Jovian Releases Financial Results for the Second Quarter of Fiscal 2010

TORONTO , Nov. 11 /CNW/ - Jovian Capital Corporation ("Jovian") (JOV: TSX) today released its results for the three and six months ended September 30, 2009 .

    
    Q2 Fiscal 2010 Highlights

    -   Revenue increased by 24% to $28.9 million from $23.3 million in Q2 of
        fiscal 2009
    -   Client assets in portfolio companies increased 11% to $14.2 billion,
        from $12.8 billion in Q1 of fiscal 2010
    -   Adjusted EBITDA(2) of $1.4 million, compared with an Adjusted EBITDA
        loss of $3.5 million in Q2 fiscal 2009
    -   Net loss decreased to $1.4 million, or $0.17 per share (basic and
        diluted), compared to a loss of $3.8 million, or $0.47 per share
        (basic and diluted) in Q2 of fiscal 2009
    -   Completed acquisition of 50% of Hahn Investment Stewards & Company
        Inc. ("Hahn"), a globally-diversified exchange trade funds ("ETF")
        portfolio manager
    -   Horizons AlphaPro Fiera Tactical Bond Fund successfully completed $30
        million initial public offering
    

"New client acquisition and growth in the capital markets combined to increase both client assets and revenues this quarter," said Philip Armstrong , C.E.O. of Jovian. "As we pursue our mandate to grow each of our businesses, we have maintained control over expenses without compromising the service and value we deliver to our clients. This helped us deliver positive EBITDA during the quarter."

"Our ETF platform is expanding as we continue to launch innovative new products. This quarter, as the business continues to gain momentum, we rebranded our ETF product line under our Horizons umbrella," continued Mr. Armstrong . "We are committed to expanding our ETF platform and expect our 50% acquisition of Hahn to further support this effort."

"In October, subsequent to quarter end, we launched the Horizons AlphaPro Inflation/Deflation Fund, in conjunction with Barclays Capital, one of the leading money managers in the world," added Mr. Armstrong . "Also in October, we strengthened our working capital with the sale of Felcom Data Services' ("Felcom") unitholder recordkeeping and fund administration business to CIBC Mellon. Felcom was an important contributor to Jovian's early growth, however, it no longer fit with our core strategy. We look forward to continuing to work with CIBC Mellon."

    
    Selected Financial Data (unaudited)

    -------------------------------------------------------------------------
    (in thousands of
     Canadian dollars)             Three months ended      Six months ended
    -------------------------------------------------------------------------
                                 Sept 30/09 Sept 30/08 Sept 30/09 Sept 30/08
    -------------------------------------------------------------------------
    Revenues                         28,854     23,320     54,156     46,744
    -------------------------------------------------------------------------
    Compensation and Benefits,
     Selling, General and
     Administration                  27,421     26,864     53,415     52,056
    -------------------------------------------------------------------------
    Adjusted EBITDA(2)                1,433     (3,544)       741     (5,312)
    -------------------------------------------------------------------------
    Stock-based Compensation
     Expense(1)                         291        262        453        426
    -------------------------------------------------------------------------
    EBITDA(2)                         1,142     (3,806)       288     (5,738)
    -------------------------------------------------------------------------
    Loss                             (1,430)    (3,836)    (5,309)    (6,672)
    -------------------------------------------------------------------------
    Loss Per Share - Basic(3)         (0.17)     (0.47)     (0.63)     (0.82)
    -------------------------------------------------------------------------
    Loss Per Share - Diluted(3)       (0.17)     (0.47)     (0.63)     (0.82)
    -------------------------------------------------------------------------
    (1) For measurement purposes, stock-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.
    (2) EBITDA and Adjusted EBITDA are non-GAAP 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 stock-based
        compensation.
    (3) Earnings per share for all periods have been adjusted to reflect the
        20:1 common shares consolidation on April 29, 2009.
    

Financial Review

Q2 Fiscal 2010

Revenue for the three months ended September 30, 2009 , was $28.9 million , compared to $23.3 million in the second quarter of fiscal 2009. The increase in comparable revenue is largely the result of a $4.6 million increase in investment banking and principle trading revenue.

Assets Under Administration ("AUA") were $7.2 billion at September 30, 2009 , compared with $8.3 billion at the same time last year. However, on a comparative basis, assets have shifted from transactional-based assets AUA toward recurring revenue-based assets. Jovian's Assets Under Management ("AUM") classification, in aggregate, at the end of the second quarter of fiscal 2010 increased to $7.0 billion , compared to $5.9 billion at the end of September 2008 . This significant increase in AUM was largely due to the $1.4 billion contributed by BetaPro Management Inc. ("BetaPro") during the period. The dramatic growth in BetaPro's AUM more than offset the $1.1 billion decrease in AUA.

Total expenses for the three months ended September 30, 2009 , were $30.3 million , compared to $27.4 million for the same period in the prior year. Compensation and benefits for the second quarter of fiscal 2010 were $15.0 million , compared to $14.8 million for the same period the prior year.

Adjusted EBITDA(2), a key management performance measure, improved dramatically to $1.4 million during the second quarter of fiscal 2010, compared to negative $3.5 million in corresponding period the prior fiscal year. The improved adjusted EBITDA(2) this quarter reflects improving market conditions, client asset structure and the corresponding impact on revenue generation.

The net loss for the period ended September 30, 2009 , was $1.4 million , or $0.17 per share (basic and diluted), compared to a loss of $3.8 million , or $0.47 per share (basic and diluted), for the corresponding period the prior year.

For the six months ended September 30, 2009 , revenue increased by 16% to $54.2 million from $46.7 million in the prior year period. The $7.5 million increase was primarily due to the consolidation of BetaPro into Jovian's results effective the second quarter of fiscal 2009. As a result, revenue from the first quarter of fiscal 2009 was exclusive of any contribution from BetaPro. Jovian reported revenue from BetaPro of $6.8 during the first quarter of fiscal 2010.

Total expenses or the six months ended September 30, 2009 , increased by 10% to $59.4 million from $53.9 million in the prior year period. The $5.5 million increase was primarily due to the consolidation of BetaPro into Jovian's results effective the second quarter of fiscal 2009. As a result, total expenses from the first quarter of fiscal 2009 was exclusive of any contribution from BetaPro. Jovian reported total expenses from BetaPro of $5.8 during the first quarter of fiscal 2010.

Adjusted EBITDA(2) improved dramatically to $0.3 million for the six month period, compared to negative $5.7 million in corresponding period the prior fiscal year. The net loss for the six month period was $5.3 million , or $0.63 per share (basic and diluted), compared to a net loss of $6.7 million , or $0.82 per share (basic and diluted), for the corresponding period the prior year.

Liquidity and Capital Resources

Cash and highly liquid investments included in securities owned were $25.9 million as at September 30, 2009 , compared with $22.8 million as at June 30, 2009 .

In addition, for the three months ended September 30, 2009 , Jovian reported an increase in cash and cash equivalents of $2.7 million .

About Jovian Capital Corporation

Jovian acquires, creates and grows financial services companies specializing in wealth and asset management. The Jovian group of companies (AlphaPro Management Inc., BetaPro Management Inc., Horizons Exchange Traded Funds Inc., Horizons Funds Inc., JovFunds Management Inc., JovInvestment Management Inc., Leon Frazer & Associates Inc., MGI Financial Inc., MGI Securities Inc., MGI Securities (USA) Inc. and T.E. Wealth) manages approximately $11.5 billion* of client assets ( $7.0 billion in assets under management and $4.5 billion* in assets under administration). Additional information is available at www.joviancapital.com and www.sedar.com.

* These numbers reflect the sale of the assets of Felcom's unitholder recordkeeping and fund administration business and the corresponding reduction of $2.3 billion in client assets serviced, which was completed in October, following the end of the fiscal quarter reported above.

For further information: Don Sangster, Investor Relations, Jovian Capital Corporation, [phone]; or Mark Arthur, President, Jovian Capital Corporation, [phone]