TORONTO, ON–(Marketwired – May 12, 2016) –
Difference Capital Financial Inc. (“DCF” or the “Company”)
(TSX: DCF) (TSX: DCF.DB) today reported its financial results for first quarter ended March 31, 2016.
Q1 2016 Highlights
- Net asset value per share decreased to $1.88 from $2.01 at December 31, 2015.
- Net loss on investments and marketable securities of $2.1 million during the quarter, due in large part from unrealized foreign exchange loss on U.S. investments.
- Cash on hand at the end of March 31, 2016 was $10.4 million.
| (figures are in $’000 except per share amounts and shares outstanding) | Q1 2016 | Q4 2015 | Q1 2015 | ||||||
| Net realized gain (loss) on investments and marketable securities | (2,445 | ) | 1,983 | (8,350 | ) | ||||
| Net unrealized gain (loss) on investments and marketable securities | 310 | (716 | ) | 14,161 | |||||
| Net gain (loss) on investments and marketable securities | (2,135 | ) | 1,267 | 5,811 | |||||
| Other income | 336 | 1,015 | 1,346 | ||||||
| Total expenses | (2,204 | ) | (2,225 | ) | (3,661 | ) | |||
| Net income (loss) | (4,003 | ) | 57 | 3,496 | |||||
| Basic and fully diluted earnings per share | ($0.14 | ) | $0.00 | $0.09 | |||||
| Total assets | 89,025 | 93,066 | 113,678 | ||||||
| Total liabilities | 33,844 | 34,190 | 46,107 | ||||||
| Net asset value | 55,181 | 58,876 | 67,571 | ||||||
| Shares outstanding | 29,361,984 | 29,361,984 | 36,328,934 | ||||||
| Net asset value per share | $1.88 | $2.01 | $1.86 | ||||||
| Share price | $1.20 | $0.97 | $0.93 | ||||||
First Quarter Financial Results
Net loss for the quarter ended March 31, 2016 was $4.0 million, or $0.14 per share compared to a net income of $3.5 million, or $0.09 per share for the quarter ended March 31, 2015 and a net income of $0.1 million, or $0.00 per share for the quarter ended December 31, 2015.
During the three months ended March 31, 2016, the Company recorded $2.4 million of net realized capital losses compared to net realized capital losses of $8.4 million during the same period last year. The realized losses were primarily attributed to the restructuring of the Company’s investment in the convertible debentures of Cricket Media Group Ltd. (“Cricket Media”), which was approved by Cricket Media debenture holders in January. The Company had previously marked down its investment in the Cricket Media, and thus the debt restructuring had no net income impact during the quarter other than a reclassification of previously recorded unrealized losses to realized losses.
The Company recorded $0.3 million of net unrealized gain on investments and marketable securities during the quarter ended March 31, 2016 compared to net unrealized gain of $14.2 million during the quarter ended March 31, 2015. The unrealized gain was primarily due the reversal of previously unrealized loss on investment in Cricket Media ($1.9 million) that was realized upon the completion of the debt restructuring. The increase in unrealized gain was offset by $1.6 million of unrealized foreign exchange loss on the Company’s U.S. investments.
Other income decreased from $1.3 million for the three months ended March 31, 2015 to $0.4 million for the three months ended March 31, 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 March 31, 2016 were $2.2 million compared to $3.7 million during the quarter ended March 31, 2015. The significant components of expenses were as follows:
- Management and performance fees decreased to nil compared to $1.4 million in the prior year. Effective June 1, 2015, the Management Agreement with Difference Capital Management Inc. (“DCM”) was terminated in connection with the internalization acquisition of Difference Capital Inc. (“DCI”).
- Compensation expense for the three months ended March 31, 2016 was $0.9 million versus nil during the same period in 2015. Effective June 1, 2015 all DCM and DCI employees became employees of the Company. Also included in compensation and benefits during the quarter was $0.3 million relating to the Company’s equity-based compensation plan.
- Harmonized Sales Tax decreased to $0.0 million from $0.3 million in 2015 due to the elimination of HST on management fees paid to DCM.
- Financing costs were $0.9 million compared to $1.3 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.
“The quarter saw minor adjustments to investment values, however we continue to be excited about the prospects for our portfolio of emerging technology and media names,” says Henry Kneis, CEO of Difference Capital Financial. “We note that while we wait for IPO market conditions to improve, the M&A market for Canadian growth companies remains active,” adds Tom Astle, Chief Investment Officer of DCF.
Update on Real Estate Investment
The Company indirectly owns 52% of a 40% tenants-in-common (“TIC”) interest in a 650 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. There can be no certainty that a sale of the Property will occur or, if it does, as to the timing of, or value to be realized upon, any such transaction.
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.
Difference Capital Financial Inc.:
Henry Kneis
Chief Executive Officer
416 649 5085
www.differencecapital.com
