Jovian Releases Results for the Second Quarter of Fiscal 2012

Asset Sales Expected to Generate Total Gross Proceeds of $117 million

TORONTO, Nov. 9, 2011 /CNW/ - Jovian Capital Corporation (TSX: JOV) ("Jovian") today released its results for the three and six months ended September 30, 2011. Jovian commenced applying International Financial Reporting Standards ("IFRS") to its financial statements effective April 1, 2011, including comparative figures for fiscal 2011.

Q2 Fiscal 2012 Highlights

  • Jovian entered into an agreement to sell its Horizons ETF business (the "ETF Business'), not including Hahn Investment Stewards & Company Inc., to Mirae Asset Global Investments Co., Ltd.  Jovian's portion of the purchase price gross proceeds is anticipated to be approximately $90 million. Closing of the transaction is anticipated to occur by the end of November, subject to several conditions
  • Jovian sold its mutual fund dealer subsidiary MGI Financial Inc. ("MFI") and its various subsidiaries to Desjardins Financial Security for approximately $27 million subsequent to the end of the second quarter
  • As a result of the selling initiatives noted as subsequent events, the ETF Business and MFI operating results are classified separately as discontinued operations, as well these entities' assets and liabilities are classified separately on the balance sheet as held for sale
  • Revenue from continuing operations was $9.5 million, compared to $13.1 million in the second quarter of fiscal 2011
  • Net loss from continuing operations for the second quarter of $3.6 million, compared with net loss of $1.7 million in the second quarter of fiscal 2011.  The loss from continuing operations for the current quarter was largely attributed to unrealized losses in principal trading revenue of $3.2 million representing broker warrants held with our securities dealer
  • Subsequent to the end of the second quarter, Jovian completed the early repayment of $5 million of the $10 million in convertible debentures issued in June 2010

"Subsequent to the quarter we completed the sale of MGI Financial Inc. and expect the sale of our ETF Business to close before the end of November. Together, these transactions will generate approximately $117 million in gross proceeds, prior to significant costs including but not limited to taxes and deal costs, as well as indemnity holdbacks as per the purchase/sale agreements," said Philip Armstrong, C.E.O. of Jovian. "The successful sale of these businesses confirms the value that we have built in our investee companies and highlights our ability to surface this value at the appropriate time."

"We are now well positioned to continue focusing on growing the enterprise value of our current portfolio companies, while evaluating other investment opportunities where we see the potential to create additional value for our shareholders," Mr. Armstrong continued.

Selected Financial Data (unaudited)1

thousands of Canadian dollars   Three months ended1 Six months ended1
   Sept. 30/11 Sept. 30/10 Sept. 30/11 Sept. 30/10
Revenues   9,461 13,137 21,692 25,594
Compensation and Benefits, Management and Advisory Fees, and Other expenses including selling, general and administrative expenses   12,337 13,257 24,330 25,700
Adjusted EBITDA3   (2,876) (120) (2,638) (106)
Stock-based Compensation Expense2   116 179 358 421
EBITDA3 from continuing operations   (2,992) (299) (2,996) (527)
Loss from continuing    operation   (3,596) (1,657) (5,088) (3,105)
Loss Per Share - Basic   (0.40) (0.19) (0.58) (0.36)
Loss Per Share - Diluted   (0.40) (0.19) (0.58) (0.36)
          
Loss for the period (5,555) (1,982) (8,663) (4,630)
Loss Per Share - Basic (0.62) (0.19) (0.95) (0.49)
Loss Per Share - Diluted (0.62) (0.19) (0.95) (0.49)

1As a result of the subsequent sale of MFI and conditional sale of the ETF Business, these entities' assets and liabilities are classified separately as held for sale, and their operating results are classified separately as discontinued operations. MFI and the ETF Business were not classified as held for sale or presented as discontinued operations in prior periods and, accordingly, the comparative statements of operations and comprehensive income have been represented to show the discontinued operations separately from continuing operations.

2 For measurement purposes, share-based compensation expense, which is a non-cash item, is excluded from compensation and benefits expense in this table in order to determine Adjusted EBITDA.

3 EBITDA and Adjusted EBITDA are non-IFRS performance measures utilized by Jovian. EBITDA is defined here as earnings before interest on long-term debt, taxes, depreciation, amortization, impairment, revaluation of share redemption liability and non-controlling interest.  Adjusted EBITDA is EBITDA adjusted for share-based compensation.

Financial Review

Q2 Fiscal 2012
Revenue from continuing operations for the quarter ended September 30, 2011, was $9.5 million, compared to $13.1 million in the second quarter of fiscal 2011. For the six months ended September 30, 2011, revenue from continuing operations was $21.7 million, compared to $25.6 million for the first half of fiscal 2011. The decrease in revenue for both the three- and six-month periods was attributed to decreased principal trading revenue which was only partially offset by increased Assets Under Management ("AUM") and Assets Under Administration ("AUA") as well as increased investment banking activity.

AUM increased by $0.2 billion and AUA increased by $0.1 billion from the period ended September 30, 2010. The growth in AUM is principally the contribution from our traditional asset managers, T.E. Wealth and Leon Frazer & Associates Inc., who experienced a 5% growth in their comparable AUM accounting for the total AUM appreciation.

Total net expenses from continuing operations for the quarter ended September 30, 2011, was $13.1 million, compared to $14.8 million in the corresponding quarter of the prior year. Total net expenses for the six-month period ended September 30, 2011, was $26.8 million, compared to $28.7 million for the six months ended September 30, 2010.

Adjusted EBTIDA2, a key management performance measure, was negative $2.9 million for the quarter, compared to negative $0.1 million during the same period the prior fiscal year. For the six month ended September 30, 2011, adjusted EBITDA2 was negative $2.6 million, compared to negative $0.1 million for the first six months of fiscal 2011.

Net loss for the quarter ended September 30, 2011, was $3.6 million, compared with a net loss of $1.7 million in the second quarter of fiscal 2011. For the six-month period ended September 30, 2011, net loss was $5.1 million, compared to a loss of $3.1 million for the comparative period the prior year.

Liquidity and Capital Resources
Cash and those investments considered highly liquid included in securities owned on the consolidated balance sheet, net of assets classified as held for sale, were $10.6 million as at September 30, 2011, compared with $11.0 million as at June 30, 2011.

About Jovian Capital Corporation
Jovian acquires, creates and grows financial services companies specializing in three primary market segments: wealth management, traditional asset managers, and exchange traded fund asset managers. The Jovian group of companies (AlphaPro Management Inc., Hahn Investment Stewards & Company Inc., Horizons ETFs Management (Canada) Inc., Horizons Exchange Traded Funds Inc., Horizons Investment Management Inc., JovFunds Management Inc., Leon Frazer & Associates Inc., MGI Securities Inc., MGI Securities (USA) Inc. and T.E. Wealth) manages approximately $9.5 billion of client assets ($8.0 billion in assets under management and $1.5 billion in assets under administration).  Additional information is available at www.joviancapital.com and www.sedar.com.
 

SOURCE Jovian Capital Corporation

For further information:

Don Sangster, Investor Relations, Jovian Capital Corporation, (416) 933-5744; or
Philip Armstrong. C.E.O., Jovian Capital Corporation, (416) 933-5752.

Organization Profile

Jovian Capital Corporation

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890