Clarke Inc. Reports 2019 Third Quarter Results and Announces Continuation of Normal Course Issuer Bid Following the Assumption of Series B Convertible Debentures from Holloway Lodging Corporation

HALIFAX, Nov. 13, 2019 /CNW/ - Clarke Inc. ("Clarke" or the "Company") (TSX: CKI) (TSX: CKI.DB) today announced its results for the three and nine months ended September 30, 2019.

Third Quarter Results

On August 9, 2019, we announced an agreement to acquire the 49% of Holloway Lodging Corporation ("Holloway") that we did not yet own.  On September 30, 2019, we completed this acquisition by issuing 4,799,455 Common Shares at a price of $12.50 per share, which was the closing price of the Company's stock that day. We also assumed Holloway's $50.9 million of convertible debentures as part of the transaction.

Net income (loss) attributable to equity holders of the Company for the three and nine months ended September 30, 2019 was ($2.9) million and $31.2 million, respectively, compared with $6.2 and $9.2 million for the same periods in 2018. During the three and nine months ended September 30, 2019, the Company had unrealized losses on its investments of $5.9 million and $5.2 million, respectively, compared to unrealized gains of $2.1 million and $1.7 million for the same periods in 2018. The Company had realized gains on its investments of nil and $12.5 million, respectively, for the three and nine months ended September 30, 2019, compared with $1.8 million and $4.0 million for the same periods in 2018.

In the third quarter of 2019, the Company's book value per share decreased by $0.53 or 3.6%. The decrease can be ascribed to a decrease in the value of our pension plan surplus, unrealized losses on our marketable securities and the issuance of Common Shares for the remaining shares of Holloway at less than the book value of our Common Shares. Our book value per Common Share at the end of the quarter was $14.26 while our Common Share price was $12.50. 

Additional commentary on our third quarter results can be found in our Management's Discussion & Analysis for the three and nine months ended September 30, 2019.

Highlights of the interim condensed consolidated financial statements for the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018 are as follows:

(in millions, except per share amounts)	Three months  ended  September 30, 2019  $	Three months  ended  September 30, 2018  $	Nine months  ended  September 30, 2019  $	Nine months  ended  September 30, 2018  $
Hotel and management services	21.7	―	58.7	―
Provision of services	4.5	4.1	6.7	6.0
Bargain purchase	―	―	20.7	―
Investment and other income (loss) *	(4.9)	4.5	9.3	8.4
Net income (loss) attributable to equity holders of the Company	(2.9)	6.2	31.2	9.2
Comprehensive income (loss) attributable to equity holders of the Company	(3.3)	27.4	26.6	30.6
Basic earnings per share	(0.24)	0.49	2.58	0.72
Diluted earnings per share	(0.24)	0.49	2.56	0.72
Total assets	391.5	180.2	391.5	180.2
Long-term financial liabilities	95.3	2.8	95.3	2.8
Book value per share	14.26	13.18	14.26	13.18

*Investment and other income (loss) include unrealized/realized gains/losses on investments, dividend and interest income, pension recovery/expense, losses on disposal of assets, and foreign exchange gains/losses.

Other Information

Further information about Clarke, including Clarke's Interim Condensed Consolidated Financial Statements and Management's Discussion & Analysis for the three and nine months ended September 30, 2019, is available at www.sedar.com and www.clarkeinc.com.

Normal Course Issuer Bid

The Company has filed an amended notice with the Toronto Stock Exchange and received its approval to continue the normal course issuer bid previously announced by Holloway Lodging Corporation ("Holloway") on January 23, 2019 (the "Debenture Issuer Bid"), as a result of Clarke assuming the Series B Convertible Debentures from Holloway on September 30, 2019. The Debenture Issuer Bid commenced January 25, 2019 and will terminate on January 24, 2020.

In connection with the program, the Company has established an automatic securities purchase plan (the "Plan") for the Debenture Issuer Bid.  The Plan was established to provide standard instructions regarding how Clarke debentures are to be repurchased under the Debenture Issuer Bid.  Accordingly, Clarke may repurchase its debentures under the Plan on any trading day during the Debenture Issuer Bid including during self-imposed trading blackout periods.  The Plan will commence immediately and terminate with the Debenture Issuer Bid.  The Company may otherwise vary, suspend or terminate the Plan only if it does not have material non-public information and the decision to vary, suspend or terminate the Plan is not taken during a self-imposed trading blackout period.  The Plan constitutes an "automatic plan" for purposes of applicable Canadian securities legislation and has been pre-cleared by the Toronto Stock Exchange.

The Directors and Senior Management of Clarke are of the opinion that from time to time the purchase of Clarke debentures at the prevailing market price would be a worthwhile use of available funds and in the best interests of the Company and its stakeholders. Holloway did not purchase any of the Series B Debentures pursuant to the current Debenture Issuer Bid prior to Clarke's assumption of the debentures. A total of $4,920,000 principal amount of the Series B Debentures was approved for purchase for the current Debenture Issuer Bid, representing 10% of the public float of the debentures as of January 22, 2019.

Purchases are restricted to a maximum of $8,187 principal amount per day other than block purchase exemptions. The purchases may be effected through the facilities of the Toronto Stock Exchange and all alternative trading systems. All debenture purchases will be cancelled.

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, CKI.DB); 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 attributable to equity holders of the Company 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", "budgets", "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 investment in a 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.

Michael Rapps, President and CEO, at [phone] or Stephen Cyr, CFO, at [phone].

Related Links

http://www.clarkeinc.com/