Jovian Capital

Jovian Capital Corporationannual report2007

2

Letter to Shareholders 3

Corporate Profiles Jovian Capital 4 Wealth Management 7 Asset Management 8

Management’s Discussion & Analysis 11

Financial Statements 26

Board of Directors 47

Shareholder Information 47

Table of Contents

3

Jovian 2007 | | Annual R

eport

Letter to Shareholders

Jovian revenue and EBITDA continue to be sensitive to the earnings of MGI Securities Inc. The significant contribution made by our broker warrant position last year was not as evident this year, thus both EBITDA and revenue were down compared to last year. However, the company continues to make progress in line with our strategy established in 2003.

Since we merged with Rice Capital Management in 2003 we have seen tremendous growth, surpassing our original forecast. Revenue has increased from an approximate $21.0 million to $128.0 million and our EBITDA has increased from a negative position to $12.9 million. Total client assets are now in excess of $14.0 billion compared with $3.7 billion in 2003 and more significantly our asset management business now accounts for some $5.0 billion of the $14.0 billion total.

We have created and grown our asset management platform, making it a significant contributor to our total revenue and EBITDA. The asset management platform generates a more predictable flow of earnings than that of the wealth management platform. It has always been part of our strategy to grow this platform in order to minimize the volatile nature of earnings associated with the wealth management companies, and in particular MGI Securities Inc.

The year has been a significant one in moving our growth strategy forward:

• Our asset management companies T.E. Investment Counsel Inc., JovInvestment Management Inc. and Leon Frazer & Associates Inc. saw good growth. Today they manage approximately $5.0 billion in assets collectively.

• Subsequent to our year end, we reached an agreement with the professionals at MGI Securities Inc. to have them become shareholders in MGI with the sale of up to 30 per cent of MGI to staff. We welcome them as a significant stakeholder in the company and believe it important to the growth of an entrepreneurial company like MGI that employees have an equity stake.

• Our Principal Protected Note business has continued to grow over the year. We have issued more than $500 million of Notes to date.

• We acquired Fairway Asset Management Corporation, now called JovFunds Management Inc., a company that creates, manages and markets financial products. All our investment product brands are now being consolidated under the JovFunds Management umbrella.

• We have hired two new CEOs, Doug Kee at Leon Frazer and Lewis Reford at MGI. Both bring considerable experience to help these companies continue to grow. In addition, the management team at Jovian has also been strengthened.

• We continue to see positive margin expansion from our asset management platform.

• Our strategic investment in BetaPro Management Inc. is turning out to be a very significant investment. Its Bull and Bear Funds continue to grow and its ETFs business has seen significant growth. BetaPro has eight ETFs in the market and is one of the fastest growing providers of such products in North America.

• George Frazer, Chairman of Leon Frazer and lead manager of the IA Canadian Conservative Equity Fund, was awarded the Career Achievement Award by Canadian Investment Awards, in recognition of his service in the financial services industry. Mr. Frazer is added to the list of previous winners of this prestigious award including: Ned Goodman, Alexander Christ, Dominic D’Alessandro, James O’Donnell, Peter Cundill, David Bisset, Robert Krembil, Warren Golding, and Sir John Templeton.

We continue to believe we are building a unique and attractive business model. As with any fast growing organization, we will show volatility in our financial results. However, as every quarter goes by I become more comfortable that we will be able to execute our strategy and meet our goals.

Philip Armstrong President & CEO, Jovian Capital Corporation

Jovian Corporate Profile

Jovian Capital is a publicly traded financial services holding and management company that creates, distributes, and manufactures financial solutions through a community of growing, innovative operating companies that share a common operating platform. These companies provide an extensive range of financial solutions for Canadian investors from all walks of life. Responsible for over $14.0 billion in client assets, Jovian companies provide wealth accumulation, asset protection, and service solutions under a number of consumer brands. Jovian provides overall structure, strategic direction and management oversight as well as economies of scale to each of its affiliated companies.

4

Jovi

an 2

007

|

|

Ann

ual R

epor

t

Vision, Values, Mission

5

Vision} To be a growing, profitable, dividend-paying financial services holding and management company that delivers quality financial

solutions to our clients.

Values} Dedicated to our clients’ success.

} Integrity, to be fair and honest in all our interactions and foster trust and personal responsibility in all relationships.

} Innovation, learning, and risk-taking in a participatory workplace that enables people to get involved in making decisions that advance our common business objectives.

} Enhancing shareholder value, our business must be profitable and needs to generate superior returns on the assets entrusted to Jovian by our stakeholders.

Mission} To be a publicly traded financial services holding and management company.

} To generate shareholder value by developing a business model where we create income diversity and balance by investing in companies involved in wealth and asset management sectors.

} To create and distribute financial solutions through a community of growing, innovative, and profitable affiliated companies.

} To provide overall structure, and superior strategic direction, management oversight, and economies of scale to each of our affiliated companies.

} To leverage the individual brands of our invested companies by maximizing operating efficiencies and providing common service and support to each – rather than through consolidation or integration.

Jovian 2007 | | Annual R

eport

WEALTH MANAGEMENT ASSET MANAGEMENT

Product Management

Product Distribution

Investment Management

COMMON SERVICES PLATFORM

Jovian Corporation Organizational Chart

Management Inc.6

Jovi

an 2

007

|

|

Ann

ual R

epor

t

Jovian Companies

7

BUSINESS PROFILERFG is committed to helping Canadian investors achieve financial security and peace of mind at every stage of their lives by providing financial solutions responding to clients’ individual needs. Designed to serve investors seeking alternatives to big banking and insurance institutions, RFG has maintained a unique market position for the past 39 years.

A network of branch and associate offices stretches from the BC coast to the Ontario/Quebec border, administering assets in excess of $3.9 billion.

Jovian owns 100% of RFG.

STRATEGY FOR GROWTHWith a view to broaden its distribution network, the company intends to focus its branch expansion efforts in Ontario, BC, and Alberta. As part of an overall strategy to more aggressively market services and solutions to new and existing clients, the company will also continue to affect a shift in corporate image from product retailer to solution provider.

Mal Anderson, President & CEO

BUSINESS PROFILEMGI is an established, full-service Canadian investment dealer offering both professional wealth management solutions for individual investors, plus a comprehensive range of specialized services for institutional investors. Currently, MGI administers assets in excess of $1.8 billion. An IDA member, the company provides services under two primary platforms:

Wealth Management – working with individual, private clients to develop a plan that aims to accumulate, preserve and transfer wealth using tools such as: stocks, bonds, funds and income trusts, and alternative investments.

Capital Markets – raising capital for clients through securities underwriting, private placements, and other financing techniques using superior skills in: institutional equity sales and trading, investment banking, and research.

Jovian owns 100% of MGI, as at March 31, 2007.

STRATEGY FOR GROWTHBuilding on several years of developing its platforms, MGI will further strengthen the capital markets, trading, research and sales teams. On the wealth management side, the company will diversify geographically by adding to its offices in both western and eastern Canada.

Lewis Reford, President & CEO

Jovian Annual R

eport | | Wealth M

anagement

BUSINESS PROFILEFounded in 1939, Leon Frazer is one of Canada’s oldest investment counselors. Providing investment advice mainly to high net worth individuals, Leon Frazer has offered to its clients such products as the IA Conservative Canadian Equity Fund for the past 50 years. The company has earned a reputation as one of Canada’s pre-eminent equity managers—gained through a rich mix of specialists and generalists with an average of 20 years of experience.

The company has offices in Toronto and Vancouver and manages over $1.8 billion of client assets.

Jovian owns 84% of Leon Frazer and was acquired by Jovian in July 2004.

STRATEGY FOR GROWTHLeon Frazer plans to focus on growing its high net worth business. The company intends, over the next short while, to build both administrative and investment capacity in order to ensure its asset management business can be grown in an orderly fashion.

George L. Frazer, Chair Douglas Kee, CEO William Tynkaluk, President

BUSINESS PROFILET.E. Wealth, comprised of both T.E. Financial Consultants Ltd. (TEFC) and T.E. Investment Counsel Inc. (TEIC), was founded in 1972.

TEFC provides financial, investment, tax and estate planning services to high net worth individuals and institutions in Canada. Built on the principles of complete objectivity and fully comprehensive financial advice, it is Canada’s largest FEE-ONLY™ financial counseling firm.

TEIC is an investment counselor that employs “best of class managers” on behalf of its clients. To achieve solid results in today’s environment, TEIC relies on a multi-manager approach to ensure their investment standards remain uncompromised. Committed to delivering consistently superior strategies to help clients preserve and grow their assets, it manages over $2 billion of assets on behalf of its clients.

Jovian owns 100% of T.E. Wealth.

STRATEGY FOR GROWTHTo further grow both businesses, T.E. Wealth will enhance its team by aggressively recruiting successful financial advisors and business developers. The company is also increasing its marketing efforts to increase its public profile.

TEIC Tim Egan, Chair Steven Belchetz, President

TEFC Tim Egan, Chair Kostas Andrikopoulos, President & CEO

Jovian Companies

Jovi

an A

nnua

l Rep

ort |

| A

sset

Man

agem

ent

8

9

JovFunds also is responsible for the management and distribution of a family of labour sponsored products.

BUSINESS PROFILEJovFunds Management Inc. is a specialized financial services firm headquartered in Toronto. It concentrates on the creation, marketing, distribution, and management of investment products in both traditional and alternative asset classes.

JovFunds products are uniquely structured, providing yield enhancement, tax advantages, and other benefits that complement the needs of Canadian investors. JovFunds’ principals are experienced investment professionals who share a strong track record as innovators in the Canadian securities industry. It manages approximately $600 million for clients.

JovFunds oversees the management of a number of product brands such as: Accumulus Management, the manager of a family of mutual funds; Gibraltar, the creator of principal protected notes; Horizons Funds, the manager of alternative investment products; and Fairway, the manager of closed end funds and structured products. JovFunds also is responsible for the management and distribution of a family of labour sponsored products.

Jovian owns 100% of JovFunds.

STRATEGY FOR GROWTHTo be an innovative provider of investment products to individual investors in conjunction with investment advisors.

Managing Partners Steve Hawkins Raj Lala Peter Rizakos

BUSINESS PROFILE

Felcom provides a series of back office and middle office services to Jovian affiliated companies as well as provides professional administrative services – including portfolio and fund valuation, accounting, transfer agent services, client/dealer services and management administration to mutual funds, hedge funds, alternative products and their managers.

FDS also provides management administration services including regulatory reporting and document maintenance – to smaller management companies that lack their own resources and/or experience.

Currently, FDS supports more than 50 customer products with a combined asset value in excess of $3.2 billion.

Jovian owns 100% of FDS.

STRATEGY FOR GROWTHBuilding on its reputation, much of FDS’s growth has stemmed from referrals and unsolicited inquiries from potential clients.

FDS is firmly committed to continue delivering flexible and comprehensive quality services with an emphasis on achieving a high level of client satisfaction through superior customer service.

Kevin S. Beatson, CEO Ron Landry, President

Jovian Annual R

eport | | Asset M

anagement

Jovian Companies

Management Inc.

10

BUSINESS PROFILEHorizons BetaPro Funds are a specialized series of alternative ETFs and index funds that offer both Bull and Bear (long and short) exposures to a variety of indices.

The manager, BetaPro Management Inc., is an innovative Toronto-based financial services company that provides investment tools to investors, which may allow them to profit when the market is rising or falling, or reduce their risk by hedging their existing market possitions.

Maryland-based ProFund Advisors LLC (investment advisor to ProFunds) is the Portfolio Manager for the Horizon BetaPro Funds and ETFs ProFunds®. ProFunds offers one of the largest lineups of indexed mutual funds and is one of the pioneers of alternative (beta) indexed mutual fund products in the United Sates. It currently manages over $8 billion in assets.

Jovian owns 33% of BetaPro Management Inc.

STRATEGY FOR GROWTHThe company intends to aggressively expand its family of Bull and Bear ETFs and mutual funds to become a dominant force in the new emerging ETFs businesss.

Adam Felesky, PresidentPhilip Armstrong, CEO

BUSINESS PROFILETailwind is a US Special Purpose Acquisition Company (sometimes known as a SPAC, which is similar to a blind pool CCP corporation in Canada). In an issue lead by Deutsche Bank, Tailwind recently raised approximately US $100 million. Tailwind’s mandate will be to acquire a company in the North American financial services sector (principally in Canada) within 18 months. The company is a public company listed on the AMEX (TFN U).

Jovian owns indirectly approximately 13% of Tailwind.

Andrew McKay, CEO

Jovi

an A

nnua

l Rep

ort |

| A

sset

Man

agem

ent

Jovian Strategic Investments

11

The following discussion and analysis is intended to provide additional information regarding Jovian Capital’s operations, business environment, and factors affecting business and financial results for the quarter and year ended March 31, 2007 compared to the corresponding periods in the preceding fiscal year.

This MD&A should be read in conjunction with the 2007 annual report, which is comprised of the audited consolidated financial statements for the year ending March 31, 2007, and are the responsibility of the management of the company. As in prior years, the company’s Audit and Risk Committee reviewed this MD&A and attached audited consolidated financial statements. The company’s Board of Directors approved these documents on June 26, 2007, and the MD&A is current as of that date.

FORWARD-LOOKING STATEMENTS This document contains forward-looking statements with respect to expected financial performance, strategy and business conditions. These statements involve risk and uncertainties, are based on assumptions and estimates, and therefore actual results may differ materially from those expressed or implied by Jovian. Some of the factors that could affect future performance include, but are not limited to, general economic conditions, regulatory changes, and competitive environment and technological changes. Therefore, future events and results may vary significantly from what the company currently foresees. Please refer to the section entitled Risks and Uncertainties that Could Affect Future Results within this MD&A for general risk factors affecting the industry and for risk factors specific to the company. The reader is cautioned against undue reliance on these forward-looking statements.

All amounts discussed herein have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) and are expressed in Canadian dollars unless otherwise stated.

NON-GAAP FINANCIAL MEASURESFor internal purposes, the company uses certain measures not defined by GAAP. These measurements of performance are utilized by management, investors, and investment analysts to evaluate and analyze the company’s results and are discussed further in the MD&A. These non-GAAP financial measures do not have standard meanings and are not directly comparable to any GAAP measure or to similar measures used by other companies.

Management’s Discussion & Analysis (MD&A)

Unless otherwise indicated, all references to the “company,” “we,” “our,” “us,” “Jovian,” and “Jovian Capital” refer to Jovian Capital Corporation.

The following are non-GAAP measures used by the company in this MD&A:

EBITDA refers to earnings before interest, taxes, revaluation of share redemption liability, depreciation and amortization, and non-controlling interest and Adjusted EBITDA (EBITDA adjusted for additional non-cash items) are measurements the company uses to assess financial performance.

Assets under administration (AUA) represent the market value of client assets administered by Jovian, where the company earns financial planning commissions and other financial management-type fees.

Assets under management (AUM) represent the market value of client assets managed by Jovian where the company earns an investment fee.

Transactional revenue is revenue that requires a specified event or occurrence to result in generating revenue. Examples of transactional revenue include, but are not limited to: trade-generated commission, investment banking fees, and performance fees.

Recurring revenue is defined as revenue that is considered continual; whereby, under normal circumstances, the occurrence of this revenue from a given source is consistently renewable on a regular basis.

OVERVIEWJovian is a management and holding company that invests in and grows a diversified range of companies in the financial service sector. We operate within two primary market segments: wealth management and asset management.

Jovian offers professional wealth management solutions through its wholly-owned subsidiaries: MGI Securities Inc. and MGI Securities (USA) Inc. (combined: MGI), a fully integrated investment dealer; Rice Financial Group Inc. (RFG) a financial services firm specializing in life-cycle solutions; JovFunds Inc. (formerly Gibraltar Alternative Asset Consulting Group Inc.), a sales and marketing firm that delivers innovative and alternative investment products to financial service professionals across Canada; and Convoy Capital Corp., which offers hedge fund strategic and operational consulting together with international sales and marketing support to family offices, private banks, high net worth individuals, and funds of funds.

Jovian Annual R

eport | | Managem

ent’s Discussion &

Analysis

12

Asset management for traditional and alternative portfolios is provided through a number of Jovian’s investment management companies. JovInvestment Management Inc. offers portfolio advisory services to pooled funds, managed funds, and high net worth individuals. T.E. Wealth (TE) provides fee-only financial counseling as well as pooled funds and asset allocation management to high net worth individuals and institutions. Leon Frazer & Associates Inc. (LEON) offers investment management services to high net worth individuals, trusts, and foundations. Accumulus Management Ltd. (ACCUMULUS) manages the Accumulus family of mutual funds and principal protected notes. JovFunds Mangement Inc. (“JFI” – formerly Fairway Asset Management Corp.) is a Canadian-based financial services firm that creates, markets, and manages closed end and labour-sponsored investment products and is responsible for the alternative asset funds found within the Jovian family. Jovian also maintains a minority ownership interest in BetaPro Management Inc. (BetaPro), which offers a unique pair of alternative index exchange traded funds (“ETFs”) as well as the family of Horizons BetaPro Funds. The Horizons BetaPro ETFs provide Bull & Bear exposures to the S&P/TSX 60 index and endeavor to correspond to two times (200%) the daily (or inverse daily) performance of the underlying index. The family of Horizons BetaPro Funds provides investors the ability to profit or protect from the rise or fall in equity markets, interest rates, the US dollar, crude oil, or the physical gold price. The family is comprised of seven long funds

– the Bull Plus Funds – and seven short funds – the Bear Plus Funds.

In addition, Jovian provides a range of financial services to alternative products, mutual and hedge funds, and their management companies through wholly-owned subsidiary Felcom Data Services Inc. (FDS), which includes Québec administrator Felcom Data Services (Québec) Inc. These financial services include: portfolio and fund valuation, accounting, transfer agent services, client/dealer services, and management administration.

Our strategy is to generate shareholder value using a business model that seeks to diversify and balance operations within the two separate market segments in order to leverage the strengths of each investment’s brand recognition and operating efficiencies.

During the past year, Jovian was very successful in introducing new products to the Canadian marketplace, while increasing its presence in both the asset and wealth management businesses.

PRODUCT LAUNCHESThrough the combined efforts of our subsidiaries LEON, ACCUMULUS, and JFI in combination with RBC and IA Clarington, the closing of the sale of the RBC IA Leon Frazer Yield Deposit Notes Series 7 and 8 was announced after successfully reaching over $60 million in sales. In aggregate, over $200 million has been raised in Series 1 through 8 of the Note program in less than one year.

During the year, JFI with its partners CIBC and ABN AMRO Asset Management exceeded $45 million in sales of the CIBC International Yield Notes Series 1 and 2. The Note is linked to a portfolio comprised initially of three international funds managed by ABN AMRO Asset Management, including the award-winning ABN AMRO Global Emerging Markets Bond Fund.

A further partnering with CIBC resulted in $28 million of sales into the CIBC Gartman Global Allocation Deposit Notes, Series 1. This Note is sub-advised by The Gartman Letter, L.C., the publisher of The Gartman Letter.

Through related company BetaPro and its partnership with National Bank Financial and ProShare Advisors LLC, the first exchange-traded funds in Canada to offer inverse and magnified exposure to the S&P/TSX 60 Index were launched on January 9, 2007. These innovative and timely products trade under the names Horizons BetaPro S&P 60 Bull Plus ETF (symbol: HXU) and the Horizons BetaPro S&P 60 Bear Plus ETF (symbol: HXD).

Subsequent to year end, in response to positive investor reception, BetaPro is in the process of introducing six additional Horizon BetaPro exchange-traded funds providing inverse and magnified exposure to the S&P/TSX Capped Energy, S&P/TSX Global Gold and the S&P/TSX Capped Financials indexes.

In addition, on April 20, 2007 JovFunds completed a $2.35 million USD investment, representing an approximate 13 per cent total interest, into Tailwind Financial Inc. (“Tailwind”), a special purpose acquisition company formed in the US to acquire one or more businesses in the financial services industry. Tailwind raised approximately

Operational Results

Jovi

an A

nnua

l Rep

ort |

| M

anag

emen

t’s D

iscu

ssio

n &

Ana

lysi

s

13

$100 million USD through a public offering and is listed on the AMEX under the symbol TNF.U. Additional information on this investment is available at www.tailwindfc.com.

ACQUISITIONSOn May 9, 2006, Jovian partnered with Fairway Asset Management Corp. of Toronto. In exchange for 100 per cent of the Class “A” Shares and 49 per cent of the Class “C” Shares of Fairway. Jovian paid $11.3 million in cash, issued 7 million common shares with a deemed issue price of $0.88 per share, and issued a convertible debenture in the principal amount of $6 million, for a total purchase price of approximately $23.5 million. Subsequently on March 31, 2007 the company acquired the remaining Class “C” Shares for nominal consideration.

On May 19, 2006, Jovian acquired Charterhouse PSI Management Corporation (“Charterhouse”), by taking up the balance of shares under an earn-out arrangement for cash consideration of $300 thousand. The company originally invested $250 thousand in September, 2004 for a 12.5 per cent minority stake. Charterhouse is the manager of $54 million Charterhouse Preferred Share Index Corporation (“PSI”) (PFD.PR.A: TSX).

On May 31, 2006, the company also acquired control of Horizons Funds Inc. for $910 thousand cash and the issuance of 2,564,972 shares at a deemed issue price of $1.01. This transaction added approximately $90 million in managed assets to Jovian through the Horizons Mondiale Hedge Fund.

The combination of these acquisitions furthers our initiative to build our asset management platform into a significant player within the management of alternative asset products.

On June 21, 2006 RFG within our wealth management segment acquired 100 per cent of the issued and outstanding shares of Kemp Consulting Ltd, a provider of group insurance services, for $501 thousand of cash consideration. The subsidiary also acquired the right to service and the revenues generated from certain clients of Sawyer and Sawyer Ltd. for $287 thousand cash consideration.

AMENDMENTS TO CAPITAL RESOURCES During the second quarter, certain minority shareholders of LEON amended the terms of their shareholders agreement and removed the obligation of the company to repurchase their shares upon their death, disability, dismissal (without cause), or retirement. The amendment resulted in the elimination of the share redemption liability associated with these shares of approximately $3.4 million. The amount was added to contributed surplus during the quarter. The remaining minority shareholders retain their redemption privileges as per their shareholding terms and continue to be valued under the share redemption liability caption.

During the third quarter, the company amended the terms of its $3.5 million convertible debenture announced on December 31, 2003. The original convertible debenture matured in three years, but was extended for an additional two years to December 12, 2008. The interest owing to maturity under the original terms was paid and the coupon going forward was reduced from 12 per cent to 6 per cent, payable semi-annually. The debenture remains convertible into common shares of Jovian, at the option of the holder, at any time up to maturity. The conversion price has been increased from the previous $0.75, and is now variable based on a formula derived from the 20-day weighed average trading price of Jovian’s common shares. As a result of the amended terms, the debt is now presented as long-term debt moving out of the current portion classification on the consolidated balance sheet.

Subsequent to year end, the company announced its subsidiary MGI had created an Equity Plan for employees. The purpose of the plan is to attract and retain key professionals by providing eligible employees the ability to purchase, in the aggregate, up to 30 per cent of the outstanding shares of MGI.

Jovian Annual R

eport | | Managem


Analysis

14

RELATED PARTY TRANSACTIONSThe company entered into transactions with related parties that have been recorded at the exchange amount – the amount that has been agreed to by the related parties.

During the year, the company paid rents and signage of $415 thousand (2006 – $407 thousand) to companies controlled by a significant shareholder of the company.

During the year, the Company received commissions and fees of $264 thousand (2006 – $62 thousand) and other revenue of $42 thousand (2006 – $nil) from a related company.

Security trades executed by the company for directors and officers are transacted under the terms and conditions applicable to all customers.

REVENUERevenue for the quarter and year ended March 31, 2007 was $30.8 million and $128.4 million compared to $59.9 million and $131.8 million in the prior year. As referenced in the prior quarters’ MD&A, revenue was contributed via a subsidiary that in the prior year was not part of the consolidated entity. As a result, approximately $3.4 million and $11.3 million of the commissions and fees revenue for the three and twelve month periods have no comparable figures. Exclusive of this contribution, the comparison of the three month periods result in a revenue decrease of $32.5 million or 54 per cent and the comparable twelve month periods result in a decrease of $14.7 million or 11 per cent respectively. In addition, revenue for the comparative twelve months ended March 31, 2006 included a performance fee from the asset management segment of $4.6 million, which is non-recurring in nature.

The largest contribution to the decrease in revenue for the comparable three month period and for the year was found within our investment dealer, MGI, and in particular their capital markets group. The capital markets group within this dealer contributed $52.4 million of investment banking and principal trading revenue or 40 per cent of Jovian’s total revenues for the year ended March 31, 2006. This compares to a contribution of $28.0 million or 22 per cent of the total revenues for the year ended March 31, 2007. In addition, much of the 2006 contribution occurred within the fourth

quarter with investment banking and principal trading revenue reported as $36.8 million versus $1.8 million for the fourth quarter of 2007.

As referenced in both the 2005 and 2006 annual reports, MGI’s corporate finance group will on occasion receive broker warrants as part of their compensation for services performed. Broker warrants entitle the holder to acquire stock of an issuing company at a predetermined price over a specified period of time. In fiscal 2005, the company received such compensation warrants from its banking client, Falcon Oil & Gas Ltd., and during fiscal 2006, the company greatly benefited from the market appreciation of the underlying shares. This form of revenue is very susceptible to changes in market sentiment and the overall risk associated with the financial and capital markets. The holdings in this particular warrant position have significantly decreased in fiscal 2007 via dispositions within the market place. As a result, the associated revenue will not have any comparable amounts in future periods.

In order to manage the risks associated with financial service revenues, the company’s strategy is to diversify its sources of revenue across its client asset platforms. The services provided to clients make up two baskets of revenue: transactional revenue and recurring revenue. The company’s strategy is to provide and grow services that create or shift assets to recurring revenue, while maintaining its core assets under administration and related transactional revenue. The comparative yearly results reflect an improved revenue mix and in particular a growth in our recurring revenue within both segments of the company.

Exclusive of the direct influence of the MGI capital markets group and acquisitions made during 2007 with no comparable amounts, revenue was $25.6 million for three months ended March 31, 2007 compared to $23.1 million for the same period of 2006. This represents an increase of $2.5 million or 11 per cent quarter versus quarter.

Offsetting the decrease in revenue associated with MGI, the company had positive contributions across its significant operating companies. TE, LEON, and FDS, all experienced revenue growth over the same periods of the prior year. Revenue growth for the comparable year over year for these companies ranged from 20 to 40 per cent. This is further evidenced by the increase in client assets found within the organization and outlined in the Client Assets table.

Financial Results

Jovi

an A

nnua

l Rep

ort |

| M

anag

emen

t’s D

iscu

ssio

n &

Ana

lysi

s

15Revenue Classification (in thousands of Canadian Dollars)

For the Quarters Ended 31-Mar-07 31-Mar-06

Recurring Transactional Total Recurring Transactional Total

Total Wealth Management Revenues 4,947 12,745 17,692 5,219 45,952 51,171

Total Asset Management Revenues 11,116 2,010 13,126 6,364 2,359 8,723

Total Revenues 16,063 14,755 30,818 11,583 48,311 59,894

For the Years Ended 31-Mar-07 31-Mar-06

Recurring Transactional Total Recurring Transactional Total

Total Wealth Management Revenues 19,871 59,029 78,900 17,303 79,105 96,408

Total Asset Management Revenues 40,788 8,681 49,469 22,179 13,180 35,359

Total Revenues 60,659 67,710 128,369 39,482 92,285 131,767

Client Assets (in thousands of Canadian Dollars)

As at 31-Mar-07 31-Mar-06

Assets under administration 9,120,000 7,523,000

Assets under management 5,074,000 3,695,000

Total Client Assets 14,194,000 11,218,000

Consolidated Overview (in thousands of Canadian dollars except % amounts)

For the Quarters Ended For the Years Ended

$ and % $ and %

31-Mar-07 31-Mar-06 Increase/(Decrease) 31-Mar-07 31-Mar-06 Increase/(Decrease)

Revenue 30,818 59,894 (29,076) -49% 128,369 131,767 (3,398) -3%

Operating Expenses 30,029 48,485 (18,456) -38% 115,272 113,597 1,675 1%

Adjusted EBITDA 789 11,409 (10,620) -93% 13,097 18,170 (5,073) -28%

Stock-based compensation expense 124 229 (105) -46% 229 532 (303) -57%

EBITDA 665 11,180 (10,515) -94% 12,868 17,638 (4,770) -27%

Net Earnings (loss) (260) 5,293 (5,553) n/a 1,969 5,446 (3,477) -64%

Jovian Annual R

eport | | Managem


Analysis

16

Reconciliation of EBITDA and Adjusted EBITDA to Earnings (in thousands of Canadian Dollars)

For the Quarters Ended For the Years Ended

31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06

Earnings (loss) (260) 5,293 1,969 5,446

Add: Non-controlling interest 171 70 406 94

Income tax expense (recovery) (1,396) 4,668 2,646 6,602

Revaluation of share redemption liability 5 78 298 864

Amortization 1,619 564 4,834 2,750

Interest 526 507 2,715 1,882

EBITDA 665 11,180 12,868 17,638

Stock-based compensation 124 229 229 532

Adjusted EBITDA 789 11,409 13,097 18,170

ADJUSTED EBITDA AND EBITDAJovian reported Adjusted EBITDA and EBITDA, management performance measures, of $0.8 million and $0.7 million for the three months ended March 31, 2007, compared with $11.4 million and $11.2 million for the three months ended March 31, 2006. Adjusted EBITDA as a per centage of revenue was 3 per cent for the quarter compared to 19 per cent for the fourth quarter of the previous year. The decrease in the comparable percentages resulted from the decrease in revenue contributed from MGI. As indicated previously, MGI in the fourth quarter of 2006 had a significant influence on the results due to the success within their capital markets group. Investment banking and principal trading revenue for the comparable quarter of 2007 was approximately $35.0 million lower than that of the prior year. This decrease in high margin warrant revenue within the segment, due to the variable nature of compensation payouts, accounted for the dramatic drop in the EBITDA during the comparable quarter.

For the year ended March 31, 2007, Adjusted EBITDA and EBITDA was $13.1 million and $12.9 million compared to $18.2 million and $17.6 million for the comparable 2006 year. Adjusted EBITDA as a percentage of revenue for the comparative twelve month periods was 10 per cent and 14 per cent respectively. The company’s strategy to diversify its sources of revenue across its client asset platforms has aided in its ability to report comparative percentages for the year inclusive of the MGI influence on results.

Management uses these measurements to evaluate its success in growing the underlying business. This is particularly important for an emerging-stages company where part of its growth strategy is through acquisitions. The majority of the assets acquired in the purchase of a financial services company are classified as intangible assets and amortized over the term of their useful lives. This includes, but is not limited to: value assigned to customer relationships, contracts, and brand names. The use of EBITDA and Adjusted EBITDA enables management to measure performance before the inclusion of these costs and non-cash costs to concentrate on the operating expenses of the company and its return on revenue.

EXPENSESTotal expenses for the three month period ended March 31, 2007 was $31.1 million compared to $54.6 million in the corresponding quarter of the prior year representing a decrease of $23.5 million or 43 per cent. Total expenses for the year ended March 31, 2007 was $126.4 million compared to $126.3 million for the year ended March 31, 2006. Jovian reported $8.0 million in subsidiary expenses for the year ended March 31, 2007 that in the prior year was not part of the consolidated entity. Of this, $2.1 million was classified as compensation and benefits; $5.3 million as selling, general and administrative; $0.4 million in amortization expense; and $0.2 million as income taxes. A comparative figure does not exist due to the subsidiary’s date of purchase.

Jovi

an A

nnua

l Rep

ort |

| M

anag

emen

t’s D

iscu

ssio

n &

Ana

lysi

s

17

Compensation and benefits was $18.6 million for fourth quarter of fiscal 2007 compared to $38.9 million for the same period in fiscal 2006. For the year ended March 31, 2007, compensation and benefits was $76.0 million compared to $85.8 million for the corresponding period for fiscal 2006 representing a decrease of $9.8 million or 11 per cent. Compensation expenses as a percentage of revenue was 60 per cent for the quarter ended March 31, 2007 compared to 65 per cent for the quarter ended March 31, 2006, and 59 per cent versus 65 per cent for the comparable twelve month period. The ratio reflects the largely variable nature of compensation and is influenced by the individual platforms and compensation grids found within each entity. The ratio for the current quarter of 60 per cent is higher than the 59 per cent reported for the twelve month period due to the relative contribution by these different platforms within the company. A similar occurrence was also reported in the third quarter of fiscal 2007 with compensation as percentage of revenue reported as 56 per cent for the quarter and 59 per cent for the nine months ended December 31, 2006.

Selling, general and administration expense was $11.5 million for the three months and $39.5 million for the year ended March 31, 2007 compared to $9.8 million and $28.3 million for the prior year. The $1.7 million or 17 per cent and $11.2 million or 40 per cent increase in the comparable periods represents the expansion occurring within the existing platforms in addition to the impact of acquisitions completed during the course of the year. Selling, general and administration expense represents 31 per cent of total revenues and comprises 31 per cent of total expenses for the year ended March 31, 2007 compared to 22 per cent of total revenues and 23 per cent of total expenses for the year ended March 31, 2006.

For the fourth quarter of fiscal 2007, interest on long-term debt was $0.5 million compared to $0.5 million in the corresponding period of fiscal 2006 and $2.7 million versus $1.9 million for the year ended March 31, 2007 and March 31, 2006. The interest on long-term debt reflects the interest-bearing debt structure found within the balance sheet. The debt advanced and issued during the later part of the first quarter, as a result of acquisitions, amounted to approximately $11.0 million and continues to result in a greater increase in interest expense for the year. However, the magnitude of the increase has been offset by the interest rate savings negotiated on the $3.5 million convertible debenture in the third quarter of 2007, which was referenced above within the operational results caption.

For the three months and year ended March 31, 2007, amortization expense was $1.6 million and $4.8 million, compared to $0.6 million and $2.8 million for the prior year. The increase of $2.0 million or 100 per cent for the comparable twelve months is a result of the final allocation of the excess purchase prices over estimated fair values of the net assets acquired for the JovFunds acquisition.

Revaluation of share redemption liability is the change in the company’s obligation to repurchase the shares held by certain individuals of LEON. The twelve month change to the total obligation, a non-cash charge to the statement of operations, is $0.3 million compared to $0.9 million during the comparable period of the prior year. On a comparative basis, the expense item has been impacted by certain minority shareholders of LEON amending the terms of their shareholders agreement and removing the obligation of the company to repurchase their shares upon their death, disability, or dismissal (without cause), as referenced in second quarter of fiscal 2007. As a result, the current obligation only represents the remaining minority shareholders who have retained their redemption privileges as per their shareholding terms. The three month change to the total obligation ended March 31, 2007 was nil compared to $0.1 million during the comparable period of the prior year.

Income taxes for the year ended March 31, 2007 was $2.6 million compared to a provision of $6.6 million for the year ended March 31, 2006. The provision for income taxes for the current fiscal year of $2.6 million is comprised of a $9.0 million current income tax provision and a $6.4 million future income tax recovery as compared to a $1.5 million current income tax provision and a $5.1 million future tax provision. The future tax amounts arise as a result of the timing difference associated with revenue recognized for accounting versus tax purposes. The prior year’s provision for future tax has largely been moved into the current year’s provision as the gains associated with warrant positions have been realized due to disposition of the underlying shares.

EARNINGSThe company reported earnings for the year ended March 31, 2007 of $2.0 million after incurring a fourth quarter net loss of $0.3 million. This compares to net earnings of $5.4 million and $5.3 million for the corresponding periods ended March 31, 2006.

SEGMENTED INFORMATIONThe company operates within two industry segments: wealth management and asset management. Wealth management provides the administration of private wealth assets and distribution of financial solutions. Asset management is the management and support of financial assets.

Corporate and other includes revenue and expenses not specifically allocable to wealth and asset management. Corporate compensation and benefits as well as general administrative expenses are comprised of amounts paid to, and in support of, corporate personnel including executive, legal, information technology, and accounting. This also includes any costs directly related to being a public issuer.

Jovian Annual R

eport | | Managem


Analysis

18

Jovi

an A

nnua

l Rep

ort |

| M

anag

emen

t’s D

iscu

ssio

n &

Ana

lysi

s

FOR THE QUARTERS ENDED

March 31, 2007 Consolidated Jovian

Wealth Management

Asset Management

Corporate and Other

Revenue $ 30,818,000 $ 16,545,000 $ 14,002,000 $ 271,000

Expenses:

Compensation and benefits 18,608,000 10,471,000 5,787,000 2,350,000

Selling, general and administrative 11,545,000 3,927,000 5,291,000 2,327,000

30,153,000 14,398,000 11,078,000 4,677,000

Earnings (loss) before the following: 665,000 2,147,000 2,924,000 (4,406,000)

Interest on long-term debt 526,000 – – 526,000

Amortization 1,619,000 330,000 1,065,000 224,000

Revaluation of share redemption liability 5,000 – 5,000 –

2,150,000 330,000 1,070,000 750,000

Earning (loss) before income tax and non-controlling interest (1,485,000) 1,817,000 1,854,000 (5,156,000)

Income taxes (1,396,000)

Loss before non-controlling interest (89,000)

Non-controlling interest 171,000

Loss $ (260,000)


Wealth Management

Asset Management

Corporate and Other

Revenue $ 59,894,000 $ 51,171,000 $ 8,712,000 $ 11,000

Expenses:



48,714,000 35,377,000 9,123,000 4,214,000

Earnings (loss) before the following: 11,180,000 15,794,000 (411,000) (4,203,000)

Interest on long-term debt 507,000 – 1,000 506,000

Amortization 564,000 181,000 99,000 284,000


1,149,000 181,000 178,000 790,000

Earnings (loss) before income tax and non-controlling interest 10,031,000 15,613,000 (589,000) (4,993,000)

Income taxes 4,668,000

Earnings before non-controlling interest 5,363,000


Earnings $ 5,293,000

19

Jovian Annual R

eport | | Managem


Analysis

FOR THE YEARS ENDED


Wealth Management

Asset Management

Corporate and Other

Revenue $ 128,369,000 $ 78,900,000 $ 48,968,000 $ 501,000

Expenses:



115,501,000 69,619,000 38,228,000 7,654,000

Earnings (loss) before the following: 12,868,000 9,281,000 10,740,000 (7,153,000)

Interest on long-term debt 2,715,000 – – 2,715,000

Amortization 4,834,000 826,000 3,167,000 841,000


7,847,000 826,000 3,465,000 3,556,000

Earnings (loss) before income tax and non-controlling interest 5,021,000 8,455,000 7,275,000 (10,709,000)






Wealth Management

Asset Management

Corporate and Other

Revenue $ 131,767,000 $ 96,408,000 $ 34,896,000 $ 463,000

Expenses:



114,129,000 77,541,000 29,795,000 6,793,000


Interest on long-term debt 1,882,000 – 9,000 1,873,000

Amortization 2,750,000 777,000 828,000 1,145,000


5,496,000 777,000 1,701,000 3,018,000

Earnings (loss) before income tax and non-controlling interest 12,142,000 18,090,000 3,400,000 (9,348,000)





20

ASSET MANAGEMENT Revenue for the quarter ended March 31, 2007 was $14.0 million representing an increase of $5.3 million or 61 per cent over the comparable quarter of the prior year. As referenced above, the fiscal 2007 quarter includes $3.4 million of revenue contributed via subsidiaries that do not have a comparable figure in the prior year. Excluding this item, the revenue for the segment has increased $1.9 million or 22 per cent.

For the year ended March 31, 2007 revenue was $49.0 million compared to $34.9 million for the same period of the prior year. As referenced above, two factors have influenced the comparison of the twelve month periods: $11.3 million of revenue was contributed via subsidiaries with no comparable figure in the prior year and the 2006 comparable period includes a $4.6 million performance fee that is not recurring revenue for the segment. Excluding these two factors, revenue for the segment has increased $7.4 million or 24 per cent.

Compensation and benefits was $5.8 million for fourth quarter of fiscal 2007 compared to $6.5 million for the same period in fiscal 2006. For the year ended March 31, 2007, compensation and benefits was $21.9 million compared to $21.1 million for the corresponding period of fiscal 2006. Compensation expenses as a percentage of revenue was 45 per cent for the year ended March 31, 2007 compared to 61 per cent for the comparable period. The fiscal 2006 comparable period includes a variable payout on the $4.6 million performance fee earned by the company and represents a portion of decrease in the comparison to fiscal 2007; however, as expected, a further decrease was realized due to the segment’s revenue growth and the corresponding primarily fixed nature of the payout grid found within the segment.

Selling, general and administration expense for the three month period ended March 31, 2007 was $5.3 million compared to $2.7 million in the corresponding quarter of the prior year. Selling, general and administration expense for the year ended March 31, 2007 was $16.3 million compared to $8.6 million for the year ended March 31, 2006. It represents 38 per cent and 33 per cent of total revenue for the three month and year ended March 31, 2007 compared to a 31 per cent and 24 per cent reported for the same period of the prior year. As referenced above, fiscal 2007 includes $5.1 million of selling, general and administrative expenses from subsidiaries that do not have a comparable figure in the prior year. Excluding this item, selling, general and administrative expense for the segment has increased $2.6 million or 33 per cent. Further, approximately $1.0 million of this increase is directly attributable to third-party system costs required to expand the fund accounting, shareholder and unitholder, record-keeping services of FDS, which is reported within this segment.

For the quarter and year ended March 31, 2007 EBITDA was $2.9 million and $10.7 million compared to $(0.4) million and $5.1 million for the prior year. EBITDA as a percentage of revenue for the comparative years ended was 21 per cent and 15 per cent respectively.

LIQUIDITY AND CAPITAL RESOURCESJovian’s balance sheet is comprised of highly liquid assets due to regulatory requirements and operational needs. Cash and only those investments considered cash equivalents, included under the title Securities Owned, were $44.3 million as at March 31, 2007 compared with $27.9 million as at March 31, 2006.

Sources and Uses of Cash (in thousands of Canadian dollars except % amounts)

For the years ended 31-Mar-07 31-Mar-06

Cash from operating activities before changes in non cash operating working capital items

$ 1,386 $ 14,679

Changes in non cash operating working capital items 20,781 (19,080)

Cash from operating activities 22,167 ( 4,401)

Cash from financing activities 3,599 13,169

Cash used in investing activities (14,006) (1,881)

Increase in cash during the year $ 11,760 $ 6,887

The company’s liquidity needs are met through a variety of sources including: cash generated from operations, short-term and long-term borrowings, and the issuance of share capital. Funds are primarily used for operational expenses, sustaining and growth capital expenditures, acquisitions, interest, and principal payment on debentures.

Before changes in non-cash operating working capital items, cash flow from activities for the year ended March 31, 2007 was $1.4 million as compared to $14.7 million for the year ended March 31, 2006 representing a decrease of $13.3 million or 90 per cent. The decrease under this caption on a comparative basis is a direct result of the decrease in revenue and thereby earnings contributed by the wealth management segment—and in particular MGI from its broker warrant holdings. The $24.4 million decrease in investment banking and principal trading revenue on a comparative fiscal year end basis has largely accounted for the resulting $3.5 million decrease in earnings. In addition, as a result of exercising a significant portion of warrant holdings and selling the underlying security during fiscal 2007 the tax obligation associated with the gain has moved from a $5.0 million future tax obligation or positive effect on cash flow to one that is current in nature and thereby negative by approximately the same amount. This represents a further $10.0 million shift in cash flow from operations on a comparative basis.

Jovi

an A

nnua

l Rep

ort |

| M

anag

emen

t’s D

iscu

ssio

n &

Ana

lysi

s

21

During fiscal 2006, the company received net proceeds from financing activities, via the issuance of share capital and proceeds from its operating lines, of approximately $13.0 million that was primarily invested in short-term securities decreasing non cash operating working capital.

During fiscal 2007, the company redeemed the prior year’s short-term investments, increasing non cash operating working capital, and drew an additional $5.0 million on its operating facility. The company repaid $2.5 million of previously issued long-term debt and employed the majority of the amount remaining available to fund its acquisition activities which, net of cash acquired, was $12.3 million.

The balance of the increase in cash flow as compared to the March 31, 2006 balance sheet results in the remaining change in non-cash operating working capital as presented in the statement of cash flows. Jovian A

nnual Report | | M

anagement’s D

iscussion & A

nalysis

Payments Due By Period

Total Commitments Within 1 year Year 2 Year 3 Year 4 After 5 Years

Long-term debt $ 26,251,000 16,169,000 10,082,000 – – –

Operating Lease 21,604,000 3,724,000 3,298,000 3,068,000 2,845,000 8,669,000

Capital Lease 380,000 78,000 84,000 92,000 100,000 26,000

Total contractual obligations $ 48,235,000 19,971,000 13,464,000 3,160,000 2,945,000 8,695,000

Outstanding Share DataJovian’s outstanding share data as at March 31, 2007 and 2006 is as follows:

31-Mar-07 31-Mar-06

Common Shares Issued and Outstanding 119,265,276 106,539,589

Series 1 Preferred Shares Issued and Outstanding 5,924 1,039,293

Outstanding Options 7,694,810 7,154,101

Exercisable Options 6,163,803 5,012,067

Warrants 4,600,000 4,450,000

Earnings Per Share:

Basic $0.02 $0.06

Fully Diluted $0.02 $0.05

22

OPERATING CREDIT FACILITY AND LONG-TERM DEBTThe company has approximately $26.6 million in long-term debt outstanding at March 31, 2007 of which $16.3 million is due within the proceeding twelve months.

The company has a debenture, repayment option in cash or common shares, due October 27, 2007 with a current maturity value of $1.1 million.

At March 31, 2007, the company had $14.9 million outstanding of a $28.0 million credit facility. The credit facility expires December 15, 2007 and the company is currently in negotiations with the provider with the intent to extend the term.

During the first quarter, the company drew down $3.0 million on its credit facility, which resulted in the issuance of 650 thousand warrants plus $2.0 million on its banking facility. The advances were a result of acquisition funding requirements incurred during the quarter.

The acquisitions completed during the year have resulted in the issuance of 9,699,972 shares and a $6.0 million unsecured, convertible, and callable debenture bearing interest at 6 per cent due May 4, 2008. In addition, the company may have a final amount owing, to a maximum of $4.0 million, which is contingent upon the aggregate asset value found within a specific underlying fund and, if applicable, would be payable in combination on January 25, 2007 and 2008.

The company also has an outstanding secured debenture bearing interest at 6 per cent with a maturity value of $3.5 million due December 12, 2008.

The remaining issuances and information regarding our long-term debt is available in Note 11 of the March 31, 2007 Consolidated Financial Statements.

At March 31, 2007 the company has 4.6 million warrants outstanding entitling the holder to purchase one common share of the company for each warrant at $0.75 per common share. During the year 500 thousand warrants were exercised and the underlying 500 thousand shares due on exercise but not issued have been recorded as due for share issuance.

Risks and Uncertainties that Could Affect Future ResultsCOMPETITIONEngaged in a highly competitive marketplace, Jovian continually competes with other financial services companies often with greater financial scales and distribution capacities. Although the players and themes are constantly changing, they include

Jovi

an A

nnua

l Rep

ort |

| M

anag

emen

t’s D

iscu

ssio

n &

Ana

lysi

s

discount transaction firms, niche players, and integrated financial service companies. In order to compete and protect our existing market share, Jovian has strategically diversified its revenue sources and its client base while typically focusing financial solutions to the retail investor who historically has a higher rate of retention when compared to that of an institutional investor.

ABILITY TO RETAIN AND RECRUIT PERSONNEL As a service provider, Jovian depends on its employees’ capacity to foster relationships and deliver quality service. Jovian’s ability to nurture, enhance, and augment client relationships is directly impacted by its employees’ ability to meet their clients’ needs and expectations. Recognizing the impact a competitive environment could have on our ability to retain and recruit qualified personnel, Jovian has mitigated the risks by offering competitive, performance-based incentives, profit-sharing programs, and employee share purchase programs. All of these serve to attract qualified employees who share management‘s and shareholders’ strategic focus.

GENERAL MARKET RISK AND CONSUMER CONFIDENCEThe financial services industry is subject to a variety of inherent risks including, without limitation: economic growth, market risk, inflation, political risk, interest rate risk, liquidity, and market volatility. Each risk factor has the potential to impact consumer confidence, as well as Jovian’s ability to generate revenue.

A reduction in revenue would more likely occur in Jovian’s transactional-based businesses, where trading and underwriting volumes could potentially decrease. Jovian has mitigated this risk by also investing in entities that produce non-transactional revenue. By investing in entities with fee-based revenue and focusing on ownership in managed products that seek to capitalize on market risk, we ensure a means of uninterrupted revenue during unstable times.

STRATEGIC RELATIONSHIPS AND MANAGEMENT OF ORGANIC AND ACQUISITION GROWTHJovian continues to grow its operations organically and through strategic relationships and acquisitions. In doing so, management must ensure resources are available to administer, monitor, and manage a growing organization. Without continued revenue growth, Jovian may experience a constriction in margins, which could further inhibit our ability to invest in the people, systems, and controls required to successfully manage our growing operations.

23

REGULATIONJovian is subject to a number of regulatory bodies throughout its financial services platforms. The regulatory environment is one of constant change, encompassing the current views of provincial securities commissions, stock exchanges, the Office of the Superintendent of Financial Institutions, the Investment Dealers Association, the Mutual Fund Dealer Associations of Canada, and the Canadian Investor Protection Fund. These bodies regulate and protect the sale and purchase, underwriting, and distribution of securities.

In a constant state of flux, regulations continue to tighten in response to the public’s perception of the securities industry and the collapse of many public companies. Regulatory changes, incorrect interpretations, or failure to comply with the laws, rules and regulations could all have an adverse affect on us. Jovian supports all regulatory efforts to protect client interests and preserve the integrity and reputation of the industry and its members. We look forward to ways in which future developments will further these objectives.

Critical Accounting PoliciesA summary of significant accounting policies is presented in the Notes to Jovian’s March 31, 2007 Consolidated Financial Statements. The policies discussed below are considered to hold a particular amount of importance due to their use of management estimates, which may relate to matters inherently uncertain.

GOODWILLGoodwill and other intangible assets with indefinite useful lives are not amortized, but rather subject to impairment tests. We must apply judgment in the selection and approach to determine fair value of any underlying assumptions. These judgments may affect the fair value and any resulting impairment write-downs. There is further information regarding our goodwill accounting policy and the composition of our goodwill in Notes 2 and 8 of the March 31, 2007 Consolidated Financial Statements.

FINANCIAL INSTRUMENTSFair value for the majority of financial assets, including securities owned and liabilities, is determined on quoted market prices. If quoted market values are not available, a best estimate of the amount for which the instrument could be exchanged in a current transaction is used. A provision is made in situations where we believe there is potential for the amount realized on sale to be less than the estimated fair value, due to liquidity or market concerns. However, as we primarily invest and trade in publicly-traded instruments, the use of estimates does not significantly affect our financial condition.

Jovian Annual R

eport | | Managem


Analysis

INCOME TAXESManagement uses its judgment in the estimation of income taxes and future income tax assets and liabilities. This process involves estimating actual current tax exposure, assessing temporary differences that give rise to future tax assets and liabilities, and the valuation and the expected timing of the reversal of these future tax assets and liabilities. If management’s estimates and assumptions regarding the above differ from actual results, there could be an increase or decrease in the provision for income taxes in future periods.

Change in Accounting PoliciesJovian did not make any changes to its accounting policies during the current fiscal year.

Future Changes in Accounting PoliciesFINANCIAL INSTRUMENTS AND OTHER COMPREHENSIVE INCOMEThe Canadian Institute of Chartered Accountants (“CICA”) issued three new accounting standards: CICA 1530, Comprehensive Income, CICA 3855, Financial Instruments – Recognition and Measurement; CICA 3865, Hedges. The company adopted these new rules on April 1, 2007 and the impact will be presented within the June 2008 quarterly report. The company will have measured its financial assets and financial liabilities, as appropriate, at fair value and report a new section of shareholders’ equity called other comprehensive income.

A transition adjustment attributable to investment securities that the company classifies as held-for-trading and that were not previously recorded at fair value is recognized in the opening balance of retained earnings. Adjustments arising due to remeasuring investment securities that were not previously recorded at fair value and that are classified as available-for-sale are recognized in the opening balance of accumulated other comprehensive income. None of the transition amounts that will be recorded in the opening retained earnings or in the opening accumulated other comprehensive income are expected to be material.

Controls – Disclosure & Internal Controls Over Financial ReportingPursuant to Multilateral Instrument 52-109, management is responsible for establishing and maintaining disclosure controls and procedures in order to provide reasonable assurance that material information is made known to management in a timely manner and that information required to be disclosed is reported within time periods prescribed

24

by applicable securities legislation. Management has evaluated, or caused an evaluation under their direct supervision, the effectiveness of the company’s disclosure controls and procedures at March 31, 2007 and as a result of the review the company’s Chief Executive Officer and Chief Financial Officer believe them to be effective in providing such reasonable assurance.

Management is also responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has designed internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with Canadian GAAP. Management has evaluated and concluded that there were no changes that materially affect, or are reasonable likely to materially affect, the company’s design of internal controls over financial reporting during the period ended March 31, 2007.

ADDITIONAL INFORMATIONAdditional information relating to the company is available on SEDAR at www.sedar.com

Jovi

an A

nnua

l Rep

ort |

| M

anag

emen

t’s D

iscu

ssio

n &

Ana

lysi

s

25

Selected Financial DataQuarterly Review (unaudited) (in thousands of Canadian Dollars)

Three Months Ended

Fiscal Year (March 31) 2007 2006

March 31/07 Dec 31/06 Sept 30/06 June 30/06 March 31/06 Dec 31/05 Sept 30/05 June 30/05

Revenues 30,818 36,664 21,047 39,840 59,894 26,553 25,741 19,579

(a) Operating Expenses 30,029 30,578 22,979 31,686 48,485 23,808 23,275 18,029

(b) Adjusted EBITDA 789 6,086 (1,932) 8,154 11,409 2,745 2,466 1,550

(a) Stock-based Compensation Expense 124 14 37 54 229 150 153 -

EBITDA 665 6,072 (1,969) 8,100 11,180 2,595 2,313 1,550

Earnings (loss) (260) 1,885 (3,559) 3,903 5,293 84 51 18

Earnings per share – basic 0.00 0.02 (0.03) 0.03 0.06 0.00 0.00 0.00

Earnings per share – fully diluted 0.00 0.02 (0.03) 0.03 0.05 0.00 0.00 0.00

(a) Stock-based compensation expense is a non-cash item included in operating expenses as a result of the adoption of the Canadian Institute of Chartered Accountants Handbook Section 3870, Stock-Based Compensation and Other Stock-Based Payments. For measurement purposes, stock-based compensation expense is excluded from operating expenses in this table in order to determine Adjusted EBITDA.

(b) EBITDA and Adjusted EBITDA are non-GAAP performance measures utilized by Jovian. EBITDA is defined here as earnings before interest on long-term debt, taxes, depreciation, amortization, revaluation of share redemption liability and non-controlling interest. Adjusted EBITDA is EBITDA adjusted for stock-based compensation.

Jovian Annual R

eport | | Managem


Analysis

26

Management’s Responsibility for Financial Statements

The accompanying consolidated financial statements, which consolidate the financial results of Jovian Capital Corporation, were prepared by management who are responsible for the integrity and fairness of all information presented in this annual report. The consolidated financial statements were prepared by management in accordance with the Canadian generally accepted accounting principles (GAAP). Financial information presented elsewhere in this annual report is consistent with that in the financial statements.

In management’s opinion, the financial statements have been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized in Note 1 of the financial statements. Management maintains a system of internal controls to meet its responsibilities for the integrity of the financial statements. Management also administers a program of ethical business conduct compliance.

The board of directors appoints the company’s audit committee annually. Among other things, the audit committee has a mandate to review the company’s consolidated financial statements on a quarterly basis and to provide a recommendation to the board of directors for approval. The audit committee has access to management and the auditors to review their activities and to discuss the external audit program, internal controls, accounting policies, and financial reporting matters.

KPMG LLP performed an independent audit of the consolidated financial statements as outlined in the audit report below. KPMG LLP retains full and unrestricted access to management, the audit committee and the board of directors to discuss their audit and related findings and have the right to request a meeting in the absence of management at any time.

The audit committee has reviewed the financial statements and management’s discussion and analysis and recommended their approval to the board of directors. The board has, upon the recommendations of the audit committee, approved the financial statements and management’s discussion and analysis.

Signed:

Philip Armstrong Jason MackeyPresident & CEO Chief Financial Officer

Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

27

To the Shareholders of Jovian Capital Corporation

We have audited the consolidated balance sheets of Jovian Capital Corporation as at March 31, 2007 and 2006 and the consolidated statements of operations, retained earnings (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at March 31, 2007 and 2006 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Signed “KPMG LLP”

Chartered Accountants

Winnipeg, Canada

June 25, 2007

Auditors’ Report

Jovian Annual R

eport | | Financial Statements

28

Consolidated Balance SheetsMarch 31, 2007 and 2006 2007 2006

restated (Note 2(c))

Assets

Current assets:

Cash $ 23,501,000 $ 11,741,000

Cash held in trust 1,418,000 2,406,000

Securities owned (note 3) 39,775,000 72,436,000

Accounts receivable (note 4) 14,583,000 7,396,000

Loans receivable 385,000 289,000

Work in process 315,000 326,000

Prepaid expenses and other assets 1,835,000 1,507,000

81,812,000 96,101,000

Other assets (note 5) 2,184,000 1,460,000

Deferred charges (note 6) 929,000 960,000

Property and equipment (note 7) 4,354,000 3,289,000

Goodwill (notes 2 and 8) 38,065,000 21,800,000

Intangible assets (notes 2 and 8) 32,968,000 15,889,000

$ 160,312,000 $ 139,499,000

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Trust liability $ 1,418,000 $ 2,406,000

General operating bank line (note 11) 1,998,000 –

Accounts payable and accrued liabilities

(note 9) 42,623,000 48,377,000

Securities sold short (note 3) – 79,000

Income taxes payable 5,074,000 938,000

Current portion of long term debt (note 11) 16,247,000 5,800,000

Callable preferred shares 240,000 240,000

67,600,000 57,840,000

March 31, 2007 and 2006 2007 2006 restated (Note 2(c))

Long term debt (note 11) 10,384,000 12,859,000

Share redemption liability (note 12) 287,000 3,415,000

Future income tax liability (note 10) 11,285,000 11,154,000

Non-controlling minority interest 323,000 94,000

Shareholders’ equity (note 13):

Capital stock 56,582,000 46,245,000

Warrants 715,000 711,000

Contributed surplus 6,359,000 2,648,000

Due to vendors – 100,000

Shares to be issued 375,000 –

Retained earnings 6,402,000 4,433,000

70,433,000 54,137,000

Commitments and contingencies (note 16) Subsequent events (note 18)

$ 160,312,000 $ 139,499,000

See accompanying notes to consolidated financial statements. On behalf of the Board:

Signed: Thomas J. Rice, Director

Signed: Donald H. Penny, Director

Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

29

Consolidated Statements of Operations Years ended March 31, 2007 and 2006

2007 2006

Revenues: Commissions and fees $ 96,108,000 $ 76,664,000 Investment banking and principal trading revenue 28,015,000 52,374,000 Other revenue 4,246,000 2,729,000

128,369,000 131,767,000

Expenses: Compensation and benefits 75,978,000 85,833,000 Selling, general and administration 39,523,000 28,296,000

115,501,000 114,129,000

Earnings before the undernoted 12,868,000 17,638,000

Interest on long term debt 2,715,000 1,882,000 Amortization of property and equipment 1,391,000 861,000 Amortization of deferred finance charges 975,000 1,011,000 Amortization of intangible assets 2,468,000 878,000 Revaluation of share redemption liability 298,000 864,000

7,847,000 5,496,000

Earnings before income taxes and non-controlling interest 5,021,000 12,142,000

Income taxes (note 10)

Current 9,000,000 1,461,000

Future (recovery) (6,354,000) 5,141,000

2,646,000 6,602,000

Earnings before non-controlling interest 2,375,000 5,540,000

Non-controlling interest 406,000 94,000

Earnings $ 1,969,000 $ 5,446,000

Earnings per share (note 13): Basic $ 0.02 $ 0.06 Fully diluted 0.02 0.05

Consolidated Statements of Retained Earnings (Deficit)Years ended March 31, 2007 and 2006

2007 2006

Retained earnings (deficit), beginning of year $ 4,433,000 $ (1,013,000)

Earnings 1,969,000 5,446,000

Retained earnings, end of year $ 6,402,000 $ 4,433,000

See accompanying notes to consolidated financial statements.

Jovian Annual R


30

Consolidated Statements of Cash FlowsYears ended March 31, 2007 and 2006

2007 2006

Cash provided by (used in):

Operating activities:

Earnings $ 1,969,000 $ 5,446,000

Items not involving cash: Amortization of property and equipment 1,391,000 861,000 Amortization of deferred finance charges 975,000 1,011,000 Amortization of intangible assets 2,468,000 878,000 Revaluation of share redemption liability 298,000 864,000

Future income taxes (6,350,000) 4,993,000 Stock-based compensation 229,000 532,000

Non-controlling interest 406,000 94,000

1,386,000 14,679,000

Change in non-cash operating working capital 20,781,000 (19,080,000)

22,167,000 (4,401,000)

Financing activities: Proceeds from issuance of share capital 1,387,000 18,430,000

Proceeds from general operating bank line 2,000,000 – Proceeds from long-term debt 3,000,000 4,000,000 Payment of long-term debt (2,499,000) (9,043,000) Deferred charges – (218,000) Dividend paid to non-controlling interest (289,000) –

3,599,000 13,169,000

Investing activities: Purchase of property and equipment (1,756,000) (1,284,000) Business acquisitions, net of cash acquired (note 2) (12,250,000) (421,000)

Change in other assets – (176,000)

(14,006,000) (1,881,000)

Increase in cash 11,760,000 6,887,000

Cash, beginning of year 11,741,000 4,854,000

Cash, end of year $ 23,501,000 $ 11,741,000

Supplementary information:

Interest paid $ 1,406,000 $ 1,230,000

Income taxes paid 4,596,000 163,000

See accompanying notes to consolidated financial statements.

Years ended March 31, 2007 and 2006 (continued)

2007 2006

Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

31

Notes to Consolidated Financial StatementsYears ended March 31, 2007 and 2006

(b) Revenue recognition:

Securities transactions and related revenue, commissions and related clearing expenses are recorded in the accounts on a trade date basis.

Commission revenue related to the sale of investment products is recognized on a trade date basis. Trailer commission fees on mutual fund products are recognized over time as they become receivable.

Corporate finance revenue consists of underwriting revenue and fees from mergers and acquisitions and other corporate finance advisory assignments which are recorded when the underlying transaction is substantially completed under the terms of the engagement. Syndicate expenses related to securities offerings in which the company acts as an underwriter or agent are deferred until the related revenue is recognized.

Revenue from investment management services is recognized on the net asset value of client investment portfolios as the revenues are earned. Revenue from financial planning services (including taxation, financial planning and financial education services) is based upon the hourly rate as such services are rendered. The Company recognizes work in progress based upon management’s estimate of the services performed to period end and is recorded at the lower of docket cost and net realizable values. Billings in advance of the delivery of services are recorded as deferred revenue.

Commission revenue on the subscriptions of individual insurance policies is recognized when the policy is underwritten by the insurance carrier. Commission revenue on group insurance policies is considered fully earned on the effective date of the policy.

(c) Cash held in trust:

Cash held in trust represents amounts deposited in trust accounts with Canadian financial institutions held principally for the settlement of purchase transactions, and cash held related to group insurance activities for remittance to insurance carriers. The corresponding liabilities are included in trust liability.

Jovian Annual R


1. SIGNIFICANT ACCOUNTING POLICIES: Jovian Capital Corporation (the Company) is a publicly traded Company listed on the

TSX Venture Exchange (JVN). The Company is a management and holding company with interests in a variety of financial service firms specializing in wealth and asset management.

(a) Basis of presentation:

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and include the accounts of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated upon consolidation.

The principal operating subsidiaries are:

• Accumulus Management Ltd. • Charterhouse PSI Management Corporation • Convoy Capital Corp. • DOCP Management Corp. (formerly DeltaOne Capital Partners Corp. (Canada))

• Felcom Data Services Inc. • Horizons Funds Inc. • JovFunds Inc. (formerly Gibraltar Alternative Asset Consulting Group Inc.) • JovFunds Management Inc. (formerly Fairway Asset Management Corporation)

• JovInvestment Management Inc. (formerly Jove Investment Management Inc.)

• Leon Frazer & Associates Inc. • MGI Securities Inc. • MGI Securities (USA) Inc. • Pescara Partners Inc. • Rice Financial Group Inc. • T.E. Financial Consultants Ltd. • T.E. Investment Counsel Inc.

32

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

(d) Securities owned and securities sold short:

Securities owned and securities sold short are carried at fair values as at the close of business at the balance sheet date. Fair value is based on quoted market prices for the exchange-traded equities. Equities, warrants and fixed income securities traded in the over-the-counter markets are based on management’s estimate of amount to be realized on settlement assuming current market condition and an orderly disposition over a reasonable period of time. For privately held or restricted securities, fair value is estimated by management using appropriate valuation methods, which take into account the liquidity of the security, the size of the bid and ask spread and the relative breadth of the market, current yield adjustments and other relevant factors or valuation models. Realized and unrealized changes in fair value are recognized in income from principal transactions in the year in which the changes occur.

(e) Property and equipment:

Property and equipment are stated at cost. The cost of furniture and equipment is being amortized using the declining balance method over the estimated lives of the assets at the following annual rates:

Asset Rate Furniture and equipment 20% Computer equipment 30%

The cost of leasehold improvements is amortized by the straight-line method over the terms of the leases at rates varying between 10 per cent and 50 per cent per year. The cost of application software is amortized by the straight-line method over three years. Proprietary software is amortized by the straight-line method over five years.

(f) Deferred charges:

Costs incurred by the Company in conjunction with obtaining long-term debt are deferred and amortized on a straight-line basis over the term of the related debt. Costs relating to fees for client account transfers, transition fees, and the prepayment of amounts for customer relationships managed by investment advisors are amortized on a straight-line basis over three years.

(g) Income taxes:

The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. Under this method of accounting, the effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that enactment or substantive enactment occurs. When necessary, a valuation allowance is recorded to reduce future income taxes to an amount which will more likely than not be realized.

(h) Foreign exchange translation:

Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the year-end exchange rates and non-monetary items are translated at the rates of exchange in effect when the assets were acquired or obligations incurred. Revenue and expenses are translated at average rates of exchange in effect during the year. Foreign exchange translation gains and losses are recorded in income in the year in which they occur.

(i) Long-term investments:

Long-term investments are carried at cost less provisions for impairment which are other than temporary. The fair value of the long-term investments is not readily determinable.

(j) Use of estimates:

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.


Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

33

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

(k) Goodwill and intangible assets:

Goodwill is the excess of the purchase price paid for the acquisition of a subsidiary over the fair value of the net assets acquired.

Goodwill is not amortized and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test is carried out in two steps. In the first step, the carrying amount of the reporting unit is compared with its fair value. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired and the second step of the impairment test is unnecessary. The second step is carried out when the carrying amount of a reporting unit exceeds its fair value, in which case the implied fair value of the reporting unit’s goodwill is compared with its carrying amount to measure the amount of the impairment loss, if any. The implied fair value of goodwill is determined in the same manner as the value of goodwill is determined in a business combination described in the preceding paragraph, using the fair value of the reporting unit as if it was the purchase price. When the carrying amount of reporting unit goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess and is presented as a separate line item in the statement of earnings before extraordinary items and discontinued operations.

Intangible assets, other than goodwill, which do not have indefinite useful lives are amortized on a straight-line basis over their useful lives ranging from 3 to 30 years. These intangible assets are subject to an impairment test when events and circumstances indicate the carrying amounts may not be recoverable.

(l) Compensation plans:

The Board of Directors has approved a profit sharing plan that provides for profit sharing with senior management of the Company and its affiliates on earnings in excess of pre-determined returns to shareholders.

The company follows the fair value method of accounting for stock-based compensation for stock option awards granted after April 1, 2003. During the period, the company recorded $229,000 (2006 – $532,000) in stock-based compensation expense for options issued to directors, officers, key employees and consultants with a corresponding increase to contributed surplus.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 2007 (year of issuance): dividend yield of 0 per cent; expected volatility of 50 per cent; risk-free interest rate of 4.10 per cent; and expected life of three to five years.

(m) Per share calculations:

Basic earnings per share are calculated using the daily weighted average number of shares outstanding.

Diluted earnings per share are calculated using the daily weighted average number of shares that would have been outstanding during the period had all dilutive potential common shares been issued at the beginning of the period, or when the underlying options warrants or convertible securities were granted or issued, if later. The treasury stock method is employed to determine the incremental number of shares that would have been outstanding had the Company used proceeds from the exercise of options to acquire shares.

2. ACQUISITIONS:

(a) Acquisitions during 2007:

On May 9, 2006, a subsidiary of the Company, acquired 100 per cent of the Class A shares and 49 per cent of the Class C shares of JovFunds Management Inc (formerly Fairway Asset Management Corporation) (JovFunds). On March 31, 2007, the remaining 51 per cent of Class C shares were acquired. Consideration for the acquisition was $11,300,000 of cash, the issuance 7,000,000 common shares at $0.88 per share, and the issuance of a convertible debenture in the principal amount of $6,000,000. The debenture is unsecured, bearing interest at 6 per cent and due May 4, 2008 (note 11). The Company also incurred acquisition costs of $42,000. A final amount owing, to a maximum of $4,000,000, is contingent upon the aggregate asset value found within a specific fund managed by JovFunds and is payable January 25, 2007 and 2008, if applicable. The excess purchase price over the estimated fair value of the net assets acquired of $29,608,000 has been recorded as goodwill and intangible assets. The acquired intangible assets consist of amortizable contracts of $17,500,000.

Jovian Annual R



34

2. ACQUISITIONS (CONTINUED):

(a) Acquisitions during 2007 (continued):

On May 19, 2006, the Company acquired control of Charterhouse PSI Management Corporation (Charterhouse), the manager of Charterhouse Preferred Share Index Corporation and Charterhouse PSI Investment Corporation, by taking up the balance of the shares of Charterhouse Holding Corporation under an earn-out arrangement for cash consideration of $300,000. The Company originally invested $250,000 in September, 2004 for the 12.5 per cent minority stake in Charterhouse. In addition, $50,000 of acquisition costs were incurred. The excess purchase price over the estimated fair value of the net assets acquired of $860,000 has been recorded as goodwill.

On May 31, 2006, a subsidiary of the Company acquired control of Horizons Funds Inc. (Horizons). Initial consideration for the acquisition was $910,000 of cash and the issuance of 2,564,972 common shares at $1.01 per share. The shares are subject to a two-year escrow agreement. The Company also incurred acquisition costs of $181,000, which was satisfied by the issuance of 135,000 common shares at $1.01 and cash consideration of $59,000. The excess purchase price over the estimated fair values of the net assets acquired of $4,038,000 has been recorded as goodwill and intangible assets. The acquired intangible assets consist of amortizable contracts of $900,000.


March 31, 2007 JovFunds Charterhouse Horizons Kemp Other Total

Total tangible

assets acquired $ 1,927,000 $ 17,000 $ 1,762,000 $ 25,000 $ – $ 3,731,000

Goodwill 12,108,000 860,000 3,138,000 174,000 (15,000) 16,265,000

Intangible assets 17,500,000 – 900,000 508,000 – 18,908,000

31,535,000 877,000 5,800,000 707,000 (15,000) 38,904,000

Less total liabilities 2,033,000 577,000 1,855,000 25,000 – 4,490,000

Less future income tax 6,000,000 – 308,000 174,000 – 6,482,000

Net assets acquired $ 23,502,000 $ 300,000 $ 3,637,000 $ 508,000 $ (15,000) $ 27,932,000

Consideration given:

Cash $ 11,342,000 $ 300,000 $ 910,000 $ 508,000 $ (15,000) $ 13,045,000

Convertible debenture 6,000,000 – – – – 6,000,000

Common shares 6,160,000 – 2,727,000 – – 8,887,000

Total consideration $ 23,502,000 $ 300,000 $ 3,637,000 $ 508,000 $ (15,000) $ 27,932,000

Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

35

On June 21, 2006, a subsidiary of the Company acquired 100 per cent of the issued and outstanding shares of Kemp Consulting Ltd. (Kemp), a provider of group insurance services, for $501,000 of cash consideration. The Company also incurred acquisition costs of $7,000. The excess purchase price over the estimated fair values of the net assets acquired of $508,000 has been recorded as amortizable customer relationships.

During the first quarter, the Company recorded the final purchase adjustment of ($15,000) related to the acquisition of the business assets of Ascot Financial Services Limited (Ascot). The adjustment has been recorded as an adjustment to goodwill.

Purchase price amounts give rise to future income tax liabilities that have been recorded in the same year in which the intangible assets are separately identified. The purchase prices have been allocated to tangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the estimated fair values of the net assets acquired has been recorded as goodwill and intangible assets.

As a result of the acquisitions completed, the Company drew down $3,000,000 on its long term operating credit facility and $2,000,000 on its general operating bank line.

(b) Acquisitions during 2006:

On April 15, 2005, a subsidiary of the Company completed the acquisition of the business assets of Ascot Financial Services Limited (Ascot). Initial cash consideration for the acquisition of business assets was $257,000 and promissory notes totaling $127,000. The company also incurred asset acquisition costs of $34,000. The Company has performed an assessment of the purchase price allocation and the entire amount of the acquisition has been recorded as goodwill. The purchase price is adjustable based upon the assets under administration of Ascot as of April 15, 2007.

During the year, the Company recorded the final purchase adjustment to goodwill of $202,000 related to the acquisition of DOCP Management Corp.

March 31, 2006 Ascot

Total tangible assets acquired $ – Goodwill 418,000Intangible assets – 418,000

Less total liabilities –

Net assets acquired $ 418,000

Consideration given: Cash $ 291,000 Note payable 127,000Common shares –

Total consideration $ 418,000

(c) Restatement:

The Company has determined that future tax liabilities related to certain intangible assets acquired upon previous years’ business acquisitions were not correctly reported in prior years. The impact of this correction is to increase the 2006 balance of goodwill in the amount of $6,515,000 (note 8) with a corresponding increase in the 2006 future tax liabilities balance (note 10). The impact of this correction on fiscal 2006 income, opening retained earnings and cash flow is not material and therefore no adjustment has been made to these accounts.

Jovian Annual R


2. ACQUISITIONS (CONTINUED):

(a) Acquisitions during 2007 (continued):


36

3. SECURITIES OWNED:

2007 2006

Securities Securities Securities Securities owned sold short owned sold short

Equities and options:

Canadian: Listed equities $ 8,311,000 $ – $ 9,475,000 $ 79,000Warrants 10,406,000 – 35,641,000 –

United States: Listed equities 242,000 – – –

Money market securities 20,581,000 – 5,049,000 –

Fixed income funds 235,000 – 11,226,000 –

Fixed income securities – – 205,000 –

Short-term commercial paper – – 10,840,000 –

Total securities, at fair value $ 39,775,000 $ – $ 72,436,000 $ 79,000

Money market securities consist of bankers’ acceptances and Government Investment Certificates which mature between April 4, 2007 and August 24, 2007 with average effective yield of 4.52% (2006 – 3.95%).

4. ACCOUNTS RECEIVABLE:

Accounts receivable are comprised of the following:

2007 2006

Commissions and fees receivable $ 7,671,000 $ 3,453,000

Due from BetaPro, a related party 854,000 159,000

Management fees 3,293,000 1,169,000

Promissory note – 1,200,000

Other 2,765,000 1,415,000

$ 14,583,000 $ 7,396,000

5. OTHER ASSETS:

Other assets are comprised of the following:

2007 2006

Deposit with carrying broker $ 250,000 $ 250,000

Investments: Mountainview Asset Management Limited 100,000 100,000 Charterhouse Holdings Corporation [note 2(a)] – 250,000 Horizons Funds Inc. [note 2(a)] – 100,000

Employee Loans 1,608,000 570,000

Other 226,000 190,000

$ 2,184,000 $ 1,460,000


The Company has a $250,000 fixed income security with the carrying broker as a margin deposit.

A subsidiary of the Company has granted loans to certain employees which are non-interest bearing and repayable over terms of three to five years, or on demand upon termination of employment.

Pursuant to regulations of certain provincial securities commissions, contingency fund deposits are required during the tenure of the Company’s license to conduct business.

6. DEFERRED CHARGES:

Deferred charges, net of accumulated amortization of $2,808,000 (2006 – $1,833,000), are as follows:

2007 2006

Deferred finance charges $ 13,000 $ 143,000

Deferred transition and transfer costs 916,000 817,000

$ 929,000 $ 960,000

Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

37

7. PROPERTY AND EQUIPMENT:

Accumulated Net bookMarch 31, 2007 Cost amortization value

Furniture and equipment $ 1,662,000 $ 727,000 $ 935,000

Computer equipment 1,829,000 718,000 1,111,000

Leasehold improvements 2,260,000 566,000 1,694,000

Application software 1,362,000 1,150,000 212,000

Proprietary software 1,150,000 748,000 402,000

$ 8,263,000 $ 3,909,000 $ 4,354,000

Accumulated Net bookMarch 31, 2006 Cost amortization value

Furniture and equipment $ 1,129,000 $ 404,000 $ 725,000

Computer equipment 988,000 332,000 656,000

Leasehold improvements 1,642,000 452,000 1,190,000

Application software 1,048,000 962,000 86,000

Proprietary software 1,150,000 518,000 632,000

$ 5,957,000 $ 2,668,000 $ 3,289,000

8. GOODWILL AND INTANGIBLE ASSETS:

Gross carrying Accumulated Net carryingMarch 31, 2007 value amortization value

Finite-lived intangible assets: Customer relationships $ 16,240,000 $ 2,616,000 $ 13,624,000 Contracts 19,758,000 1,464,000 18,294,000

Indefinite-lived intangible assets:Trade names 1,050,000 – 1,050,000

37,048,000 4,080,000 32,968,000Goodwill 38,065,000 – 38,065,000

$ 75,113,000 $ 4,080,000 $ 71,033,000

Throughout the year, subsidiaries of the Company acquired books of accounts totaling $640,000, which have been recorded as amortizable customer relationships

Gross carrying Accumulated Net carrying valueMarch 31, 2006 value amortization (restated) (Note 2 (c))

Finite-lived intangible assets: Customer relationships $ 15,350,000 $ 1,474,000 $ 13,876,000 Contracts 1,100,000 137,000 963,000

Indefinite-lived intangible assets: Trade names 1,050,000 – 1,050,000

17,500,000 1,611,000 15,889,000 Goodwill 21,800,000 – 21,800,000

$ 39,300,000 $ 1,611,000 $ 37,689,000

9. ACCOUNTS PAYABLE AND ACCRUED CHARGES:

Accounts payable and accrued charges are comprised of the following:

2007 2006

Trade $ 13,568,000 $ 15,860,000 Compensation 18,600,000 32,517,000Due to issuer 7,500,000 – Due to carrying broker 2,955,000 –

$ 42,623,000 $ 48,377,000


Jovian Annual R


38

10. INCOME TAXES:

The components of the total income tax provision are as follows:

2007 2006

Current income taxes $ 9,000,000 $ 1,461,000

Future income taxes (6,354,000) 5,141,000

Income tax $ 2,646,000 $ 6,602,000

The components of the future income tax balance are as follows:

2007 2006 (restated)

(note 2(c))

Future income tax asset (liability):

Accrued liabilities $ 1,514,000 $ 1,363,000

Deferred charges 145,000 (85,000)

Intangible assets (11,829,000) (6,093,000)

Non-capital loss carry-forwards 4,346,000 1,794,000

Property and equipment (414,000) (366,000)

Securities owned (1,765,000) (6,299,000)

Other temporary differences 360,000 466,000

(7,643,000) (9,220,000)

Valuation allowance (3,642,000) (1,934,000)

$ (11,285,000) $ (11,154,000)

The total recovery for income taxes in the consolidated statement of operations is at a rate less than the combined federal and provincial statutory income tax rate of the current period for the following reasons:

2007 2006

Earnings before income taxes $ 5,021,000 $ 12,142,000

Combined statutory rate 35.17% 35.82%

Income tax expense based on statutory $ 1,766,000 $ 4,349,000income tax rate

Recognition of income tax rate change 130,000 23,000on future income taxes

Effect on non-deductible expenses 32,000 1,068,000

Other (43,000) 460,000

Change in valuation allowance 761,000 702,000

$ 2,646,000 $ 6,602,000

The Company has non-capital loss carry-forwards for tax purposes which expire as follows:

Year ending March 31:

2008 $ 414,000

2009 139,000

2010 645,000

2011 314,000

2012 2,000

2013 170,000

2014 1,420,000

2015 1,537,000

2025 9,000

2026 1,937,000

2027 6,544,000

$ 13,131,000


Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

39

11. LONG-TERM DEBT:

Details of long-term debt are as follows:

2007 2006

Operating credit facility:

Secured by a general security agreement over all assets of the Company:

$28,000,000 credit facility, bearing interest at prime plus 3.25%, with a current maturity value of $15,000,000 matures on December 15, 2007. Provides for the issuance of up to 2,925,000 additional common share purchase warrants. All warrants will be exercisable for three years from issue at a price of $0.75 per common share. $ 14,895,000 $ 11,738,000

Secured debentures:

Secured by a general security agreement over the assets of T.E. Financial Consultants Ltd. subordinate to the operating credit facility:

Callable, bearing interest at 6%, due December 12, 2008, repayable interest only semi-annually until maturity. The principal is convertible at the option of the holder into common shares of the Company based on a formula derived from the 20-day weighted average trading price of the common shares.

3,500,000 –

Callable, bearing interest at 8%, with a maturity value of $4,409,000, due December 12, 2006, repayable in full upon maturity. This debenture was renegotiated during the year. – 4,200,000

Carried forward 18,395,000 15,938,000

2007 2006

Brought forward $ 18,395,000 $ 15,938,000

Secured by a general security agreement over the assets of a subsidiary of the Company:

Subordinated promissory note, non-interest bearing, repayable in full February 28, 2009 581,000 –

Other secured debt:

Vendor take-back promissory note bearing interest at 6.7825%, due January 1, 2007, repaid in cash during the year.

– 500,000

Other long-term debt:

Unsecured:

Convertible debentures, bearing interest at 6%, due May 1, 2008, repayable interest only semi-annually until maturity. The principal is convertible at the option of the holders into common shares of the Company at $0.95 per share, and contains a forced conversion component based on the trading price of the Company’s shares. 6,000,000 –

Series 1 convertible bonds, with a face value of 587,000, bearing interest at 7%, due December 14, 2006, repaid in cash during the year.

– 587,000

Carried forward 24,976,000 17,025,000


Jovian Annual R


40

2007 2006

Brought forward $ 24,976,000 $ 17,025,000

Non-interest bearing with a maturity value of $1,160,000, repayable in full October 27, 2007, repayable in cash or common shares. 1,088,000 971,000

Non-interest bearing, installments of $42,000 due April 18, 2006, October 18, 2006 and April 18, 2007. Amount outstanding is subject to purchase price adjustment. 37,000 126,000

Promissory note bearing interest at 6.0% from March 31, 2005, due July 15, 2006, repaid in cash during the year.

– 387,000

Promissory note, quarterly installments of 6% of all gross fees payable to Jovian Asset Management Inc. by the North American Index Momentum RSP Fund during each quarter within 15 days of the quarter during which the assets under management of the Fund reach or have exceeded $10 million. As at year end, the fund was at $9.8 million. Subsequent to year-end, the fund exceeded $10 million. 150,000 150,000

Other loans and capital leases:

Capital lease, monthly payments of $9,000, final payment due June 1, 2012 380,000 –

26,631,000 18,659,000

Current portion 16,247,000 5,800,000

$ 10,384,000 $ 12,859,000

Principal payments in aggregate are due as follows:

2008 $ 16,247,000

2009 10,166,000

2010 92,000

2011 100,000

2012 26,000

$ 26,631,000

General operating banking line:

As at March 31, 2007, the Company had drawn $1,998,000 of its general operating banking line (2006 – nil). The operating line of $2,000,000 was secured by a general security agreement over all the assets of the company and is reviewed annually on July 31.

Capital lease:

The Company has entered into a capital lease agreement to finance the purchase of equipment to the maximum of $750,000. As at March 31, 2007, the Company has financed $435,000 due June 30, 2011 with monthly payments of $9,000. Subsequent to year end, the Company financed an additional $244,000 due June 30, 2011 with monthly payments of $6,000.


Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

11. LONG-TERM DEBT (CONTINUED):

41

12. SHARE REDEMPTION LIABILITY:

As per a shareholder agreement with a certain subsidiary, the company is obligated to repurchase the shares of certain individuals upon their death, disability, dismissal (without cause) or retirement. These shares have been valued based on a prescribed formula and disclosed as liability of the company. During the year, certain minority shareholders amended the terms of their shareholders agreement and removed the obligation of the company to repurchase their shares upon their death, disability, dismissal (without cause) or retirement. The amendment resulted in the dismissal of the share redemption liability associated with these shares of approximately $3.5 million. The amount was added to contributed surplus. The remaining minority shareholders retain their redemption privileges as per their shareholding terms and continue to be valued under the share redemption liability caption. As at March 31, 2007, the repurchase obligation is $287,000 (2006 – $3,415,000).

13. CAPITAL STOCK:

Authorized: Unlimited number of common shares Unlimited number of preferred shares issuable in series: 10,265,500 Series 1 convertible preferred shares Unlimited number of Series 2 preferred shares Unlimited number of Series 3 preferred shares 145,000 Series 4 preferred shares 222,000 Series 5 preferred shares

13. CAPITAL STOCK (CONTINUED):

Issued:

Year ended March 31, 2007:

Number of shares Amount

Common shares

Balance, beginning of year 106,539,589 $ 46,071,000

Exercise of options 785,131 417,000 Employee share purchase plans 1,094,855 934,000 Acquisitions 9,699,972 8,886,000 Transferred from due to vendor 112,360 100,000 Conversion of Series 1 preferred shares 1,033,369 173,000

Balance, end of year 119,265,276 $ 56,581,000

Series 1 preferred shares

Balance, beginning of year 1,039,293 $ 174,000 Conversion to common shares 1,033,369 173,000

Balance, end of year 5,924 $ 1,000

Closing balance $ 56,582,000


Jovian Annual R


42


Year ended March 31, 2006:

Number of shares Amount

Common shares

Balance, beginning of year 76,462,449 $ 26,267,000

Exercise of options 648,331 259,000 Employee share purchase plans 853,153 692,000 Private placement 21,000,000 17,479,000 Transferred from due to vendor 111,111 128,000 Conversion of Series 1 preferred shares 7,464,545 1,246,000

Balance, end of year 106,539,589 $ 46,071,000

Series 1 preferred shares

Balance, beginning of year 8,503,838 $ 1,420,000Conversion to common shares (7,464,545) (1,246,000)

Balance, end of year 1,039,293 $ 174,000

Closing balance $ 46,245,000 Stock options:

The Company has a stock option plan that permits 12,000,000 (March 31, 2006 – 9,000,000) options to be granted to eligible participants subject to certain requirements. There are outstanding options to purchase 7,694,810 (March 31, 2006 – 7,154,101) common shares which have been issued to directors, officers, key employees and consultants of the company. A summary of the status of the Company’s stock option plan as of March 31, 2007 and changes during the period is presented below:

March 31, 2007 Options Weighted average exercise price

Balance, beginning of year 7,154,101 $ 0.50Granted 1,447,674 0.86Exercised (785,131) 0.53Expired (121,834) 0.65

Balance, end of year 7,694,810 $ 0.56

March 31, 2006 Options Weighted average exerciseprice

Balance, beginning of year 7,845,667 $ 0.48Granted 310,100 0.77Exercised (648,331) 0.40Expired (353,335) 0.40

Balance, end of year 7,154,101 $ 0.50

The following options to purchase common shares were outstanding as at March 31, 2007.

Exercise Expiry date 2007 Exercisable at price by fiscal Number March 31, year outstanding 2007

Year granted:

March 31, 2004 $ 0.40 2009 4,397,136 4,397,136March 31, 2005 0.70 2010 1,600,000 1,516,667March 31, 2006 0.79 2011 250,000 250,000March 31, 2007 0.86 2012 1,447,674 –

7,694,810 6,163,803


Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

43


Warrants:

At March 31, 2007 the Company has 4,600,000 warrants outstanding (March 31, 2006 – 4,450,000) which entitle the holder to purchase one common share of the Company for each warrant at $0.75 per common share.

During 2007, the Company issued 650,000 warrants, with an assigned cost of $59,000, as a result of drawing $3,000,000 on the credit facility. In addition, 500,000 warrants valued at $55,000 were exercised and the underlying value of the shares due on exercise but not issued has been recorded as due for share issuance.

Due to vendors:

The Company’s obligation to issue capital stock to satisfy consideration in relation to acquisitions and the exercise of stock options has been recorded and is reflected as a component of shareholders’ equity. During 2007 the Company satisfied all its outstanding obligations.

Contributed surplus:

2007 2006

Opening balance $ 2,648,000 $ 2,116,000

Stock-based compensation 229,000 532,000

Amendment of shareholders agreement (note 12) 3,482,000 –

$ 6,359,000 $ 2,648,000

Shares to be issued:

The Company’s obligation to issue capital stock to satisfy consideration in relation to the exercise of warrants has been recorded and is reflected as a component of shareholders’ equity.

Earnings per share:

2007 2006

Earnings $ 1,969,000 $ 5,446,000

Average number of common shares outstanding 117,044,506 90,336,911 Add• Potential conversion of preferred shares 5,924 1,039,293 • Potential conversion of warrants 862,500 738,663 • Potential conversion of outstanding stock options 2,910,590 3,113,787 • Potential conversion of convertible debt 4,117,647 4,666,667

Average number of common shares outstanding

• Fully diluted basis 124,941,167 99,895,321

Earnings per common share Basic $ 0.02 $ 0.06

Fully diluted 0.02 0.05


Jovian Annual R


44

14. FINANCIAL INSTRUMENTS:

Fair values:

The fair values of cash, accounts receivables, accounts payable and accrued liabilities approximate their carrying value due to their current nature. The fair value of long-term debt approximates its carrying value, since they bear interest at rates comparable to the prevailing market rates.

Credit risk:

The Company’s financial assets that are exposed to credit risk consist primarily of accounts receivable. The Company earns its commissions and fees from various financial institutions for placing funds for a large number of customers broadly dispersed across Canada.

Interest rate risk:

The Company is exposed to interest rate risk as its operating credit facility bears interest at a variable rate.

15. RELATED PARTY TRANSACTIONS:

The Company entered into the following transactions with related parties which have been recorded at the exchange amount which is the amount that has been agreed to by the related parties.

During the year, the Company paid rents and signage costs of $415,000 (2006 – $407,000) to companies controlled by a significant shareholder of the Company.

During the year, the Company received commissions and fees of $264,000 (2006 – $62,000) and other revenue of $42,000 (2006 – $nil) from a related company.

Security trades executed by the Company for directors and officers are transacted under the terms and conditions applicable to all customers.

16. COMMITMENTS AND CONTINGENCIES:

(a) The Company has entered into agreements to lease premises and equipment for various periods until 2017. Minimum rent payable for premises and equipment in the aggregate and for each of the next five years is as follows:

2008 $ 3,724,000

2009 3,298,000

2010 3,068,000

2011 2,845,000

2012 2,043,000

Thereafter 6,626,000

$ 21,604,000

The amounts noted for property lease commitments are exclusive of the Company’s obligation in respect of utility, common area and realty tax costs.

(b) In connection with its operations, the Company is from time to time subject to regulatory examinations, legal actions, or is named as defendant in actions for damages and costs allegedly sustained by the plaintiffs. Although it is difficult to predict the outcome of such legal actions, based on current knowledge and consultation with legal counsel, management does not expect the outcome of any of these matters, individually or in aggregate, to have a material adverse effect on the Company’s consolidated financial position in excess of the amounts provided.


Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

45

For the year ended March 31, 2007

Consolidated Wealth Asset Corporate Jovian Management Management and Other

Revenue $128,369,000 $78,900,000 $48,968,000 $501,000

Expenses:



115,501,000 69,619,000 38,228,000 7,654,000


Interest on long term debt 2,715,000 – – 2,715,000

Amortization 4,834,000 826,000 3,167,000 841,000


7,847,000 826,000 3,465,000 3,556,000

Earnings (loss) before income taxes and non-controlling interest 5,021,000 8,455,000 7,275,000 (10,709,000)





Assets $ 89,279,000 $ 59,927,000 $ 22,425,000 $ 6,927,000

Goodwill & intangible assets 71,033,000 15,188,000 55,845,000 –


Jovian Annual R


17. SEGMENTED INFORMATION:

The Company has determined that it operates in two industry segments as follows:

Wealth management – the administration of private wealth assets and distribution of financial solutions.

Asset management – the management and support of financial assets.

“Corporate and other” includes revenue and expenses not specifically allocatable to wealth and asset management. Corporate compensation and benefits as well as general administrative expenses are comprised of amounts paid to, and in support of, corporate personnel, including executive, legal, information technology, and accounting. This also includes any costs directly related to being a public issuer.

The Company’s industry segments are managed separately because each business offers different services and requires different personnel and marketing strategies. The Company evaluates the performance of each business based on earnings before interest, taxes, depreciation and amortization (“EBITDA”).

The Company does not allocate interest on long term debt on acquisitions, nor is amortization associated to acquisitions assigned to a business unit.

46

18. SUBSEQUENT EVENTS:

(a) Acquisitions:

On April 20, 2007, JovFunds completed a $2.35 million USD investment in Tailwind Financial Inc. (“Tailwind”), a special purpose acquisition company formed in the U.S. to acquire one or more businesses in the financial services industry. The investment in Tailwind is via the purchase of 4.7 million common share warrants at $1 USD each by Parkwood Holdings Ltd. (“Parkwood”), a Canadian company that is 50% owned by JovFunds. These warrants have the same terms as those sold under the prospectus, including an exercise price of $6 USD each per warrant. Parkwood also holds approximately 3.5 million common shares of Tailwind, issued for nominal value.

(b) Equity plan:

Subsequent to year end, the company announced that its subsidiary MGI Securities Inc. (MGI) had created an Equity Plan for employees. The purpose of the plan is to attract and retain key professionals by providing eligible employees the ability to purchase, in the aggregate, up to 30% of the outstanding shares of MGI.

19. COMPARATIVE FIGURES:

Certain comparative figures have been reclassified to conform with the financial statement presentation adopted in the current year.


Jovi

an A

nnua

l Rep

ort |

| Fi

nanc

ial

Stat

emen

ts

For the year ended March 31, 2006

Consolidated Wealth Asset Corporate Jovian Management Management and Other

Revenue $ 131,767,000 $ 96,408,000 $ 34,896,000 $ 463,000

Expenses:



114,129,000 77,541,000 29,795,000 6,793,000


Interest on long term debt 1,882,000 – 9,000 1,873,000

Amortization 2,750,000 777,000 828,000 1,145,000


5,496,000 777,000 1,701,000 3,018,000

Earnings (loss) before income taxes and non-controlling interest 12,142,000 18,090,000 3,400,000 (9,348,000)





Assets $ 101,810,000 $ 72,950,000 $ 14,820,000 $ 14,040,000

Goodwill & intangible assets 37,689,000 14,526,000 23,163,000 –

17. SEGMENTED INFORMATION (CONTINUED):

Board of Directors Thomas J. Rice, CLU Chairman of the Board

Philip Armstrong, BA (Law) Hons

Mark L. Arthur, MBA, CFA

Bradley D. Griffiths, B Comm., CA

* Melvin A. MacRae, CA

* Patrick Matthews, B Comm., CA

Donald S. McFarlane, BA Economics

* John M. McKimm, B Comm., MBA, LLB, FCSI

Derek Nelson, B Comm.

* Donald Penny, CM, FCA, LLD

Bradley D. Rice

* independent director

Audit and Risk Management CommitteeDonald Penny, Chair Patrick Matthews John McKimm

Compensation CommitteeMelvin MacRae, Chair Patrick Matthews John McKimm

Corporate Governance CommitteePatrick Matthews, Chair Donald Penny Melvin MacRae

Shares and Stock Exchange ListingThe common shares for Jovian Capital Corporation are listed on the TSX Venture Exchange under the symbol JVN.

Shareholder Information

Registrar and Transfer AgentsComputershare Trust Company of Canada 9th Floor, 100 University Avenue Toronto, ON M5J 2Y1

AuditorsKPMG LLP Suite 2000, One Lombard Place Winnipeg, MB R3B 0X6

Legal CounselMcCarthy Tetrault LLP Suite 4700 Toronto Dominion Bank Tower Toronto, ON M5K 1E6

BanksCanadian Western Bank The Royal Bank of Canada Scotiabank

Annual General MeetingThursday, August 9, 2007 1:00 p.m. The Albany Club 91 King Street East Toronto, ON

Jovian Annual R


47

HEAD OFFICE491 Portage Avenue Winnipeg, MB R3B 2E4 Ph: 204 786-0586 Fax: 204 774-1873

EXECUTIVE OFFICES26 Wellington Street East, Suite 920 Toronto, ON M5E 1S2 Ph: 416 933-5750 Toll free: 1 866 234-2552 Fax: 416 933-5751

www.joviancapital.com

Jovian Capital

Documents

asset management platform

betapro management

asset management companies

asset management business

jovinvestment management

management team

wealth management platform

wealth management companies