Jovian Reports Results for Q1 Fiscal 2014

TORONTO, Aug. 7, 2013 /CNW/ - Jovian Capital Corporation (TSX: JOV) ("Jovian") today released its results for the three months ended June 30, 2013.

Q1 Fiscal 2014 Highlights

• Client assets of $6.8 billion as at June 30, 2013, versus $6.2 billion at June 30, 2012, and $6.9 billion at March 31, 2013
• Revenues of $13.5 million were in line with $13.5 million recorded in Q1 fiscal 2013, with increases in commission and fees revenue offset by lower investment banking and other revenue as well as principal trading loss
• Recurring revenue increased to 65% of total revenues, versus 59% in Q1 fiscal 2013
• Adjusted EBITDA of $(1.5) million versus $(0.9) million in the first quarter of fiscal 2013, primarily due to increased commission and fees revenue being more than offset by lower investment banking and other revenue, principal trading loss and an increase in compensation and benefits
• Net Loss of $(1.6) million, or $(0.16) per diluted share, compared to ($2.6) million, or $(0.28) per diluted share, in Q1 fiscal 2013, with the improvement primarily due to reduced finance costs partially offset by increased operating expenses

Proposed Acquisition by Industrial Alliance
Subsequent to the end of the first quarter, on July 16, 2013, Jovian announced that it had entered into a definitive agreement whereby Industrial Alliance and Financial Services Inc. ("Industrial Alliance") would acquire all of the issued and outstanding common shares in the capital of Jovian for $10.23 in cash per share (the "Cash Consideration") or 0.2386 of a common share of Industrial Alliance or a combination thereof, subject to pro-ration based upon the issuance of a maximum of 35% of the aggregate consideration payable in Industrial Alliance common shares. The acquisition will be completed pursuant to a statutory plan of arrangement (the "Arrangement") with the closing date anticipated to be on or about October 1, 2013, subject to the completion of a number of obligations and conditions including obtaining necessary approvals. On September 11, 2013, Jovian will hold a special meeting of its shareholders and debentureholders as of the record date of August 9, 2013, to consider the Arrangement. Jovian's major shareholder and all of the directors and senior officers of Jovian, holding directly and indirectly 38% of the common shares of Jovian and 100% of the debentures, have signed voting support agreements pursuant to which such persons will agree to vote in support of the Arrangement, subject to certain terms and conditions.

"This transaction is the final chapter in our goal of providing long-term value to our shareholders," said Philip Armstrong, C.E.O. of Jovian. "The Cash Consideration represents a premium of 46% to the closing price of Jovian's common shares on the TSX on July 15, 2013, allowing shareholders to harvest the economic value of our enterprise. Additionally, it allows our operating companies to continue providing excellent service to their clients with the support of one of the largest financial institutions in Canada."

Regarding the financial results, Mr. Armstrong said: "We're quite pleased with the increase in our percentage of recurring revenue in the first quarter, the growth of which has been an objective of ours. Additionally, revenues in our profitable asset management segment grew as assets under management increased 10% on a year-over-year basis."

"However, the first quarter continued to be difficult for our wealth management segment," continued Mr. Armstrong. "Concerns about slowing domestic growth compounded a growing apprehension with respect to global demand for commodities, and investors continued to abandon small and micro-cap securities as evidenced by the poor performance of the S&P/TSX Venture Index, which fell 20% and is down 28% for all of 2013. Our wealth management segment is sensitive to the movement in the small cap and resource sector as our mandates primarily focus on the mining and commodity industries."

Selected Financial Data

thousands of Canadian dollars except per share amounts	Three months ended
	June 30/13	June 30/12
Revenues	13,537	13,535
Adjusted EBITDA^1	(1,476)	(888)
Earnings (Loss)	(1,576)	(2,646)
Earnings (Loss) Per Share - Diluted	$(0.16)	$(0.28)
Assets under management (AUM)	5,378,000	4,901,000
Assets under administration (AUA)	1,423,000	1,296,000

¹ Adjusted EBITDA is a non-IFRS performance measure utilized by Jovian. Adjusted EBITDA
is defined here as earnings before finance costs, income taxes, depreciation and amortization,
gains or losses on sales and other income or expense, share of profit or loss of equity
accounted investees (net of income tax) and share based compensation.

Q1 Fiscal 2014 Financial Review

Client Assets
Client assets increased by $0.6 billion, or 10%, to $6.8 billion at June 30, 2013, from $6.2 billion as at June 30, 2012. Client assets were comprised of $5.4 billion in AUM ($4.9 billion at June 30, 2012) and $1.4 billion in AUA ($1.3 billion at June 30, 2012). The increase in AUM was contributed by Jovian's asset managers, Leon Frazer & Associates, T.E. Wealth and HAHN Investment Stewards & Company, who experienced a combined 11% growth in AUM over the comparative quarter. Jovian's wealth management segment experienced an AUA growth of $0.1 billion or 10% over the comparative quarter, largely through the acquisition of seven retail advisors and their books of business in the fourth quarter of the prior fiscal year.

Revenue

Three months ended June 30

thousands of Canadian   dollars	Asset  Management		Wealth  Management		Corporate		Consolidated
	2013	2012	2013	2012	2013	2012	2013	2012
Commissions and fees	9,351	8,976	3,464	2,797	9	21	12,824	11,794
Investment Banking	-	-	785	843	4	124	789	967
Principal trading	-	-	(568)	37	-	-	(568)	37
Other	14	29	369	287	109	421	492	737
TOTAL	9,365	9,005	4,050	3,964	122	566	13,537	13,535

Revenue for the three months ended June 30, 2013, was $13.5 million, which was consistent with that of the comparable three month period. The increase in commission and fees revenue in the asset management segment reflects the increase in AUM and the increase in the wealth management segment largely results from the addition of the new retail advisors noted above, who predominantly have fee-based accounts. The decrease in investment banking revenue reflects the general slowdown for investment banking services related to micro and small cap mandates and the 15% year-over-year decrease in trading volumes on the TSX Venture Exchange in the first quarter. The principal trading loss represents a decrease in value from the end of the previous reporting period on broker warrants that remain in securities owned at June 30, 2013. Market fluctuations significantly affect the valuations of these securities, and the decline reflects the general slowdown experienced by Jovian and the market for micro and small cap sectors.

Expenses
The total of compensation and benefits, other expenses, management and advisory fees and depreciation and amortization expenses increased to $15.6 million from $14.9 million in Q1 of fiscal 2013, primarily due to a $0.6 million increase in compensation and benefits in the wealth management segment.

Finance costs decreased to $0.2 million from $1.7 million in Q1 of fiscal 2013. There was a payment of $1.5 million made to the holder of Jovian's convertible debentures in the prior comparable quarter related to the special cash distribution made to shareholders by way of return of capital on May 11, 2012.

Earnings
For the three months ended June 30, 2013, Jovian reported net loss of $(1.6) million, or $(0.16) per basic and diluted share, compared to net loss of $(2.6) million, or $(0.28) per basic and diluted share. The improvement was primarily due to a decrease in finance costs partially offset by an increase in compensation and benefits, as described above.

Adjusted EBITDA and EBITDA
Adjusted EBITDA decreased to $(1.5) million from $(0.9) million in Q1 fiscal 2013, primarily due to a combination of higher operating expenses stemming largely from increased compensation and benefits in the wealth management segment, and flat revenues as higher commission and fees revenue were essentially offset by a principal trading loss and lower investment banking and other revenue.

Liquidity and Capital Resources
Cash and those investments considered highly liquid, included in securities owned on the consolidated statement of financial position, were $23.6 million as at June 30, 2013, compared with $26.0 million as at March 31, 2013.

Non-IFRS Financial Information
Jovian reports its financial results in accordance with International Financial Reporting Standards (IFRS). It also publishes certain non-IFRS financial measures that do not have an IFRS equivalent, including adjusted EBITDA, assets under administration, assets under management, working capital, transactional and recurring revenues. These non-IFRS financial measures are accompanied by and reconciled with IFRS financial measures. Jovian believes that these non-IFRS financial measures provide investors and analysts with additional information to better understand Jovian's financial results as well as assess its growth and earnings potential. Since non-IFRS financial measures do not have a standardized definition, they may differ from the non-IFRS financial measures used by other institutions. Jovian strongly encourages investors to review its financial statements and other publicly-filed reports in their entirety and not to rely on any single financial measure.

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 $6.8 billion of client assets ($5.4 billion in client assets managed or advised and $1.4 billion in assets under administration).  Additional information is available at www.joviancapital.com and www.sedar.com. 

SOURCE: Jovian Capital Corporation

Don Sangster, Investor Relations, Jovian Capital Corporation, [phone]; or
Philip Armstrong, C.E.O., Jovian Capital Corporation, [phone]