TORONTO, ONTARIO--(Marketwired - Nov. 10, 2015) - Wilmington Capital Management Inc. ("Wilmington" or the "Corporation") (TSX:WCM.A)(TSX:WCM.B) reported net income attributable to shareholders for the three months ended September 30, 2015 of $0.1 million or $0.01 per share compared to net income of $0.3 million or $0.03 per share for the same period in 2014. For the nine months ended September 30, 2015, the Corporation generated a net income attributable to shareholders of $0.6 million or $0.07 per share compared to net income of $0.2 million or $0.03 per share for the same period in 2014.
To view a full copy of the Corporation's unaudited interim financial results for the three and nine months ended September 30, 2015 including the Corporation's unaudited interim Consolidated Financial Statements and accompanying interim Management Discussion and Analysis ("MD&A"), please refer to SEDAR's website at www.sedar.com.
The Corporation has included the gender diversity disclosure required by items 10-15 of Form 58-101F1 - Corporate Governance Disclosure on page 14 of the Corporations MD&A.
THIRD QUARTER 2015 FINANCIAL HIGHLIGHTS
The financial highlights of the Corporation and those of its associated and controlled entities are set out below. Investments in associated and controlled entities account for the majority of the Corporation's financial results and are based on the ownership interest in each entity.
Corporation
- In September 2015, the Corporation completed a non-brokered private placement, whereby 1.5 million Class A shares were issued at a price of $3.50 per Class A share for gross proceeds of $5.4 million. Proceeds of the issue were used to subscribe for additional units in Real Storage Private Trust subsequent to the period ended September 30, 2015.
Self-storage facilities
- The Real Storage Private Trust (the "Trust") generated funds from operations of $1.1 million in the third quarter which represents an increase of 18% over the $0.9 million generated in the third quarter 2014. A significant portion of the increase reflects the earnings contribution from the three facilities acquired and successfully integrated in the first quarter of 2015;
- The Trust distributed $236,000 (Q3 2014 - $179,000) to unit holders in the period, representing 4% per annum of invested capital;
- Subsequent to the quarter ended September 30, 2015, the Trust raised $13.0 million to fund future acquisitions and general corporate purposes. The Corporation subscribed for $5.5 million raised and maintained its 42.5% ownership interest in the Trust.
Private equity
- Network Capital Management Inc.'s ("NCMI") assets under management amounted to approximately $33.4 million as at September 30, 2015. This represents a decrease of approximately $22.3 million of assets under management as at December 31, 2014, which resulted from the divesture of underlying investments in certain funds, along with the distribution of proceeds to unit holders and lower valuations attributed to the underlying investments in the funds given the prolonged decline in oil and gas prices. A total of $2.3 million was distributed to unit holders during the third quarter of 2015 (Corporation's share - $0.6 million).
Natural gas assets
- Shackleton 2011 Limited Partnership (the "Shackleton Partnership") generated $0.2 million in funds flow from operations for the third quarter compared to $0.5 million for the third quarter in 2014. The decrease was a result of significantly lower natural gas prices and the natural decline of production volumes;
- Northpoint Resources Ltd. ("Northpoint") generated funds flow from operations of $0.1 million in the third quarter compared to $0.6 million in funds flow from operations for the comparable period 2014. The decrease was due to significantly lower natural gas prices realized in 2015 and a decrease in production volumes.
Given the severity of the downturn in the energy sector, Northpoint continues to implement cost cutting measures as well as pursuing farm-out drilling strategies to preserve capital and entering into discussions with lenders to extend debt maturities as well as restructuring the terms of its senior debentures.
As at September 30, 2015, Wilmington had assets under management in its operating platforms of approximately $157 million ($63 million representing Wilmington's share).
OPERATIONS REVIEW
Self - Storage Facilities
Real Storage Private Trust
The Trust (43% owned) owns 23 self-storage facilities comprising 961,421 square feet of net rentable area and an interest in a development property. During the third quarter of 2015, same store occupancy levels averaged 83% compared to 86% in Q3 2014; same store operating margins averaged 60% in Q3 2015 compared to 63% in Q3 2014. Lower economic activity in Alberta adversely affected occupancy margins of the Western Canadian stores; however, these were offset by higher rents and increased occupancy and margins of the Ontario facilities.
The Trust paid distributions to unit holders in the amount of $236,000 (Corporation's share - $100,000), equivalent to 4% per annum on invested capital during the third quarter of 2015.
Private Equity
Network Capital Management Inc. and Network 2012 Fund
NCMI (50% owned) had funds under management totaling approximately $33.4 million as at September 30, 2015. The underlying investments in each of the various funds consist of a mix of early stage energy companies and energy service companies. The Corporation invested $8.0 million of capital in the Network 2012 Fund and has received cumulative distributions of $3.6 million to date. NCMI is focused on deploying capital raised in its most recent fund which closed in the fall of 2014 and continues to monitor investments in its other funds.
Natural Gas Assets
Shackleton 2011 Limited Partnership
The Shackleton Partnership (59% owned) owns and operates a 100% interest in natural gas assets in Southwestern Saskatchewan. The Shackleton Partnership's natural gas production amounted to 530 barrel of oil equivalent per day ("boe/d") for the three months ended September 30, 2015. The average price realized during the period was $2.83 per mcf and operating netback averaged $1.06 per mcf (realized price of $3.72 per mcf and netbacks of $1.96 per mcf for the comparable period in 2014). The Shackleton Partnership is focused on production optimization through well optimization programs as it continues to weather the depressed natural gas price environment.
Northpoint Resources Ltd.
Northpoint (38.6% owned) is a privately held natural gas producer with assets in the Altares region of Northeastern British Columbia. In addition and as part of an overall recapitalization plan, in 2013 the Corporation acquired $798,000 (carrying value of nil) of the $5.0 million, 10% debentures issued by Northpoint which mature on August 1, 2017. Northpoint's production for the three months ended September 30, 2015 averaged 1,060 boe/d. The average price realized during the third quarter of 2015 was $3.06 per mcf and operating netbacks averaged $1.23 per mcf (realized price of $4.20 per mcf and netback of $1.79 per mcf for the comparable period in 2014). Northpoint continues to evaluate ways of optimizing its production, improving operating efficiencies during this period of low natural gas price environment and conserving cash resources.
Outlook
The Corporation continues to execute its long-term strategy of building shareholder value by increasing the Trust's ownership of self-storage facilities through development and acquisition as well as judiciously deploying capital and managing investments in its private equity platform. The Corporation's goal of scaling its interest in natural gas assets held through the Shackleton Partnership and Northpoint to the equivalent of 4,000 boe/d is not seen as being viable in the current low natural gas price environment. The Shackleton Partnership and Northpoint combined have production of approximately 1,590 boe/d (Corporation's share - 730 boe/d) and the focus, through this prolonged period of low natural gas prices, is on preserving capital and optimizing production.
| |
| FINANCIAL RESULTS |
| CONSOLIDATED STATEMENTS OF INCOME (unaudited) |
| |
|
|
|
|
For the three months ended
September 30, |
|
|
For the nine months ended
September 30, |
|
| (CDN $ Thousands, except per share amounts) |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
| Natural gas sales |
|
828 |
|
|
1,156 |
|
|
2,381 |
|
|
3,834 |
|
| Royalties |
|
(133 |
) |
|
(206 |
) |
|
(377 |
) |
|
(804 |
) |
| Natural gas revenue |
|
695 |
|
|
950 |
|
|
2,004 |
|
|
3,030 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Investment and other income |
|
53 |
|
|
46 |
|
|
153 |
|
|
145 |
|
| |
|
748 |
|
|
996 |
|
|
2,157 |
|
|
3,175 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Petroleum operations |
|
384 |
|
|
340 |
|
|
1,128 |
|
|
1,072 |
|
| General and administrative |
|
273 |
|
|
276 |
|
|
885 |
|
|
864 |
|
| Depletion, depreciation and amortization |
|
231 |
|
|
335 |
|
|
683 |
|
|
1,027 |
|
| Stock-based compensation |
|
4 |
|
|
26 |
|
|
24 |
|
|
83 |
|
| Finance costs |
|
53 |
|
|
72 |
|
|
171 |
|
|
190 |
|
| |
|
945 |
|
|
1,049 |
|
|
2,891 |
|
|
3,236 |
|
| Loss before share of equity accounted investments and income tax |
|
(197 |
) |
|
(53 |
) |
|
(734 |
) |
|
(61 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Share of net income from Real Storage Private Trust |
|
159 |
|
|
259 |
|
|
652 |
|
|
547 |
|
| Loss on ownership change in Real Storage Private Trust |
|
--- |
|
|
--- |
|
|
(83 |
) |
|
--- |
|
| Share of net income from Network Capital Management Inc. |
|
2 |
|
|
86 |
|
|
129 |
|
|
105 |
|
| Share of net income (loss) from Network 2012 Limited Partnership |
|
110 |
|
|
(147 |
) |
|
1,214 |
|
|
(182 |
) |
| Share of net income (loss) from Northpoint Resources Ltd. |
|
--- |
|
|
102 |
|
|
(583 |
) |
|
(5 |
) |
| Income before income tax |
|
74 |
|
|
247 |
|
|
595 |
|
|
404 |
|
| Income tax expense (recovery) |
|
54 |
|
|
(60 |
) |
|
128 |
|
|
(29 |
) |
| Net income |
|
20 |
|
|
307 |
|
|
467 |
|
|
433 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Owners of the Corporation |
|
46 |
|
|
265 |
|
|
566 |
|
|
247 |
|
| |
Non-controlling interest |
|
(26 |
) |
|
42 |
|
|
(99 |
) |
|
186 |
|
| |
|
20 |
|
|
307 |
|
|
467 |
|
|
433 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
0.01 |
|
|
0.03 |
|
|
0.07 |
|
|
0.03 |
|
| |
Diluted |
|
0.01 |
|
|
0.03 |
|
|
0.07 |
|
|
0.03 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| CONSOLIDATED BALANCE SHEETS (unaudited) |
| |
|
|
|
|
| As at |
|
September 30, |
|
December 31, |
| (CDN $ Thousands) |
|
2015 |
|
2014 |
| |
|
|
|
|
| Assets |
|
|
|
|
| Non-current assets |
|
|
|
|
| Investment in Real Storage Private Trust |
|
10,769 |
|
10,501 |
| Investment in Network Capital Management Inc. |
|
257 |
|
128 |
| Investment in Network 2012 Limited Partnership |
|
3,869 |
|
7,793 |
| Investment in Northpoint Resources Ltd. |
|
--- |
|
--- |
| Northpoint Debenture |
|
--- |
|
583 |
| Natural gas property, plant and equipment |
|
8,439 |
|
9,046 |
| Deferred income tax assets |
|
557 |
|
317 |
| |
|
23,891 |
|
28,368 |
| Current assets |
|
|
|
|
| Income tax receivable |
|
--- |
|
350 |
| Accounts receivables and other |
|
596 |
|
821 |
| Cash |
|
9,858 |
|
2,174 |
| |
|
10,454 |
|
3,345 |
| |
|
|
|
|
| Total assets |
|
34,345 |
|
31,713 |
| |
|
|
|
|
| Liabilities |
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Decommissioning liabilities |
|
881 |
|
843 |
| |
|
881 |
|
843 |
| Current liabilities |
|
|
|
|
| Accounts payable and other |
|
892 |
|
1,182 |
| Revolving Loan facility |
|
4,125 |
|
4,400 |
| |
|
5,017 |
|
5,582 |
| Total liabilities |
|
5,898 |
|
6,425 |
| |
|
|
|
|
| Equity |
|
|
|
|
| Shareholders' equity |
|
26,951 |
|
23,693 |
| Non-controlling interest |
|
1,496 |
|
1,595 |
| Total equity |
|
28,447 |
|
25,288 |
| |
|
|
|
|
| Total liabilities and equity |
|
34,345 |
|
31,713 |
| |
|
|
|
|
| |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) |
| |
|
|
For the three months ended
September 30, |
|
For the nine months ended
September 30, |
| (CDN $ Thousands) |
|
2015 |
|
|
2014 |
|
2015 |
|
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
| Net income |
|
20 |
|
|
307 |
|
467 |
|
|
433 |
| Items that may be reclassified to net income |
|
|
|
|
|
|
|
|
|
|
| |
Share of other comprehensive income (loss) from Network 2012 Fund |
|
(873 |
) |
|
814 |
|
(3,102 |
) |
|
2,644 |
| |
Deferred income tax expense (recovery) on above item |
|
(114 |
) |
|
106 |
|
(403 |
) |
|
344 |
| Other comprehensive income (loss) |
|
(759 |
) |
|
708 |
|
(2,699 |
) |
|
2,300 |
| |
|
|
|
|
|
|
|
|
|
|
| Comprehensive income (loss) |
|
(739 |
) |
|
1,015 |
|
(2,232 |
) |
|
2,733 |
| |
|
|
|
|
|
|
|
|
|
|
| Comprehensive income (loss) attributable to: |
|
|
|
|
|
|
|
|
|
|
| |
Owners of the Corporation |
|
(713 |
) |
|
973 |
|
(2,133 |
) |
|
2,547 |
| |
Non-controlling interest |
|
(26 |
) |
|
42 |
|
(99 |
) |
|
186 |
| |
|
(739 |
) |
|
1,015 |
|
(2,232 |
) |
|
2,733 |
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements included in this news release may constitute forward-looking statements or information under applicable securities legislation. Forward-looking statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial conditions, expected financial results, performance, opportunities, priorities, ongoing objectives, strategies and outlook of the Corporation and its investee entities and contain words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar expressions and statements relating to matters that are not historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities legislation.
While the Corporation believes the anticipated future results, performance or achievements reflected or implied in those forward-looking statements are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond the Corporation's control, which may cause the actual results, performance and achievements of the Corporation to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.
These risks and uncertainties include but are not limited to: the ability of management of Wilmington and its investee entities to execute its and their business plans; health, safety and environmental risks; uncertainties as to the availability and cost of financing; general economic and business conditions; the possibility that government policies or laws may change or governmental or regulatory approvals may be delayed or withheld; risks associated with existing and potential future law suits and regulatory actions against Wilmington; and other risks and uncertainties described in Wilmington's filings with Canadian securities regulatory authorities.
The foregoing list of important factors that may affect future results is not exhaustive. When relying on the forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the Corporation undertakes no obligation to publicly update or revise any forward-looking statements or information, that may be as a result of new information, future events or otherwise. These forward-looking statements are effective only as of the date of this document.
This new release contains natural gas volumes which have been converted on the basis of six thousand cubic feet of natural gas to one barrel of oil equivalent. Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
