TerraVest announces 2012 year-end financial results, introduces quarterly dividend and announces change in year-end

VEGREVILLE, AB, March 6, 2013 /CNW/ - TerraVest Capital Inc. (TSX: TVK) is pleased to announce the financial results for the fiscal year ended December 31, 2012 and introduction of a quarterly dividend. TerraVest also announces a change in its year end from December 31 to September 30.

All references to "TerraVest" or the "Corporation" in this press release include TerraVest Capital Inc., the successor to TerraVest Income Fund (the "Fund") following the conversion of the Fund from an income trust to a corporate entity (please see "Corporate Conversion" for further discussion), together with the Fund and its subsidiaries, as applicable, including the operations controlled and consolidated by them, unless otherwise indicated.

Corporate Conversion

On October 31, 2012, TerraVest announced that it had completed the previously announced conversion of the Fund to a corporation called TerraVest Capital Inc. pursuant to a plan of arrangement (the "Arrangement") under the Business Corporations Act (Alberta).  The Arrangement was approved by a special resolution in writing of the unitholders of the Fund holding not less than 66 2/3% of the issued and outstanding units of the Fund and was binding on all unitholders of the Fund.  Pursuant to the Arrangement, each unitholder of the Fund received one common share of the Corporation for each Unit held. The trading symbol for the Corporation's common shares is TVK on the Toronto Stock Exchange.

Effective on the closing of the Arrangement and related transactions, the Corporation now owns the subsidiaries that operate the businesses that were held and operated by the Fund and its subsidiaries prior to the Arrangement.  As part of the Arrangement, the Fund was wound-up and dissolved, all of the assets of the Fund were transferred to the Corporation and the Corporation assumed all of the existing liabilities of the Fund.  The Trustees and Officers of the Fund prior to the Arrangement are now the Directors and Officers of the Corporation.


All amounts in this news release are stated in thousands of Canadian dollars, except per share or per unit data.

For the year ended December 31, 2012 TerraVest reported:

FINANCIAL PERFORMANCE                    
            2012       2011
Revenue         $ 70,914     $ 74,032
EBITDA (Note 1)           14,046       10,913
Income from continuing operations           2,946       2,820
Income (loss) from discontinued operations           -       (4,057)
Income (loss) and comprehensive income (loss) for the year           2,946       (1,237)
Free cash flow (Note 1)           9,129       12,071
Income per Share/Unit, continuing operations, basic and diluted         $ 0.20     $ 0.14
Income (loss) per Share/Unit, discontinued operations, basic and diluted           -       (0.20)
Income (loss) per Share/Unit, basic and diluted         $ 0.20     $ (0.06)

FINANCIAL POSITION           2012       2011
Working capital (Note 1)         $ 7,592     $ 14,102
Property, plant and equipment           32,885       33,527
Total assets           77,283       94,929
Non-current portion of long-term debt           3,700       22
Shareholders' equity           44,402       62,193

Note 1: EBITDA, Free Cash Flow and Working Capital are not defined measures under International Financial Reporting Standards ("IFRS") and are therefore defined below.  TerraVest's definitions may differ from those of other issuers and therefore may not be comparable to measures used by them.
    EBITDA: is defined as income from continuing operations before financial expenses, income taxes, depreciation and amortization, impairment charges and changes in fair values of derivative instruments. EBITDA should not be used as an exclusive measure of cash flow since it does not account for the impact of working capital changes, capital expenditures, debt changes and other sources and uses of cash which are disclosed in the condensed consolidated statement of cash flows. Management uses EBITDA as part of its assessment of TerraVest's operating performance. There is no directly comparable IFRS measure for EBITDA.
    Free Cash Flow: is defined as cash flow from operating activities from continuing operations less net capital expenditures from continuing operations. Free cash flow is a useful measure in that it provides management and investors an indication of TerraVest's capacity to generate discretionary cash flows from operations. Free cash flow should not be an exclusive measure of cash flow since it does not necessarily reflect the cash flow in the period available for management to use at its discretion, which may be affected by other sources and non-discretionary uses of cash such as scheduled debt repayments. There is no directly comparable IFRS measure for free cash flow.
    Working Capital: is calculated by subtracting current liabilities from current assets. Management uses working capital as a measure for assessing overall liquidity. There is no directly comparable IFRS measure.

While sales year over year declined, TerraVest's EBITDA improved by 29% as a result of improved utilization levels for service rigs in the Service segment and stronger margins in both of the fabrication and service segments. Working capital declined 46% as TerraVest used available cash resources in 2012 to repurchase Fund units under the substantial issuer bid which closed on August 20, 2012. Non-cash operating working capital was $24,534 for the year ended December 31, 2012 compared to $23,114 for the year ended December 31, 2011. Net Capital expenditures in 2012 were $2,728 compared to $2,128 in 2011 as the service segment had higher capital expenditures to maintain its service rigs and equipment. Free Cash Flow in 2011 was higher than in 2012 primarily as a result of collection of a note receivable of $5,916 in 2011. Absent the collection of the note receivable in 2011, TerraVest's free cash flow improved by approximately $2,974 in 2012 over 2011.

TerraVest's net earnings of $2,946 in 2012 were impacted by a significant increase in the provision for deferred taxes due to a change in the tax rate as a result of the conversion from a trust structure to a corporate structure. As a trust, TerraVest's implied tax rate was 39%, and as a corporation TerraVest tax rate is 25%. The change in tax rate from 39% to 25% and the resulting revaluation of the deferred tax asset that was previously recorded at the 39% rate to the new 25% rate accounted for an increase in the deferred tax provision of $4,089 in 2012 compared to 2011. As a result, TerraVest's net earnings were $4,089 lower than they otherwise would have been had TerraVest not converted from a trust structure to a corporation.

During the fourth quarter of 2012, TerraVest introduced a normal course issuer bid (the "Bid"). Pursuant to the Bid, which expires on November 25, 2013, TerraVest may repurchase a total of 626,470 shares. In 2012, TerraVest repurchased 12,000 shares and subsequent to December 31, 2012, TerraVest repurchased 30,900 shares for a cumulative total number of shares repurchased to March 6, 2013 of 42,900 at an average cost of $2.97 per share.


TerraVest is pleased to announce the introduction of a quarterly dividend of $0.08 payable on April 11, 2013 to shareholders of record as of March 28, 2013. The introduction of this dividend reflects TerraVest's commitment to provide value to its shareholders.


TerraVest announces that it has changed its year-end from December 31 to September 30 commencing in 2013. The decision to change the year end was made to allow TerraVest to have a year-end that will have reporting deadlines that occur during a less busy part of the seasonal business of the Corporation. In 2013, TerraVest will report results for the three months ended March 31, 2013, the three and six months ended June 30, 2013 and the year ended September 30, 2013. The comparative periods for the quarters will be the three months ended March 31, 2012 and the three and six months ended June 30, 2012 and the year-end comparative will be December 31, 2012. A Notice of Change of Year-End will be filed today via SEDAR and will be accessible at www.SEDAR.com.

Additional information can be found in TerraVest's audited consolidated financial statements and MD&A which are available on SEDAR at www.sedar.com.

Caution Regarding Forward-Looking Statements
This news release contains forward-looking statements.  All statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, statements regarding our strategic direction and evaluation of the business segments and TerraVest as a whole, and other plans and objectives of or involving TerraVest. Readers can identify many of these statements by looking for words such as "expects" and "will" and similar words or the negative thereof. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements require us to make assumptions and, accordingly, forward looking statements are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors may cause actual future circumstances, results, conditions, actions or events to differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements and the assumptions underlying the forward-looking statements. 

Assumptions and analysis about the performance of TerraVest as a whole and its business segments, the markets in which the business segments compete and the prospects and values of the business segments are considered in setting the business plan for TerraVest, plans and/or ability to pay dividends, outlook for operations, financial position, results and cash flow, other plans and objectives and in making related forward-looking statements. Such assumptions include, without limitation, demand for products and services of the business segments in respect of the Canadian and other markets in which the businesses are active will be stable, and that input costs to business segments do not vary significantly from levels experienced historically. Should any of these factors or assumptions vary, actual results may differ materially from the forward-looking statements.

The information set forth under "Risk Factors" in the annual information form of TerraVest dated March 6, 2013 and under "Risk Factors" in the MD&A of TerraVest for the year ended December 31, 2012, identifies risk factors that could affect the operating results and performance of TerraVest and its business segments and the values of the business segments and TerraVest as a whole. We caution that the lists of factors discussed in such information is not exhaustive and that, when relying on forward-looking statements to make decisions with respect to TerraVest, investors and others should carefully consider the factors discussed, as well as other uncertainties and potential events, and the inherent risks and uncertainties of forward-looking statements.  The forward-looking statements herein are made based on the assumption that TerraVest will not be affected by such risks, but that, if TerraVest is affected by such risks, the forward-looking statements may become inaccurate.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.  The forward-looking statements included in this news release are made as of the date of this news release.  Except as required by applicable securities laws, TerraVest does not undertake to update such forward-looking statements.




SOURCE: TerraVest Capital Inc.

For further information:

Dale Laniuk
TerraVest Capital Inc.
Chief Executive Officer
(780) 632 -7774


Paul A. Casey, CA
TerraVest Capital Inc.
Chief Financial Officer
(780) 632-2040


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