Dundee Corporation Reports Second Quarter 2011 Financial Results
August 10 2011 - 4:57PM
Marketwired
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 six months ended June 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.
HIGHLIGHTS
-- Net Earnings from continuing operations in the second quarter of 2011
were $24.3 million or $0.27 per share on a fully diluted basis. This
compares to net earnings from continuing operations of $36.0 million or
$0.44 per share on a fully diluted basis earned in the second quarter of
the prior year.
-- Gain on Sale of DundeeWealth - The Company's year to date earnings of
$903.2 million or $12.66 per share on a fully diluted basis, include 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 $1.8 billion at June 30,
2011, and includes the shares of Scotiabank received by the Company on
its divestment of DundeeWealth. During the second quarter, the Company
invested $97.5 million in its portfolio of available-for-sale
securities, predominantly in the resource sector.
-- Equity Accounted Investments - Earnings from equity accounted
investments were $13.9 million in the second quarter of this year
compared with $12.3 million in the same period of the prior year. At
June 30, 2011, the market value of these equity accounted investments
was $578.7 million.
-- Fee Earning Assets under Management and Administration increased to
$12.0 billion at June 30, 2011, compared with $11.1 billion at December
31, 2010.
-- Corporate Debt at June 30, 2011 was $401.3 million and included $160.0
million drawn against the Company's corporate revolving term credit
facility.
-- Normal Course Issuer Bid - During the second quarter of 2011, the
Company completed the purchase and cancellation of Subordinate Voting
Shares pursuant to its normal course issuer bid arrangements. Since
January 1, 2011, the Company has acquired 5.8 million shares pursuant to
these arrangements at an aggregate cost of $141.6 million.
RESULTS OF OPERATIONS
The Company's real estate segment generated net earnings before
income taxes of $12.9 million during the second quarter of 2011
compared with $14.1 million earned in the second 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 offset
by the Company's share of improved earnings from Dundee REIT, which
increased to $6.1 million in the current quarter compared with $2.6
million earned in the second quarter of the prior year.
Earnings from the Company's resource segment include a full
quarter of operations from oil and gas assets acquired in southern
Ontario in June 2010. As these assets were acquired late in the
second quarter of the prior year, there are no comparative
operating amounts. In the three months ended June 30, 2011, the
resource segment incurred operating losses of $0.3 million compared
with operating losses of $4.1 million in the same period of the
prior year. Improved operating earnings were offset by a decrease
in equity earnings from resource-based investments, which were $7.7
million in the current quarter, compared with $9.7 million earned
in the same period of 2010.
The Company's asset management business continues to expand.
Management fees earned on asset management activities were $6.0
million in the second quarter of 2011 compared with $5.5 million
earned in the same period of 2010. NGIC earned management fees of
$1.4 million in the second quarter of the current year (three
months ended June 30, 2010 - $0.9 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 $3.7 million in the second quarter,
consistent with revenues earned in the same period of 2010.
Dundee Capital Markets generated earnings before taxes of $4.3
million in the second quarter of 2011 compared with $5.4 million
earned in the second quarter of the prior year. Following the
market volatility of recent years, 2010 and the first half of 2011
have shown signs of renewed growth and investment activities. This
is evidenced in the growth of new issues and mergers and
acquisitions activity throughout diversified industry sectors
across Canada. While Dundee Capital Markets has benefitted from
this increased activity, emphasis has been placed on strengthening
and broadening competencies within its areas of focus, in
anticipation of a more specialized entrepreneurial firm, with
carefully selected core strengths. These initiatives are reflected
in increased selling, general and administrative costs during the
current quarter compared with the same period of the prior
year.
RECENT DEVELOPMENTS
All-Cash Offer for Breakwater Resources
Dundee Corporation has entered into a lock-up agreement pursuant
to which it has agreed to tender all of its common shares in
Breakwater Resources Ltd. in favour of an all-cash offer made by
Nyrstar NV for all of the issued and outstanding shares of
Breakwater. The Company expects to receive approximately $155
million in cash as a result of the transaction, including $145
million from the sale of its interest and a $10 million special
dividend. Once the transaction has been completed, the Company
expects to record a pre-tax gain in respect of its divestment in
Breakwater of approximately $100 million. The transaction is
expected to close in the third quarter of 2011.
Initial Public Offering - Dundee International Real Estate
Investment Trust
On August 3, 2011, Dundee International REIT completed its
initial public offering of 27 million trust units at $10.00 per
unit and $140 million 5.5% convertible unsecured subordinate
debentures due July 31, 2018. 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, and DREAM has been retained to act as its asset manager.
Dundee International REIT will initially invest in a portfolio of
properties consisting of 292 office, logistics and other commercial
properties, with a residential component, comprising approximately
12.3 million square feet of commercial gross leasable area located
in Germany. Approximately 75% of the gross leasable area on these
properties is currently leased to Deutsche Post. On completion of
the acquisition of these properties, Dundee International REIT will
be the single largest landlord of Deutsche Post, providing central
and strategically placed locations that are difficult to replace.
On a combined basis, Dundee Corporation and Dundee Realty currently
own 12.8 million units of Dundee International REIT, representing a
32.2% ownership interest.
ABOUT THE COMPANY
Dundee Corporation is an independent publicly traded Canadian
asset management company. Asset management activities are focused
in the areas of the Company's core competencies including real
estate and infrastructure, resources, and energy. Asset management
activities are carried out by Ned Goodman Investment Counsel
Limited ("NGIC"), a registered portfolio manager and exempt market
dealer across Canada and an investment fund manager in the province
of Ontario, and by Dundee Real Estate Asset Management ("DREAM"),
the asset management division of Dundee Realty Corporation ("Dundee
Realty"), a 70% owned subsidiary of the Company. Asset management
activities are supported by the Company's 48% interest in Dundee
Capital Markets Inc. ("Dundee Capital Markets"). Dundee Capital
Markets is also the manager of the 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, an
owner and developer of residential and recreational properties in
North America. Resource investments are managed through Dundee
Resources Limited ("Dundee Resources"), a wholly owned subsidiary
of the Company, and 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. Dundee Resources also
manages several other equity accounted investments.
Contacts: Dundee Corporation Ned Goodman President and Chief
Executive Officer (416) 365-5665 Dundee Corporation Lucie Presot
Vice President and Chief Financial Officer (416) 365-5157
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