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.
FINANCIAL HIGHLIGHTS
- 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.
RECENT DEVELOPMENTS
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.
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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