be available on its 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 is focused
on investments in small- and middle-capitalization public and private companies,
with emphasis on the industrials, real estate, infrastructure and financial
services sectors.
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. 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, elsewhere in the Management's Discussion and Analysis for the
year ended December 31, 2009 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, Company's success in preserving capital, managing debt, maintaining
liquidity and managing operating costs. This news release makes reference to net
results of investments that are different than reported under Canadian GAAP.
C.A. Bancorp has reclassified its interest in AgriFinancial from Discontinued
Operations to Net Results of Operations. C.A. Bancorp believes that it is more
appropriate to classify AgriFinancial under Net Results of Operations because it
is more akin to a private equity investment and the capital gains from the sale
of AgriFinancial would normally fall in Net Results of Operations if it were a
non-consolidated private equity investment. C.A. Bancorp's method of classifying
AgriFinancial 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. For a reconciliation of this Non-GAAP financial measure to
Canadian GAAP, please see the Company's MD&A. In addition, 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-GGAP 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.
C.A. Bancorp Inc.
The Exchange Tower
130 King Street West, Suite 2810,
Toronto, Ontario M5X 1A4
Telephone: (416) 214-5985
Fax: (416) 861-8166
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