TORONTO, Feb. 8, 2012 /CNW/ - Jovian Capital Corporation (TSX: JOV) ("Jovian") today released its results for the three- and nine-months ended December 31, 2011. Jovian commenced applying International Financial Reporting Standards ("IFRS") to its financial statements effective April 1, 2011, including comparative figures for fiscal 2011.
Q3 Fiscal 2012 Highlights
- Finalized the sale of the Horizons ETF business ("ETF Business"), not including Hahn Investment Stewards & Company Inc., to Mirae Asset Global Investments Co. Ltd. for gross proceeds of $91.5 million
- Sold MGI Financial Inc. ("MFI") and its various subsidiaries to Desjardins Financial Security for $27.5 million
- Net earnings of $57.1 million compared with a net loss of $0.3 million in the third quarter of fiscal 2011
- Client assets (exclusive of discontinued operations) increased by $0.3 billion to $6.3 billion as at December 31, 2011, from $6.0 billion at the end of the third quarter of fiscal 2011
- Revenue of $13.2 million, compared to $20.4 million in the third quarter of fiscal 2011
- Completed the early repayment of $5 million of the $10 million in convertible debentures issued in June 2010
"We continued to create value for our shareholders during the quarter through the successful completion of the sales of both MGI Financial Inc. and our Horizons ETF business," said Philip Armstrong, C.E.O. of Jovian. "The combined total proceeds of these transactions were $119 million and have put us in a favourable position to take advantage of some of the opportunities that currently exist in the marketplace.
'The ongoing climate of global economic uncertainty had an impact on our operating businesses during the third quarter, particularly in the wealth management segment," continued Mr. Armstrong. "However, our asset management business was largely unaffected by the ongoing volatility and reported results consistent with the prior year."
Selected Financial Data (unaudited)
|thousands of Canadian dollars||Three months ended1||Nine months ended1|
|Dec. 31/11||Dec. 31/10||Dec. 31/11||Dec. 31/10|
| Compensation and Benefits, Management and Advisory Fees, and Other
expenses including selling, general and administrative expenses2
| Share-based Compensation
|EBITDA3 from continuing operations||(11,802)||2,424||(14,798)||1,897|
|Earnings (loss) from continuing operations||(7,294)||497||(12,382)||(2,608)|
|Earnings (loss) Per Share - Basic||(0.86)||0.03||(1.44)||(0.33)|
|Earnings (loss) Per Share - Diluted||(0.86)||0.03||(1.44)||(0.33)|
|Earnings (loss) for the period||57,096||(290)||48,433||(4,920)|
|Earnings (loss) Per Share - Basic||6.69||(0.05)||5.75||(0.54)|
|Earnings (loss) Per Share - Diluted||6.58||(0.05)||5.67||(0.54)|
1As a result of the sale of MFI and the ETF Business, their operating results are classified separately as discontinued operations. MFI and ETF Business were not 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.
2In the quarter ended December 31, 2011, Jovian has recorded a preliminary provision for the Jovian senior management profit plan of $12.2 million attributed to the results of both continued and discontinued operations. This has been recorded in compensation and benefits expense in the statement of operations. The preliminary provision will be reassessed at March 31, 2012, and adjusted accordingly.
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.
4 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.
Q3 Fiscal 2012
Revenue from continuing operations for the quarter ended December 31, 2011, was $13.2 million, compared to $20.4 million in the third quarter of fiscal 2011. For the nine months ended December 31, 2011, revenue from continuing operations was $34.9 million, compared to $46.0 million for the same period in fiscal 2011. The decrease in revenue for both the three- and nine-month periods was attributed to decreased investment banking and principal trading revenue which was only partially offset by increased Assets Under Management ("AUM").
AUM increased by $0.4 billion and Assets Under Administration ("AUA") decreased by $0.1 billion from the period ended December 31, 2010. The growth in AUM is principally the contribution from Jovian's traditional asset managers, T.E. Wealth and Leon Frazer & Associates Inc., which experienced a 5% growth in their comparable AUM accounting for the total AUM appreciation.
Total net expenses from continuing operations (see table above) for the three-month period ended December 31, 2011, were $20.5 million, compared to $19.9 million in the corresponding quarter of the prior year. Total net expenses for the nine-month period ended December 31, 2011, were $47.3 million, compared to $48.6 million for the nine months ended December 31, 2010.
Adjusted EBTIDA2, a key management performance measure, was negative $11.5 million for the quarter, compared to $2.6 million during the same period the prior fiscal year. For the nine-months ended December 31, 2011, adjusted EBITDA2 was negative $14.2 million, compared to $2.3 million for the first nine months of fiscal 2011. In the quarter ended December 31, 2011, Jovian has recorded a preliminary provision for the Jovian senior management profit plan of $12,200,000 attributed to the results of both continued and discontinued operations. This has been recorded in compensation and benefits expense in the statement of operations. The preliminary provision will be reassessed at March 31, 2012, and adjusted accordingly.
Net earnings for the quarter ended December 31, 2011, were $57.1 million, compared with a net loss of $0.3 million in the third quarter of fiscal 2011. For the nine-month period ended December 31, 2011, net earnings were $48.4 million, compared to a loss of $4.9 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 $117 million as at December 31, 2011, compared with $10.6 million as at September 30, 2011. The company's liquidity and capital resources have been impacted by the sale of MGI Financial Inc. and the Horizons ETF business.
About Jovian Capital Corporation
Jovian acquires, creates and grows financial services companies specializing in two primary market segments: wealth management and traditional asset managers. The Jovian group of companies (MGI Securities Inc., MGI Securities (USA) Inc., T.E. Wealth, Leon Frazer & Associates Inc., Hahn Investment Stewards & Company Inc., JovFinancial Solutions Inc. and JovPortfolio Management Inc.) manages approximately $6.3 billion of client assets ($4.9 billion in assets under management and $1.4 billion in assets under administration). Additional information is available at www.joviancapital.com and www.sedar.com.
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.