Dundee Wealth-Third Quarter 2004 Results.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- DUNDEE WEALTH MANAGEMENT Dundee Wealth management is a Toronto, Canada based financial services firm. The parent company of Dundee Wealth Management is Dundee Corporation. Dundee Wealth Management operates a number of different wholly-owned subsidiaries, shown in the sections below. INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. . (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :DW) reports its financial results for the three and nine months ended September September: see month. 30, 2004. Net earnings for the first nine months of 2004 were $31.0 million or $0.31 per share attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common and special shares outstanding, compared with $9.5 million or $0.12 per share in the first nine months of 2003. On a quarterly basis, net earnings decreased from $2.7 million in the third quarter of 2003 to $2.3 million in the third quarter of this year.
(in millions of dollars)
---------------------------------------------------------------------
Investment Corporate and
Management Brokerage Intersegment Total
------------------------------------------------------------
As at
September
30, 2004 2003 2004 2003 2004 2003 2004 2003
---------------------------------------------------------------------
AUM (i) $12,463 $9,647 $ 640 $ 394 $ - $ - $13,103 $10,041
AUA (ii) - - 25,990 9,024 - - 25,990 9,024
---------------------------------------------------------------------
For the nine months ended September 30,
---------------------------------------------------------------------
Revenue
(iii) $ 199 $ 125 $ 282 $ 117 $ (28) $(12) $ 453 $ 230
EBITDA (iv) 113 59 4 4 (15) (7) 102 56
Pre-tax
earnings
(loss) 81 23 (3) 1 (12) (6) 66 18
Non controlling
interest - - - - - - 8 2
Net earnings - - - - - - 31 10
---------------------------------------------------------------------
For the three months ended September 30,
---------------------------------------------------------------------
Revenue $ 55 $ 43 $ 84 $ 44 $ (9) $ (5) $ 130 $ 82
EBITDA 30 19 (4) 2 (6) (2) 20 19
Pre-tax
earnings
(loss) 19 8 (7) 1 (5) (2) 7 7
Non controlling
interest - - - - - - - 1
Net earnings - - - - - - 2 3
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(i) "AUM Aum (ä·ōōmˑ), n.pr 1. in Ayurveda, the subtle, noiseless cosmic vibration in which consciousness existed in the beginning, before the elements appeared. " or "Assets under Management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. " represent the market value of client assets managed by the Company on a discretionary basis in respect of which the Company earns an investment management fee. AUM are not reflected on the Company's balance sheet. (ii) "AUA AUA American Urological Association, see there " or "Assets under Administration" represent the market value of client assets administered in respect of which the Company earns commissions, trailer fees Trailer Fee A fee that a mutual fund manager pays to a salesperson who sells the fund to investors. Notes: The trailer fee pays the salesperson for providing the investor with ongoing investment advice and services. and administrative and other similar fees. AUA are not reflected on the Company's balance sheet. To the extent that AUA are managed by the Company, such assets may also be included in their respective AUM. (iii) Revenue includes a gain of $26.8 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of an investment management contract which was recorded in the second quarter of 2004. (iv) "EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become " represents earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of operations of Dundee Dundee, city (1991 pop. 172,294) and council area, E central Scotland, on the Firth of Tay. It is a port and manufacturing city. Dundee is historically known for its manufacture and processing of jute. Its marmalade is also famous. Wealth and is a non-GAAP measure. The Company uses this measure as a supplement for net earnings and cash flows. The operating results for the three and nine months ended September 30, 2004 include the operations of the former Cartier Partners Financial Group Inc. ("Cartier") which were acquired on December December: see month. 30, 2003, and are in the process of being integrated with those of the Company. At the time of the acquisition, we estimated that the integration of Cartier's Cartier’s jewelry firm founded by Alfred and Louis Cartier in Paris (1898). [Fr. Hist.: EB, 10: 177] See : Luxury brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. operations into our own would take 18 to 24 months. The integration process is progressing in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with our expectations, albeit at a slower pace than originally anticipated. We have successfully merged similar Dundee and Cartier regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , as well as the operations of Cartier Mutual Funds into Goodman Goodman was a polite term of address, used where Mister (Mr.) would be used today. Compare Goodwife. Goodman refers to:
n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . We still have several operational projects of significance to complete before the integration will be concluded, including additional systems conversions, however, we expect to be able to meet our anticipated 18 to 24 month period to complete the project. We expected to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. higher than normal operating costs operating costs npl → gastos mpl operacionales above and beyond the Cartier inherited inherited received by inheritance. inherited achondroplastic dwarfism see achondroplastic dwarfism. inherited combined immunodeficiency see combined immune deficiency syndrome (disease). costs during the 18 to 24 month integration period in order to complete the acquisition process. These costs include systems upgrades and conversion costs, additional personnel to bring Cartier documentation and compliance procedures to industry standards, costs associated with change of names of branch offices, relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. and employee downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing costs and contract terminations Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). . Although some of these costs are capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. , in the nine-month period ended September 30, 2004, we have selling, general and administrative ("SG&A") costs of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $34 million relating to the former Cartier operations and we estimate that we incurred additional costs of approximately $8 million solely related to the integration. As we have discussed in previous reports, the Cartier organization was incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. approximately $50 million of annual operating costs. We believe that following the successful completion of the integration period, we will realize operating synergies which will have the effect of reducing the costs we inherited from Cartier by about 50%. EBITDA in the first three quarters of 2004 of $101.7 million includes a gain of $26.8 million from the prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of an investment management contract with Dundee Precious Metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. Inc. ("Dundee Precious") which was recorded in the second quarter of this year and included in our financial statements as "investment income". This compares with EBITDA of $56.3 million in the first three quarters of 2003. EBITDA in the third quarter of 2004 was $19.5 million compared with $19.2 million in the same quarter of 2003.
REVENUES
Segmented Revenues
(in millions of dollars)
---------------------------------------------------------------------
Investment Corporate and
Management Brokerage Intersegment Total
--------------------------------------------------------
For the nine
months ended
September
30, 2004 2003 2004 2003 2004 2003 2004 2003
---------------------------------------------------------------------
Management
fees $157.0 $113.3 $ 5.4 $2.1 $ - $ - $162.4 $115.4
Performance
fees 5.7 3.4 - - - - 5.7 3.4
Redemption
fees 7.8 8.0 - - - - 7.8 8.0
Financial
services 0.9 - 276.1 114.5 (27.6) (11.2) 249.4 103.3
Other
income 27.3 0.4 0.3 - 0.6 - 28.2 0.4
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$198.7 $125.1 $281.8 $116.6 $(27.0) $(11.2) $453.5 $230.5
---------------------------------------------------------------------
For the three
months ended
September
30, 2004 2003 2004 2003 2004 2003 2004 2003
---------------------------------------------------------------------
Management
fees $52.7 $40.7 $1.5 $0.8 $ - $ - $54.2 $41.5
Performance
fees - - - - - - - -
Redemption
fees 2.4 2.4 - - - - 2.4 2.4
Financial
services 0.2 - 82.4 42.3 (8.6) (4.1) 74.0 38.2
Other income - 0.2 (0.1) - - - (0.1) 0.2
---------------------------------------------------------------------
$55.3 $43.3 $83.8 $43.1 $(8.6) $(4.1) $130.5 $82.3
---------------------------------------------------------------------
Growth in AUM AUM at the end of September 30, 2004 totalled $13.1 billion. Growth in AUM was fueled both by net additions, which in the nine months ended September 30, 2004 was $787 million, and by market appreciation of $473 million. AUM of $13.1 billion reflects a $331 million deletion deletion /de·le·tion/ (de-le´shun) in genetics, loss of genetic material from a chromosome. de·le·tion n. Loss, as from mutation, of one or more nucleotides from a chromosome. resulting from the voluntary termination and sale of certain investment management contracts in the second and third quarters of this year.
(in millions of dollars)
---------------------------------------------------------------------
2004 Year-to
------------------------------------ -Date
and as at
Third Second First Year-to Sept. 30,
AUM Quarter Quarter Quarter -Date 2003
---------------------------------------------------------------------
Investment management
division
AUM, beginning
of period $11,904 $12,227 $11,534 $11,534 $8,632
Net sales 177 316 294 787 272
Market appreciation
(depreciation) 394 (320) 399 473 743
Termination or sale
of investment
management contracts (12) (319) - (331) -
-------------------------------------------------------------------
12,463 11,904 12,227 12,463 9,647
AUM managed by
the brokerage
division, end
of period 640 577 560 640 394
---------------------------------------------------------------------
AUM, end of
period $13,103 $12,481 $12,787 $13,103 $10,041
---------------------------------------------------------------------
Management Fees from AUM Continuing management fee revenues in the first nine months of 2004 were $162.4 million, an increase of $47.0 million or 41% over $115.4 million earned in the same period of 2003. This increase is primarily attributed to higher AUM levels which, on an average basis, increased to $11.9 billion in the first nine months of 2004 compared with $8.7 billion in the same period of 2003. Redemption Fees Redemption fee A fee some mutual funds charge when an investor sells shares within a specified short period of time. Redemption fees earned in the first nine months of 2004 were $7.8 million, lower by $0.2 million from the same period of 2003. In the first nine months of 2004, clients redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. assets worth $2.0 billion compared to $1.4 billion in the same period of 2003. Approximately $193 million of current year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. redemptions resulted from expected annual rollovers of CMP CMP (cytidine monophosphate): see cytosine. (1) (CMP Media LLC, Manhasset, NY, www.cmp.com) Part of United Business Media, CMP is a leading integrated media company that offers a wide variety of publications and services in the information and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of Dominion dominion, power to rule, or that which is subject to rule. Before 1949 the term was used officially to describe the self-governing countries of the Commonwealth of Nations—e.g., Canada, Australia, or India. resource limited partnerships. Financial Service Revenues AUA administered by about 2,200 financial advisors was $26.0 billion at September 30, 2004 compared with $27.5 billion at the end of June June: see month. 2004 and $26.4 billion at the end of 2003.In addition, we today have over 600 insurance-only advisors who do not carry AUA. The rationalization rationalization, in psychology: see defense mechanism. of certain financial advisors that have not been integrated into our core operations is a major reason for the decline.As a result, we now report $2 billion less AUA and almost 960 fewer financial advisors, including 300 originally incorrectly in·cor·rect adj. 1. Not correct; erroneous or wrong: an incorrect answer. 2. Defective; faulty: incorrect programming of the computer. 3. counted by Cartier. All four streams of financial service revenues generated increases in the first nine months of 2004 compared to 2003. In aggregate, financial service revenues, before intersegment eliminations, have increased by $162.5 million to $277.0 million. The most significant increase is in retail commission and trailer In communications, a code or set of codes that make up the last part of a transmitted message. See trailer label. revenue, which includes $134.2 million generated by the recently acquired financial advisors.
(in millions of dollars)
---------------------------------------------------------------------
For the three and nine months Three Months Nine Months
ended September 30, 2004 2003 2004 2003
---------------------------------------------------------------------
Commission and trailer revenue $ 67.9 $ 26.5 $ 226.3 $ 77.3
Corporate finance and
related revenue 8.4 6.2 23.1 15.7
Principal trading revenue 1.6 6.1 11.9 11.3
Margin interest and other
revenue 4.7 3.5 15.7 10.2
---------------------------------------------------------------------
82.6 42.3 277.0 114.5
Intersegment eliminations (8.6) (4.1) (27.6) (11.2)
---------------------------------------------------------------------
$ 74.0 $ 38.2 $ 249.4 $ 103.3
---------------------------------------------------------------------
EXPENSES
Segmented Expenses
(in millions of dollars)
---------------------------------------------------------------------
Investment Corporate and
Management Brokerage Intersegment Total
--------------------------------------------------------
For the nine
months ended
September 30, 2004 2003 2004 2003 2004 2003 2004 2003
---------------------------------------------------------------------
Selling,
general
and
adminis-
trative $40.6 $34.2 $91.1 $49.8 $10.7 $4.6 $142.4 $88.6
Variable
compensation - - 186.6 63.1 (11.8) (4.8) 174.8 58.3
Distribution
fees 3.5 3.7 - - - - 3.5 3.7
Trailer fees 41.8 27.7 - - (10.8) (4.1) 31.0 23.6
Amortization
of:
Deferred
sales
commissions 28.3 32.5 - - (1.9) (0.8) 26.4 31.7
Capital and
other
assets 1.6 2.2 3.2 1.5 2.5 0.1 7.3 3.8
Interest
expense 1.5 2.1 3.9 0.8 (3.9) - 1.5 2.9
---------------------------------------------------------------------
$117.3 $102.4 $284.8 $115.2 $(15.2) $(5.0) $386.9 $212.6
---------------------------------------------------------------------
For the three
months ended
September 30, 2004 2003 2004 2003 2004 2003 2004 2003
---------------------------------------------------------------------
Selling,
general
and
adminis-
trative $10.1 $12.7 $32.0 $17.7 $4.3 $1.4 $46.4 $31.8
Variable
compensation - - 56.3 23.3 (3.3) (1.8) 53.0 21.5
Distribution
fees 1.1 1.2 - - - - 1.1 1.2
Trailer fees 14.3 10.1 - - (3.8) (1.5) 10.5 8.6
Amortization
of:
Deferred sales
commissions 9.4 10.8 - - (0.6) (0.3) 8.8 10.5
Capital and
other assets 0.5 0.7 1.6 0.5 0.8 - 2.9 1.2
Interest
expense 0.2 0.6 1.2 0.3 (1.1) - 0.3 0.9
---------------------------------------------------------------------
$35.6 $36.1 $91.1 $41.8 $(3.7) $(2.2) $123.0 $75.7
---------------------------------------------------------------------
Selling, General and Administrative SG&A expenses in the investment management segment increased by $6.4 million in the first nine months of 2004 compared with the same period of 2003. Of this amount, approximately $3.0 million relates to the acquired investment management operations of Cartier. SG&A expenses in the brokerage division have increased by $41.3 million and include approximately $31 million of costs inherited from Cartier operations. In addition, we estimate that we incurred additional costs of approximately $8 million that relate specifically to the integration process. We are expecting costs to remain at these higher levels in the upcoming quarters of 2004 and 2005 as we complete the integration of the operations of Cartier into Dundee. Variable Compensation Variable compensation costs totalled $174.8 million in the nine months ended September 30, 2004, higher by $116.5 million than the same period in 2003. This increase results from an increase in total financial service revenues. Amortization of Deferred Sales Commissions Commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with increased additions of AUM, the Company paid sales commissions of $43.1 million in the first nine months of 2004 (2003 - $26.0 million). These commissions are deferred and amortized to expense over a five-year period. Year-to-date amortization of deferred sales commissions was $26.4 million compared with $31.7 million in the same period of 2003. Amortization expense declined by $5.3 million as deferred commissions included in a business acquisition completed in 2002 were fully amortized by early 2004. The Company's net book value of deferred sales commissions was $102.1 million at September 30, 2004. The contingent Fortuitous; dependent upon the possible occurrence of a future event, the existence of which is not assured. The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the redemption fees receivable by the Company if all assets sold on a deferred sales charge deferred sales charge A fee levied by some open-end investment companies on shareholder redemptions and by many insurance companies on annuities. The charge of up to 5% of the value of the shares being redeemed frequently varies inversely with the period of basis were redeemed on September 30, 2004 are $190.8 million, well in excess of net book value. SIGNIFICANT SOURCES AND USES OF CASH AND SHORT TERM INVESTMENTS At September 30, 2004, cash and short term investments aggregated $150.4 million compared with $171.9 million at June 30, 2004 and $116.9 million at the end of 2003. Cash flows from operations increased to $101.4 million in the first nine months of 2004 compared with $19.7 million in the same period of 2003 and include cash proceeds of $27 million in respect of the Dundee Precious transaction. In the third quarter, operating activities generated a cash outflow of $5.8 million compared with a cash inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. of $4.5 million in the third quarter of 2003. Operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. in the third quarter of 2004 include an outflow of $33.1 million from client cash activities in the brokerage division. These variances may be significant on a day-to-day day-to-day adj. 1. Occurring on a routine or daily basis: the day-to-day movements of the stock market. 2. basis, although they do not necessarily reflect any change to our financial position. Other significant cash flow changes during the third quarter are detailed below: - The Company paid $12.2 million (2003 - $9.5 million) in sales commissions in respect of back-end (programming) back-end - Any software performing either the final stage in a process, or a task not apparent to the user. A common usage is in a compiler. A compiler's back-end generates machine language and performs optimisations specific to the machine's architecture. mutual fund sales. These sales commissions have all been financed internally, permitting us to retain the management fees associated with these new assets and to receive the tax deduction Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. associated with the commission expenditure. - In May 2004, we obtained approval from the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. to purchase our common shares for cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. under a normal course issuer bid. In the third quarter, we purchased and cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. 437,900 common shares at a cost of $3.8 million. FORWARD LOOKING STATEMENTS This release contains forward looking statements about the Company, including its business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , strategy and expected financial performance and conditions. Forward looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates" or similar expressions. Such statements are based on the current expectations of management, and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industry, generally. These forward looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by forward looking statements made by the Company. The reader is cautioned to consider these and other factors carefully and not place undue reliance on forward looking statements. The Company has no specific intention to update any forward looking statements whether as a result of new information, future events or otherwise. A review of the activities and performance of the Company, together with interim consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and a Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial , will be published in the Company's Third Quarter 2004 Report to Shareholders which should be mailed to shareholders on or before November November: see month. 12, 2004.
DUNDEE WEALTH MANAGEMENT INC.
CONSOLIDATED BALANCE SHEETS
(expressed in thousands of dollars)
(unaudited)
---------------------------------------------------------------------
---------------------------------------------------------------------
September 30, 2004 December 31, 2003
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ASSETS
Cash and short term investments $ 150,367 $ 116,917
Securities owned 27,297 24,978
Accounts receivable 64,301 91,939
Client accounts receivable 330,508 354,347
Corporate investments 21,487 15,790
Deferred sales commissions 102,069 85,309
Capital and other assets 28,201 29,062
Goodwill and other intangible assets 442,694 453,937
---------------------------------------------------------------------
TOTAL ASSETS $ 1,166,924 $ 1,172,279
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LIABILITIES
Bank indebtedness $ 12,600 $ 21,181
Accounts payable and accrued liabilities 86,406 108,724
Securities sold short 7,870 3,966
Client deposits and related liabilities 325,965 336,126
Income taxes payable 6,131 13,800
Amounts due to parent - 32,359
Corporate debt 17,709 38,248
Future income tax liabilities 53,299 32,097
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509,980 586,501
---------------------------------------------------------------------
NON CONTROLLING INTEREST 100,871 76,112
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SHAREHOLDERS' EQUITY
Share capital
Common and special shares 347,900 323,231
Preference shares 54,537 54,537
Contributed surplus 25,410 26,169
Deferred acquisition obligations 481 2,446
Retained earnings 127,745 103,283
---------------------------------------------------------------------
556,073 509,666
---------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,166,924 $ 1,172,279
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DUNDEE WEALTH MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30,
(expressed in thousands of dollars, except per share amounts)
(unaudited)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Nine Months
2004 2003 2004 2003
---------------------------------------------------------------------
REVENUE
Management fees $ 54,123 $ 41,498 $ 168,036 $ 118,811
Redemption fees 2,360 2,391 7,797 8,038
Financial services 74,016 38,191 249,406 103,283
---------------------------------------------------------------------
130,499 82,080 425,239 230,132
Investment income (loss) (22) 202 28,225 349
---------------------------------------------------------------------
130,477 82,282 453,464 230,481
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EXPENSES
Selling, general and
administrative 46,426 31,756 142,434 88,602
Variable compensation 52,979 21,519 174,826 58,303
Distribution fees 1,085 1,251 3,515 3,721
Trailer fees 10,497 8,551 30,997 23,580
---------------------------------------------------------------------
110,987 63,077 351,772 174,206
---------------------------------------------------------------------
EARNINGS BEFORE INTEREST, TAXES
AND OTHER NON CASH ITEMS 19,490 19,205 101,692 56,275
Amortization of deferred
sales commissions 8,805 10,488 26,384 31,685
Depreciation and
amortization 2,894 1,223 7,300 3,838
Interest expense 354 871 1,522 2,906
---------------------------------------------------------------------
EARNINGS FROM OPERATIONS 7,437 6,623 66,486 17,846
Income tax provision
Current (985) 2,643 6,377 4,759
Future 5,555 559 20,854 1,522
---------------------------------------------------------------------
4,570 3,202 27,231 6,281
Non controlling interest 527 691 8,241 2,061
---------------------------------------------------------------------
NET EARNINGS FOR THE PERIOD $ 2,340 $ 2,730 $ 31,014 $ 9,504
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
RETAINED EARNINGS AT
BEGINNING OF PERIOD $ 127,586 $ 89,660 $ 103,283 $ 86,215
Net earnings 2,340 2,730 31,014 9,504
Dividends
Common and special shares (1,363) (853) (4,098) (2,546)
Preference shares (818) (818) (2,454) (2,454)
---------------------------------------------------------------------
RETAINED EARNINGS AT END
OF PERIOD $ 127,745 $ 90,719 $ 127,745 $ 90,719
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
NET EARNINGS PER SHARE
Basic $ 0.02 $ 0.03 $ 0.31 $ 0.12
Diluted $ 0.02 $ 0.03 $ 0.31 $ 0.12
---------------------------------------------------------------------
DUNDEE WEALTH MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three and nine months ended September 30,
(expressed in thousands of dollars) (unaudited)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Nine Months
2004 2003 2004 2003
---------------------------------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings for the period $ 2,340 $ 2,730 $ 31,014 $ 9,504
Non cash items in net
earnings:
Depreciation and
amortization 11,699 11,711 33,684 35,523
Future income taxes 5,555 559 20,854 1,522
Non controlling interest 527 691 8,241 2,061
Other 1,993 364 4,130 692
---------------------------------------------------------------------
22,114 16,055 97,923 49,302
Changes in:
Accounts receivable (6,014) (7,453) 28,461 (7,341)
Securities owned, net of
securities sold short (293) (2,634) 1,585 (2,642)
Client accounts
receivable, net of client
deposits and related
liabilities (33,125) (18,871) 13,678 (26,089)
Income taxes payable (768) 3,607 (7,668) 1,729
Bank indebtedness 7,922 1,816 (8,581) (3,057)
Accounts payable and
accrued liabilities 4,337 12,022 (23,968) 7,776
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CASH PROVIDED FROM (USED
IN) OPERATING ACTIVITIES (5,827) 4,542 101,430 19,678
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CASH FLOWS FROM INVESTING
ACTIVITIES:
Sales commissions
incurred on distribution
of mutual funds (12,249) (9,512) (43,144) (26,019)
Acquisition of corporate
investments (3,426) (744) (8,015) (887)
Proceeds on dispositions
of corporate investments 25 (311) 2,405 371
Acquisition of non
controlling interest - - (1,000) (2,000)
Additions to capital and
other assets (1,548) (748) (4,197) (2,467)
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CASH USED IN INVESTING
ACTIVITIES (17,198) (11,315) (53,951) (31,002)
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CASH FLOWS FROM FINANCING
ACTIVITIES:
(Decrease) increase in
amounts due to parent 331 191 (29,600) 16,482
(Decrease) increase in
corporate debt 5,316 (3,923) (19,539) (25,857)
Issuance of common shares,
net of issue costs 1,781 633 24,517 1,875
Dividends paid on common
and special shares (1,363) (853) (4,098) (2,546)
Dividends paid on
preference shares (818) (818) (2,454) (2,454)
Issuance of common shares
of subsidiary - - 25,000 672
Acquisition of common
shares for cancellation (3,750) - (7,855) -
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CASH (USED IN) PROVIDED
FROM FINANCING ACTIVITIES 1,497 (4,770) (14,029) (11,828)
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NET INCREASE (DECREASE)
IN CASH DURING THE PERIOD (21,528) (11,543) 33,450 (23,152)
Cash and short term
investments, beginning of
period 171,895 91,462 116,917 103,071
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CASH AND SHORT TERM
INVESTMENTS, END OF
PERIOD $ 150,367 $ 79,919 $ 150,367 $ 79,919
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Cash flows from operating
activities include the
following:
Interest paid $ 354 $ 871 $ 1,522 $ 2,906
Taxes paid (refunded) $ 613 $ (447) $ 16,233 $ 4,150
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Dundee Wealth Management Inc. (TSX:DW) |
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