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Wilmington Announces 2016 Third Quarter Results
TORONTO, ONTARIO--(Marketwired - Nov. 8, 2016) - Wilmington Capital Management Inc. ("Wilmington" or the "Corporation") (TSX:WCM.A)(TSX:WCM.B) reported a net loss attributable to shareholders for the three months ended September 30, 2016 of $0.4 million or ($0.04) per share compared to net income of $0.1 million or $0.01 per share for the same period in 2015. For the nine months ended September 30, 2016, the Corporation generated a net loss attributable to shareholders of $1.1 million or ($0.11) per share compared to net income of $0.6 million or $0.07 per share for the same period in 2015.
THIRD QUARTER 2016 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 accounted for on a consolidated basis or using the equity method of accounting.
Self-storage facilities
Real Storage Private Trust (42.5% owned - the "Trust") generated net operating income of $2.3 million for the three months ended September 30, 2016, a 21% increase from the comparable period in 2015. The Ontario portfolio continued to perform well, however, lower occupancy levels and operating margins were realized in the Alberta portfolio due to the ongoing downturn in the energy sector.
In August 2016, the Trust sold a self-storage facility located in Ottawa, Ontario in exchange for a self-storage facility located in London, Ontario.
Subsequent to the period ended September 30, 2016, the Trust received $0.1 million in insurance proceeds on account of business interruption losses sustained at the period the Fort McMurray self-storage facility which was closed due to the wildfires in May 2016.
The Trust paid a quarterly distribution of $0.4 million (Q3 2015 - $0.2 million) to unit holders in the period, representing the equivalent of 4% of invested capital per annum.
Private equity
On September 30, 2016, a strategic partner specializing in the oil and gas industry subscribed for 45% of the issued and outstanding shares of Northbridge Capital Partners Ltd. ("Northbridge") and management subscribed for 10%. The Corporation's ownership of Northbridge now stands at 45% and its mandate was expanded to include raising and deploying capital for investment in the energy and real estate sectors as well as in special situations.
On September 30, 2016, Northbridge closed its first energy fund under the new ownership, totaling $30.9 million. The Corporation subscribed $1.0 million in the fund. Northbridge's assets under management now stand at approximately $47.1 million (December 31, 2015 - $29.5 million).
Natural gas assets
Shackleton 2011 Limited Partnership's ("Shackleton Partnership") production decreased approximately 7% for the nine months ended September 30, 2016 as compared to 9% the same period in 2015.
The Corporation's investment in Northpoint had been written down to nil during the year ended December 31, 2015. Subsequent to the period ended September 30, 2016 and as a result of insolvency proceedings, the producing assets of Northpoint were sold to a third party for cash consideration of $7.5 million which, net of related expenses, was distributed to Northpoint's secured lender. No distributions will be paid to equity and debenture holders as there are no additional assets to be divested by Northpoint.
As at September 30, 2016, Wilmington had assets under management in its operating platforms of approximately $172 million ($59 million representing Wilmington's share).
OPERATIONS REVIEW
Self-Storage Facilities
Real Storage Private Trust
For the nine months ended September 30, 2016, overall occupancies improved each quarter principally due to continued strong performance in Ontario and offsetting lower occupancies in Western Canada due to the severe downturn in the energy sector.
Private Equity
Northbridge Capital Partners Ltd., Network 2012 Limited Partnership and Northbridge Fund 2016 Limited Partnership
On September 30, 2016, Northbridge closed a $30.9 million energy fund ("Northbridge Fund 2016") having a mandate to invest in public and private companies in the energy sector.
Northbridge's assets under management amounted to approximately $47.1 million as at September 30, 2016, an increase of $17.6 million in assets under management from December 31, 2015.
Natural Gas Assets
Shackleton 2011 Limited Partnership
The Shackleton Partnership owns and operates a 100% interest in natural gas assets in Southwestern Saskatchewan. Production during the second quarter 2016 declined 7% compared to the same period in 2015 to 494 boe/d, due to natural production decline. Shackleton Partnership realized a netback of $0.77 per mcf in Q3 2016 an improvement of $0.81 per mcf compared to Q2 2016 resulting from a 59% increase in natural gas prices. Despite the Q3 improvement in natural gas prices, realized natural gas prices for the nine months ended September 30, 2016 decreased 31% compared to the same period of 2015.
The Shackleton Partnership has drawn $3.94 million of the $4.14 million available under its Revolving Loan Facility. The amount available will be reduced by monthly increments of $30,000 until the next interim bank review scheduled for December 2016. The outcome of the interim review may impact the Shackleton Partnership's liquidity.
Northpoint Resources Ltd.
Northpoint filed for bankruptcy on May 30, 2016 and an order was granted by the Court of Queen's Bench of Alberta, Judicial Centre of Calgary. A receiver had been appointed to facilitate the divesture of the oil and natural gas properties held by Northpoint. Subsequent to the September 30, 2016, the producing assets of Northpoint were purchased by a third party for cash consideration of $7.5 million which, net of related expenses, was distributed to Northpoint's secured lender. No distributions will be paid to equity and debenture holders as there are no additional assets to be divested by Northpoint.
OUTLOOK
The last 24 months have weighed heavily on companies invested in the oil and gas industry, particularly those dependent on natural gas pricing. Wilmington believes the energy sector is entering into the first phase of rebalancing and is pleased to have executed the strategic initiative in respect of Northbridge, its private equity platform. The added skill sets brought about with the realigned ownership and management of Northbridge positions the Corporation exceptionally well to participate in the oil and gas sector as it moves into the recovery phase as well as in the real estate sector. The self-storage business held through Real Storage Private Trust is expected to show continued growth generated both organically and through development and acquisition. In sum, Wilmington is optimistic in the opportunities and growth that will unfold in the year ahead.
FINANCIAL RESULTS
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited)
For the | three months ended | nine months ended | ||||||
(CDN $ Thousands, except per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||
Revenue | ||||||||
Natural gas sales | 630 | 828 | 1,536 | 2,381 | ||||
Royalties | (96 | ) | (133 | ) | (233 | ) | (377 | ) |
Natural gas revenue | 534 | 695 | 1,303 | 2,004 | ||||
Investment and other income | 118 | 53 | 245 | 153 | ||||
650 | 748 | 1,548 | 2,157 | |||||
Expenses | ||||||||
Petroleum operations | 327 | 384 | 1,015 | 1,128 | ||||
General and administrative | 562 | 273 | 1,290 | 885 | ||||
Depletion, depreciation and amortization | 169 | 231 | 507 | 683 | ||||
Stock-based compensation | 51 | 4 | 157 | 24 | ||||
Finance costs | 60 | 53 | 172 | 171 | ||||
1,169 | 945 | 3,141 | 2,891 | |||||
Loss before share of equity accounted investments and income tax | (519 | ) | (197 | ) | (1,593 | ) | (734 | ) |
Share of net income (loss) from Real Storage Private Trust | (2 | ) | 159 | 101 | 652 | |||
Loss on ownership change in Real Storage Private Trust | --- | --- | --- | (83 | ) | |||
Share of net income (loss) from Northbridge Capital Partners Ltd. | --- | 2 | (53 | ) | 129 | |||
Gain on ownership change in Northbridge Capital Partners Ltd. | 48 | --- | 166 | --- | ||||
Share of net income (loss) from Network 2012 Limited Partnership | (12 | ) | 110 | 42 | 1,214 | |||
Share of net loss from Northpoint Resources Ltd. | --- | --- | --- | (583 | ) | |||
Income (loss) before income tax | (485 | ) | 74 | (1,337 | ) | 595 | ||
Income tax expense (recovery) | (68 | ) | 54 | 29 | 128 | |||
Net income (loss) | (417 | ) | 20 | (1,366 | ) | 467 | ||
Net income (loss) attributable to: | ||||||||
Owners of the Corporation | (382 | ) | 46 | (1,120 | ) | 566 | ||
Non-controlling interest | (35 | ) | (26 | ) | (246 | ) | (99 | ) |
(417 | ) | 20 | (1,366 | ) | 467 | |||
Net income (loss) per share: | ||||||||
Basic | (0.04 | ) | 0.01 | (0.11 | ) | 0.07 | ||
Diluted | (0.04 | ) | 0.01 | (0.11 | ) | 0.07 | ||
CONSOLIDATED BALANCE SHEETS (unaudited)
As at | September 30, | December 31, |
(CDN $ Thousands) | 2016 | 2015 |
Assets | ||
Non-current assets | ||
Investment in Real Storage Private Trust | 15,741 | 16,107 |
Investment in Northbridge Capital Partners Ltd. | 450 | 257 |
Investment in Network 2012 Limited Partnership | 2,724 | 3,315 |
Investment in Northbridge Fund 2016 Limited Partnership | 100 | --- |
Natural gas property, plant and equipment | 5,246 | 5,752 |
Deferred income tax assets | 612 | 622 |
24,873 | 26,053 | |
Current assets | ||
Amounts due from associated entity | 1,000 | --- |
Accounts receivables and other assets | 875 | 1,057 |
Cash | 2,682 | 3,993 |
4,557 | 5,050 | |
Total assets | 29,430 | 31,103 |
Liabilities | ||
Non-current liabilities | ||
Decommissioning liabilities | 1,121 | 1,074 |
1,121 | 1,074 | |
Current liabilities | ||
Accounts payable and accrued liabilities | 812 | 861 |
Revolving loan facility | 3,940 | 4,350 |
4,752 | 5,211 | |
Total liabilities | 5,873 | 6,285 |
Equity | ||
Shareholders' equity | 23,452 | 24,467 |
Non-controlling interest | 105 | 351 |
Total equity | 23,557 | 24,818 |
Total liabilities and equity | 29,430 | 31,103 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)
For the | three months ended | nine months ended | ||||||
(CDN $ Thousands) | 2016 | 2015 | 2016 | 2015 | ||||
Net income (loss) | (417 | ) | 20 | (1,366 | ) | 467 | ||
Items that may be reclassified to net loss | ||||||||
Share of other comprehensive income (loss) from Network 2012 Limited Partnership | 112 | (873 | ) | (161 | ) | (3,102 | ) | |
Deferred income tax expense (recovery) | 15 | (114 | ) | (22 | ) | (403 | ) | |
Other comprehensive income (loss) | 97 | (759 | ) | (139 | ) | (2,699 | ) | |
Comprehensive loss | (320 | ) | (739 | ) | (1,505 | ) | (2,232 | ) |
Comprehensive loss attributable to: | ||||||||
Owners of the Corporation | (285 | ) | (713 | ) | (1,259 | ) | (2,133 | ) |
Non-controlling interest | (35 | ) | (26 | ) | (246 | ) | (99 | ) |
(320 | ) | (739 | ) | (1,505 | ) | (2,232 | ) | |
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.
