Jovian Reports Results for Fiscal 2013

TORONTO, June 25, 2013 /CNW/ - Jovian Capital Corporation (TSX: JOV) ("Jovian") today released its results for the three and 12 months ended March 31, 2013. The current fiscal year consolidates the results of Hahn Investment Stewards & Company Inc. ("HAHN"), which Jovian acquired control of on March 31, 2012; prior to that date, Jovian accounted for its investment in HAHN under the equity method.

Fiscal 2013 Highlights

  • 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 (the "Bond Repayment"). A prepayment fee of 3% of the principal amount, or $0.5 million, was also paid.
  • On May 11, 2012, Jovian announced a special return of capital cash distribution to shareholders 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. ("MFI") in fiscal 2012 (the "Special Distribution").
  • In Q3, Jovian issued a special dividend of $3.00 per common share using proceeds received from the sale of MFI and the Horizons ETF business (the "Special Dividend"). The Special Dividend coincided with the release of certain funds Jovian received from the sale of the Horizons ETF business but which had been held in escrow.
  • On February 6, 2013, Jovian announced that it had completed the acquisition of all remaining outstanding voting shares of its asset manager subsidiary Leon Frazer & Associates Inc. ("Leon Frazer").
  • A 5.5% increase in revenues to $51.8 million from $49.1 million from continuing operations recorded in fiscal 2012, primarily due to an increase in revenues in Jovian's asset management segment.
  • EBITDA and Adjusted EBITDA from continuing operations of $(4.4) million each, versus $(8.8) and $(7.2) million, respectively, in fiscal 2012. Fiscal 2012 included a profit pool expense (the "Profit Pool Payment Provision") of $7.0 million.
  • Loss from continuing operations of $(7.5) million, or $(0.78) per diluted share, compared to ($8.8) million, or $(1.02) per diluted share, in fiscal 2012. The comparable year's results included the Profit Pool Payment Provision.
  • Net loss of $(7.5) million, or $(0.78) per diluted share, compared to net earnings (including from discontinued operations) of $53.1 million, or $6.21 per share in fiscal 2012. The comparable year's results included a $66.2 million non-recurring gain, net of taxes, from Jovian's sale of MFI and the Horizons ETF business and the Profit Pool Payment Provision.
  • Increase in client assets to $6.9 billion as at March 31, 2013, a 8.6% increase from $6.4 billion as at March 31, 2012, and a 3.4% increase from $6.7 billion as at December 31, 2012.

"In 2013, Jovian's assets under management increased 10% resulting in a commensurate increase in revenues in our profitable asset management segment," said Philip Armstrong, CEO of Jovian. "During the year, we continued to make investments in our businesses in this segment in order to position them well for future growth."

"Our wealth management segment suffered from a decrease in trading volume, with trading on the TSX Venture exchange down significantly, and a decline in activity within the mining sector," continued Mr. Armstrong. "This negatively impacted brokerage commissions and investment banking revenues during the year."

"Overall, fiscal 2013 was marked by our distributions to Jovian shareholders, thanks to the crystallization of value we had created within businesses we divested in fiscal 2012. We continue to invest in our current businesses, and we remain well capitalized," concluded Mr. Armstrong. "Looking ahead, we will aim to grow our businesses and look for ways to surface value in our ongoing businesses."

Selected Financial Data

thousands of Canadian dollars except per share
amounts
Three months ended Twelve months ended
   Mar. 31/13 Mar. 31/12 Mar. 31/13 Mar. 31/12
Revenues   13,467 14,144 51,765 49,072
Compensation and Benefits, Management and
Investment Advisory Fees, and Other Operating
expenses
14,957 7,065 56,198 56,260
Adjusted EBITDA2 from continuing operations   (1,490) 7,079 (4,433) (7,188)
Share-based Compensation Expense3 1,082 1,613
EBITDA2 from continuing operations   (1,490) 5,997 (4,433) (8,801)
Earnings (Loss) from continuing operations   (1,768) 3,589 (7,469) (8,793)
Earnings from discontinued operations  
1,081
61,896
Earnings (Loss) for the period (1,768) 4,670 (7,469) 53,103
Earnings (Loss) from continuing operations Per
Share - Diluted  
$(0.18) $0.41 $(0.78) $(1.02)
Earnings (Loss) Per Share - Diluted   $(0.18) $0.54 $(0.78) $6.21

1 The results for the twelve months ended March 31, 2012, are inclusive of $7 million in compensation
and benefits associated with the Profit Pool Payment Provision. During the quarter ending March 31,
2012, the Profit Pool Payment Provision was adjusted from $12.2 million to $7.0 million.
2 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 or losses
on sales and other income or expense, and share of profit or loss of equity accounted investees
(net of income tax). Adjusted EBITDA is EBITDA adjusted for additional non-cash items.
3 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.

Financial Review

Revenue from continuing operations

Three months ended March 31

thousands of Canadian  
dollars
Asset
 Management 
Wealth
 Management 
Corporate  Consolidated
  2013 2012 2013 2012 2013 2012 2013 2012
Commissions and fees 8,364 7,669 3,763 3,502 12 20 12,139 11,191
Investment Banking - - 1,456 956 (70) 364 1,386 1,320
Principal trading - - (800) 473 - - (800) 473
Other 54 64 458 349 230 747 742 1,160
TOTAL 8,418 7,733 4,877 5,280 172 1,131 13,467 14,144

Revenue from continuing operations for the three months ended March 31, 2013, was $13.5 million, a decrease of $0.6 million or 4% for the comparable three month period. Exclusive of Hahn, total revenue for the period was $13.0 million, a decrease of $1.2 million or 9%. The decrease in revenue is a result of a decrease in principal trading revenue on a comparable basis in the wealth segment, as well as a decrease in investment banking revenue in the corporate segment, offset by increased commission and fees revenue in both the asset and wealth management segments.

Twelve months ended March 31

thousands of Canadian
dollars
Asset
Management
Wealth
Management
Corporate Consolidated
  2013 2012 2013 2012 2013 2012 2013 2012
Commissions and fees 33,148 29,919 12,601 14,350 60 36 45,809 44,305
Investment Banking - - 3,502 5,861 115 357 3,617 6,218
Principal trading - - (583) (4,469) - - (583) (4,469)
Other 135 243 1,625 1,322 1,162 1,453 2,922 3,018
TOTAL 33,283 30,162 17,145 17,064 1,337 1,846 51,765 49,072

Revenue for the twelve months ended March 31, 2013, was $51.8 million, an increase of $2.7 million or 5% for the comparable twelve month period. Exclusive of Hahn, total revenue for the twelve month period was $49.9 million, an increase of $0.8 million or 2%. The increase in revenue over the comparative periods was largely attributed to an increase in revenues in the asset management segment and lower principal trading losses partially offset by decreases in investment banking revenues in the wealth management segment.

Expenses
Total net expenses from continuing operations were $15.2 million in Q4 fiscal 2013, $14.5 million exclusive of HAHN, compared to $15.7 million in the corresponding quarter in fiscal 2012, exclusive of a $5.2 million Profit Pool Payment Provision adjustment. For the twelve months ended March 31, 2013, total net expenses were $59.2 million, $56.6 million exclusive of HAHN, versus $50.9 million in the prior fiscal year, exclusive of the $7.0 million Profit Pool Payment Provision. The twelve-month period ended March 31, 2013, included income tax recovery of $1.6 million, versus $4.2 million in tax expense in the prior fiscal year.

Adjusted EBITDA and EBITDA
Adjusted EBITDA and EBITDA from continuing operations for the three months ended March 31, 2013, were both $(1.5) million, exclusive of HAHN ($1.3) million, compared to $1.9 and $0.8 million, respectively, for the three months ended March 31, 2012, exclusive of the Profit Pool Payment Provision. For the twelve months ended March 31, 2013, adjusted EBITDA and EBITDA from continuing operations were both $(4.4) million, exclusive of HAHN ($3.6) million, versus $(0.2) and $(1.8) million, respectively, for the prior fiscal year, exclusive of the Profit Pool Payment Provision.

Earnings
For the three and twelve months ended March 31, 2013, Jovian reported net loss from continuing operations of $(1.8) million, or $(0.18) per diluted share, and $(7.5) million, or $(0.78) per diluted share, respectively. For the three months ended March 31, 2012, Jovian reported net income from continuing operations of $3.6 million, or $0.41 per diluted share. For the fiscal year 2012, Jovian reported net loss from continuing operations of $(8.8) million, or $(1.02) per diluted share. Exclusive of the Profit Pool Payment Provision, Jovian reported net loss from continuing operations of $(1.6) million and $(1.8) million in the respective three and twelve months ended March 31, 2012.

Liquidity and Capital Resources
Cash and those investments considered highly liquid, included in securities owned on the consolidated balance sheet, were $26.0 million as at March 31, 2013, compared with $28.4 million as at December 31, 2012, and $117.3 million at March 31, 2012. The Special Distribution, Special Dividend, and Bond Repayment resulted in a decrease in cash and securities owned during fiscal 2013.

About Jovian Capital Corporation
Jovian acquires, creates and grows financial services companies specializing in two primary market segments: wealth management and asset management. 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 Fit Private Investment Counsel Inc.) oversees approximately $6.9 billion of client assets ($5.4 billion in client assets managed or advised 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

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