TORONTO, Aug. 14, 2012 /CNW/ - Jovian Capital Corporation (TSX: JOV) ("Jovian") today released its results for the three months ended June 30, 2012.
Q1 Fiscal 2013 Highlights
- On April 23, 2012, Jovian exercised its rights to prepayment of $15 million in secured bonds (the "Bond Repayment") issued in July 2010 and repaid the principal and accrued interest up to the date of repayment, contributing to a decrease in overall debt to $4.8 million as at June 30, 2012, from $19.7 million at March 31, 2012. A prepayment fee of 3% of the principal amount, or $0.5 million, was also paid.
- Reduced stated capital by way of a special cash distribution to shareholder ("Special Distribution") of $4.00 per common share, or approximately $36 million, derived from the proceeds of the sales of the Horizons ETF business and MGI Financial Inc. in fiscal 2012.
- Revenues of $13.5 million, a 10.6% increase from $12.2 million in Q1 fiscal 2012, partially resulting from a return to positive principal trading revenues.
- EBITDA and Adjusted EBITDA (EBITDA net of share based compensation expense) of $(0.9) million versus nil and $0.2 million, respectively, in the comparable quarter in fiscal 2012.
- Net loss from continuing operations of $2.6 million, or $0.28 per diluted share, compared to a loss from continuing operations of $1.5 million, or $0.17 per diluted share, in Q1 fiscal 2012.
- Client assets (exclusive of discontinued operations) of $6.2 billion as at June 30, 2012, a 1.6% decrease from $6.3 billion as at June 30, 2011; client assets decreased by 3.1% from $6.4 billion as at March 31, 2012, despite the S&P/TSX Total Return Index being down 5.7% for the same period.
"The quarter was a difficult period for Jovian's wealth management segment," said Philip Armstrong, C.E.O. "Trading volumes and commissions and investment banking revenues were negatively impacted by the poor performance of the equity markets and the global economic situation, which have combined to shake the confidence of equities investors who have retreated from the equity markets into the perceived safety of fixed income holdings."
"However, client assets in our asset management segment increased modestly, with particularly strong growth in AUM contributed by our investment manager Leon Frazer & Associates," Mr. Armstrong said. "We're also pleased with the increased percentage of revenues classified as recurring within this segment, which is in line with our strategy."
"I was also extremely happy with the $4.00 special distribution that we paid out to our shareholders in the quarter, from proceeds from the sale of our ETF business and MGI Financial," Mr. Armstrong concluded. "We realized a significant return on our investment in those companies and it was a demonstration of our ability to create value for our shareholders. Our company is well capitalized and we are focused on creating similar value in our current portfolio of companies."
Selected Financial Data (unaudited)
| thousands of Canadian dollars except per share
|Three months ended|
|June 30/12||June 30/11|
| Compensation and Benefits, Management and
Investment Advisory Fees, and Other Operating
|Share-based Compensation Expense2||—||149|
|Loss from continuing operations||(2,646)||(1,492)|
|Loss from discontinued operations||—||(1,616)|
|Loss for the period||(2,646)||(3,108)|
|Loss Per Share - Basic||$(0.28)||$(0.33)|
|Loss Per Share - Diluted||$(0.28)||$(0.33)|
1 EBITDA and Adjusted EBITDA are non-IFRS performance measures utilized by Jovian. EBITDA is defined here as earnings before finance costs, taxes, depreciation and amortization, gains on sales and other income (expense), and share of loss (profit) of equity accounted investees (net of income tax). Adjusted EBITDA is EBITDA adjusted for additional non-cash items.
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.
Revenue from continuing operations for the three months ended June 30, 2012, was $13.5 million, compared to $12.2 million in the comparable three-month period last year. The increase in revenue for the quarter was largely attributable to two items: the consolidation of Hahn Investment Stewards & Company Inc. ("Hahn"), which recorded $0.6 million in revenue (on March 31, 2012, Jovian acquired control of Hahn by increasing its equity interest in the company to 70% from 50%; prior to that date, Jovian accounted for its investment in Hahn under the equity method.); and a return to modest positive principal trading revenue in the wealth management segment from a loss of $2.7 million in Q1 fiscal 2012.
Total net expenses from continuing operations were $16.2 million in Q1 fiscal 2013 ($15.4 million exclusive of Hahn), compared to $13.7 million in the corresponding quarter in fiscal 2012. The increase is primarily due to: an increase in compensation expense compared to the corresponding quarter in fiscal 2012 (though compensation as a percentage of revenue is largely comparable to 2010 and prior results); and an increase in finance costs.
Adjusted EBITDA and EBITDA from continuing operations for the three months ended June 30, 2012, was $(0.9) million for both, compared to $0.2 million and nil, respectively, during the three months ended June 30, 2011. The decrease in EBITDA is primarily a result of a $2.3 million increase in compensation and benefits and other operating expenses, partially offset by a $1.3 million increase in revenues.
For the three months ending June 30, 2012, Jovian reported net loss from continuing operations of $2.6 million, or $0.28 per diluted share, compared to a loss of $1.5 million, or $0.17 per diluted share, in Q1 fiscal 2012.
Liquidity and Capital Resources
Cash and those investments considered highly liquid included in securities owned on the consolidated balance sheet were $65.1 million as at June 30, 2012, compared with $117.3 million as at March 31, 2012. The Special Distribution and the Bond Repayment resulted in a decrease in cash and securities owned since the end of the previous fiscal year.
About Jovian Capital Corporation
Jovian acquires, creates and grows financial services companies specializing in two primary market segments: wealth management and asset manager. 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) manages approximately $6.2 billion of client assets ($4.9 billion in assets under management and $1.3 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.