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SOURCE TerraVest Capital Inc.
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.
FINANCIAL INFORMATION
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:
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FINANCIAL PERFORMANCE
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2012
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2011
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Revenue
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$
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70,914
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$
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74,032
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EBITDA (Note 1)
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14,046
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10,913
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Income from continuing operations
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2,946
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2,820
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Income (loss) from discontinued operations
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-
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(4,057)
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Income (loss) and comprehensive income (loss) for the year
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2,946
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(1,237)
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Free cash flow (Note 1)
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9,129
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12,071
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Income per Share/Unit, continuing operations, basic and diluted
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$
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0.20
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$
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0.14
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Income (loss) per Share/Unit, discontinued operations, basic and diluted
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-
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(0.20)
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Income (loss) per Share/Unit, basic and diluted
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$
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0.20
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$
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(0.06)
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FINANCIAL POSITION
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2012
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2011
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Working capital (Note 1)
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$
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7,592
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$
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14,102
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Property, plant and equipment
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32,885
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33,527
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Total assets
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77,283
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94,929
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Non-current portion of long-term debt
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3,700
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22
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Shareholders' equity
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44,402
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62,193
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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.
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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.
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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.
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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.
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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.
QUARTERLY DIVIDEND
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.
CHANGE IN YEAR END
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.
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