Toronto Stock Exchange Symbol: CLC.UN
MISSISSAUGA, ON, May 10 /CNW/ - CML Healthcare Income Fund (the "Fund"),
(TSX: CLC.UN) today reported its first quarter financial results for the
three-month period ended March 31, 2005.
During the quarter, the Fund generated normalized cash available for
distributions of $20.3 million, of which it declared distributions of
$20.0 million or 98.4%. The Fund paid distributions to unitholders totaling
$18.9 million and dividends to exchangeable shareholders totaling $1.1 million
during the quarter. The increase in the Fund's payout ratio for the first
quarter, versus the Fund's fourth quarter of the previous fiscal year, was in
large part the result of a higher receivable balance for the month of March
2005 versus the month of December 2004. This difference in receivables balance
is the result of seasonally higher testing volumes in March versus December.
For the first quarter of fiscal 2005, revenue for the Fund was
$67.1 million versus comparable revenue of $65.9 million reported for the
three-month period ended March 31, 2004. Earnings Before Interest, Taxes,
Depreciation, Amortization and Other Expenses (EBITDA) in the current quarter
was $27.9 million, virtually unchanged from the $28.2 million reported in the
quarter ended March 31, 2004. It is important to note that the three-month
period ended March 31, 2004 was positively impacted by $1.2 million in one-
time funding received from the Ontario Ministry of Health (MOH). EBITDA is not
a recognized measure under Canadian generally accepted accounting principles.
Operating, general and administrative expenses increased by 4% from
$37.7 million for the three months ended March 31, 2004 to $39.2 million for
the three months ended March 31, 2005. The increase in operating expenses is a
direct result of increased testing volumes and associated operating expenses
during the period. As part of its operating philosophy, the Fund continues to
undertake initiatives to drive future operational efficiencies where possible.
"Our first quarter delivered strong operating results as we await the
conclusion of negotiations with the MOH for a new funding agreement regarding
our community-based laboratory services," said John Mull, President and CEO.
"In the coming year, CML will also explore strategic growth opportunities for
its imaging business. The recent removal of individual fee caps for Ontario
physicians eliminates restrictions preventing radiologists from billing above
a predetermined annual level. We believe this development is significant for
CML's imaging business as it will increase needed capacity in Ontario. In
addition, CML is planning an aggressive marketing campaign for its MRI
services both in Western Canada, and in Ontario where it will focus on
increasing non-OHIP related work."
The Fund had working capital of $64.8 million including cash and cash
equivalents of $46.5 million on March 31, 2005. This compares to working
capital of $61.8 million including cash and cash equivalents of $51.2 million
on December 31, 2004. Long-term debt of the Fund, including the current
portion, was $194.3 million on March 31, 2005.
Notice of Conference Call
CML will be holding a conference call on May 10th, 2005 at 4:45pm to
discuss its first quarter financial results. Dr John Mull, President and CEO,
will host the call.
A live audio webcast of the call will be available at
www.cmlhealthcare.com. Webcast attendees are welcome to listen to the
conference in real-time or on-demand at your convenience. A taped replay of
the call will be archived for 90 days.
Notice of Annual Meeting
CML will be holding its 2004 Annual Meeting of Shareholders, on May 17th
at 4:30 pm at the Toronto Board of Trade, East Dining Room, 1 First Canadian
Place, Adelaide Street entrance, Toronto, Ontario. CML's Annual Meeting will
also be webcast live via the internet at www.cmlhealthcare.com.
About CML Healthcare Income Fund
CML Healthcare Income Fund is an unincorporated open-ended trust that
owns CML Healthcare Inc., one of Canada's largest healthcare services
businesses. CML is a leading provider of laboratory testing services in
Ontario and the largest private provider of medical imaging services in
Canada. CML Healthcare Income Fund is publicly traded on the Toronto Stock
Exchange under the symbol "CLC.UN" and has approximately 86.6 million units
outstanding (assuming the exchange for units of all of the outstanding
exchangeable shares of CML Healthcare Inc., excluding those held by the Fund
or its affiliates).
To reach CML Healthcare Income Fund via the worldwide web log on to
www.cmlhealthcare.com.
Statements made in this news release, other than those concerning
historical financial information, should be considered forward-looking and
subject to various risks and uncertainties. Such forward-looking statements
are based on management's beliefs and assumptions regarding the information
currently available. The Company's actual results could differ materially from
those expressed in the forward-looking statements. Factors that could cause
results to vary include, among other things, those expressed in the Company's
filings with Canadian securities regulatory authorities. All information
presented herein should be read in conjunction with such filings.
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CML Healthcare Income Fund
Unaudited Consolidated Balance Sheets
(in thousands of dollars)
As at March 31, December 31
2005 2004
ASSETS
Current assets
Cash and cash equivalents $ 46,523 $ 51,198
Accounts receivable 34,168 28,169
Income taxes receivable 6,366 6,677
Other current assets 1,517 1,878
Future income taxes 2,006 3,237
Due from related parties 438 904
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91,018 92,063
Property and equipment 18,066 18,292
Licenses 196,618 196,618
Goodwill 5,027 5,027
Investments and other assets 3,217 3,356
Restricted cash 912 912
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$ 314,858 $ 316,268
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LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 18,336 $ 22,347
Due to related party 75 75
Distributions/dividends payable (note 5) 6,653 6,652
Current portion of long-term debt 1,118 1,148
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26,182 30,222
Long-term debt 193,164 193,439
Future income taxes 18,651 17,740
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237,997 241,401
UNITHOLDERS' EQUITY
Trust units (note 3) 68,236 68,204
Exchangeable shares (note 3) 5,310 5,342
Retained earnings 3,315 1,321
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76,861 74,867
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$ 314,858 $ 316,268
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CML Healthcare Income Fund
Unaudited Consolidated Statements of Earnings
(in thousands of dollars, except for per share amounts)
For the three For the six
months ended months ended
March 31 March 31
2005 2004 2004
Revenue $ 67,079 $ 65,879 $ 130,099
Expenses
Operating, general and administrative 39,197 37,677 77,873
Amortization of other assets 53 - -
Amortization of property and equipment 720 804 1,626
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39,970 38,481 79,499
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27,109 27,398 50,600
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Other expenses (note 1) - 4,864 6,228
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Interest expense
Long-term 2,790 1,346 1,876
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Earnings from continuing operations
before income tax 24,319 21,188 42,496
Provision for income taxes 2,413 4,257 15,660
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Earnings from continuing operations 21,906 16,931 26,836
Loss from discontinued operations - 4,620 4,411
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Net earnings for the period $ 21,906 $ 12,311 $ 22,425
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Basic and diluted earnings (loss) per unit
(note 4)
Continuing operations 0.25 0.20 0.32
Discontinued operations - (0.05) (0.05)
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Basic and diluted $ 0.25 $ 0.15 $ 0.27
CML Healthcare Income Fund
Unaudited Consolidated Statements of Retained Earnings (Deficit)
(in thousands of dollars)
For the
fifteen
month
period
For the three For the six ended
months ended months ended December
March 31 March 31 31
2005 2004 2004 2004
Retained earnings - Beginning
of period $ 1,321 $ 176,646 $ 166,594 $ 166,594
Excess of purchase price of
common shares over book value - - (62) (62)
Transfer of investment in
Cipher Pharmaceuticals Inc.
to shareholders (note 1) - (37,403) (37,403) (37,403)
Payment to unitholders' and
exchangeable shareholders
(note 1) - (146,667) (146,667) (146,667)
Distributions declared during
the period to unitholders'
(note 5) (18,856) (7,651) (7,651) (63,636)
Dividends declared during the
period to holders of
exchangeable shares (net of tax
of $45 (2004 - nil)) (note 5) (1,056) (554) (554) (4,248)
Net earnings for the period 21,906 12,311 22,425 86,743
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Retained earnings (deficit) -
End of period $ 3,315 $ (3,318) $ (3,318) $ 1,321
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CML Healthcare Income Fund
Unaudited Consolidated Statements of Cash Flows
(in thousands of dollars)
For the three For the six
months ended months ended
March 31 March 31
2005 2004 2004
Cash provided by (used in)
Operating activities
Earnings from continuing operations $ 21,906 $ 16,931 $ 26,836
Items not affecting cash
Amortization of property and equipment 720 804 1,626
Amortization of other assets 53 - -
Future income taxes 2,142 1,437 4,541
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24,821 19,172 33,003
Net change in non-cash working capital
items (9,293) (19,170) (23,215)
Discontinued operations - (752) 7,109
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15,528 (750) 16,897
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Investing activities
Purchase of property and equipment (494) (317) (922)
Decrease in investments and other assets 86 139 348
Discontinued operations - (693) (898)
Contribution to discontinued operations - (30,351) (36,775)
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(408) (31,222) (38,247)
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Financing activities
Principal repayment of long-term debt (305) (6,806) (19,985)
Proceeds from issuance of long-term debt - 190,000 190,000
Proceeds from exercise of stock options - 9,674 9,674
Distributions/dividends paid (19,956) (146,667) (146,667)
Decrease (Increase) in due from related
parties - net 466 (222) (592)
Repurchase of share capital - - (68)
Discontinued operations - (356) (1,790)
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(19,795) 45,623 30,572
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Increase (Decrease) in cash and cash
equivalents (4,675) 13,651 9,222
Cash and cash equivalents, beginning of
period 51,198 13,645 18,074
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Cash and cash equivalents, end of
period $ 46,523 $ 27,296 $ 27,296
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Supplementary information
Interest paid $ 5,524 $ 443 $ 1,069
Income taxes paid $ 1,443 $ 7,973 $ 15,824
CML Healthcare Income Fund
Notes to Unaudited Consolidated Financial Statements
1 Organization and nature of operations
The CML Healthcare Income Fund (the "Fund") is a trust established
under the laws of Ontario pursuant to a declaration of trust dated
January 16, 2004. The Fund was created to invest in common shares and
$630,446,000 of 12% unsecured subordinated notes of CML Healthcare
Inc. ("CML"). Through its wholly-owned subsidiaries, the Fund provides
medical laboratory services in Ontario and medical imaging services in
the provinces of Ontario, Quebec, Manitoba, Alberta and British
Columbia.
On February 22, 2004, a Plan of Arrangement (the "Arrangement") to re-
organize CML into (a) the Fund, an income trust and (b) Cipher
Pharmaceuticals Inc. ("Cipher"), a public entity, was completed. In
accordance with the Arrangement, the Fund issued to former CML
shareholders one Series A note and four exchangeable shares and
related ancillary rights or one Series B note and four units of the
Fund for each CML share transferred. Each Series A note and Series B
note was redeemed for one common share of Cipher and a cash payment of
$7. The transfer of the common shares of CML to the Fund was recorded
at the carrying values of CML's assets and liabilities on February 22,
2004 in accordance with the continuity of interest method of
accounting as the Fund is considered to be a continuation of CML. The
transfer of the common shares of Cipher in exchange for the Series A
and Series B notes has been accounted for as a distribution and a
discontinued operation. Upon completion of the Arrangement, the Fund
changed its fiscal year-end from September 30 to December 31.
Accordingly, the fiscal 2004 period is composed of the period from
October 1, 2003 to December 31, 2004.
During the six month and three month periods ended March 31, 2004, CML
incurred and expensed professional fees of $6,228,000 and $4,864,000
in respect of the creation of the Fund.
2 Basis of presentation
The accompanying interim consolidated financial statements of CML
Healthcare Income Fund (the Fund) have been prepared in accordance
with accounting principles generally accepted in Canada for interim
reporting. Accordingly, these financial statements do not include all
of the disclosures required by generally accepted accounting
principles for annual financial statements and should be read in
conjunction with the annual financial statements of the Fund. In the
opinion of management, all adjustments considered necessary for fair
presentation have been included. All such adjustments are of a normal
recurring nature. Operating results for the three-months ended March
31, 2005 are not necessarily indicative of the results that may be
expected for the 12 months ending December 31, 2005.
There have been no changes to the accounting policies as described in
Note 1 to the consolidated financial statements for the fifteen month
period ended December 31, 2004.
3 Unitholders' equity
The authorized capital of the Fund consists of an unlimited amount of
trust units.
The following is a summary of changes in unitholder's equity (in
thousands):
Trust Units Exchangeable shares
Number $ Number $
December 31, 2004 79,635 68,204 7,008 5,342
Exchangeable shares
exchanged for trust units 42 32 (42) (32)
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March 31, 2005 79,677 68,236 6,966 5,310
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During the period ended March 31, 2005 41,600 exchangeable shares were
exchanged for 41,600 trust units.
4 Earnings per unit/share
Earnings per unit is calculated using the weighted average and diluted
number of units and exchangeable shares outstanding. The weighted
average number of units and exchangeable shares outstanding for the
basic and diluted earnings per unit/share for the three-month period
ended March 31, 2005 was 86,642,404 (three months ended March 31, 2004
- 84,183,000 and six months ended March 31, 2004 - 83,996,000).
5 Distributions/Dividends
During the three month period ended March 31, 2005 the Fund declared
total distributions to Unitholders of $18,856,000 and total dividends
to Shareholders of $1,101,000. The amounts and record dates of
distributions/dividends were as follows (in thousands of dollars,
except per unit and per share amounts):
Trust Units Exchangeable Shares
Record Date $ Amounts per Unit $ Amounts per Unit
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January 31, 2005 6,283 0.0789 369 0.0526
February 28, 2005 6,286 0.0789 366 0.0526
March 31, 2005 6,287 0.0789 366 0.0526
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18,856 0.2367 1,101 0.1578
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%SEDAR: 00020333E
