TORONTO, CANADA – November 12, 2014 – Difference Capital Financial Inc. (“DCF”) (TSX:DCF) (TSX:DCF.DB), today released its unaudited financial results for the quarter ended September 30, 2014.
|Summary of Quarterly Results All amounts in thousands, except per share amounts||Q3 2014||Q2 2014||Q3 2013|
|Net realized gain (loss) on investments and marketable securities||$340||$1,015||($87)|
|Net change in unrealized gain (loss) on investments and marketable securities||(9,958)||(11,217)||1,865|
|Net income (loss)||(12,046)||(12,995)||472|
|Basic and fully diluted earnings (loss) per share||$(0.31)||($0.33)||$0.01|
|Net asset value||91,998||104,870||136,162|
|Net asset value per share||$2.40||$2.70||$3.46|
Q3 2014 Operational Highlights
- The Company’s total assets decreased to $139.9 million from $157.1 million in the prior quarter.
- Unrealized loss on investments of $10.0 million was driven by a change in valuation of primarily Lignol Energy, Cricket Media Corporation, Fem Med, World Gaming and iPowow
- $17.7 million in cash as at September 30, 2014.
“Our team has made progress towards aggressively targeting quality late-stage opportunities while eliminating underperforming holdings from our portfolio” said Michael Wekerle, CEO of Difference Capital. “This rigour has resulted in a stable of high calibre Canadian technology, media and healthcare companies poised for near term catalysts.”
Third Quarter Financial Results
The Company reported a net loss of $12.0 million, or $0.31 per share compared to a net income of $0.5 million, or $0.01 per share for the quarter ended September 30, 2013 and a net loss of $13.0 million, or $0.33 per share for the quarter ended June 30, 2014.
The Company realized a $0.3 million gain on dispositions of investments and marketable securities during the quarter ended September 30, 2014 compared with $0.1 million in realized loss during the quarter ended September 30, 2013 and a realized gain of $1.0 million during the second quarter of 2014. The realized gain during the third quarter was primarily attributed to a $1.7 million gain on the disposition of common shares in BENEV Capital Inc. (“BENEV Capital”), offset by realized losses on the dispositions of shares in other publicly traded positions.
Subsequent to September 30, 2014, the Company entered into an agreement to sell its interests in Chieftain Residential Limited Partnership for aggregate proceeds of US$10,150,000. The transaction is expected to close in the fourth quarter of 2014.
During the third quarter of 2014, the Company recorded $10.0 million of net change in unrealized depreciation on investments and marketable securities, compared to a net change in unrealized appreciation of $1.9 million in the third quarter of 2013. The net change in unrealized depreciation recorded during the quarter was primarily due to fair value adjustments in privately held investments including Lignol Energy Corporation (“Lignol Energy”), Cricket Media Corporation, Fem Med Formulas Limited Partnership (“Fem Med”), WG Limited (“World Gaming”) and iPowow! Inc. as well as marked-to-market losses in publicly listed securities including Aurinia Pharmaceuticals Inc. and Lignol Energy. The net change in unrealized depreciation was partially offset by approximately $1.8 million of net change in unrealized appreciation of foreign exchange during the quarter.
Other income for the quarter ended September 30, 2014 was $1.7 million, in line with $1.7 million during the same period in 2013 and $1.8 million during the previous quarter. Included in other income were interest and dividend income from the investment portfolio totaling $1.6 million, up from $1.3 million in the same period of 2013. Also included in other income was the 40% revenue participation in Difference Capital Management’s advisory revenue business of $0.1 million, compared to $0.4 million in the third quarter of 2013.
Total expenses during the quarter ended September 30, 2014 were $4.1 million compared to $3.0 million for the quarter ended September 30, 2013 and $4.6 million for the prior quarter ended June 30, 2014. The year-over-year increase in total expenses was primarily due to increased professional fees associated with the BENEV Capital investment and the Lignol Energy receivership proceedings. In addition, total expenses were impacted by a $0.6 million provision for uncollectible receivables recorded during the third quarter of 2014, primarily due to uncertainty as to the full collectability of interest on the Fem MED loan and Lignol Energy promissory note. The increase in total expenses during the quarter was partially offset by $0.5 million of gain recognized on the repurchase of convertible debentures.
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 http://www.sedar.com.
DCF will host a conference call Thursday, November 13, 2014, at 9:00 AM ET to discuss its results. Michael Wekerle, CEO, Henry Kneis, CFO and Tom Astle, CIO 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 http://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.
|Difference Capital Financial Inc.:Henry KneisChief Financial Officer|
|Investor Relations:Robert KellyTMX Equicom|
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