HALIFAX, Aug. 11, 2011 /CNW/ - Clarke Inc. ("Clarke" or the "Company") (TSX: CKI CKI.DB CKI.DB.A) today announced its results for the three and six months ended June 30, 2011.
Improved earnings in the Freight segment and a gain realized on the sale of Countdown were offset by unrealized losses on the Company's investment portfolio, resulting in a net loss. Net loss of the Company for the three and six months ended June 30, 2011 was $1.7 million and $2.7 million or income of $0.09 and a net loss of $0.13 per share compared with net income of $1.9 million and a net loss of $0.6 million or $0.09 and $0.03 per share in the corresponding periods in 2010.
Basic loss per share ("EPS") from continuing operations for the three and six months ended June 30, 2011 was $0.36 and $0.44, compared to basic earnings per share of $0.13 and $0.03 for the three and six months ended June 30, 2010, a decline of $0.49 and $0.47 per share. Book value per share at June 30, 2011 was $5.24, an increase of $1.38 or 35.8% from a book value per share of $3.86 on June 30, 2010.
RESULTS OF OPERATIONS
Highlights of the interim condensed consolidated financial statements
for the three and six months ended June 30, 2011 compared to the three
and six months ended June 30, 2010 are as follows:
|
3 months ended June 30, 2011 $ |
3 months ended June 30, 2010 $ |
6 months ended June 30, 2011 $ |
6 months ended June 30, 2010 $ |
|||||
| Revenue and other income | 45.5 | 44.6 | 92.2 | 88.7 | ||||
| Income (loss) from continuing operations attributable to equity holders of the Company | (7.2) | 2.9 | (8.8) | 0.8 | ||||
| Net income (loss) attributable to equity holders of the Company | (1.7) | 1.9 | (2.7) | (0.6) | ||||
| Comprehensive income (loss) attributable to equity holders of the Company | (1.9) | 2.1 | (2.9) | (0.7) | ||||
| Basic earnings per share ("EPS") (in dollars) | ||||||||
| Earnings (loss) from continuing operations | (0.36) | 0.13 | (0.44) | 0.03 | ||||
| Net income (loss) | (0.09) | 0.09 | (0.13) | (0.03) | ||||
| Total assets | 263.8 | 240.6 | 263.8 | 240.6 | ||||
| Book value per share | 5.24 | 3.86 | 5.24 |
3.86 |
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THREE AND SIX MONTHS ENDED JUNE 30, 2011
The net loss attributable to equity holders of the Company for the three and six months ended June 30, 2011 was $1.7 million and $2.7 million, compared to net income of $1.9 million and a net loss of $0.6 million during the same periods in 2010. Under IFRS, the Company has designated all publicly traded securities as at fair value through profit or loss. This means that all unrealized and realized gains and losses are included in investment and other income in the consolidated statements of earnings. Under Canadian GAAP, all unrealized gains and losses were recorded in accumulated other comprehensive income. In the three and six months ended June 30, 2011, the Company had net realized and unrealized losses of $9.7 million and $10.7 million, respectively, compared to $5.8 million and $7.7 million for the same periods in 2010.
The Freight Transportation segment delivered increased revenues for both the three and six months ended June 2011, when compared to the corresponding periods of 2010. Efficiencies introduced over the last two years enabled these increases to translate into solid earnings growth, with EBITDA of $4.4 million and $5.7 million for the three and six months ended June 30, 2011 respectively, compared to $2.9 million and $4.5 million for the corresponding periods last year.
The Home Heating segment continued to deliver strong sales volumes due in part to incremental sales associated with the furnace business that was acquired in 2010. However, the strong Canadian dollar continues to adversely affect profit margins, resulting in reduced earnings. Delays in implementing further plant and production efficiencies have limited Granby's ability to adjust to the change in currency value.
On June 14, 2011, the Company sold its interest in a digital licensing business (representing the remaining assets of the former Entertainment segment owned 50% in a joint venture with the founders) to a private buyer. Total proceeds to the Company were $5.0 million net of the repayment of certain indebtedness. This resulted in a gain to Clarke of $7.2 million. An additional US $1.75 million in proceeds to Clarke is available if certain earn-out targets are met. At this time, due to the uncertainty surrounding these payments, no amount has been realized in respect of the earn-out. The results of the former Entertainment segment, including this gain, are included with discontinued operations.
During the six months ended June 30, 2011, the Company restructured certain of its debt. Non-recourse facilities established by the Company's freight subsidiaries were drawn on to reduce debt at the Clarke corporate level. On April 11, 2011, the Company announced that it was redeeming approximately half the outstanding principal amount of its 2012 debentures. The redemption of $18.3 million in principal amount of such debentures occurred on May 11, 2011.
Further information about Clarke, including Clarke's Consolidated Financial Statements and Management's Discussion Analysis for the three and six months ended June 30, 2011, is available at www.sedar.com and www.clarkeinc.com.
About Clarke
Halifax-based Clarke Inc. invests in undervalued businesses and participates actively where necessary to enhance performance and increase return. Clarke's securities trade on the Toronto Stock Exchange (CKI, CKI.DB; CKI.DB.A); for more information about Clarke Inc., please visit our website at www.clarkeinc.com.
Note on Forward-Looking Statements and Risks
This press release may contain or refer to certain forward-looking statements relating, but not limited to, the Company's expectations, intentions, plans and beliefs with respect to the Company. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "does not expect", "is expected", "budget", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or equivalents or variations, including negative variations, of such words and phrases, or state that certain actions, events or results, "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements include, without limitation, those with respect to the future price of securities held by the Company, changes in these securities holdings, changes to the Company's hedging practices, currency fluctuations, requirements for additional capital, changes to government regulations and the timing and possible outcome of pending litigation. Forward-looking statements rely on certain underlying assumptions that, if not realized, can result in such forward-looking statements not being achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements.
With respect to the Company's Investment segment, such risks and uncertainties include, without limitation, the Company's investment strategy, legal and regulatory risks, general market risk, potential lack of diversification in the Company's investments, reliance on certain key executives, interest rates and foreign currency fluctuations and other factors. With respect to the Company's Freight Transportation segment, such risks and uncertainties include, without limitation, competition, expiry of certain leases, labour relations, the use of third party service providers, dependence on certain personnel, fuel costs, weather conditions, customer relationships, claims, litigation and insurance, government regulation of the transport industry and other factors. With respect to the Company's Home Heating segment (formerly the Steel Tanks segment), such risks and uncertainties include, without limitation, the costs of housing and major consumer products, energy costs, alternative energy sources, steel costs, product liability claims, foreign exchange risk, and other factors. Other general risks and uncertainties include, without limitation, environmental considerations, use of information technology and information systems, safety issues, concentration of sales among a small number of customers, the seasonality of business cycles for certain segments, commodity market risk, risks associated with investment in derivative instruments and other factors.
Although the Company has attempted to identify important factors that could cause actual actions, events or results or cause actions, events or results not to be estimated or intended, there can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Other than as required by applicable Canadian securities laws, the Company does not update or revise any such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements.