k1 Ventures

k1 Ventures: 3QFYJun13 results. Headline numbers poor due to lumpy investments, but underlying shows improvement. Revenue at $22.4m, +2.8% yoy, driven by transportation leasing related activities (+30% yoy to $19.5m), offset by a decrease in investment income (-57% to $2.9m). Operating profit was $3.5m, halved yoy, due to the revenue mix shift (ie. decline in investment income). Operating margin at Helm – the transport leasing business, was flat at 9.1%, boosted by a net profit of $2.1m from the sale of inventory and held for sale locomotives. Accordingly, net profit plunged to $1.4m, -79% yoy, without the contributions from investment income. Mgt notes Helm is expected to be impacted by continued weakness in the 6-axle locomotive leasing mkt, which has decreased the overall demand for Helm’s group of eqpt. Helm remains focused on overall fleet mgt and is in the process of disposing the remaining fleet of off lease 6-axle locomotives. Helm will not be making new invmts, but will focus on managing the current portfolio of assets, and realizing such assets to return to sh/h. The stock remains unchg at $0.166, trading at par to book value, and at 1.5x NTA. P/E is less relevant due to the lumpy investment income.