Clarke Inc. Reports 2015 Second Quarter Results and Declares Quarterly Dividend

HALIFAX, Aug. 5, 2015 /CNW/ - Clarke Inc. ("Clarke" or the "Company") (TSX: CKI) today announced its results for the three and six months ended June 30, 2015.

Results for the Three and Six Months Ended June 30, 2015

In the first half of the year, the Company increased book value per share by $0.56 and returned $0.20 per share to shareholders in the form of dividends (a total return of 6.0% per share). The Company spent $40.0 million during the first half of the year to repurchase its Common Shares, all at a discount to book value. Book value per share at the end of the quarter was $13.13 while our share price was $11.85.

Net income (loss) attributable to equity holders of the Company for the three and six months ended June 30, 2015 was a net loss of $1.9 million and net income of $1.6 million, respectively, compared with net income of $19.9 million and $92.9 million for the same period in 2014. The significant net income earned for the six months ended June 30, 2014 was due to the sale of the Company's freight transport business and its interest in Jerico, which resulted in gains on sale of $71.1 million. During the three and six months ended June 30, 2015, the Company had unrealized losses on its investments of $3.3 million and unrealized gains of $0.5 million, respectively, compared to unrealized gains of $8.4 million and $16.4 million for the same period in 2014. The Company had realized gains on its investments of $0.2 million and $0.8 million, respectively, for the three and six months ended June 30, 2015 compared with realized gains of $8.1 million and $9.1 million for the same period in 2014.

Third Quarter Dividend

Clarke also announced today that its Board of Directors declared a quarterly dividend of $0.10 per Common Share payable on October 9, 2015 to shareholders of record at the end of business on September 30, 2015.

Outlook

As a result of our various investment sales in recent years, Clarke eliminated substantially all of its debt and built a cash balance of $79.1 million at the beginning of 2015. During the first half of 2015, Clarke deployed $71.8 million, consisting of $31.8 million of investment purchases and $40.0 million of share repurchases while also receiving $44.0 million of loans receivable repayments. At June 30, 2015, our cash balance (net of all debt) was $55.8 million representing 30% of Clarke's market capitalization.

Our investment purchases in the first half of 2015 were focused on the oil and gas industry as corporate valuations declined in response to the decline in oil and gas prices. Historically, Clarke has generated substantial returns by investing in out of favour companies and industries that are either suffering from mismanagement or from factors that are perceived by investors to be permanent when they are more likely temporary in nature. We believe that current oil prices (which are approximately $46 per WTI barrel) are too low to warrant substantial investment in replacing existing production or developing new production and that the dramatic decline in oil prices will lead to some increase in the demand for oil. Our belief is that the confluence of these factors will, over time, lead to higher oil prices and higher security prices for well positioned companies, including those in our energy basket.

Since the start of 2015, the Company has repurchased 3,866,802 of our shares at an average cost of $10.34 per share and at a total cost of $40.0 million. All of these shares were repurchased at less than our book value per share and less than management's view of our intrinsic value per share. As we believe that our investment holdings will appreciate in value in coming years (particularly as the oil and gas markets normalize), we believe that these repurchases will benefit shareholders greatly.

We continue to see limited investment opportunities outside of the oil and gas industry due to generally high valuations, although we remain on the lookout. We will remain disciplined in deploying our capital as that capital retains option value while it is in our hands.

In addition to seeking new investments, we will continue working with our two major investee companies to maximize their business values. We believe there is significant opportunity for each of Terravest Capital Inc. and Holloway Lodging Corporation to continue acquiring complementary businesses and hotels, respectively, at accretive prices. Each of these companies remains undervalued in our view.

Finally, as we completed our normal course issuer bid during the second quarter, we will evaluate the merits of additional share repurchases as the year progresses. As always, we benchmark all investments against share repurchases and other expenditures of capital regularly.

Other Information

Further information about Clarke, including Clarke's Interim Condensed Consolidated Financial Statements and Management's Discussion & Analysis for the three and six months ended June 30, 2015, is available at www.sedar.com and www.clarkeinc.com.

Highlights of the interim condensed consolidated financial statements for the three and six months ended June 30, 2015 compared to the three and six months ended June 30, 2014 are as follows:

 






 

 

(in millions, except per share amounts)

Three months ended 

June 30, 2015 
$

Three months ended

June 30, 2014
$ 

Six months ended 

June 30, 2015 
$

Six months ended 

June 30, 2014 
$

Realized and unrealized gains (losses) on investments

(3.0)

16.5

1.4

25.5

Interest income

0.6

1.0

1.7

1.7

Dividend income

0.9

2.3

1.8

3.8

Revenue and other income*

2.0

4.6

3.1

9.4

Income (loss) from continuing operations

(1.9)

19.9

1.6

33.2

Net income (loss) attributable to equity holders of the Company

(1.9)

19.9

1.6

92.9

Comprehensive income (loss) attributable to equity holders of the Company

(2.0)

19.7

2.8

88.9

Basic earnings per share ("EPS")






Income (loss) from continuing operations

(0.12)

1.00

0.09

1.74


Net income (loss)

(0.12)

1.00

0.09

4.87

Diluted EPS






Income (loss) from continuing operations

(0.12)

0.94

0.09

1.40


Net income (loss)

(0.12)

0.94

0.09

3.86

Total assets

217.6

258.6

217.6

258.6

Long-term financial liabilities

2.1

2.8

2.1

2.8

Cash dividends declared per share

0.10

0.10

0.20

0.30

Book value per share

13.13

12.19

13.13

12.19






*Revenue and other income includes pension recovery/expense, gains on sale of fixed assets, foreign exchange gains/losses, gains on convertible debenture redemptions and repurchases and service revenue.

 

 

Voting Results from 2015 Annual General and Special Meeting

Below are the voting results from Clarke's Annual General and Special meeting held May 7, 2015 in Toronto, Ontario:

 

 

MATTERS VOTED UPON

VOTING RESULTS

Outcome
of  Vote

Votes in Favour

Votes Withheld

1. The election of the following nominees as directors of the Corporation for the ensuing year or until their successors are elected or appointed:




(a) George Armoyan

Carried

11,933,922

96.30%

458,373

3.70%

(b) Blair Cook

Carried

12,220,370

98.61%

171,925

1.39%

(c) Brian Luborsky

Carried

12,223,370

98.64%

168,925

1.36%

(d) Charles Pellerin

Carried

12,190,470

98.37%

201,825

1.63%

(e) Michael Rapps

Carried

12,142,087

97.98%

250,208

2.02%

2. The appointment of PricewaterhouseCoopers LLP as auditors of the Corporation to hold office until the close of the next annual meeting of the Corporation.

Carried

12,389,356

99.98%

2,939

0.02%


Outcome of  Vote

Votes in Favour

Votes Against

3. Approval of a resolution of the shareholders of the Corporation to approve the Corporation's Stock  Option Plan dated August 7, 2014 and previous stock option grants

Carried

11,089,807

89.23%

1,338,050

10.77%

 

About Clarke

Halifax-based Clarke invests in a variety of private and publicly-traded businesses and participates actively where necessary to enhance the performance of such businesses and increase its return. Clarke's securities trade on the Toronto Stock Exchange (CKI); for more information about Clarke Inc., please visit our website at www.clarkeinc.com.

Cautionary Statement Regarding Use of Non-IFRS Accounting Measures

This press release makes reference to the Company's book value per share as a measure of the performance of the Company as a whole. Book value per share is measured by dividing shareholders' equity at the date of the statement of financial position by the number of Common Shares outstanding at that date. Clarke's method of determining this amount may differ from other companies' methods and, accordingly, this amount may not be comparable to measures used by other companies. This amount is not a performance measure as defined under IFRS and should not be considered either in isolation of, or as a substitute for, net earnings prepared in accordance with IFRS.

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", "believes", or equivalents or 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 or expected performance of the Company's investee companies, the future price and value of securities held by the Company, changes in these securities holdings, the future price of oil and value of securities held in the Company's energy basket, changes to the Company's hedging practices, currency fluctuations and requirements for additional capital. 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. Such risks and uncertainties include, among others, the Company's investment strategy, legal and regulatory risks, general market risk, potential lack of diversification in the Company's investments, interest rates, foreign currency fluctuations, the sale of Company investments, the fact that dividends from investee companies are not guaranteed, reliance on key executives, commodity market risk, risks associated with investment in derivative instruments and other factors. With respect to the Company's ferry operation, such risks and uncertainties include, among others, weather conditions, safety, claims and insurance, labour relations, and other factors.

Although the Company has attempted to identify important factors that could cause actions, events or results not to be as 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.

 

SOURCE Clarke Inc.

For further information: Michael Rapps, President and CEO, at (416) 855-1925 or Andrew Snelgrove, CFO, at (902) 442-3987.

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