TORONTO, June 29, 2012 /CNW/ - Jovian Capital Corporation (TSX: JOV) ("Jovian") today released its results for the three and 12 months ended March 31, 2012. Jovian commenced applying International Financial Reporting Standards ("IFRS") to its financial statements effective April 1, 2011, including comparative figures for fiscal 2011.
Fiscal 2012 Highlights
- Net earnings of $53.1 million, or $6.21 per diluted share, compared to a loss of $3.9 million, or ($0.44) per diluted share, in fiscal 2011.
- Client assets (exclusive of discontinued operations) increased by 1.5% to $6.4 billion as at March 31, 2012, from $6.3 billion at the end of fiscal 2011, despite the TSX Composite Index being down approximately 12.5% for the same period.
- Finalized the sale of the Horizons ETF business, not including Hahn Investment Stewards & Company Inc. ("Hahn") to Mirae Asset Global Investments Co., Ltd. for gross proceeds of $91.5 million. A gain of $59.2 million, net of taxes and disposal costs, was recorded in earnings on discontinued operations.
- Completed the sale of MGI Financial Inc. and its various subsidiaries to Desjardins Financial Security for gross proceeds of $27.5 million. A gain of $7.0 million, net of taxes, advisory fees and disposal costs, was recorded in earnings on discontinued operations.
- Completed the early repayment of $5.0 million of the $10.0 million in convertible debentures issued in June 2010.
- Increased its ownership stake in Hahn to 70% from 50% for total consideration of $1.4 million, with a contingent consideration to be paid based on future revenue targets being reached.
- On April 23, 2012, Jovian exercised its rights to prepayment of $15 million in secured bonds issued in July 2010 and repaid the principal and accrued interest up to the date of repayment.
- Reduced stated capital by way of a special cash distribution of $4.00 per common share, or approximately $36 million, to shareholders of Jovian, derived from the proceeds of the sales of the Horizons ETF business and MGI Financial Inc.
"The last year has been one of significant change for Jovian," said Philip Armstrong, C.E.O. "Although the sale of our ETF business and MGI Financial represented the end of a chapter in Jovian's history, it also realized a significant return on our investment and demonstrated our ability to create value for our shareholders. The $4.00 special distribution that we subsequently paid out rewarded our shareholders for their support, and was the first distribution since Jovian's current structure was formed in July 2003," he added. "At the same time, we feel that our acquisition of a controlling interest in Hahn Investment Stewards represents a new chapter, as we look to help Hahn achieve its enormous growth potential in North America."
"While the economic environment has improved somewhat, there is still significant uncertainty. Although our wealth management business continues to be negatively impacted, EBITDA within our asset management segment increased to $5.7 million from $4.7 million in the prior year. This increase is attributable to increased management fee revenue, driven largely by the increase in assets under management," Mr. Armstrong said.
Selected Financial Data (audited)
|thousands of Canadian dollars||Three months ended||12 months ended|
|Mar. 31/12||Mar. 31/11||Mar. 31/12||Mar. 31/11|
| Compensation and Benefits,
Management and Investment
Advisory Fees, and Other
| Share-based Compensation
| Earnings (loss) from
| Earnings (loss) from
|Earnings (loss for the period)||4,670||1,030||53,103||(3,890)|
|Earnings Per Share - Basic||$0.55||$0.10||$6.29||$(0.44)|
|Earnings Per Share - Diluted||$0.54||$0.10||$6.21||$(0.44)|
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 March 31, 2012, was $14.1 million, compared to $26.6 million in the comparable three-month period last year. For the full year, revenue was $49.1 million, a decrease of $23.6 million compared with revenue in 2011. The decrease in revenue for both periods was largely attributable to decreases in principal trading and investment banking revenues in Jovian's wealth management business.
Total net expenses from continuing operations decreased substantially to $10.5 million in Q4 2012, compared to $25.0 million in Q4 2011, partly reflecting a 43% decrease in compensation and benefits expense. In the third quarter, a provision for a $12.2 million profit pool payment was recorded in compensation and benefits expense in the statement of operations. Subsequently, the Board and management agreed to a revised payment of $7.0 million in the aggregate in respect of entitlement under the profit pool for the current fiscal year (for a detailed discussion of the profit pool and its application, please see "Corporate Matters" in the 2012 Annual Report). As a result, a $5.2 million adjustment was booked to decrease compensation and benefits during the fourth quarter. The profit pool expense is presented in the continuing operations but is attributed to the results of both continuing and discontinued operations. For the full year, total net expenses declined to $57.9 million, compared to $73.7 million in fiscal 2011.
Adjusted EBITDA and EBITDA from continuing operations were $7.1 and $6.0 million for the three months ended March 31, 2012, compared to $4.8 million and $4.7 million during the three months ended March 31, 2011. Exclusive of the $5.2 million adjustment to decrease compensation and benefits expense, Adjusted EBITDA and EBITDA from continuing operations were $1.9 and $0.8 million for the three months ended March 31, 2012, and is representative of the decrease in revenue experienced in our wealth management segment.
For the twelve months ended March 31, 2012, Adjusted EBITDA and EBITDA from continuing operations, before the senior management profit pool, was a loss of $0.2 and $1.8 million, compared to income of $7.1 and $6.6 million, respectively, for both measures during the twelve months ended March 31, 2011. The comparative decrease in these measures is further reflective of the relative performance of our wealth management segment year over year.
Jovian reported net earnings of $53.1 million, or $6.21 per diluted share, compared to a loss of $3.9 million, or ($0.44) per diluted share, in fiscal 2011. The current year's net earnings is inclusive of the approximately $66.2 million combined net gain on the sale of MGI Financial Inc. and the Horizons ETF business.
Liquidity and Capital Resources
Cash and those investments considered highly liquid included in securities owned on the consolidated balance sheet were $117.3 million as at March 31, 2012, compared with $117.0 million as at December 31, 2011. Jovian'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 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 Inc.) manages approximately $6.4 billion of client assets ($5.0 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.