Press release from Marketwire
Dundee Corporation Reports Third Quarter 2011 Financial Results
Monday, November 14, 2011
TORONTO, ONTARIO--(Marketwire - Nov. 14, 2011) - Dundee Corporation (TSX:DC.A)(TSX:DC.PR.A)(TSX:DC.PR.B) (the "Company") is today reporting its financial results for the three and nine months ended September 30, 2011. The Company's unaudited interim consolidated financial statements, along with management's discussion and analysis have been filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") and may be viewed under the Company's profile at www.sedar.com or the Company's website at www.dundeecorporation.com.
• Net Earnings from continuing operations attributable to equity holders in the third quarter of 2011 were $88.6 million or $1.29 per share on a fully diluted basis. This compares to net earnings from continuing operations attributable to equity holders of $42.9 million or $0.44 per share on a fully diluted basis earned in the third quarter of the prior year.
• Gain on Sale of Breakwater Resources – Included in third quarter earnings is a pre-tax gain of $95.6 million ($71.1 million after tax) from the Company's divestment of Breakwater.
• Gain on Sale of DundeeWealth – The Company's year to date earnings of $995.1 million or $14.12 per share on a fully diluted basis, includes a gain of $870.8 million from the Company's divestment of its interest in DundeeWealth, which was completed during the first quarter of this year.
• Market Value of Investments – The market value of the Company's portfolio of available-for-sale securities was $1.7 billion at September 30, 2011, and includes shares of Scotiabank received by the Company on its divestment of DundeeWealth. Amidst concerns of a global economic downturn, during the third quarter, the Company's portfolio of available-for-sale securities depreciated by $174.4 million, including $99.5 million relating to the Company's interest in Scotiabank.
• Equity Accounted Investments – Earnings from equity accounted investments were $15.7 million in the third quarter of this year compared with $21.5 million in the same period of the prior year. At September 30, 2011, the market value of these equity accounted investments was $557.9 million.
• Fee Earning Assets under Management and Administration increased to $12.3 billion at September 30, 2011, compared with $10.4 billion at December 31, 2010 and $10.8 billion at September 30, 2010.
• Corporate Debt at September 30, 2011 was $444.4 million and included $240.7 million borrowed in our real estate and resource based subsidiaries.
Substantial Issuer Bid
On September 12, 2011, the Company launched a substantial issuer bid to purchase for cancellation up to 10 million of its Class A Subordinate Shares for $23.75 per share. The purchase price of $23.75 per share represented a premium of approximately 15% over the September 9, 2011 closing price of the Class A Subordinate Shares on the TSX, the last day the Class A Subordinate Shares traded prior to the announcement of the substantial issuer bid. The substantial issuer bid expired on October 19, 2011, with 12.6 million shares having been deposited. The Company took up and paid for 10 million of the Class A Subordinate Shares representing approximately 16.2% of the Class A Subordinate Shares issued and outstanding as of October 19, 2011. The aggregate consideration paid for the 10 million shares purchased and cancelled was $237.5 million. The Company funded the purchase price using working capital provided through its established credit facilities as well as the sale of certain of its AFS securities.
Divestment of Breakwater Resources
The Company previously held a 22% interest in Breakwater Resources, a mining, exploration and development company that produces zinc, copper, lead and gold concentrates from mines located in Canada, Chile and Honduras. On August 31, 2011, Nyrstar NV ("Nyrstar"), a global multi-metals company, successfully completed an all-cash offer to acquire all of the outstanding common shares of Breakwater. Under the terms of Nyrstar's offer, shareholders of Breakwater received $7.00 per common share and a special dividend of $0.50 per common share, which was declared by Breakwater immediately prior to the sale to Nyrstar. The Company received cash of approximately $155.0 million for the divestment of its interest in Breakwater Resources, including $144.7 million from the direct sale of its common share holdings and a $10.3 million special dividend.
Initial Public Offering – Dundee International Real Estate Investment Trust
During the third quarter, Dundee International REIT completed its initial public offering of 31.1 million trust units at $10.00 per unit and $161 million 5.5% convertible unsecured subordinate debentures due July 31, 2018. Both the trust units and convertible unsecured subordinated debentures are listed on the TSX and trade under the symbols "DI.UN" and "DI.DB", respectively. The Company has invested approximately $120.4 million to acquire 12.8 million shares of Dundee International REIT, representing a 29% equity interest.
Dundee International REIT is a newly established real estate investment trust formed to invest in real estate outside of Canada. It was originally founded by Dundee Realty Corporation, and Dundee Real Estate Asset Management ("DREAM") has been retained to act as its asset manager. Dundee International REIT has initially invested in a portfolio of properties consisting of 292 offices, logistics and other commercial properties, with a residential component, comprising approximately 12.3 million square feet of commercial gross leasable area ("GLA") located in Germany. This portfolio of properties is currently 87% leased, with a weighted average remaining lease term of seven years. Approximately 75% of the GLA on these properties is currently leased to Deutsche Post, making Dundee International REIT the single largest landlord of Deutsche Post, providing central and strategically placed locations that are difficult to replace.
THIRD QUARTER SEGMENTED RESULTS OF OPERATIONS
The Company's real estate segment generated net earnings before income taxes of $25.2 million during the third quarter of 2011 compared with $29.2 million earned in the third quarter of the prior year, during which the real estate segment had completed a significant condominium closing. Decreases in real estate contribution margins, which are often project-driven, were partially offset by the Company's share of improved earnings from Dundee REIT, which increased to $4.9 million in the current quarter compared with $3.6 million earned in the third quarter of the prior year. Also included in the real estate segment is the Company's share of earnings from its recent investment in Dundee International REIT of $0.8 million.
In the three months ended September 30, 2011, the resource segment incurred operating losses of $3.0 million compared with operating earnings of $0.4 million in the same period of the prior year. Operating losses in the current quarter reflect increased oil and gas operating costs in the peak summer operating season following the acquisition of oil and gas assets in southern Ontario late in the second quarter of the prior year. Equity earnings from resource based investments were $10.1 million in the current quarter compared with $17.9 million earned in the third quarter of the prior year.
The Company's asset management business continues to expand. Management fees earned on asset management activities were $11.6 million in the third quarter of 2011 compared with $5.9 million earned in the same period of 2010. Ned Goodman Investment Counsel Limited ("NGIC") earned management fees of $1.2 million in the third quarter of the current year (three months ended September 30, 2010 - $1.0 million). As part of the arrangement with Scotiabank, NGIC will continue to provide sub-advisory services to certain mutual funds and other investment products managed by DundeeWealth. Asset management revenues generated by DREAM were $9.6 million in the third quarter of 2011 compared with $4.2 million earned in the same period of the prior year.
The third quarter of 2011 was marked by significant fluctuations in asset prices and concerns that the global economic recovery remains uncertain, eroding investor confidence. These concerns are reflected in the operating results of Dundee Capital Markets which generated losses before taxes of $1.5 million in the third quarter of 2011 compared with earnings of $9.9 million earned in the third quarter of the prior year.
ABOUT THE COMPANY
Dundee Corporation is an independent publicly traded Canadian asset management company. The Company's asset management activities are focused in the areas of the Company's core competencies and include real estate and infrastructure as well as energy and resources. Asset management activities are carried out by Ned Goodman Investment Counsel Limited, a registered portfolio manager and exempt market dealer across Canada and an investment fund manager in the province of Ontario, and by DREAM, the asset management division of Dundee Realty Corporation, a 70% owned subsidiary of the Company. Asset management activities are supported by the Company's 49% interest in Dundee Capital Markets Inc. Dundee Capital Markets is also the asset manager of the Company's flow-through limited partnership business carried out through the "CMP", "CDR" and "Canada Dominion Resources" brands. Dundee Corporation also owns and manages direct investments in these core focus areas, through ownership of both publicly listed and private companies. Real estate operations are carried out through the Company's investment in Dundee Realty Corporation, an owner and developer of residential and recreational properties in North America. Energy and resource operations include the Company's 57% investment in Dundee Energy Limited (formerly Eurogas Corporation), an oil and natural gas company with a mandate to create long-term value through the development of high impact energy projects. The Company also holds several other equity accounted investments in the resource sector.
FOR FURTHER INFORMATION PLEASE CONTACT:
Ned Goodman Dundee Corporation President and Chief Executive Officer (416) 365-5665
Lucie Presot Dundee Corporation Vice President and Chief Financial Officer (416) 365-5157