Western Investment Company Files Q1 Financial Statements on SEDAR Including Non-Cash Write-Down of Goodwill. CEO Provides COVID-19 Update to Shareholders
High River, Alberta--(Newsfile Corp. - May 29, 2020) - The Western Investment Company of Canada Limited (TSXV: WI) ("WICC" or "Western") announces that it has filed its Q1 Financial Statements and MD&A on SEDAR.
In a message to shareholders, WICC CEO Scott Tannas provided the following commentary:
"As we continue to navigate our way through this severely depressed economy, WICC and its partners have been focused on making sure that each investee company has the resources to come through to the other side of this crisis. While we remain confident all our companies will thrive as things normalize, damage has been done that will take time to repair. That said, we have five strong companies with talented management teams and we are inspired by their passion and energy in confronting their unique business issues.
- Throughout the crisis, GlassMasters has remained open for business in their locations and with their extensive mobile service fleet. In the early weeks, the workforce was significantly reduced to fit the volume of sales activity. Since the end of Q1, sales have steadily risen week over week, and many previously laid off staff members have been recalled to meet surging demand.
- After a very strong January and February, Ocean Sales has suffered a significant reduction in revenue during the COVID-19 crisis. Together with management, we have put in place a plan that will see the company scale back its operations and temporarily focus all efforts on sales through the internet, while waiting for its traditional channels of sales to re-open. So far, the online sales results have been very encouraging, and it is clear there is a virtual market for Ocean Sales' lineup of household consumer products. This is an important channel that Ocean Sales will continue to develop into the future. However, the resiliency of the exhibition and show industry in a post COVID-19 environment is in question. At best it will be many months before Ocean Sales will resume selling through that channel. This uncertainty caused us to reflect on the carrying value of the company - specifically the goodwill and intangible assets. We have determined that the goodwill value of the company has sustained impairment, and as result, we are taking a non-cash charge to our Q1 net income in the amount of $3.475 million. We do not take this magnitude of loss lightly. However, it is the prudent thing to do given what we know today, and it provides us with some additional flexibility as we position the company for the future. I want to be clear that our belief in the long term success of Ocean Sales remains firm, and we are resolved to continue to work with our partners, employees and suppliers to make sure this company is successful. Ocean Sales has a strong tangible asset base, including inventory and equipment that will allow its people to generate sales and profits in the future. In the meantime, they have the financial resources to hunker down and continue to invest in their online sales efforts. Once the current restrictions around public gatherings and retail store capacities are lifted, Ocean Sales will be ready to execute a plan to resume their traditional operations, while continuing to develop new channels of distribution.
- Foothills Creamery remains in high production mode producing ice cream and butter for consumers, with consumer packaged butter sales up significantly over last year, while sales to restaurants and bakeries are down. In Q1 Foothills Creamery recorded a seasonal loss that is typical for that business.
- So far, Golden Health Care has been successful in protecting their residents from COVID-19, and delivered a steady return on investment in Q1. This company has significant cash reserves of $3.3 million to meet any future challenge or opportunity.
- Fortress Insurance continues to add new customers and premiums every month, and we expect the pace of growth will accelerate throughout 2020. Our goals for 2020 remain unchanged for the company. The equity component of the investment portfolio at Fortress Insurance was impacted by the market but mitigated by our 75% allocation to fixed-income investments which have performed well. Some of the investment losses incurred near the end of Q1 have since been recovered as the market improved over the past few weeks. The company has very strong capitalization levels to support its growing business.
We are now 75+ days into this crisis, and we continue to be confident that our businesses are doing the right things to ensure future success. I reiterate the words from my previous report:
Given our current and anticipated future environment, we believe The Western Investment Company of Canada has sufficient liquidity to meet its obligations and support our investee companies through this crisis and beyond. We will continue to provide updates as time and circumstances require.
On behalf of the Board, I thank all shareholders for your continued trust and support, and wish you and your family good health through the coming weeks and months."
About The Western Investment Company of Canada Limited
Western is a unique publicly traded, private equity company founded by a group of successful Western Canadian businesspeople, and dedicated to building and maintaining ownership in successful Western Canadian companies, and helping them to grow. Western's shares are traded on the TSX Venture Exchange under the symbol WI.
For more information on Western, please visit its website at www.winv.ca
The Western Investment Company of Canada Limited
Scott Tannas President and Chief Executive Officer (403) 652-2663 email@example.com
This news release may contain certain forward-looking information and statements, including without limitation, statements pertaining to future plans, acquisitions, financings and returns. Statements containing the words: 'believes', 'intends', 'expects', 'plans', 'seeks' and 'anticipates' and any other words of similar meaning are forward-looking. All statements included herein involve various risks and uncertainties because they relate to future events and circumstances beyond Western's control. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in Western's disclosure documents on the SEDAR website at www.sedar.com. Any forward looking statements are made as of the date of this news release and Western does not undertake to update any forward-looking information except in accordance with applicable securities laws.
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