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Global Cash Access Reports 2014 Fourth Quarter Revenue of $152.1 Million and Adjusted EBITDA of $24.0 Million

LAS VEGAS, March 10, 2015 (GLOBE NEWSWIRE) — Global Cash Access Holdings, Inc. (GCA) (“GCA” or the “Company”) today reported financial results for the fourth quarter and full year ended December 31, 2014. On December 19, 2014, GCA completed the acquisition of Multimedia Games Holding Company, Inc. (“Multimedia Games”), creating a diversified organization dedicated to providing integrated payments solutions, video and mechanical reel gaming content and technology solutions, as well as compliance and efficiency software. Unless otherwise noted, all results for the 2014 fourth quarter and full year referenced below include 13 days of operations from Multimedia Games.

Three Months Ended Three Months Ended
December 31, 2014 December 31, 2013
(in millions, except for per share amounts)

Revenue $152.1 $140.5

Operating income (1) $0.4 $11.2

Net (Loss) Income (1) ($5.7) $5.7

Net (Loss) Income per Diluted Share (1) ($0.09) $0.08

Diluted Shares Outstanding 66.4 67.4

Adjusted EBITDA (2) $24.0 $17.1

Cash Earnings (3) $15.6 $13.0

Cash Earnings Per Share (“Cash EPS”) (4) $0.23 $0.19

(1) Operating income, Net Loss and Net Loss per Diluted Share for the three months ended December 31, 2014 includes $10.0 million of acquisition costs and purchase accounting adjustments and a $3.1 million asset impairment charge. (2) Adjusted EBITDA is defined as operating income plus depreciation and amortization, non-cash compensation, asset impairment charge, accretion of contract rights, acquisition costs and purchase accounting adjustments. (3) Cash Earnings is defined as net income plus non-cash compensation, deferred income tax, amortization, asset impairment charge, accretion of contract rights, acquisition costs, purchase accounting adjustments and write-off of deferred loan fees. (4) Cash Earnings Per Share (“Cash EPS”) is defined as Cash Earnings divided by the weighted average number of diluted shares of common stock outstanding.

Ram V. Chary, President and Chief Executive Officer of GCA, commented, “The completion of the acquisition of Multimedia Games in December has resulted in the combination of differentiated, industry-leading solutions offered by both GCA and Multimedia Games, which enables us to present a unique new value proposition to casino operators. We intend to leverage our slot gaming entertainment, payments and compliance solutions to bring enhanced offerings to market that provide excellent returns on our customers’ capital investments in gaming technology. In the short time since acquiring Multimedia Games, we have made measurable progress on integrating our two organizations and are tracking to our objectives.”

Fourth Quarter 2014 Results Overview (includes 13 days of operations of Multimedia Games)

Revenues increased $11.6 million, or 8% compared to the same period last year, to $152.1 million in the fourth quarter of 2014. Fourth quarter 2014 revenue includes $7.4 million from Multimedia Games and a $4.2 million, or 3%, increase in legacy GCA revenue. Operating income, inclusive of a $9.7 million impact for acquisition costs, $0.3 million for purchase accounting adjustments, and an asset impairment charge of $3.1 million, was $0.4 million in the 2014 fourth quarter compared to operating income of $11.2 million for the 2013 fourth quarter. Adjusted EBITDA increased $6.9 million, or 40%, to $24.0 million for the fourth quarter of 2014, compared to Adjusted EBITDA of $17.1 million in the same period last year. The increase in Adjusted EBITDA includes $4.0 million from Multimedia Games.

GCA recorded a loss from operations before income tax provision of $7.5 million compared to income from operations before income tax provision of $9.1 million in the fourth quarter of 2013. Diluted loss per share from continuing operations was $0.09 compared to diluted earnings per share of $0.08 for the 2013 fourth quarter. Cash EPS increased to $0.23 for the fourth quarter of 2014 from Cash EPS of $0.19 in the prior-year period. Excluding the operations of Multimedia Games, Cash EPS was $0.24 for the quarter.

Randy Taylor, Executive Vice President and Chief Financial Officer, commented, “Since completing our acquisition of Multimedia Games less than three months ago, we have been focused on our integration initiatives. As of December 31, 2014, we have eliminated approximately $10.9 million on an annual run rate basis from our overall cost structure and we expect to achieve our targeted annual run rate of $24 million in cost synergies by calendar year end. As part of our integration plans, later this year we intend to consolidate all of our manufacturing operations which will significantly enhance manufacturing efficiencies and reduce costs. Looking forward, our plan continues to focus on the deployment of cash to reduce leverage.”

Multimedia Games Full Quarter Comparative Results

The information set forth in the table below presents standalone historical data for Multimedia Games related to the three months ended December 31, 2014 (inclusive of the 79 days prior to the acquisition by GCA on December 19, 2014) and December 31, 2013. The information set forth in the table below should be read in conjunction with the historical financial statements of Multimedia Games that are incorporated by reference in the Company’s Current Report on Form 8-K/A filed with the SEC on February 27, 2015.

Three Months Ended Three Months Ended
December 31, 2014 December 31, 2013
(in millions, except for unit amounts and prices)

Revenue $48.0 $59.2

Operating (loss) income (1) ($7.4) $15.0

Adjusted EBITDA (2) $22.8 $29.2

Units Sold (3) 537 1,375

Average Sales Price (ASP) $16,318 $17,366 Domestic Participation Installed Units:(4)

Average 13,157 12,520 Quarter End 13,287 12,657

(1) Operating (loss) income for the three months ended December 31, 2014 includes $13.4 million of acquisition costs and purchase accounting adjustments. (2) Adjusted EBITDA is defined as operating income plus depreciation and amortization, non-cash compensation, accretion of contract rights, acquisition costs and purchase accounting adjustments. (3) Unit sales in the three month period ended December 31, 2013, included the sale of 499 units to a single customer in Alabama, of which 221 units were previously on a revenue share arrangement. (4) The installed base (quarter-end) and installed base (average) for the three months ended December 31, 2014, reflect the temporary removal from the installed base of 123 units at a customer’s facility in Oklahoma as the facility is undergoing a renovation. The units were initially removed from the installed base on October 1, 2014.

On a pro-forma basis, as if the acquisition of Multimedia Games was completed on January 1, 2014, the combined company would have reported full year 2014 revenue of $792.6 million and Adjusted EBITDA of $186.9 million and 2014 fourth quarter revenue of $192.7 million and Adjusted EBITDA of $42.7 million.

2015 Outlook

Reflecting the current operating and competitive environment, GCA estimates Adjusted EBITDA of between $218 million and $228 million in 2015 based on following key assumptions:

Single digit revenue growth in our Payments business; Double-digit revenue growth in our Games business; Double-digit increase in research and development costs related to the Games business; Depreciation and amortization of $130 million to $135 million driven by our purchase price allocation for Multimedia Games, which significantly increased amortizable intangible assets; Cap-ex in the range of $60 million to $70 million, including contract rights; and, Interest expense of approximately $95 million exclusive of amortization of debt issuance costs.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its fourth quarter and full year 2014 results today at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (888) 656-7430 or for international callers by dialing (913) 981-5582. A replay will be available at 8:00 p.m. ET and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the pin number is 9117092. The replay will be available until March 17, 2015. The call will be webcast live from the Company’s website at www.gcainc.com under the Investor Relations section.

Non-GAAP Financial Information

In order to enhance investor understanding of the underlying trends in our business and to provide for better comparability between periods in different years, we are providing in this press release EBITDA, Adjusted EBITDA, Cash Earnings and Cash EPS on a supplemental basis. We define EBITDA as earnings before interest, taxes, depreciation and amortization; Adjusted EBITDA as EBITDA adjusted for non-cash compensation expense, asset impairment charge, accretion of contract rights, acquisition costs and purchase accounting adjustments; Cash Earnings as net income plus non-cash compensation, deferred income tax, amortization, asset impairment charge, accretion of contract rights, acquisition costs, purchase accounting adjustments and write-off of deferred loan fees; and Cash EPS as Cash Earnings divided by our diluted weighted average number of shares of common stock outstanding. We present Adjusted EBITDA and Cash EPS as we use this information to manage our business and consider these measures to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our credit facility, senior secured notes and senior unsecured notes require us to comply with a consolidated secured leverage ratio that include performance metrics substantially similar to Adjusted EBITDA. Reconciliations between GAAP measures and non-GAAP measures and between actual results and adjusted results are provided at the end of this press release. EBITDA, Adjusted EBITDA, Cash Earnings and Cash EPS are not measures of financial performance under United States Generally Accepted Accounting Principles (“GAAP”). Accordingly, they should not be considered in isolation or as a substitute for, and should be read in conjunction with, our net income, operating income, basic or diluted earnings per share or cash flow data prepared in accordance with GAAP.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements included in this press release, other than statements that are purely historical, are forward-looking statements. Words such as “believes,” “intends,” “expects,” “plan,” “estimate” and similar expressions also identify forward-looking statements. Forward-looking statements in this press release include, without limitation, our estimates of 2015 Adjusted EBITDA and the assumptions and factors upon which it is based.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or assumed, including but not limited to the following: our ability to replace revenue associated with terminated contracts; margin degradation from contract renewals; our ability to introduce new products and services; our ability to execute on mergers, acquisitions and/or strategic alliances, including our ability to integrate Multimedia Games; gaming establishment and patron preferences; our ability to successfully complete the conversion of our third-party processor; our ability to comply with the Europay, MasterCard and Visa global standard for cards equipped with computer chips (“EMV”); national and international economic conditions; changes in gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties; competitive pressures; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; inaccuracies in underlying operating assumptions; unanticipated expenses or capital needs; technological obsolescence; and employee turnover. If any of these assumptions prove to be incorrect, the results contemplated by the forward-looking statements regarding our future results of operations are unlikely to be realized.

The forward-looking statements in this press release are subject to additional risks and uncertainties set forth under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report filed on Form 10-K on March 11, 2014, and subsequent periodic reports and are based on information available to us on the date hereof. We do not intend, and assume no obligation, to update any forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release.

About GCA

GCA is dedicated to providing integrated gaming payments solutions, video and mechanical reel gaming content and technology solutions, as well as compliance and efficiency software. The Company’s Payments business provides: (a) access to cash at gaming facilities via Automated Teller Machine (“ATM”) cash withdrawals, credit card cash access transactions, point-of-sale (“POS”) debit card transactions, and check verification and warranty services; (b) fully integrated gaming industry kiosks that provide cash access and related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and, (e) online payment processing solutions for gaming operators in States that offer intra-state, Internet-based gaming and lottery activities. The Company’s Games business, under the Multimedia Games brand, provides: (a) comprehensive content, electronic gaming units and systems for Native American and commercial casinos, including the award-winning TournEvent(R) slot tournament solution; and, (b) the central determinant system for the video lottery terminals (“VLTs”) installed at racetracks in the State of New York. More information is available at GCA’s website at www.gcainc.com.

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except earnings per share amounts)

Year Ended December 31,
2014 2013 2012

Revenues $ 593,053 $ 582,444 $ 584,486

Costs and expenses

Cost of revenues (exclusive of depreciation and amortization) 440,071 439,794 436,059 Operating expenses 95,452 76,562 75,806 Research and Development 804 — — Depreciation 8,745 7,350 6,843 Amortization 14,199 9,588 9,796

Total costs and expenses 559,271 533,294 528,504

Operating income 33,782 49,150 55,982

Other expenses

Interest expense, net of interest income 10,756 10,265 15,519 Loss on extinguishment of debt 2,725 — —

Total other expenses 13,481 10,265 15,519

Income from operations before tax 20,301 38,885 40,463

Income tax provision 8,161 14,487 14,774

Net income 12,140 24,398 25,689

Foreign currency translation (1,258) 269 218

Comprehensive income $ 10,882 $ 24,667 $ 25,907

Earnings per share

Basic $ 0.18 $ 0.37 $ 0.39 Diluted $ 0.18 $ 0.36 $ 0.38

Weighted average common shares outstanding

Basic 65,780 66,014 65,933 Diluted 66,863 67,205 67,337

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
SELECTED BALANCE SHEET AND CASH FLOWS INFORMATION
(In thousands)

Year Ended December 31, Selected Balance Sheet Information: 2014 2013 Current assets

Cash and cash equivalents
$ 89,095 $ 114,254 Settlement receivables
43,288 38,265

Current liabilities

Settlement liabilities
119,157 145,022 Current portion of long-term debt
10,000 1,030

Non-current liabilities

Long-term debt, less current portion and original issue discount
1,178,787 101,970

Total stockholders’ equity 231,473 218,604

Year Ended December 31, Selected Cash Flows Information: 2014 2013 2012
Cash flows from investing activities

Acquisitions, net of cash acquired $ (1,072,819) $ — $ — Capital expenditures (18,021) (13,900) (12,786)

Cash flows from financing activities

Proceeds from long-term debt 1,200,000 — —

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO CASH EARNINGS
AND OPERATING INCOME TO EBITDA AND ADJUSTED EBITDA
(unaudited)


Three months ended December 31, Twelve months ended December 31,
December 31, 2014 December 31, 2013 December 31, 2014 December 31, 2013 Reconciliation of net income to cash earnings (amounts in thousands, except earnings per share amounts)

Net (loss) income $ (5,749) $ 5,704 $ 12,140 $ 24,398 Equity compensation expense 1,343 1,376 8,876 5,078 Deferred income tax (1,941) 3,308 6,613 13,643 Amortization 5,723 2,614 14,199 9,588 Asset Impairment 3,129 — 3,129 — Accretion of contract rights 301 — 301 — Acquisition costs and purchase accounting adjustments 10,041 — 10,995 — Write-off of deferred loan fees 2,725 — 2,725 —

Cash earnings $ 15,572 $ 13,002 $ 58,978 $ 52,707

Diluted weighted average number of common shares outstanding 66,397 67,394 66,863 67,205

Diluted cash earnings per share (“Cash EPS”) $ 0.23 $ 0.19 $ 0.88 $ 0.78

Reconciliation of operating income to EBITDA and Adjusted EBITDA

Operating income $ 376 $ 11,196 $ 33,782 $ 49,150 Plus: depreciation and amortization 8,766 4,543 22,944 16,938

EBITDA $ 9,142 $ 15,739 $ 56,726 $ 66,088
Equity compensation expense 1,343 1,376 8,876 5,078 Asset Impairment 3,129 — 3,129 — Accretion of contract rights 301 — 301 — Acquisition costs and purchase accounting adjustments 10,041 — 10,995 —

Adjusted EBITDA $ 23,956 $ 17,115 $ 80,027 $ 71,166

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF PROJECTED OPERATING INCOME TO PROJECTED EBITDA
AND PROJECTED ADJUSTED EBITDA
FOR THE YEAR ENDING DECEMBER 31, 2015

2015 Guidance Range1
Low High

Reconciliation of projected operating income to projected EBITDA and projected Adjusted EBITDA

Projected operating income $ 79,800 $ 89,800 Plus: projected depreciation and projected amortization 133,700 133,700

Projected EBITDA $ 213,500 $ 223,500

Projected equity compensation expense 9,200 9,200 Projected accretion of contract rights 9,700 9,700 Projected non-recurring litigation settlement (14,400) (14,400)

Projected Adjusted EBITDA $ 218,000 $ 228,000

Note:

1. All figures presented are projected estimates for the year ending December 31, 2015.

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
OTHER INFORMATION AND DATA
(unaudited for other data)
(amounts in thousands, unless otherwise noted)

For the Year Ended December 31,
2014 2013 2012

Revenues

Cash advance $ 233,950 $ 231,134 $ 227,517 ATM 281,469 286,049 303,159 Check services 21,118 21,611 25,401 Games 7,406 — — Other 49,110 43,650 28,409 Corporate — — — Total revenues $ 593,053 $ 582,444 $ 584,486

Operating income

Cash advance $ 63,565 $ 60,977 $ 63,785 ATM 24,934 25,347 32,333 Check services 10,812 12,365 13,930 Games 2,151 — — Other 22,107 19,631 14,457 Corporate (89,787) (69,170) (68,523) Total operating income $ 33,782 $ 49,150 $ 55,982

For the Year Ended December 31,
2014 2013 2012

Other data

Aggregate dollar amount processed (in billions)

Cash advance $ 5.0 $ 4.9 $ 4.8 ATM $ 12.7 $ 12.9 $ 13.6 Check warranty $ 1.1 $ 1.1 $ 1.2 Number of transactions completed (in millions)

Cash advance 8.8 8.8 9.0 ATM 65.0 66.2 72.3 Check warranty 3.6 3.7 4.3 View photo.FinanceInvestment & Company InformationOperating income Contact: Investor Relations
(702) 262-5068
ir@gcamail.com
or
Richard Land, James Leahy
JCIR
212-835-8500 or gca@jcir.com
[…]

Plaintiffs Find Little Traction In Suits Against Banks Over "Payday …

Image 1382-thumb.jpg

In recent months, a number of class actions have been filed across the country against large banks in an attempt to hold those banks accountable for debiting consumers’ deposit accounts for payments to certain companies offering short-term, small dollar loans – often called “payday loans” – online. In all of the lawsuits, the plaintiffs allege that, though they initially authorized the ACH transactions, the banks nonetheless improperly processed these debits because the National Automated Clearing House Association (NACHA) Operating Rules governing ACH transactions required the borrowers’ banks to carry out due diligence and monitoring activity, and to avoid processing debits from entities known to engage in unlawful activities. The suits claim the bank defendants knew the transactions were illegal (in some cases, plaintiffs make this claim based on a letter that the New York Department of Financial Institutions sent to 117 banks in August 2013 naming 35 allegedly illegal payday lenders in connection with its own investigation of payday lending. The letter also urged banks to block online lenders from using the ACH network.).

The cases, including at least ten suits against BMO Harris Bank alone, seek relief under a variety of theories including:

breach of contract (i.e., the borrower’s deposit agreement with the bank); negligence; unjust enrichment; breach of good faith and fair dealing; unconscionability; conversion; violation of state unfair competition law and/or consumer protection statutes; violation of state payday loan laws; and, violation of state and/or federal Racketeer Influenced and Corrupt Organization (RICO) laws.

To date, however, plaintiffs have found little success in these lawsuits, with most cases being ordered to arbitration or outright dismissed because plaintiffs failed to state a claim. The latter result makes particular sense here since the borrowers’ banks ordinarily should not be liable for accepting debits the plaintiffs themselves authorized. LenderLaw Watch will continue to monitor developments of note and bring readers updates in these cases.

[…]

Salem Announces 19% Increase in Net Revenue for the Third Quarter 2014

CAMARILLO, CA–(Marketwired – Nov 6, 2014) – Salem Communications Corporation (NASDAQ: SALM) released its results for the three and nine months ended September 30, 2014.

Third Quarter 2014 Highlights

Total net revenue increased 19.0% Adjusted EBITDA(1) increased 14.3% Free cash flow(1) increased 29.5% Internet and e-commerce revenue increased 54.5% Publishing revenue increased 164.7% Repaid $5.0 million in principal on our Term Loan B

Third Quarter 2014 Results

For the quarter ended September 30, 2014 compared to the quarter ended September 30, 2013:

Consolidated

Total revenue increased 19.0% to $69.6 million from $58.5 million; Total operating expenses increased 22.7% to $60.8 million from $49.5 million; Operating expenses, excluding gains and losses on asset disposals, non-cash stock-based compensation expense, and changes in the fair value of contingent earn-out consideration increased 21.8% to $59.9 million from $49.2 million; Operating income decreased 1.4% to $8.8 million from $9.0 million; Net income decreased to $3.7 million, or $0.14 net income per diluted share, from $5.3 million, or $0.21 net income per diluted share, in the prior year; EBITDA(1) increased 10.5% to $14.1 million from $12.7 million; and Adjusted EBITDA(1) increased 14.3% to $15.0 million from $13.1 million.

Broadcast

Net broadcast revenue increased 2.1% to $47.0 million from $46.0 million; Station operating income (“SOI”)(1) decreased 5.3% to $14.4 million from $15.2 million; Same station net broadcast revenue increased 1.0% to $46.5 million from $46.0 million; Same station SOI decreased 4.8% to $14.4 million from $15.2 million; and Same station SOI margin decreased to 31.1% from 33.0%.

Internet and e-commerce

Internet and e-commerce revenue increased 54.5% to $14.5 million from $9.4 million; and Internet and e-commerce operating income(1) increased 30.4% to $3.6 million from $2.7 million.

Publishing

Publishing revenue increased 164.7% to $8.1 million from $3.1 million; and Publishing operating income(1) increased to $1.4 million from a loss of $0.2 million.

Included in the results for the quarter ended September 30, 2014 are:

A $0.5 million ($0.3 million, net of tax, or $0.01 per share) increase in the estimated fair value of the contingent earn-out consideration associated with the Twitchy.com and Eagle acquisitions; and A $0.3 million non-cash compensation charge ($0.2 million, net of tax, or $0.01 per share) related to the expensing of stock options consisting of: $0.2 million non-cash compensation included in corporate expenses; and $0.1 million non-cash compensation included in broadcast operating expenses.

Included in the results for the quarter ended September 30, 2013 are:

A $0.4 million non-cash compensation charge ($0.2 million, net of tax, or $0.01 per share) related to the expensing of stock options consisting of: $0.2 million non-cash compensation included in corporate expenses; $0.1 million non-cash compensation included in broadcast operating expenses; and $0.1 million non-cash compensation included in Internet operating expenses.

Per share numbers are calculated based on 26,265,957 diluted weighted average shares for the quarter ended September 30, 2014, and 25,921,391 diluted weighted average shares for the quarter ended September 30, 2013.

Year to Date 2014 Results

For the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013:

Consolidated

Total revenue increased 15.1% to $200.6 million from $174.2 million; Operating expenses increased 19.8% to $178.9 million from $149.4 million; Operating expenses excluding gains and losses on asset disposals, non-cash stock-based compensation expense, changes in the fair value of contingent earn-out consideration and impairment charges increased 20.0% to $176.5 million from $147.1 million; Operating income decreased 12.8% to $21.7 million from $24.8 million; Net income increased to $5.4 million, or $0.21 net income per diluted share, from a $8.1 million loss, or $0.32 net loss per share, in the prior year; EBITDA(1) increased to $36.4 million from $8.4 million; and Adjusted EBITDA(1) increased 0.8% to $38.8 from $38.5 million.

Broadcast

Net broadcast revenue increased 3.0% to $140.4 million from $136.3 million; SOI(1) decreased 5.2% to $42.7 million from $45.0 million; Same station net broadcast revenue increased 2.4% to $139.5 million from $136.2 million; Same station SOI decreased 4.7% to $43.0 million from $45.1 million; and Same station SOI margin decreased to 30.8% from 33.1%.

Internet and e-commerce

Internet and e-commerce revenue increased 44.1% to $41.8 million from $29.0 million; and Internet and e-commerce operating income(1) increased 27.3% to $11.0 million from $8.6 million.

Publishing

Publishing revenue increased 105.4% to $18.4 million from $8.9 million; and Publishing operating income(1) increased to $0.7 million from a loss of $0.8 million.

Included in the results for the nine months ended September 30, 2014 are:

A $0.9 million ($0.5 million, net of tax, or $0.02 per share) increase in the estimated fair value of the contingent earn-out consideration associated with the Twitchy.com and Eagle acquisitions; A $0.2 million loss ($0.1 million, net of tax) on disposals associated with the write-off of a receivable from a prior station sale and the relocation of our office and studio in San Francisco offset by insurance proceeds for damages associated with one of our stations; and A $1.3 million non-cash compensation charge ($0.8 million, net of tax, or $0.03 per share) related to the expensing of stock options consisting of: $0.8 million non-cash compensation included in corporate expenses; $0.3 million non-cash compensation included in broadcast operating expenses; $0.1 million non-cash compensation included in Internet operating expenses; and the remainder included in publishing operating expenses.

Included in the results for the nine months ended September 30, 2013 are:

A $27.8 million loss ($16.7 million, net of tax, or $0.68 per share) on the early retirement of long-term debt due to the repurchase of $212.6 million of our 9 5/8% senior secured second lien notes due in 2016 and the termination of then existing bank debt; A $0.8 million impairment loss ($0.5 million, net of tax, or $0.02 per share) associated with the goodwill and mastheads of our publishing businesses; and A $1.5 million non-cash compensation charge ($0.9 million, net of tax, or $0.04 per share) related to the expensing of stock options primarily consisting of: $1.0 million non-cash compensation included in corporate expenses; $0.3 million non-cash compensation included in broadcast operating expenses; and $0.2 million non-cash compensation included in Internet operating expenses.

Per share numbers are calculated based on 26,032,789 diluted weighted average shares for the nine months ended September 30, 2014, and 24,832,140 diluted weighted average shares for the nine months ended September 30, 2013.

Balance Sheet

As of September 30, 2014, the company had $2.8 million outstanding on its revolver and $284.0 million outstanding on the Term Loan B. The company was in compliance with the covenants of its credit facility. The company’s bank leverage ratio was 5.42 versus a compliance covenant of 6.50.

Cash Distribution

Salem paid a quarterly cash distribution of $0.0625 per share on its Class A and Class B common stock on September 30, 2014 to shareholders of record as of September16, 2014. The distributions totaled approximately $1.6 million.

Acquisitions and Divestitures

The following transactions were completed since July 1, 2014:

On October 1, 2014, we completed the acquisition of radio station KXXT-AM in Phoenix, Arizona for $0.6 million.

Conference Call Information

Salem will host a teleconference to discuss its results on November 6, 2014 at 2:00 p.m. Pacific Time. To access the teleconference, please dial (719) 325-2214, passcode 9300007 or listen via the investor relations portion of the company’s website, located at www.salem.cc. A replay of the teleconference will be available through November 20, 2014 and can be heard by dialing (719) 457-0820, passcode 9300007 or on the investor relations portion of the company’s website, located at www.salem.cc.

Fourth Quarter 2014 Outlook

For the fourth quarter of 2014, Salem is projecting total revenue to increase 6% to 8% over fourth quarter 2013 total revenue of $62.7 million. The company is also projecting operating expenses before gains or losses on disposal of assets, impairment losses, changes in the fair value of contingent earn-out consideration and stock-based compensation expense to increase 8% to 11% as compared to the fourth quarter of 2013 operating expenses of $52.3 million. Without the acquisition of Eagle, the company would be projecting revenue to be down 1% to up 1% and expenses to be down 1% to up 2%.

About Salem Communications

Salem Communications Corporation is America’s leading Christian and conservative multi-media corporation, with media properties comprising radio, digital media and book, magazine and newsletter publishing. Each day Salem serves a loyal and dedicated audience of listeners and readers numbering in the millions nationally. With its unique programing focus, Salem provides compelling content, fresh commentary and relevant information from some of the most respected figures across the media landscape.

The company, through its Salem Radio Group, is the largest commercial U.S. radio broadcasting company providing Christian and conservative programing. Salem owns and operates 105 local radio stations, with 63 stations in the top 25 media markets. Salem Radio Network (“SRN”) is a full-service national radio network, with nationally syndicated programs comprising Christian teaching and talk, conservative talk, news, and music. SRN is home to many industry-leading hosts including: Bill Bennett, Mike Gallagher, Hugh Hewitt, Michael Medved, Dennis Prager and Janet Mefferd.

Salem New Media is a powerful source of Christian and conservative themed news, analysis, and commentary. Salem’s Christian sites include: Christianity.com, BibleStudyTools.com, GodTube.com, GodVine.com, WorshipHouseMedia.com and OnePlace.com. Considered by many to be a consolidation of the conservative news and opinion sector’s most influential brands, Salem’s conservative sites include Townhall.com, HotAir.com, Twitchy.com, HumanEvents.com and RedState.com.

Salem’s Regnery Publishing unit, with a 65-year history, remains the nation’s leading publisher of conservative books. Having published many of the seminal works of the early conservative movement, Regnery today continues as the dominant publisher in the conservative space, with leading authors including: Ann Coulter, Dinesh D’Souza, Newt Gingrich, David Limbaugh, Michelle Malkin and Mark Steyn. Salem’s book publishing business also includes Xulon Press™, a leading provider of self-publishing services for Christian and conservative authors.

Salem Publishing™ publishes Christian and conservative magazines including Homecoming, YouthWorker Journal, The Singing News, Preaching and Townhall Magazine.

Salem Communications also owns Eagle Financial Publications and Eagle Wellness. Eagle Financial Publications provide market analysis and specific investment advice for individual investors from seasoned financial experts Mark Skousen, Nicholas Vardy, Chris Versace and Doug Fabian. Eagle Wellness provides practical health advice and is a trusted source for nutritional supplements from one of the country’s leading complementary health physicians.

Forward-Looking Statements
Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to the ability of Salem to close and integrate announced transactions, market acceptance of Salem’s radio station formats, competition from new technologies, adverse economic conditions, and other risks and uncertainties detailed from time to time in Salem’s reports on Forms 10-K, 10-Q, 8-K and other filings filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.

(1) Regulation G

Station operating income, Internet and e-commerce operating income, publishing operating income, EBITDA, Adjusted EBITDA, and free cash flow are financial measures not prepared in accordance with generally accepted accounting principles (“GAAP”). Station operating income is defined as net broadcast revenue minus broadcast operating expenses. Internet and e-commerce operating income is defined as Internet and e-commerce revenue minus Internet and e-commerce operating expenses. Publishing operating income is defined as publishing revenue minus publishing operating expenses. EBITDA is defined as net income before interest, taxes, depreciation, amortization and change in fair value of interest rate swaps. Adjusted EBITDA is defined as EBITDA before gain or loss on the disposal of assets, change in estimated fair value of contingent earn-out consideration and non-cash compensation expense. Free cash flow is defined as Adjusted EBITDA less capital expenditures, less cash paid for income taxes, less cash paid for interest. Salem has provided supplemental information as an attachment to this press release, reconciling these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP. The company believes these non-GAAP financial measures, when considered in conjunction with the most directly comparable GAAP financial measures, provide useful measures of the company’s operating performance.

Station operating income, Internet and e-commerce operating income, publishing operating income, EBITDA, Adjusted EBITDA, and free cash flow are generally recognized by the broadcast and media industry as important measures of performance. These measures are used by investors and analysts who report on the industry to provide meaningful comparisons between entities. They are not a measure of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to and not a substitute for, or superior to, the company’s results of operations presented on a GAAP basis such as operating income and net income. Salem’s definitions of station operating income, Internet and e-commerce operating income, publishing operating income, EBITDA, Adjusted EBITDA, and free cash flow are not necessarily comparable to similarly titled measures reported by other companies.

Salem Communications Corporation Condensed Consolidated Statements of Operations (in thousands, except share, per share and margin data) Three Months Ended Nine Months Ended September 30, September 30, 2013 2014 2013 2014 (Unaudited) Net broadcast revenue $ 46,015 $ 46,962 $ 136,287 $ 140,393 Net Internet and e-commerce revenue 9,390 14,511 29,012 41,811 Net publishing revenue 3,071 8,130 8,941 18,369 Total net revenue 58,476 69,603 174,240 200,573 Operating expenses: Broadcast operating expenses 30,847 32,596 91,258 97,695 Internet and e-commerce operating expenses 6,644 10,931 20,372 30,811 Publishing operating expenses 3,301 6,766 9,776 17,624 Corporate expenses 4,951 5,254 15,839 17,542 Change in the estimated fair value of contingent earn-out consideration — 545914 Impairment of indefinite-lived long-term assets other than goodwill — — 345 — Impairment of goodwill — — 438 — Depreciation and amortization 3,784 4,671 11,389 14,104 (Gain) loss on disposal of assets (25 ) (7 ) (20 ) 214 Total operating expenses 49,502 60,756 149,397 178,904 Net operating income from continuing operations 8,974 8,847 24,843 21,669 Other income (expense): Interest income 16 2 52 43 Interest expense (3,770 ) (4,139 ) (13,212 ) (11,986 ) Change in fair value of interest rate swaps (1,033 ) 1,046 2,545 (1,423 ) Loss on early retirement of long-term debt (16 ) (18 ) (27,792 ) (26 ) Net miscellaneous income and expenses 4 572 15 652 Income (loss) from continuing operations before income taxes 4,175 6,310 (13,549 ) 8,929 Provision (benefit from) for income taxes (1,159 ) 2,567 (5,506 ) 3,492 Income (loss) from continuing operations 5,334 3,743 (8,043 ) 5,437 Loss from discontinued operations, net of tax (11 ) — (26 ) — Net income (loss) $ 5,323 $ 3,743 $ (8,069 ) $ 5,437 Basic income (loss) per share before discontinued operations $ 0.21 $ 0.14 $ (0.32 ) $ 0.21 Income (loss) per share from discontinued operations, net of tax — — — — Basic income (loss) per share after discontinued operations $ 0.21 $ 0.14 $ (0.32 ) $ 0.21 Diluted income (loss) per share before discontinued operations $ 0.21 $ 0.14 $ (0.32 ) $ 0.21 Income (loss) per share from discontinued operations, net of tax — — — — Diluted income (loss) per share after discontinued operations $ 0.21 $ 0.14 $ (0.32 ) $ 0.21 Distributions per share $ — $ 0.06 $ 0.10 $ 0.18 Basic weighted average shares outstanding 25,126,858 25,536,397 24,832,140 25,258,025 Diluted weighted average shares outstanding 25,921,391 26,265,957 24,832,140 26,032,789 Other data: Station operating income $ 15,168 $ 14,366 $ 45,029 $ 42,698 Station operating margin 33.0 % 30.6 % 33.0 % 30.4 % Salem Communications Corporation Condensed Consolidated Balance Sheets (in thousands) December 31, 2013 September 30, 2014 (Unaudited) Assets Cash $ 65 $ 311 Trade accounts receivable, net 37,627 40,168 Deferred income taxes 6,876 6,876 Other current assets 6,477 12,054 Property, plant and equipment, net 98,928 100,296 Intangible assets, net 413,871 425,052 Fair value of interest rate swap agreement 3,177 1,754 Deferred financing costs 4,130 3,628 Other assets 3,962 2,413 Total assets $ 575,113 $ 592,552 Liabilities and Stockholders’ Equity Current liabilities $ 31,782 $ 42,719 Long-term debt and capital lease obligations 287,672 283,506 Deferred income taxes 43,457 46,590 Other liabilities 10,417 14,603 Stockholders’ equity 201,785 205,134 Total liabilities and stockholders’ equity $ 575,113 $ 592,552 Salem Communications Corporation Supplemental Information (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2013 2014 2013 2014 (Unaudited) Capital Expenditures $ 2,560 $ 1,793 $ 7,792 $ 7,910 Reconciliation of Same Station Net Broadcast Revenue to Total Net Broadcast Revenue Net broadcast revenue – same station $ 46,015 $ 46,491 $ 136,238 $ 139,475 Net broadcast revenue – acquisitions — 471 49 918 Total net broadcast revenue $ 46,015 $ 46,962 $ 136,287 $ 140,393 Reconciliation of Same Station Broadcast Operating Expenses to Total Broadcast Operating Expenses Broadcast operating expenses – same station $ 30,847 $ 32,048 $ 91,139 $ 96,505 Broadcast operating expenses revenue – acquisitions — 548 119 1,190 Total broadcast operating expenses $ 30,847 $ 32,596 $ 91,258 $ 97,695 Reconciliation of Same Station Operating Income to Total Station Operating Expenses Station operating income – same station $ 15,168 $ 14,443 $ 45,099 $ 42,970 Station operating income – acquisitions — (77 ) (70 ) (272 ) Total station operating income $ 15,168 $ 14,366 $ 45,029 $ 42,698 Salem Communications Corporation Supplemental Information (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2013 2014 2013 2014 (Unaudited) Reconciliation of SOI and Internet Operating Income and Publishing Operating Income to Net Operating Income from Continuing Operations
Station operating income $ 15,168 $ 14,366 $ 45,029 $ 42,698 Internet and e-commerce operating income 2,746 3,580 8,640 11,000 Publishing operating income (loss) (230 ) 1,364 (835 ) 745 Less: Corporate expenses (4,951 ) (5,254 ) (15,839 ) (17,542 ) Change in the estimated fair value of contingent earn-out consideration — (545 )(914 ) Depreciation and amortization (3,784 ) (4,671 ) (11,389 ) (14,104 ) Impairment of indefinite-lived long-term assets other than goodwill — — (345 ) — Impairment goodwill — — (438 ) — (Gain) loss on disposal of assets 25 7 20 (214 ) Net operating income from continuing operations $ 8,974 $ 8,847 $ 24,843 $ 21,669 Reconciliation of Adjusted EBITDA to EBITDA to Net Income (Loss) Adjusted EBITDA $ 13,095 $ 14,972 $ 38,539 $ 38,829 Less: Stock-based compensation (358 ) (344 ) (1,529 ) (1,276 ) Loss on early retirement of long-term debt (16 ) (18 ) (27,792 ) (26 ) Discontinued operations, net of tax (11 ) — (26 ) — Change in the estimated fair value of contingent earn-out consideration — (545 )(914 ) Impairment of indefinite-lived long-term assets other than goodwill — — (345 ) — Impairment of goodwill — — (438 ) — (Gain) loss on disposal of assets 25 7 20 (214 ) EBITDA 12,735 14,072 8,429 36,399 Plus: Interest income 16 2 52 43 Less: Depreciation and amortization (3,784 ) (4,671 ) (11,389 ) (14,104 ) Interest expense (3,770 ) (4,139 ) (13,212 ) (11,986 ) Change in fair value of interest rate swap (1,033 ) 1,046 2,545 (1,423 ) Provision for (benefit from) income taxes 1,159 (2,567 ) 5,506 (3,492 ) Net income (loss) $ 5,323 $ 3,743 $ (8,069 ) $ 5,437 Reconciliation of Adjusted EBITDA to Free Cash Flow Adjusted EBITDA $ 13,095 $ 14,972 $ 38,539 $ 38,829 Less: Cash interest (3,549 ) (4,122 ) (13,384 ) (10,804 ) Cash taxes (5 ) (16 ) (250 ) (254 ) Capital expenditures (2,560 ) (1,793 ) (7,792 ) (7,910 ) Free Cash Flow $ 6,981 $ 9,041 $ 17,113 $ 19,861 Selected Debt Data Outstanding at September 30, 2014 Applicable
Interest Rate
Term Loan B (1) $ 134,000 4.50 % Term Loan B (2) 150,000 5.52 % Revolver 2,759 5.25 % (1) Subject to rolling LIBOR but no less than 1.00% plus a spread of 3.50%. (2) Under its swap agreement, the company pays a fixed rate of 1.645% plus a spread of 3.50%. The swap is subject to a LIBOR floor of 0.625% versus the Term Loan B debt floor of 1.00%. The swap matures March 28, 2019. […]

SDLP – Seadrill Partners LLC Announces Second Quarter 2014 Results

Highlights

Seadrill Partners reports net income attributable to Seadrill Partners LLC Members for the second quarter 2014 of US$31.2 million and net operating income of US$168.6 million.Generated distributable cash flow of US$51.9 million for the second quarter 2014 representing a coverage ratio of 1.09x.Declared an increased distribution for the second quarter of US$0.5425 per unit, an increase of 7% over the first quarter distribution.Completed US$1.1 billion add-on term loan B. Proceeds of the term loan refinanced existing indebtedness and increased liquidity.Issued a total of 6.1 million common units to the public and 3.2 million common units to Seadrill Limited for general corporate purposesEconomic utilization for the second quarter of 94%

Subsequent Events

Completed the acquisition of an additional 28% interest in Seadrill Operating LP for US$373 million

Financial Results Overview

Seadrill Partners LLC1 reports:

Total contract revenues of US$339.6 million for the second quarter 2014 (the “second quarter”) compared to US$260.6 million in the first quarter of 2014 (the “first quarter”). The increase is primarily driven by a full quarter of operations for the West Auriga and improved uptime on the West Aquarius, West Capricorn, and West Leo.

Operating income for the quarter of US$168.6 million compared to US$123.6 million in the preceding quarter. The increase is largely as a result of the West Auriga and uptime improvements described above.

Net Income for the quarter of US$94.3 million compared to US$43.8 million in the previous quarter. This is after the recognition of the gain/loss on derivative instruments, which reflected a loss of US$27.8 million in the second quarter as compared to a loss of US$49.2 million for the first quarter as a result of a decrease in long term interest rates in the second quarter as well as a higher level of interest rate swaps as at the end of the second quarter. The unrealized non-cash element of these amounts is US$23.5 million loss in the second quarter 2014 and a US$49.8 million loss for the first quarter 2014.

____________________

1) All references to “Seadrill Partners” and “the Company” refer to Seadrill Partners LLC and its subsidiaries, including the operating companies that indirectly own interests in the drilling rigs Seadrill Partners LLC owns: (i) a 30% limited partner interest in Seadrill Operating LP, as well as the non-economic general partner interest in Seadrill Operating LP through its 100% ownership of its general partner, Seadrill Operating GP LLC, (ii) a 51% limited liability company interest in Seadrill Capricorn Holdings LLC and (iii) a 100% limited liability company interest in Seadrill Partners Operating LLC. Seadrill Operating LP owns: (i) a 100% interest in the entities that own the West Aquarius, West Leo and the West Vencedor and (ii) an approximate 56% interest in the entity that owns and operates the West Capella. Seadrill Capricorn Holdings LLC owns 100% of the entities that own and operate the West Capricorn,West Sirius and West Auriga. Seadrill Partners Operating LLC owns 100% of the entities that own and operate the T-15 and T-16 tender barges.

Net income attributable to Seadrill Partners LLC Members was US$31.2 million for the second quarter compared to US$19.8 million for the previous quarter.

Distributable cash flow was US$51.9 million for Seadrill Partners` second quarter as compared to US$30.0 million for the previous quarter2 giving a coverage ratio of 1.09x for the second quarter. The increase is mainly as a result of a full quarter of operations for the West Auriga and improved uptime on the West Aquarius, West Capricorn, and West Leo.

The coverage ratio has been negatively impacted by the increase in units outstanding following the June equity issuance as the second quarter distribution is payable on all outstanding units at the record date. Excluding the distribution in relation to the new units issues in the June equity offering, the coverage ratio would have been 1.22x.

Distribution for the period of US$0.5425 per unit, equivalent to an annual distribution of US$2.17, represents a 40% increase from the Company`s minimum quarterly distribution set at its IPO. Subsequent to the acquisition of an additional 28% ownership interest in Seadrill Operating LP the Company will own a 58% interest in the operating company. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

__________________

2) Please see Appendix A for a reconciliation of DCF to net income, the most directly comparable GAAP financial measure.

Operations

Seadrill Partners has an interest in nine rigs in operation. The fleet is comprised of four semi-submersible rigs, two drillships and three tender rigs operating in Canada, the US Gulf of Mexico, Ghana, Nigeria, Angola and Thailand respectively.

Overall economic utilization for the fleet was 94% for the second quarter. Following the operational issues related to third party equipment on the West Aquarius, operations have returned to normal as spare parts were located on similar units, demonstrating the synergies of being associated with a strong parent such as Seadrill Limited.

Total operating expenses for the second quarter were US$177.7 million, compared to US$151.7 million in the previous quarter the increase is largely as a result of the West Auriga operating for a full quarter. The Company has good cost controls in place and sees little risk of changes to the operating cost structure.

Acquisitions

On July 21, 2014 Seadrill Partners completed the acquisition of an additional 28% interest in Seadrill Operating LP for a total consideration of US$373 million. Seadrill Operating LP has an ownership interest in three ultra-deepwater drilling rigs, West Aquarius, West Leo and West Cappella, and one semi tender rig, the West Vencedor. The Company now owns a 58% interest in Seadrill Operating LP which in line with the ownership level of the Company`s other ultra-deepwater operating company which is 51% owned. The transaction increases exposure to assets that are well known to the Company and that have stable cash flows. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

The gross value of the 28% share acquired, after deducting the 44% non-controlling interest in the West Capella, was $804 million. The 28% share of the debt associated with the four rigs owned by Seadrill Operating L.P., net of the West Capella non-controlling interest, was $431 million. The equity portion was therefore $373 million.

The acquisition was funded with a combination of cash and proceeds from the US$300 million equity offering completed on June 19, 2014 and surplus funds from the Company`s recent term loan B financing. The Company sold a total of 6.1 million common units to the public and 3.2 million common units to Seadrill Limited in June 2014.

Financing and Liquidity

As of June 30, 2014, the Company had cash and cash equivalents, on a consolidated basis, of US$523.3 million and two revolving credit facilities totaling US$200 million. One US$100mm facility is provided by Seadrill as the lender and the second US$100mm facility is provided by a syndicate of banks and is secured in connection with the $2.9 billion term loan B. As of June 30, 2014, these facilities were undrawn. Total debt was US$3,248.8 million as of June 30, 2014; US$251 million of this debt was originally incurred by Seadrill, as borrower, in connection with its acquisition of the drilling rigs.

As of June 30, 2014 the Company had two secured credit facilities, in addition to the term loan B. These facilities expire in 2015 and 2017. A refinancing strategy should be expected at maturity debt levels or higher. Additionally the Company has a US$109.5 million vendor loan from Seadrill maturing in 2016 relating to the acquisition of the T-15.

In June 2014, Seadrill Partners executed a US$1.1 billion add-on term loan B. The term loan was upsized from US$1 billion, priced at the existing rate of Libor plus 3%, subsequently swapped to a fixed rate of approximately 5.5% and will be borrowed on substantially the same terms as the Company`s existing US$1.8 billion senior secured term loan B incurred in February 2014. The 1% amortization profile of the new facility further enables the Company to more efficiently manage its replacement capital expenditure reserves by investing in new assets. Following the completion of the add-on term loan the Company`s BB-/Ba3 rating has been reaffirmed by both S&P and Moody`s.

The Board is confident that a similar refinancing can be executed on the remaining back to back loans and related party debt in order to complete the separation of Seadrill Partners` capital structure from Seadrill Limited and further facilitate Seadrill Partners` growth.

As of June 30, 2014, Seadrill Partners had interest rate swaps outstanding on principal debt of US$3,164.2 million. All of the interest rate swap agreements were entered into subsequent to the IPO Closing Date and represent approximately 97% of debt obligations as of June 30, 2014. The average swapped rate, excluding bank margins, is approximately 2.40%. The Company has a policy of hedging the significant majority of its long-term interest rate exposure in order to reduce the risk of a rising interest rate environment.

Market

The oil market fundamentals continue to be strong with high and stable oil prices. Except for very brief periods the oil price has remained above US$100 for the last 3.5 years and the global economy continues along its growth path following the financial crisis. Even with these strong macro fundamentals oil companies seem to be unable to generate free cash flow to grow their businesses and have entered into a period of selectivity on projects as costs escalated across their entire portfolio of projects. The current situation has some similarities to the situation in 2002-2003 when oil companies had limited free cash flow to develop new reserves. This led to an increase in oil price between 2003-2008 when Brent moved from approximately US$40 to US$100 and resulted in increased investment by the oil companies. Today, the the majority of low cost inventory has been produced and oil companies are entering a new phase in which recently discovered oil must be developed in order to grow production. These reserves are in the deep and ultra-deepwater and are far more complex than reserves discovered in prior periods. We can thereby assume that the amount of rig capacity which is needed to produce a barrel of offshore oil in the future will increase.

Over the long term, return on invested capital will be the ultimate driver of capital allocation decisions and the attractive economics of the deep and ultra-deepwater will lead to increased exploration and development spending in these regions. This view is supported by most of the major oil companies.

Ultra-Deepwater Floaters

The near term market for ultra-deepwater drilling units continues to be challenging partly driven by a reduction in exploration drilling which has led to a slower growth rate in overall upstream spending. However, there is evidence of positive developments in the number of tenders that have materialized for 2015 and 2016 projects. In the meantime, independent E&P`s could potentially fill some of the exploration gap that has been created by the cuts in exploration spending from the major oil companies.

The reported overall contracting activity has increased however we see some industry participants, especially those with older units and significant portions of their fleet requiring renewal in the short term, driving prices down. The uncertain cash flow profile of these older units is forcing contractors to make difficult decisions and lock up their best assets in order to gain some clarity on the near term outlook for their business. Older 4th and 5th generations assets are quickly losing pricing power and rates are falling faster than high-specification units. Many of these units are facing high capital expenditure requirements in order to remain part of the active fleet and owners of these assets face decisions to upgrade, swap out with a new unit, or retire the asset. We have seen two examples of this recently in Norway that may prove to be a leading indicator for trends in the global market. Worldwide, out of a total active floater fleet of approximately 300 units there are 128 units more than 25 years old. It is estimated that 70 of these units will be required to have 5 year classing surveys between now and 2017. The total cost for such a classifications can easily be in excess of US$100 million.

Seadrill Partners remains in the best possible competitive position with long term contracts, robust backlog and little exposure to the near term dayrate environment.

The longer term outlook for floaters remains solid. The number of newbuild announcements has rapidly declined and existing newbuild projects are extending delivery dates. Major oil companies continue to focus their activity on 6th generation units with high variable deckload capacity, dual BOP`s, and dual activity capabilities in a bid to advance the safety and efficiency of the rigs they employ. Several oil companies are also now introducing requirements for managed pressure drilling equipment. This is not simply a matter of preference that can dissipate if customer preferences change. This migration to a higher specification fleet is in part dictated by the increasingly challenging project requirements of recent discoveries. Oil companies must now develop the challenging reserves discovered in recent years in order to replace reserves and grow production.

The main driver on the demand side will be the anticipated need to drill development wells to bring ultra-deepwater production from the present level of approximately 1.3 million barrels per day to 5 million barrels per day forecast in 2020. The delivery of 73 ultra-deepwater newbuildings from today until 2018 will increase capacity. However, it can be anticipated that a significant part of the 128 rigs that are more than 25 years old will be retired from service as they come up for classing surveys due to uneconomic classification budgets. At the same time, ordering of new rigs has more or less stopped which sets the framework for a sharp upturn when demand and supply again are balanced.

Activity in Brazil has shown the most notable improvement as Petrobras tendered their first new rig in three years and is progressing through the acceptance process for the 2015 extensions. Following a year when the market saw a number of rigs leaving the country this is certainly a step forward. Although a seemingly bearish sign to see rigs leaving the biggest operator, it was in fact a very natural market development and a perfect example of the bifurcation and fleet renewal that is occurring on a global scale today. In addition to Petrobras` initial tender and expected extension of six rigs that have contracts expiring in 2015, it is expected that an additional three to four assets will be needed in the sort term to meet drilling requirements on the Libra field, with up to ten units expected to be required in total.

The West African market continues to be an active region for tendering activity as oil companies` move into their next budgeting cycle. In particular we see opportunities in Nigeria, Angola, and Ghana as companies work through regulatory approval processes. As demonstrated by Seadrill`s contract announcements for the West Jupiter and West Saturn, tenders will get completed; however patience and working constructively with stakeholders are key for success. Additionally, there is a clear trend that going forward companies will need to develop a strong local presence to be competitive in these markets. Not only is there political pressure to increase local content, but also a clear economic benefit in replacing international workers with local crew.

The US Gulf of Mexico is the primary market that may see a pickup in short term exploration activity given the number of indigenous independent E&P companies in the region. We have already seen opportunistic independent oil and gas companies use the present market weakness to tender for projects where profitability has improved due to lower rig rates. We see some potential to fill in a portion of the exploration spending that has been cut by the major oil companies. Longer term opportunities will materialize, however we expect this to be pushed into 2015 and 2016 similar to other regions.

In Mexico, the energy reform process is progressing at an impressive pace. Following the acceptance of major oil companies into the region and the beginning of formal licensing rounds, demand for floaters should follow. Seadrill continues to be well positioned with PEMEX having operated the West Pegasus for the last 2.5 years with a high degree of success and more recently mobilizing 5 jack-ups to the region. In the intermediate term, prior to the awarding of licenses to major oil companies there may an opportunity for a number of additional floaters based on the current budgeted spending from PEMEX.

Outlook

The second quarter of 2014 was a success for Seadrill Partners having executed an add-on US$1.1 billion term loan B and successful equity offering. Additionally, operations have improved materially since the challenges encountered during first quarter and we have achieved an overall economic uptime of 94%.

Distributions have grown 7% during the second quarter, and 40% since the Company`s IPO in 2012. This growth exceeds the Board`s anticipated annual growth rate of 15% at the time of the Company`s initial public offering in October 2012. Seadrill Partners achieved a coverage ratio of 1.09x during the second quarter even after taking into consideration the increased share count following the equity offering in June. The Company continues to target a coverage ratio of 1.1x after accounting for maintenance and replacement reserves.

This track record demonstrates Seadrill Partners` commitment to growth. The Board and management team remain committed to growing distributions by acquiring operating company units or additional assets. The Board is pleased the Company has managed to diversify its fleet and reached the point where it is prudent to acquire operating company units. By moving swiftly to acquire an additional 5 rigs since IPO Seadrill Partners has opened up a new avenue for distribution growth.

The add-on term loan B completed in June is another important step towards rationalizing Seadrill Parnters` debt structure which makes the Company well positioned for future growth. The transaction, originally marketed as a US$1 billion facility and upsized to US$1.1 billion, is an add-on to the existing US$1.8 billion facility executed in February of this year and priced at the existing loan`s rate of Libor plus 3%. This represents a continuation of the strategy to refinance existing debt of acquired rigs at the partnership level with a more appropriate amortization profile. The addition of another two units to the Borrower Group increases contract duration and further diversifies the cash flows supporting the Company`s credit. By upsizing the loan, the market has acknowledged Seadrill Partners` long term contracted cash flow, visible growth profile and high quality fleet.

During the remainder of the year the Company will continue to explore financing alternatives to refinance the remaining related party debt on the West Vencedor, T-15 and T-16 at the Seadrill Partners level and continue to manage the capital structure to maximize distributable cash flow.

Operationally, the Board and management team are pleased with the improvements shown during the second quarter. The 94% utilization rate reflects the return to normal operations of the West Aquarius and West Capricorn. The ability of an MLP to maintain distributions during periods of operational challenges is linked to fleet size. The West Aquarius would have had a much more pronounced impact had Seadrill Partners owned fewer assets in its portfolio. Seadrill Partner`s ability to quickly grow its fleet has put the Company in the position to manage through periodic downtime while growing distributions. Thus far in the third quarter The West Capricorn has experienced 21 days of downtime due to BOP issues but has now returned to service. Utilization for the rest of the fleet to date in the third quarter is approximately 95% and the Company currently expects to achieve its targeted coverage ratio for the third quarter.

Distributable cash flow for the third quarter of 2014 will be positively impacted by the cash contribution from the additional 28% interest in Seadrill Operating LP. The acquisition increases exposure to assets that are well known to the Company and that have stable cash flows. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

The Board remains committed to its high growth acquisition strategy in order to strengthen the fleet composition, diversify the customer base, and increase backlog. The Company`s modern best in class fleet and long term contracts protect the Company from the current short-term negative market sentiment. It is a realistic scenario that demand growth for development drilling will have outpaced supply growth when the Company`s existing contracts roll off. Significant old capacity is expected to leave the market, while limited newbuild projects are likely to be initiated. This may put the Company in a strong negotiating position when it comes time to re-contract units. With an orderbacklog of US$5.1 billion, a new fleet and solid prospects for future growth the Board looks optimistically toward the future.

August 27, 2014

The Board of Directors

Seadrill Partners LLC

London, UK.

Questions should be directed to:

Graham Robjohns: Chief Executive Officer

Rune Magnus Lundetrae: Chief Financial Officer

Seadrill Partners Fleet Status
Seadrill Partners 2Q 2014 Results


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Seadrill Partners LLC via GlobeNewswire
HUG#1851480

FinanceInvestment & Company InformationSeadrill […]

FY 2014 Results: US$24M Cash Flow from Operations, US$9M Increase in Net Cash

SANTIAGO, Chile–(BUSINESS WIRE)–

Orosur Mining Inc. (‘OMI’ or ‘the Company’) (OMI.TO) (OMI.TO), the South American-focused gold producer, developer and explorer is pleased to announce the results for the fiscal year ended May 31, 2014.

Highlights

Gold production of 60,271 oz ahead of upgraded guidance (55,000 – 60,000 oz). Cash operating costs reduced by 28% to US$792/oz (2013: US$1,093/oz) beating upgraded guidance. All-In-Sustaining costs reduced by 34% to US$1,049/oz (2013: US$1,601/oz). Average gold price received of US$1,298/oz (US$1,605 in 2013). Net Profit after tax of US$5.1 M (2013: loss of US$14.8M). Cash Flow from operations increased by 13% to US$23.9M (2013: US$21.2M). Net cash increased by US$9.2M with a cash balance of US$10.8M and total debt of US$4.9M as at May 31, 2014 (Net cash of US$5.9M). San Gregorio Mine life extended after addition of 75,000 oz to reserves at key projects. The San Gregorio-Arenal trend in Uruguay has been delineated over an approximate 200m wide corridor and along an extension of approximately 10 km with six initial targets defined to date. Exploration models have been advanced in Chile at minimal cost with the results at Quebrada Pantanillo consistently supporting the existence of a high sulphidation epithermal system and a structural interpretation study at Anillo which has defined six domains and several new targets. Acquisition of Waymar Resources Ltd. closed on July 9, 2014, adding the high grade Anzá gold exploration project in Colombia to Orosur’s exploration portfolio.

Ignacio Salazar, CEO of Orosur, said:

“Orosur is pleased to have achieved strong 2014 operating and financial results, delivering ahead of guidance given for production and cash costs. We have been able to generate operating cash flow of some US$24 million, 13% more than we generated in 2013 despite a significantly lower gold price environment.

“Whilst implementing numerous programmes to improve operations during a year of significant change for Orosur, we successfully executed the exploration and development work necessary to extend San Gregorio´s mine-life and grow our reserve base. Guided by disciplined capital investment evaluations, progress has been made at delineating the Arenal-San Gregorio mineralised corridor in Uruguay and in defining additional targets at our Chilean explorations assets.

“After financing all our growth programs internally, Orosur still improved its net cash position by US$9 million during the year. Beyond our current assets, the recent acquisition of Waymar Resources has added an attractive high grade exploration asset with significant upside in Colombia in the Anzá project. We are delighted to deliver progress across these areas and our intention remains to work efficiently and diligently for the benefit of our shareholders. We look forward to the year to come.”

Results Conference Call

Orosur will be hosting a conference call for analysts and investors to discuss the FY 2014 results, please find details for the call below:

Time & Date:

18th August 2014 4.00pm British Summer Time 11:00am Eastern Standard Time 8:00am Pacific Standard Time

Dial-In:

Canada: + 1 (514) 841 2196 United States: +1 (718) 873 9077

London: +44 (0) 20313 94830

Passcode:

68606095# Operational & Financial Summary1 Fiscal Year (FY)
ended May 31 2014 2013 Change Operating Results Gold produced Ounces 60,271 64,994 (4,723) Operating Cash cost3 US$/oz 792 1,093 (301) Average price received

US$/oz

1,298 1,605 (307) Financial Results Revenue US$ ‘000 80,370 105,884 (25,514) Net income (loss) after tax US$ ‘000 5,123 (14,825) (19,948)

Cash flow from operations2

US$ ‘000

23,885

21,209

2,676

Cash & Debt at the end of the period – Summary 2014 2013 Diff Cash balance US$ ‘000 10,818 5,633 5,185 Total Debt US$ ‘000 4,939 8,995 (4,056) Cash net of debt US$ ´000 5,879 (3,362) (9,241) 1

Results are based on IFRS and expressed in US dollars

2

Before non-cash working capital movements

3

Operating cash cost is total cost discounting royalties and capital tax on production assets.

FY2014 & Q4 Production and Cash Costs

The constant emphasis on cost control adopted since May 2013 has delivered strong results in the fourth quarter and the financial year as a whole. Operational improvements introduced in ore control, mine planning, modelling and operations were important factors in delivering FY 2014 results which beat the upgraded guidance figures provided to the capital markets.

Cash operating costs for the year were US$792/oz compared to US$1,093/oz in FY 2013. This represents a decrease of 28% and is also lower than the upgraded cash cost guidance of US$800-875/oz.

A strong performance at Arenal in the second half (H2) and especially in Q4, with higher production than expected, helped the Company to beat the upgraded targets that were given at the half year.

All-In-Sustaining costs have been US$1,049/oz in FY2014 compared to US$1,601/oz in FY2013.

Full Year
Actual

Upgraded
Full year
Outlook

Original Full
year Outlook

Gold produced Ounces 60,271 55,000-60,000 50,000–55,000 Cash Operating cost US$/oz 792 800-875 850-925 Q4 Actual H2 Outlook H2 Actual Gold produced Ounces 15,319 23,320-28,320 28,590 Cash Operating cost US$/oz 844 850-1,000 820

FY 2015 Outlook & Guidance

The Company’s forecast production guidance for FY 2015 is between 50,000 to 55,000 ounces of gold at operating cash costs of between US$850 to US$950 per ounce. FY 2015 Production from Arenal Deeps is expected to contribute approximately 70-75% of total gold production, with open pit mining contributing the balance of the production profile.

The Company’s 2015 guidance is in line with the original guidance adopted in FY 2014, which were upgraded and beat, however the Company considers it prudent to maintain similar targets, as external factors are expected to contribute to cost appreciation and lower production grades are anticipated in the mining plan for the year. The United States Dollar:Uruguayan Peso exchange rate has remained relatively stable over the last several years despite the varying inflation rates between these two currencies. While this exchange rate is not sustainable in the long run and the Company is expected to get the benefit of the depreciation of the Peso at some stage, this has not been included in the current plan. Having said this, the Company expects to maintain the level of savings achieved since 2013 and plans to continue its operational improvement program focused on sustainable cost cutting measures and driving ongoing operational efficiencies.

As in the past, variations in production and unit costs will occur quarter on quarter as the mine plan draws ore from several Arenal stopes with different grades, positions and sizes, changing the level of access required as well as the addition of ore from several open pits at varying grades and stages of stripping. The Company plans to achieve its production and cost targets over the course of the year and is expecting higher unit cash costs in the first half of the year compared to the second half based on the current planned mining sequence.

FY 2014 Financial Summary

FY 2014 cash flow generated from operations before working capital was US$23.9M (FY 2013: US$21.2M). This increase was realized despite an average gold price in FY 2014 of US$1,298/oz compared to US$1,605/oz in FY2013.

FY 2014 Corporate expenses were US$3.5M compared to $5.3M in FY 2013, representing a 35% reduction as a result of the overall drive to sustainably reduce costs. This reduction was achieved by reducing or cancelling non essential activities or services, doing internally services performed in the past by consultants, renegotiating fees and working more efficiently.

FY 2014 profit after tax was US$5.1M, compared with a loss of US$14.8M in FY 2013.

The Company invested US$7.3M in capital and US$6.6M in exploration in FY 2014 compared to US$22.0M and US$9.2M respectively in FY 2013. The decrease in capital expenditure is as a result of the Arenal underground mine moving from development into production, as well as more efficient exploration expenditures.

Orosur’s cash position as at May 31 2014 was US$10.8M (FY 2013: US$5.6M) with total debt of US$4.9M (FY 2013: US$9M). The Company is following the contracted schedule of lease repayments with HSBC and Banco Santander and expects to almost entirely repay these facilities and be practically debt free by end of FY 2015. Net working capital (current assets less current liabilities including cash) was US$10.5M in FY 2014 (FY 2013:US$4.3M). The Company has US$3.0M of commited but undrawn lines of credit available at May 31, 2014 and at present is not planning to utilize them within the current development plans and gold price environment.

Q4 Development and Exploration

During the year, the Company has been systematically identifying new gold resources, and converting them to reserves. As a result, the Company has created a portfolio of projects to develop around San Gregorio which have extended its life of mine. The Company’s objective remains to sustainably carry out sufficient exploration to maintain a four-to-six year rolling reserve, as it has done for many years now.

As previously announced, the Company successfully added 40,000 oz of gold reserves from pillar-less mining using Cemented Rock Fill at the Arenal Deeps Mine in Q2, and 9,000 oz of gold reserves at Vaca Muerta following the results of an infill drilling campaign during Q2 and after re-optimizing the mineral reserves calculations using a US$1,200/oz gold price during Q3.

In addition, on the basis of historical drilling since 2006 and following a 4,886m exploration drilling campaign in Q4, the Company has successfully added an additional 11,000 oz of gold reserves in the Laureles open pit and 27,000 oz of resources (note that all resources are stated inclusive of reserves). The cost of the drilling campaign is equivalent to US$22/oz of reserves. The Laureles project is situated approximately 18 km north-east of the San Gregorio plant. Orosur continues its brownfield exploration program during FY14–15 around Vaca Muerta, Laureles as well as some secondary targets around the San Gregorio facility and on the Zapucay cluster.

The recent 2,504 m brownfield exploration drilling campaign in Arenal Deeps, below and along strike of the Arenal Deeps underground mine was conducted from underground platforms and targeting three different zones with potential mineralization, in close proximity to the current underground operations. As a result, Orosur has added 18,000 oz of resources and 15,000 oz of reserves. Additional exploration, targeting mineralization further along strike as well as at depth is planned to continue in FY 2015 at Arenal, with 2,300m of drilling focused on four additional blocks aimed to add similar geological resources to those added in the FY 2014 campaign.

In total, the Company added 75,000 oz of reserves to its main projects during FY 2014, thereby extending the minelife at San Gregorio to approximately 4 years.

Uruguay Development Projects

In additional to the brownfield exploration and development work in the above-mentioned open pits and at Arenal, the Company is carrying out modelling and engineering work on the San Gregorio deposit, aimed at delineating a significant geological resource adjacent to the existing open pit as well as evaluation an underground project at Veta A. The current potential of the underground project at Veta A Deeps was calculated using a cut-off of 1.71 g/t Au with a total of 138 kt @ 2.55 g/t Au for total resources of approximately 11,000 oz. Management believes that there is ample room for adding reserves to these projects and is evaluating potential synergies and optimal sequencing of these two projects as they are located within 1 km of each other.

Uruguay Greenfield Exploration

The Company’s exploratory efforts during Q4 continued to focus primarily on the high grade granulite basement and specifically on the corridor of the Santa Teresa, San Gregorio and Arenal Shear Zone (“SGSZ”), with a low cost surface exploration program to identify new mineralization centers along the historically poorly defined and mostly hidden south east extension of the SGSZ. This zone was delineated in 2014 within an approximate 200m wide corridor and along an extension of approximately 10 km. Six initial targets have been defined on this highly prospective potential belt and a program of 2,000m of DDH drilling, planned as a first pass campaign, started during Q4 and continues at present.

Additionally, in the Sobresaliente District, four target zones were identified and are currently under review. Mineralization is hosted in irregular, pod like bodies that require a more robust geophysical analysis as well as further drilling to delineate.

The recently acquired L-500 diamond rig is operational and supporting all surface exploration drilling. The incorporation of this drill rig is not only providing flexibility but also reducing the Company’s drilling costs.

Chile

In Chile, activities were concentrated on surface exploration at Quebrada Pantanillo and at Anillo. The goal is to acquire valuable data and information that contributes to advancing the current exploration models at minimal cost.

Work at Quebrada Pantanillo consisted of surface delineation work including mapping, a groundmagnetic 3D inversion model, spectrometry, geochem reinterpretation and three CSAMT sections. Results from this data consistently support the existence of a high sulphidation epithermal system.

At Anillo, the Company completed a structural interpretation study by Nick Olivier which defined six domains and several new targets.

There were no significant additional activities in Chile during Q4.

Colombia

The acquisition of Waymar Resources Ltd. by way of a plan of arrangement closed after the FY 2014 year end on July 9, 2014, on schedule and within budget as already announced. The integration of the Anzá project and the team within Orosur progressed smoothly and has now completed. The Anzá gold exploration project is an attractive high grade asset with significant upside. There are several targets in Anzá at different stages of development. In FY 2015, Orosur is planning to review and advance the technical evaluation of the various options in Anzá to plan and define the upcoming round of drilling in Colombia, and re-constitute the local team during the second half of the year.

END

Qualified Person’s Statement

The information presented in this press release has been reviewed by Walter Muehlebach, GM Exploration of OMI and by Francisco Castillo, GM San Gregorio and they are both considered to be in compliance with N.I. 43-101 reporting guidelines. Mr. Muehlebach is a graduate in Geology of the Universidad Católica del Norte (Chile) and a member of the Chilean Comisión Calificadora de Competencias en Recursos y Reservas Mineras, and has 23 years of experience in the field of mineral exploration. Mr. Castillo is a graduate in Mining Engineering of the Universidad de Santiago de Chile and a member of the Chilean Comisión Calificadora de Competencias en Recursos y Reservas Mineras, and has 12 years of professional experience.

Forward Looking Statements

All statements, other than statements of historical fact, contained or incorporated by reference in this news release, including any information as to the future financial or operating performance of the Company, constitute “forward-looking statements” within the meaning of certain securities laws, including the “safe harbour” provisions of the Securities Act (Ontario) and the United States Private Securities Litigation Reform Act of 1995 and are based on expectations estimates and projections as of the date of this news release. There can be no assurance that such statements will prove to be accurate, such statements are subject to significant risks and uncertainties, and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements include, without limitation success of exploration activities; permitting time lines; the failure of plant; equipment or processes to operate as anticipated; accidents; labour disputes; requirements for additional capital title disputes or claims and limitations on insurance coverage. The Company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information, future events and such forward-looking statements, except to the extent required by applicable law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

About Orosur Mining Inc.

Orosur Mining Inc. is a fully integrated gold producer, developer and exploration company focused on identifying and advancing gold projects in South America. The Company operates the only producing gold mine in Uruguay (San Gregorio), and has assembled an exploration portfolio of high quality assets in Uruguay, Chile and Colombia. The Company is quoted in Canada (OMI.TO) and London (OMI.TO).

For more information please visit www.orosur.ca

– Financial Statements Follow –

Orosur Mining Inc. Consolidated Statements of Financial Position

Thousands of United States Dollars, except where indicated

As at May 31
2014($)

As at May 31
2013($)

Assets Notes Cash and cash equivalents 10,818 5,633 Accounts receivable and other assets 5 3,338 3,776 Inventories 6 14,254 15,715 Total current assets 28,410 25,124 Accounts receivable and other assets 5 414 Property plant and equipment and development costs 7 37,323 47,321 Exploration and evaluation costs 8 35,813 31,686 Deferred income tax assets 14 5,470 5,305 Restricted cash 258 332 Total non-current assets 79,278 84,644 Total Assets 107,688 109,768 Liabilities and Shareholders’ Equity Trade payables and other accrued liabilities 5 13,343 16,665 Financial debt 20 3,978 4,172 Environmental rehabilitation provisions 10 598 Total current liabilities 17,919 20,837 Financial debt 20 961 4,823 Environmental rehabilitation provisions 10 5,828 6,148 Total non-current liabilities 6,789 10,971 Total liabilities 24,708 31,808 Capital stock 11 55,184 55,184 Warrants 12 276 Contributed surplus 12 5,708 5,535 Retained earnings 22,088 16,965 Total shareholders’ equity 82,980 77,960 Total liabilities and shareholders’ equity 107,688 109,768 Orosur Mining Inc. Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Thousands of United States Dollars except for earnings per share amounts)

2014 ($ ) 2013 ($ ) For the years ended May 31 Note 80,370 105,884 Sales Cost of sales 22 (72,905 ) (97,657 ) Gross profit 7,465 8,227 (3,498 ) (5,303 ) Corporate and administrative expense Exploration expenses and exploration write off 8 (245 ) (4,282 ) Impairment of assets 9 (557 ) (14,057 ) Obsolescence provision 9 (22 ) Uncollectible Receivables (45 ) Other income 1,139 589 Finance cost 21 (670 ) (261 ) Finance income 21 4 8 Derivative income 16 0 41 Net foreign exchange gain (loss) 91 (603 ) (3,803 ) (23,868 ) Profit (loss) before income tax 3,662 (15,641 ) Income tax recovery 14 1,461 816 Total income (loss) and comprehensive income (loss) for the year 5,123 (14,825 ) Earnings per common share Basic 19 0.07 (0.19 ) Diluted 19 0.07 (0.19 )

Orosur Mining Inc.

Consolidated Statements of Cash Flows

Thousands of United States Dollars, except where indicated

For the years ended May 31 Note 2014 ($) 2013 ($)

Net inflow (outflow) of cash related to the
following activities

Cash flow from Operating activities Net income (loss) for the year 5,123 (14,825 )

Adjustments to reconcile net income to net cash
provided from operating activities:

Depreciation 7 18,738 19,712 Impairment of assets 7 557 14,057 Exploration and evaluation expenses written off 8 219 4,217 Fair value of derivatives 16 (41 ) Accretion of asset retirement obligation 10 231 76 Deferred income tax assets 14(b) (165 ) (1,663 ) Stock based compensation 12 175 151 Gain on sale of property, plant and equipment 7 (706 ) (509 ) Others (287 ) 34 Subtotal 23,885 21,209 Changes in operating assets and liabilities Accounts receivable and other assets 78 897 Inventories 1,462 1,393 Trade payables and other accrued liabilities (3,324 ) (2,267 ) Net cash generated from operating activities 22,101 21,232 Cash flow from Financing activities Proceeds from the exercise of share options 70 Loans received 20 4,713 Loan payments (3,854 ) (1,518 ) Net cash from financing activities (3,854 ) 3,265 Cash flow from Investing activities Purchase of property, plant and equipment and development costs (4,762 ) (21,088 ) 7 Enviromental tasks 8 (2,572 ) (960 ) Proceeds from the sale of fixed assets 847 969 Exploration and evaluation expenditure assets 8 (6,575 ) (9,246 ) Net cash used in investing activities (13,062 ) (30,325 ) Increase / Decrease in cash and cash equivalents 5,185 (5,828 ) Cash and cash equivalents at the beginning of year 5,633 11,461

Cash and cash equivalents at the end of year

10,818

5,633

Orosur Mining Inc. Consolidated Statements of Changes in Shareholders’ Equity

Thousands of United States Dollars, except where indicated

For the years ended May 31 Note 2014 ($) 2013 ($) Capital stock Balance at beginning of year 55,184 55,074 Exercise of stock options 70 Transfer from contributed surplus for exercise of options 40 Balance at end of year 55,184 55,184 Broker warrants Balance at beginning of year 276 276 Warrant expiration (276 ) Balance at end of year 276 Contributed surplus Balance at beginning of year 5,534 5,424 Employee stock based compensation recognized 12 174 151 Transfer to Capital stock (40 ) Balance at end of year 5,708 5,535 Retained earnings Balance at beginning of year 16,965 31,790 Net income for the year 5,123 (14,825 ) Balance at end of year 22,088 16,965 Shareholders’ equity at end of year 82,980 77,960 Commodity MarketsCompany Earnings Contact: Orosur Mining Inc

Ignacio Salazar, + 562 2924 6800

Chief Executive Officer

info@orosur.ca

or

Cantor Fitzgerald Europe

Stewart Dickson / Jeremy Stephenson / Carrie Lun

Tel: +44 (0) 20 7894 7000

or

FTI Consulting

Ben Brewerton / Oliver Winters / Sara Powell

Tel: +44 (0) 20 3727 1000

[…]

JMP Group Reports First Quarter 2014 Financial Results

SAN FRANCISCO–(BUSINESS WIRE)–

JMP Group Inc. (NYSE: JMP), an investment banking and alternative asset management firm, reported financial results today for the quarter ended March 31, 2014.

Adjusted net revenues, which exclude certain non-cash items and non-controlling interests, were $44.1 million, an increase of 37.6% from $32.0 million for the first quarter of 2013. For more information on adjusted net revenues, including a reconciliation to net revenues, please see the section below titled “Non-GAAP Financial Measures.” Operating net income was $4.4 million, or $0.19 per diluted share, an increase of 21.1% from $3.6 million, or $0.16 per share, for the first quarter of 2013. For more information on operating net income, including a reconciliation to net income attributable to JMP Group, please see the section below titled “Non-GAAP Financial Measures.” Total net revenues under generally accepted accounting principles, or GAAP, were $37.7 million, compared to $23.2 million for the first quarter of 2013. Net income attributable to JMP Group on a GAAP basis was $4.0 million, or $0.17 per share, compared to a net loss of $1.7 million, or $0.08 per share, for the first quarter of 2013.

“JMP Group had a very good first quarter, driven by record earnings at JMP Securities, which jumped 350% year-over-year to $0.18 per share,” said Chairman and Chief Executive Officer Joe Jolson. “Total operating EPS of $0.19 exceeded expectations and provided a great start to 2014. Adjusted net revenues of $44.1 million grew 38% from a year ago, primarily due to record investment banking revenues of $25.1 million. Our adjusted operating margin improved to 16.0% for the quarter, compared to 14.1% for the whole of 2013, and our operating return on tangible equity increased to 13.6%.”

Segment Results of Operations

At JMP Securities, the broker-dealer segment, adjusted net revenues were $31.8 million, an increase of 83.3% from $17.4 million for the first quarter of 2013, due to in large part to a substantial increase in investment banking revenues. The broker-dealer segment’s operating margin on adjusted net revenues was 20.5% for the quarter, compared to 9.4% for the first quarter of 2013 and 14.5% for the full year of 2013.

At Harvest Capital Strategies, the asset management segment, adjusted net revenues of $6.2 million decreased 23.7% from $8.2 million for the first quarter of 2013. For the first quarter of 2014, JMP Group’s return on its capital invested in hedge funds managed by Harvest Capital Strategies was 2.3%.

At JMP Credit Advisors, the corporate credit management segment, adjusted net revenues totaled $1.1 million, an increase of 20.0% from $0.9 million for the first quarter of 2013. For the first quarter of 2014, there was no net gain or loss on the sale or payoff of loans acquired by JMP Credit in April 2009; while, for the first quarter of 2013, there was a net realized loss of $0.7 million, which included a loan loss provision of $0.9 million in connection with an impaired loan.

A summary of JMP Group’s operating net income per share by segment for the quarter ended March 31, 2014 and for comparable prior periods is set forth below.

Quarter Ended

($ as shown)

Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2013 Broker-dealer $ 0.18 $ 0.12 $ 0.04 Asset management 0.00 0.04 0.03 Corporate credit management 0.00 0.01 0.00 Operating platform EPS 0.18 0.17 0.07 Investment income 0.13 0.15 0.20 Corporate costs (0.12 ) (0.15 ) (0.11 ) Operating EPS (diluted) $ 0.19 $ 0.17 $ 0.16

For more information on segment reporting; adjusted net revenues, including a reconciliation to net revenues; and operating net income, including a reconciliation to net income, please see the section below titled “Non-GAAP Financial Measures.”

Composition of Revenues

Investment Banking

Investment banking revenues were a record $25.1 million, an increase of 106.9% from $12.1 million for the first quarter of 2013.

A summary of the company’s investment banking revenues and transaction counts for the quarter ended March 31, 2014 and for comparable prior periods is set forth below.

Quarter Ended Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2013 ($ in thousands) Count Revenues Count Revenues Count Revenues Public equity 33 $ 19,521 26 $ 10,503 33 $ 8,914 Debt and convertible securities 6 1,571 9 8,730 10 1,648 Private capital markets and other 1 698 – – – 145 Strategic advisory 3 3,263 3 2,639 1 1,400 Total 43 $ 25,053 38 $ 21,872 44 $ 12,107

Brokerage

Net brokerage revenues were $6.7 million, an increase of 28.1% from $5.2 million for the first quarter of 2013.

Asset Management

Asset management-related fee revenues were $6.1 million, a decrease of 22.2% from $7.9 million for the first quarter of 2013 due to a decline in incentive fees. For more information on asset management-related fee revenues, please see the section below titled “Non-GAAP Financial Measures.”

Client assets under management at March 31, 2014 totaled $1.8 billion, including $952.7 million of funds managed by Harvest Capital Strategies and HCAP Advisors and $845.4 million par value of loans and cash managed by JMP Credit Advisors. Client assets under management were $1.7 billion at December 31, 2013 and $1.2 billion at March 31, 2013. Including sponsored funds in which Harvest Capital Strategies owns an economic interest, client assets under management totaled $2.0 billion at March 31, 2014.

At March 31, 2014, private capital, including corporate credit, small business lending, venture capital and real estate-related advisory services, represented 60.8% of client assets under management, including sponsored funds.

Principal Transactions

Principal transactions generated a net realized and unrealized loss of $3.7 million, compared to a net realized and unrealized gain of $1.9 million for the first quarter of 2013.

A summary of the company’s principal transaction revenues for the quarter ended March 31, 2014 and for comparable prior periods is set forth below.

Quarter Ended (in thousands) Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2013 Hedge fund investments $ 1,707 $ 2,317 $ 1,898 Principal investments: Investment in Harvest Capital Credit Corporation (163 ) – – Other principal investments 55 140 85 Total principal investments (108 ) 140 85 Venture investments: Investment in Harvest Growth Capital funds (302 ) 500 (19 ) Other venture investments and warrants 289 657 553 Total venture investments (13 ) 1,157 534

Principal transaction revenues net of non-controlling interests in Harvest Growth Capital funds

1,586 3,614 2,517 Non-controlling interests in Harvest Growth Capital funds (5,279 ) 12,264 (599 ) Total principal transaction revenues

$

(3,693

) $ 15,878 $ 1,918

Included in the net loss of $3.7 million for the quarter ended March 31, 2014 was a loss of $5.3 million attributable to non-controlling interests in net realized and unrealized gains at Harvest Growth Capital and Harvest Growth Capital II, venture capital funds managed by Harvest Capital Strategies that are consolidated under GAAP. GAAP accounting requires that JMP Group consolidate both funds due to Harvest Capital Strategies’ role as the funds’ manager and managing member, despite the company’s ownership of just 4.7% of Harvest Growth Capital and 2.2% of Harvest Growth Capital II. The presentation of adjusted net revenues elsewhere in this press release excludes JMP Group’s non-controlling interests in these funds; and, accordingly, the aforementioned loss of $5.3 million is not included in adjusted net revenues. Net of its non-controlling interests, JMP Group had a net realized and unrealized loss of $0.3 million on its investments in Harvest Growth Capital and Harvest Growth Capital II for the quarter. For more information on adjusted net revenues, including a reconciliation to net revenues, please see the section below titled “Non-GAAP Financial Measures.”

Collateralized Loan Obligations

The net return on invested capital managed by JMP Credit Advisors was 4.3% for the quarter, compared to 11.2% for the first quarter of 2013.

At March 31, 2014, discounts and reserves (including liquidity discounts, allowances for loan losses and deferred loan fees) equaled $9.1 million, or 1.2% of gross performing loans outstanding at JMP Credit. There were no impaired loans with associated discounts or reserves at March 31, 2014; while, at March 31, 2013, discounts and reserves (including credit discounts, liquidity discounts, and allowances for loan losses) with regard to impaired loans equaled $2.6 million, or 0.6% of gross loans outstanding.

A net loan loss provision of $0.5 million for the quarter was recorded at JMP Credit, which is consolidated under GAAP, primarily representing a general reserve in connection with the loan portfolio being accumulated for JMP Credit Advisors CLO III. At March 31, 2014, general loan loss reserves equaled 0.6% of gross performing loans at JMP Credit.

Net Interest Income

Net interest income was $3.8 million, compared to net interest expense of $3.1 million for the first quarter of 2013, when interest expense due to net amortization of liquidity discounts at JMP Credit equaled $8.7 million. Excluding the amortization-related expense for the period, net interest income would have been $5.6 million for the first quarter of 2013. Further excluding net interest income of $1.3 million attributable to Harvest Capital Credit, which, due to its May 2013 initial public offering, is no longer consolidated by JMP Group, net interest income would have been $4.3 million for the first quarter of 2013.

Expenses

Compensation and Benefits

Compensation and benefits expense was $31.4 million, compared to $19.6 million for the first quarter of 2013. Excluding the cost of stock-based awards but accelerating and recognizing the cost of net deferred compensation related to the quarter, compensation and benefits expense was 69.7% of adjusted net revenues, compared to 62.4% for the first quarter of 2013. Further excluding compensation expense related to strategic initiatives, the compensation ratio was 68.4%, compared to 58.5% for the first quarter of 2013. For more information on compensation ratios, please see the section below titled “Non-GAAP Financial Measures.”

Non-Compensation Expense

Non-compensation expense was $6.5 million, compared to $6.2 million for the first quarter of 2013.

Personnel

At March 31, 2014, the company had 232 full-time employees, compared to 235 at December 31, 2013 and 218 at March 31, 2013.

Non-GAAP Financial Measures

In addition to the GAAP financial results presented in this press release, JMP Group presents the non-GAAP financial measures discussed below. These non-GAAP measures are provided to enhance investors’ overall understanding of the company’s current financial performance. Furthermore, company management believes that this presentation enables more meaningful comparison of JMP Group’s financial performance in various periods. However, the non-GAAP financial results presented should not be considered a substitute for results that are presented in a manner consistent with GAAP. A limitation of the non-GAAP financial measures presented is that the adjustments concern gains, losses or expenses that JMP Group generally expects to continue to recognize. The adjustment of these non-GAAP items should not be construed as an inference that these gains or expenses are unusual, infrequent or non-recurring. Therefore, both GAAP measures of JMP Group’s financial performance and the respective non-GAAP measures should be considered together. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies.

Adjusted Net Revenue

Adjusted net revenue is a non-GAAP financial measure that (i) includes asset management fees, net interest income or expense, and other revenues eliminated upon the consolidation of Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit (until its IPO on May 2, 2013), (ii) excludes the net amortization of liquidity discounts on loans held and asset-backed securities issued by JMP Credit Advisors CLO I, (iii) reverses the general loan loss provision taken with regard to JMP Credit Advisors CLO II and JMP Credit Advisors CLO III, (iv) adjusts for unrealized mark-to-market gains and losses recorded at Harvest Capital Credit (prior to its IPO on May 2, 2013), (v) reverses net unrealized gains and losses on strategic equity investments and warrants, and (vi) excludes the non-controlling interest in net unrealized gains and losses on Harvest Growth Capital and Harvest Growth Capital II. In particular, adjusted net revenue adjusts for:

base management and incentive fees earned by Harvest Capital Strategies as manager of Harvest Growth Capital and Harvest Growth Capital II, both venture capital funds, and Harvest Capital Credit, a small business lending strategy; Harvest Capital Strategies is managing member of Harvest Growth Capital and Harvest Growth Capital II and was the external manager of Harvest Capital Credit, and, as a result of its ownership of each (until the IPO of Harvest Capital Credit on May 2, 2013), JMP Group has consolidated the three entities (for the appropriate periods) in accordance with GAAP accounting standards and has eliminated the fees in consolidation; presenting these fees as though Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit were deconsolidated presents the entities’ results in a manner similar to those of the other investment funds managed by Harvest Capital Strategies; the non-cash net amortization of liquidity discounts associated with JMP Credit Advisors CLO I, due to scheduled contractual principal repayments, for periods prior to that ended September 30, 2013; the non-specific, non-cash loan loss provision recorded with regard to loans acquired during the period by JMP Credit Advisors CLO II and JMP Credit Advisors III, which is required by GAAP; unrealized mark-to-market gains or losses on the investment portfolio at Harvest Capital Credit; unrealized mark-to-market gains or losses on the company’s strategic equity investments as well as certain warrant positions; and non-controlling interests in net unrealized gains and losses generated by Harvest Growth Capital and Harvest Growth Capital II, of which Harvest Capital Strategies is manager and managing member; under GAAP, JMP Group consolidates the two funds, however, as presented, unrealized gains and losses that do not accrue to the company are reversed.

A reconciliation of JMP Group’s net revenues to its adjusted net revenues for the quarter ended March 31, 2014 and for comparable prior periods is set forth below.

Quarter Ended (in thousands) Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2013 Revenues: Non-interest revenues $ 34,397 $ 55,474 $ 27,338 Net interest income/(expense) 3,760 4,458 (3,141 ) General loan loss provision (497 ) (246 ) (949 ) Total net revenues 37,660 59,686 23,248

Asset management fees earned on Harvest Growth Capital funds and Harvest Capital Credit (1)(2)

378 386 858 Dividend distribution from Harvest Capital Credit (2) – – 257

Less: Net interest income and other revenues from Harvest Capital Credit (2)

– – (1,327 )

Total net revenues including fee revenues from consolidated entities

38,038 60,072 23,036

Add back/(subtract):

Net amortization of liquidity discounts on loans and asset-backed securities issued

– – 8,740 Loan loss provision – collateralized loan obligations 550 200 – Unrealized mark-to-market (gain) – Harvest Capital Credit – – (516 )

Net unrealized loss on strategic equity investments and warrants

174 21 157

Non-controlling interests in net unrealized losses/(gains) on Harvest Growth Capital funds

5,297 (12,248 ) 599 Adjusted net revenues $ 44,059 $ 48,045 $ 32,016

(1) Adjustments to reflect economic contributions from two Harvest Growth Capital funds and Harvest Capital Credit as though deconsolidated for purposes of financial reporting; upon deconsolidation, fee revenues and dividend payments would be recognized, while net interest income and other revenues generated by these entities would not be recorded by JMP Group.

(2) Subsequent to its IPO on May 2, 2013, Harvest Capital Credit is no longer consolidated; therefore, fees and dividends related to Harvest Capital Credit are included in non-interest revenues following that date.

Company management has utilized adjusted net revenue, adjusted in the manner described above, as an additional device to aid in understanding and analyzing JMP Group’s financial results for the periods presented. Management believes that adjusting net revenue in these ways is useful in that it allows for a better evaluation of the performance of JMP Group’s ongoing business and facilitates a meaningful comparison of the company’s results in a given period to those in prior and future periods.

Asset Management-Related Fee Revenues

Asset management-related fee revenue is a non-GAAP financial measure that sums asset management fees with certain fee revenues (in particular, asset management fundraising fees generated by JMP Securities, loan fees, and revenues from fee-sharing arrangements with other asset managers) that are reported in JMP Group’s financial statements as other income. In addition, asset management-related fee revenues incorporate base management and incentive fees earned by Harvest Capital Strategies as manager of Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit. JMP Group consolidates the two Harvest Growth Capital funds and Harvest Capital Credit (until its IPO on May 2, 2013) in accordance with GAAP accounting standards; however, asset management fees generated by these entities are included in asset management-related fee revenues as though deconsolidated.

A statement of JMP Group’s asset management-related fee revenues for the quarter ended March 31, 2014 and for comparable prior periods is set forth below.

Quarter Ended (in thousands) Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2013 Base management fees: Fees reported as asset management fees $ 2,594 $ 2,612 $ 2,365

Fees earned at Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit/HCAP Advisors

768 697 508 Total base management fees 3,362 3,309 2,873 Incentive fees: Fees reported as asset management fees 2,919 7,423 4,387

Fees earned at Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit/HCAP Advisors

(359 ) – 350 Total incentive fees 2,560 7,423 4,737 Other fee income: Fundraising and other fees 223 217 288 Total other fee income 223 217 288 Asset management-related fee revenues: Fees reported as asset management fees 5,513 10,035 6,752 Fees reported as other income 223 217 288

Fees earned at Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit/HCAP Advisors

409 697 858

Total asset management-related fee revenues

$ 6,145 $ 10,949 $ 7,898

Company management has utilized asset management-related fee revenue as a means of assessing the performance of JMP Group’s combined asset management activities, including its fundraising and other services for third parties. Management believes that asset management-related fee revenues, as presented above, provide useful information by indicating the relative contributions of base management fees and performance-related incentive fees, thus facilitating a comparison of those fees in a given period to those in prior and future periods. Management also believes that asset management-related fee revenue is a more meaningful measure than standalone asset management fees as reported, because asset management-related fee revenues represent the combined impact of JMP Group’s various asset management activities on the company’s total net revenues.

Compensation Ratio

A compensation ratio expresses GAAP compensation expense as a percentage of GAAP net revenues in a given period. Adjusted compensation ratios are non-GAAP financial measures that utilize adjusted net revenues as the denominator in their calculation. Furthermore, these ratios adjust the financial impact of certain compensation-related and transaction-related expenses that are or are not recognized under GAAP. In particular, the adjusted compensation ratio reverses compensation expense related to stock-based awards and deferred compensation (so that the compensation expenses used in the numerator are those that correspond to the adjusted net revenues generated in the periods presented) as well as a one-time administrative cost incurred by JMP Group in connection with the initial public offering of Harvest Capital Credit Corporation in May 2013. The adjusted compensation ratio is further adjusted by excluding compensation paid to employees hired in connection with the company’s strategic investments in new business initiatives.

A statement of JMP Group’s compensation ratio for the quarter ended March 31, 2014 and for comparable prior periods is set forth below.

Quarter Ended ($ in thousands) Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2013 Adjusted net revenues $ 44,059 $ 48,045 $ 32,016 Compensation and benefits $ 31,376 $ 33,366 $ 19,605 Subtract/(add back): Compensation expense – stock option grants 395 262 137 Compensation expense – post-IPO RSU grants 853 804 616 Compensation expense – net deferred compensation (597 ) (2,623 ) (1,124 ) IPO-related administrative expense – Harvest Capital Credit Corporation – 450 – Adjusted compensation and benefits 30,725 34,473 19,976 Subtract: Compensation expense – strategic initiatives 610 895 1,250

Adjusted non-compensation expense, excluding strategic initiatives

$ 30,115 $ 33,578 $ 18,726 Adjusted ratio of compensation expense to revenues 69.7 % 71.8 % 62.4 %

Adjusted ratio of compensation expense to revenues, excluding strategic initiatives

68.4 % 69.9 % 58.5 %

Company management has utilized compensation ratios, adjusted in the manners described above, to assess JMP Group’s personnel expenses as they relate to its revenues for the periods presented. Management believes that adjusted compensation ratios provide useful information by including or excluding certain expenses as a means of representing the company’s ongoing personnel costs resulting from its core business activities. Management also believes that compensation ratios are useful measures because they allow and facilitate meaningful comparisons of the company’s personnel expenses in a given period to those in prior and future periods.

Operating Net Income

Operating net income is a non-GAAP financial measure that (i) reverses compensation expense related to stock-based awards and deferred compensation, (ii) excludes the net amortization of liquidity discounts on loans held and asset-backed securities issued by JMP Credit Advisors CLO I, (iii) reverses the general loan loss provision taken with regard to JMP Credit Advisors CLO II and JMP Credit Advisors CLO III, (iv) adjusts for unrealized mark-to-market gains and losses recorded at Harvest Capital Credit, (v) reverses net unrealized gains and losses on strategic equity investments and warrants, and (vi) assumes an effective tax rate. In particular, operating net income adjusts for:

the grant of RSUs and stock options subsequent to the company’s IPO; net deferred compensation, which consists of (a) deferred compensation awarded at year-end 2012 and reflected in operating net income for 2012 though recognized as a GAAP expense in 2013 and 2014 less (b) compensation awarded at year-end 2013 and deferred into 2014 and 2015; the non-cash net amortization of liquidity discounts associated with JMP Credit Advisors CLO I, due to scheduled contractual principal repayments, for periods prior to that ended September 30, 2013; the non-specific, non-cash loan loss provision recorded with regard to loans acquired during the period by JMP Credit Advisors CLO II and JMP Credit Advisors III, which is required by GAAP; unrealized mark-to-market gains or losses on the investment portfolio at Harvest Capital Credit; unrealized mark-to-market gains or losses on the company’s strategic equity investments as well as certain warrant positions; and a combined federal, state and local income tax rate of 38%.

A reconciliation of JMP Group’s net income to its operating net income for the quarter ended March 31, 2014 and for comparable prior periods is set forth below.

Quarter Ended (in thousands, except per share amounts) Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2013 Net income/(loss) attributable to JMP Group Inc. $ 3,998 $ 3,493

$

(1,719

) Add back: Income tax expense/(benefit) 1,696 3,772 (812 ) Income/(loss) before taxes 5,694 7,265 (2,531 ) Add back/(subtract): Compensation expense – stock options 395 262 137 Compensation expense – post-IPO RSUs 853 804 616 Compensation expense – deferred compensation (597 ) (2,623 ) (1,124 )

Net amortization of liquidity discounts – JMP Credit Advisors CLO I

– – 8,740 Loan loss provision – collateralized loan obligations 545 146 – IPO-related expense – Harvest Capital Credit – 450 –

Unrealized mark-to-market (gain) – Harvest Capital Credit

– – (162 )

Unrealized mark-to-market loss – strategic equity investments and warrants

174 21 157 Operating income before taxes 7,064 6,325 5,833 Income tax expense (assumed rate of 38%) 2,684 2,403 2,216 Operating net income $ 4,380 $ 3,922 $ 3,617 Operating net income per share: Basic $ 0.20 $ 0.18 $ 0.16 Diluted (1) $ 0.19 $ 0.17 $ 0.16 Weighted average shares outstanding: Basic 21,820 21,825 22,607 Diluted (1) 22,806 22,701 22,905

(1) In 2013 and the first quarter of 2014, JMP Group issued restricted stock units, or RSUs, bearing non-forfeitable dividend equivalent rights. GAAP requires RSUs with non-forfeitable dividend equivalent rights to be included in the diluted share count (without applying the treasury method). Management prefers to present a non-GAAP diluted share count for the period, in keeping with the presentation for quarters not impacted by this GAAP requirement for such RSUs. The non-GAAP diluted share count reflects the impact of such RSUs under the treasury method, which is consistent with the calculation of the dilutive impact of all other RSUs outstanding. On a GAAP basis, the weighted average number of diluted shares outstanding for the quarter ended March 31, 2014 was 23,611,899; given that denominator, operating net income per diluted share would have been unchanged, at $0.19.

Company management has utilized operating net income on a total and per share basis, adjusted in the manner described above, as an additional device to aid in understanding and analyzing JMP Group’s financial results for the periods presented. Management believes that operating net income provides useful information by excluding certain items that may not be representative of the company’s core operating results or core business activities. Management also believes that operating net income is a useful measure because it allows for a better evaluation of the performance of JMP Group’s ongoing business and facilitates a meaningful comparison of the company’s results in a given period to those in prior and future periods.

Segment Reporting

In order to demonstrate the contribution to the company’s results of each of its primary businesses on a standalone basis, JMP Group presents the operating net income generated by each segment in the tables that follow. Management believes that this presentation enables investors to better understand the separate but interrelated financial operations of the company’s various business lines and to more accurately assess the contribution of each to JMP Group’s aggregate results.

Total net revenues have been adjusted, in part, as detailed above in the section titled “Adjusted Net Revenue,” and the resulting adjusted net revenues (i) include asset management fees, net interest income or expense, and other revenues eliminated upon the consolidation of Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit (until its IPO on May 2, 2013), (ii) exclude the net amortization of liquidity discounts on loans held and asset-backed securities issued by JMP Credit Advisors CLO I, (iii) reverse the general loan loss provision taken in connection with the origination of JMP Credit Advisors CLO II, (iv) adjust for unrealized mark-to-market gains and losses recorded at Harvest Capital Credit; (v) reverse net unrealized gains and losses on strategic equity investments and warrants and (vi) exclude non-controlling interests in net unrealized gains and losses on Harvest Growth Capital and Harvest Growth Capital II. Total non-interest expenses have been adjusted, in part, as detailed above in the section titled “Operating Net Income,” and the resulting adjusted non-interest expense reverses compensation expense related to stock-based awards granted subsequent to JMP Group’s initial public offering. For the purposes of calculating operating net income, an effective tax rate of 38% is assumed.

A statement of JMP Group’s operating net income on a segment basis for the quarter ended March 31, 2014 is set forth below.

Quarter Ended March 31, 2014 Corp. Invest- HGC Consoli- Broker- Asset Credit Operating ment Corp. Elimin- JMP Consoli- dated JMP (in thousands, except per share amounts) Dealer Mgmt. Mgmt. Platforms Income Costs ations Group dation Group Revenues: Investment banking $ 25,143 – – $ 25,143 – –

$

(90

) $ 25,053 – $ 25,053 Brokerage 6,656 – – 6,656 – – – 6,656 – 6,656 Asset management-related fees (1) 50 $ 6,224 $ 1,061 7,335 – – (1,190 ) 6,145

$

(379

) 5,766 Principal transactions (2) – – – – $ 1,760 – – 1,760 (5,279 ) (3,519 ) Gain on sale and payoff of loans – – – – 380 – – 380 – 380 Net dividend income – – – – 235 – – 235 – 235 Net interest income – – – – 3,777 – – 3,777 (18 ) 3,759 Provision for loan losses – – – – 53 – – 53 – 53 Adjusted net revenues 31,849 6,224 1,061 39,134 6,205 – (1,280 ) 44,059 (5,676 ) 38,383 Expenses: Non-interest expense/(income) (3) 25,335 6,432 1,024 32,791 1,360 4,239 (1,190 ) 37,200 42 37,242 Less: Non-controlling interest (4) – (356 ) – (356 ) 150 – – (206 ) (5,718 ) (5,924 )

Operating income/(loss) before taxes

6,514 148 37 6,699 4,695 (4,239 ) (90 ) 7,065 – 7,065 Income tax expense/(benefit) 2,475 56 14 2,545 1,785 (1,611 ) (34 ) 2,685 – 2,685 Operating net income/(loss) $ 4,039 $ 92 $ 23 $ 4,154 $ 2,910

$

(2,628

)

$

(56

) $ 4,380 – $ 4,380

Operating net income/(loss) per share:

Basic $ 0.19 $ 0.00 $ 0.00 $ 0.19 $ 0.13

$

(0.12

)

$

(0.00

) $ 0.20 – $ 0.20 Diluted (5) $ 0.18 $ 0.00 $ 0.00 $ 0.18 $ 0.13

$

(0.12

)

$

(0.00

) $ 0.19 – $ 0.19

(1) Reflects revenues detailed in section above titled “Asset Management-Related Fee Revenues;” management fees of $0.4 million are eliminated upon consolidation of two Harvest Growth Capital funds.

(2) Reverses net unrealized gains and losses on strategic equity investments and warrants. Excludes non-controlling interests in net realized and unrealized gains totaling $5.3 million that are recognized upon consolidation of two Harvest Growth Capital funds.

(3) Reverses stock-based compensation expense as well as accounting adjustments related to deferred compensation expense and excludes fund-related expenses totaling $42,000 that are recognized upon consolidation of two Harvest Growth Capital funds.

(4) Excludes non-controlling interests totaling $5.7 million in the net realized and unrealized gains of two Harvest Growth Capital funds that are recognized upon consolidation of the entities.

(5) In 2013 and the first quarter of 2014, JMP Group issued restricted stock units, or RSUs, bearing non-forfeitable dividend equivalent rights. GAAP requires RSUs with non-forfeitable dividend equivalent rights to be included in the diluted share count (without applying the treasury method). Management prefers to present a non-GAAP diluted share count for the period, in keeping with the presentation for quarters not impacted by this GAAP requirement for such RSUs. The non-GAAP diluted share count reflects the impact of such RSUs under the treasury method, which is consistent with the calculation of the dilutive impact of all other RSUs outstanding. On a GAAP basis, the weighted average number of diluted shares outstanding for the quarter ended March 31, 2014 was 23,611,899; given that denominator, operating net income per diluted share would have been unchanged, at $0.19.

Book Value per Share

At March 31, 2014, JMP Group’s tangible book value per share was $5.97, as set forth below.

(in thousands, except per share amounts) Mar. 31, 2014 Dec. 31, 2013 Mar. 31, 2013 Total JMP Group stockholders’ equity $ 130,373 $ 126,385 $ 125,238 Less: Goodwill and intangible assets – – – Tangible stockholders’ equity $ 130,373 $ 126,385 $ 125,238 Tangible book value per share $ 5.97 $ 5.79 $ 5.54 Basic shares outstanding 21,833 21,819 22,609 Quarterly operating ROTE (1) 13.6 % 12.5 % 11.5 % LTM operating ROTE (1) 11.4 % 10.9 % 12.5 %

(1) Return on tangible equity (ROTE) equals annualized operating net income divided by average tangible stockholders’ equity.

Share Repurchase Activity

During the quarter, JMP Group repurchased 4,656 shares of its common stock at an aggregate price of approximately $33,000, or $7.04 per share. At March 31, 2014, approximately 1.1 million shares remained eligible for repurchase under the company’s existing repurchase authorization.

Cautionary Note Regarding Quarterly Financial Results

Due to the nature of its business, JMP Group’s quarterly revenues and net income may fluctuate materially depending on: the size and number of investment banking transactions on which it advises; the timing of the completion of those transactions; the size and number of securities trades which it executes for brokerage customers; the performance of its asset management funds and inflows and outflows of assets under management; gains or losses stemming from sales of or prepayments on, or losses stemming from defaults on, loans underlying the company’s collateralized loan obligations; and the effect of the overall condition of the securities markets and economy as a whole. Accordingly, revenues and net income in any particular quarter may not be indicative of future results. Furthermore, JMP Group’s compensation expense is generally based upon revenues and can fluctuate materially in any quarter, depending upon the amount and sorts of revenue recognized as well as other factors. The amount of compensation and benefits expense recognized in a particular quarter may not be indicative of such expense in any future period. As a result, the company suggests that its annual results may be the most meaningful gauge for investors in evaluating the performance of its business.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide JMP Group’s current expectations or forecasts about future events, including beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expected or implied by the forward-looking statements. The company’s actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on March 13, 2014, as well as in the similarly captioned sections of other periodic reports filed by the company under the Exchange Act. The Form 10-K for the year ended December 31, 2013 and all other periodic reports are available on JMP Group’s website at www.jmpg.com and on the Securities and Exchange Commission’s website at www.sec.gov. Unless required by law, JMP Group undertakes no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this press release.

Conference Call

JMP Group will hold a conference call to discuss the results detailed herein at 10:00 a.m. EDT on Wednesday, April 23, 2014. To participate in the call, dial (888) 566-6060 (domestic) or (973) 200-3100 (international). The conference identification number is 31646719.

The conference call will also be broadcast live over the Internet and will be accessible via a link in the investor relations section of the company’s website, at investor.jmpg.com/events.cfm. The Internet broadcast will be archived and will remain available on the website for future replay.

About JMP Group

JMP Group Inc. is an investment banking and asset management firm that provides investment banking, sales and trading, and equity research services to corporate and institutional clients as well as alternative asset management products and services to institutional and high-net-worth investors. JMP Group operates through three subsidiaries: JMP Securities, Harvest Capital Strategies and JMP Credit Advisors. For more information, visit www.jmpg.com.

JMP GROUP INC.

Consolidated Statements of Financial Condition

(Unaudited)

(in thousands) Mar. 31, 2014 Dec. 31, 2013 Assets Cash and cash equivalents $ 41,676 $ 65,906 Restricted cash and deposits 75,550 68,029 Marketable securities owned, at fair value 31,505 29,295 Other investments 180,678 161,773

Loans collateralizing asset-backed securities issued, net of allowance for loan losses

783,326 727,270 Deferred tax assets 13,868 12,492 Other assets 37,212 57,166 Total assets $ 1,163,815 $ 1,121,931 Liabilities and Stockholders’ Equity Liabilities: Marketable securities sold, but not yet purchased, at fair value $ 14,506 $ 13,749 Accrued compensation 18,256 51,347 Asset-backed securities issued 713,508 716,423 Line of credit – 2,895 Note payable – 15,000 Warehouse credit facility – JMP Credit Advisors CLO III 50,413 – Bond payable 94,300 46,000 Deferred tax liability 3,841 3,625 Other liabilities 36,036 35,652 Total liabilities 930,860 884,691 Stockholders’ Equity: Total JMP Group Inc. stockholders’ equity 130,373 126,385 Non-redeemable non-controlling interest 102,582 110,855 Total equity 232,955 237,240 Total liabilities and stockholders’ equity $ 1,163,815 $ 1,121,931

JMP GROUP INC.

Consolidated Statements of Operations

(Unaudited)

Quarter Ended

(in thousands, except per share amounts)

Mar. 31, 2014 Mar. 31, 2013 Revenues: Investment banking $ 25,053 $ 12,107 Brokerage 6,656 5,194 Asset management fees 5,544 6,751 Principal transactions (3,693 ) 1,917 Gain on sale, payoff and mark-to-market of loans 380 1,089 Net dividend income/(expense) 235 (8 ) Other income 222 288 Non-interest revenues 34,397 27,338 Interest income 8,588 8,158 Interest expense (4,828 ) (11,299 ) Net interest income/(expense) 3,760 (3,141 ) Provision for loan losses (497 ) (949 ) Total net revenues 37,660 23,248 Non-interest expenses: Compensation and benefits 31,376 19,605 Administration 1,722 1,331 Brokerage, clearing and exchange fees 925 887 Travel and business development 851 958 Communications and technology 948 853 Occupancy 825 804 Professional fees 807 1,024 Depreciation 227 226 Other 212 83 Total non-interest expense 37,893 25,771 (Loss) before income tax expense (233 ) (2,523 ) Income tax expense 1,696 (812 ) Net (loss) (1,929 ) (1,711 ) Less: Net (loss)/income attributable to noncontrolling interests (5,927 ) 8 Net income/(loss) attributable to JMP Group Inc. $ 3,998

$

(1,719

) Net income/(loss) attributable to JMP Group Inc. per share: Basic $ 0.17

$

(0.08

) Diluted $ 0.17

$

(0.08

) Weighted average common shares outstanding: Basic 21,820 22,607 Diluted 23,612 22,607 Financials IndustryFinance Contact: Investor Relations Contact

JMP Group Inc.

Andrew Palmer, 415-835-8978

apalmer@jmpg.com

or

Media Relations Contact

Dukas Public Relations

Seth Linden, 212-704-7385

seth@dukaspr.com

Zach Leibowitz, 212-704-7385

zach@dukaspr.com […]

JMP Group Reports Third Quarter 2013 Financial Results

SAN FRANCISCO–(BUSINESS WIRE)–

JMP Group Inc. (NYSE: JMP), an investment banking and alternative asset management firm, reported financial results today for the quarter and nine months ended September 30, 2013.

Adjusted net revenues, which exclude certain non-cash items and non-controlling interests, were $36.2 million, an increase of 25.7% from $28.8 million for the third quarter of 2012. For the nine months ended September 30, 2013, adjusted net revenues were $106.3 million, an increase of 15.9% from $91.7 million for the nine months ended September 30, 2012. For more information on adjusted net revenues, including a reconciliation to net revenues, please see the section below titled “Non-GAAP Financial Measures.” Operating net income was $2.7 million, or $0.12 per diluted share, compared to $3.0 million, or $0.13 per share, for the third quarter of 2012. For the nine months ended September 30, 2013, operating net income was $9.6 million, or $0.43 per share, compared to $10.6 million, or $0.46 per share, for the nine months ended September 30, 2012. For more information on operating net income, including a reconciliation to net income attributable to JMP Group, please see the section below titled “Non-GAAP Financial Measures.” Total net revenues under generally accepted accounting principles, or GAAP, were $35.4 million and $89.5 million for the quarter and nine months ended September 30, 2013, respectively, compared to $18.6 million and $77.2 million for the quarter and nine months ended September 30, 2012, respectively. Net income attributable to JMP Group on a GAAP basis was $3.3 million, or $0.14 per share, compared to a net loss of $1.3 million, or $0.06 per share, for the third quarter of 2012. For the nine months ended September 30, 2013, net income was $0.1 million, or $0.01 per share, compared to a net loss of $2.6 million, or $0.11 per share, for the nine months ended September 30, 2012.

“I am proud to report that JMP Securities had the best third quarter in our history, driven by a 57% year-over-year increase in investment banking revenues and positive operating margin leverage,” said Chairman and Chief Executive Officer Joe Jolson. “The fact that productivity was broadly diversified across our four industry verticals and by product line demonstrates the rapidly growing value of our franchise. Having invested heavily to organically grow JMP Securities over the past four years, we are pleased to see such strong positive momentum. Excluding net investment income and corporate expenses, JMP Group’s operating platforms earned $0.10 per share in the quarter, compared to $0.03 per share a year ago. For the first nine months of the year, platform earnings were $0.26 per share, or twice last year’s level.”

Segment Results of Operations

At JMP Securities, adjusted net revenues excluding net investment income (which consists of principal transactions, net dividend income and net interest income) were $24.9 million, an increase of 41.4% from $17.6 million for the third quarter of 2012, as a result of very strong investment banking results. JMP Securities’ operating margins on adjusted net revenues were 14.7% and 14.3% for the quarter and nine months ended September 30, 2013, respectively, comparing favorably to 9.2% for the full year of 2012.

At Harvest Capital Strategies, adjusted net revenues of $6.0 million, excluding net investment income, increased 25.4% from $4.8 million for the third quarter of 2012. JMP Group’s return on the capital it had invested in hedge funds managed by Harvest Capital Strategies was 0.3% for the quarter and 4.5% for the nine months ended September 30, 2013.

At JMP Credit, adjusted net revenues totaled $5.6 million, an increase of 9.2% from $5.1 million for the third quarter of 2012. The net gain on acquired loans was $0.1 million, compared to $0.5 million for the third quarter of 2012.

A summary of JMP Group’s operating net income per share by segment for the quarter and nine months ended September 30, 2013 and for comparable prior periods is set forth below.

Quarter Ended Nine Months Ended ($ as shown) Sept. 30, 2013 June 30, 2013 Sept. 30, 2012 Sept. 30, 2013 Sept. 30, 2012 JMP Securities $ 0.10 $ 0.13 $ 0.03 $ 0.28 $ 0.13 Harvest Capital Strategies 0.02 (0.01 ) 0.02 0.04 0.10 JMP Credit 0.09 0.13 0.14 0.38 0.43 Corporate (0.09 ) (0.10 ) (0.06 ) (0.27 ) (0.20 )

Operating EPS (diluted)

$ 0.12 $ 0.15 $ 0.13 $ 0.43 $ 0.46

For more information on segment reporting; adjusted net revenues, including a reconciliation to net revenues; and operating net income, including a reconciliation to net income, please see the section below titled “Non-GAAP Financial Measures.”

Composition of Revenues

Investment Banking

Investment banking revenues were $19.1 million, an increase of 56.6% from $12.2 million for the third quarter of 2012. For the nine months ended September 30, 2013, investment banking revenues were a record $52.3 million, an increase of 37.6% from $38.0 million for the nine months ended September 30, 2012.

A summary of the company’s investment banking revenues and transaction counts for the quarter and nine months ended September 30, 2013 and for comparable prior periods is set forth below.

Quarter Ended Nine Months Ended Sept. 30, 2013 June 30, 2013 Sept. 30, 2012 Sept. 30, 2013 Sept. 30, 2012 ($ in thousands) Count Revenues Count Revenues Count Revenues Count Revenues Count Revenues Public equity 27 $ 10,822 37 $ 9,517 28 $ 9,297 97 $ 29,253 67 $ 25,050 Debt and convertible securities 5 3,495 8 4,890 3 293 23 10,033 13 2,393 Private capital markets and other 2 1,534 2 2,830 2 989 4 4,509 7 4,236 Strategic advisory 4 3,286 4 3,820 3 1,639 9 8,506 9 6,331 Total 38 $ 19,137 51 $ 21,057 36 $ 12,218 133 $ 52,301 96 $ 38,010

Brokerage

Net brokerage revenues were $5.8 million, an increase of 7.1% from $5.4 million for the third quarter of 2012. For the nine months ended September 30, 2013, net brokerage revenues were $17.9 million, an increase of 10.1% from $16.3 million for the nine months ended September 30, 2012.

Asset Management

Asset management fees and other related revenues were $6.0 million, an increase of 26.8% from $4.7 million for the third quarter of 2012. For the nine months ended September 30, 2013, such fees and revenues were $18.0 million, an increase of 16.1% from $15.5 million for the nine months ended September 30, 2012. For more information on asset management-related fee revenues, please see the section below titled “Non-GAAP Financial Measures.”

Client assets under management at September 30, 2013 totaled $1.6 billion, including $865.4 million of funds managed by Harvest Capital Strategies and HCAP Advisors and $777.7 million par value of loans and cash underlying the two collateralized loan obligations managed by JMP Credit Advisors. Client assets under management were $1.6 billion at June 30, 2013 and $1.2 billion at September 30, 2012. Including sponsored funds, client assets under management totaled $1.8 billion at September 30, 2013, compared to $1.8 billion at June 30, 2013 and $1.7 billion at September 30, 2012.

At September 30, 2013, private capital, including corporate credit, small business lending, venture capital and REIT advisory services, represented 62.0% of client assets under management, including sponsored funds.

Principal Transactions

Principal transactions generated net realized and unrealized gains of $0.6 million and $4.8 million for the quarter and nine months ended September 30, 2013, respectively, compared to net realized and unrealized losses of $2.0 million and net realized and unrealized gains of $12.3 million for the quarter and nine months ended September 30, 2012, respectively.

A summary of the company’s principal transaction revenues for the quarter and nine months ended September 30, 2013 and for comparable prior periods is set forth below.

Quarter Ended Nine Months Ended (in thousands) Sept. 30, 2013 June 30, 2013 Sept. 30, 2012 Sept. 30, 2013 Sept. 30, 2012 Hedge fund investments $ 432 $ 908 $ 1,580 $ 3,238 $ 4,076 Principal investments: Investment in Harvest Capital Credit 205 (136 ) – 69 – Other principal investments (139 ) 55 38 – 620 Total principal investments 66 (81 ) 38 69 620 Venture investments: Investment in Harvest Growth Capital funds (33 ) 86 (131 ) 34 394 Other venture investments and warrants 794 485 (421 ) 1,831 360 Total venture investments 761 571 (552 ) 1,865 754

Principal transaction revenues net of non-controlling interests in Harvest Growth Capital funds

1,259 1,398 1,066 5,172 5,450 Non-controlling interests in Harvest Growth Capital funds (619 ) 895 (3,021 ) (323 ) 6,859 Total principal transaction revenues $ 640 $ 2,293 ($1,955 ) $ 4,849 $ 12,309

Included in the net gain of $0.6 million for the quarter ended September 30, 2013 was a loss of $0.6 million attributable to non-controlling interests in net realized and unrealized losses at Harvest Growth Capital and Harvest Growth Capital II, venture capital funds managed by Harvest Capital Strategies that are consolidated under GAAP. GAAP accounting requires that JMP Group consolidate both funds due to Harvest Capital Strategies’ role as the funds’ manager and managing member, despite the company’s ownership of just 4.6% of Harvest Growth Capital and 2.2% of Harvest Growth Capital II. The presentation of adjusted net revenues elsewhere in this press release excludes JMP Group’s non-controlling interests in these funds; and, accordingly, the aforementioned loss of $0.6 million is not included in adjusted net revenues. Net of its non-controlling interests, JMP Group had a net realized and unrealized loss of $33,000 on its investments in Harvest Growth Capital and Harvest Growth Capital II for the quarter. For more information on adjusted net revenues, including a reconciliation to net revenues, please see the section below titled “Non-GAAP Financial Measures.”

Gain on Sale, Payoff and Mark-to-Market of Loans and Loan Loss Provision

Net realized and unrealized gains from the sale, payoff or mark-to-market of loans were $0.2 million, compared to $0.6 million for the third quarter of 2012. Gains for the third quarter of 2013 were generated by JMP Credit Corporation, while gains for the third quarter of 2012 were generated by JMP Credit Corporation as well as Harvest Capital Credit, which, having completed its initial public offering in May 2013, is no longer consolidated by JMP Group under GAAP. For the nine months ended September 30, 2013, net realized and unrealized gains from the sale, payoff or mark-to-market of loans were $1.6 million, compared to $3.0 million for the nine months ended September 30, 2012.

For the quarter ended September 30, 2013, JMP Credit Corporation realized a net gain of $0.2 million due to the sale or payoff of 50 of the loans in its portfolio, compared to $0.2 million in connection with 28 loans for the third quarter of 2012. For the nine months ended September 30, 2013, the net realized gain amounted to $1.5 million due to the sale or payoff of 117 loans, compared to $2.6 million in connection with 67 loans for the nine months ended September 30, 2012. For the quarter and nine months ended September 30, 2013, net realized gains of $0.1 million and $0.3 million, respectively, resulted from the sale or payoff of loans acquired by JMP Credit in April 2009, compared to net realized gains of $0.5 million and $2.0 million, respectively, for the quarter and nine months ended September 30, 2012.

At September 30, 2013, discounts and reserves (including liquidity discounts, allowances for loan losses and deferred loan fees) equaled $8.5 million, or 1.2% of gross performing loans outstanding at JMP Credit. There were no impaired loans and no associated discounts or reserves at September 30, 2013; while, at September 30, 2012, discounts and reserves (including credit discounts, liquidity discounts, and allowances for loan losses) with regard to impaired loans equaled $3.2 million, or 0.8% of gross loans outstanding.

A net loan loss provision of $0.5 million for the quarter ended September 30, 2013 was recorded at JMP Credit, which is consolidated under GAAP, of which $0.4 million was a general reserve in connection with the loan portfolio underlying the company’s recently closed collateralized loan obligation, JMP Credit Advisors CLO II. At September 30, 2013, general loan loss reserves equaled 0.5% of gross performing loans at JMP Credit, in line with 0.5% at September 30, 2012.

Other Income

Other income was $0.3 and $0.6 million for the quarter and nine months ended September 30, 2013, respectively, compared to $0.4 million and $3.5 million for the quarter and nine months ended September 30, 2012, respectively. The year-over-year comparison is uneven for the nine-month periods in part because, in the second quarter of 2012, New York Mortgage Trust, Inc. paid a one-time fee of $1.7 million upon termination of its advisory agreement with Harvest Capital Strategies.

Net Interest Income

Net interest income was $4.3 million, compared to net interest expense of $1.8 million for the third quarter of 2012, when interest expense due to net amortization of liquidity discounts at JMP Credit Corporation equaled $7.5 million. Excluding the amortization-related expense for the period would have resulted in net interest income of $5.7 million for the third quarter of 2012. Further excluding net interest income of $0.8 million attributable to Harvest Capital Credit, which, due to its IPO, is no longer consolidated by JMP Group, net interest income would have been $4.9 million for the third quarter of 2012. For the nine months ended September 30, 2013, net interest expense was $1.2 million, compared to net interest expense of $5.5 million for the nine months ended September 30, 2012; excluding interest expense due to net amortization of liquidity discounts, net interest income would have been $13.8 million and $16.1 million, respectively, for those periods.

Expenses

Compensation and Benefits

Compensation and benefits expense was $24.7 million, compared to $17.4 million for the third quarter of 2012. Non-cash compensation expense attributable to stock-based awards such as stock options and restricted stock units, or RSUs, was $1.0 million, compared to $0.2 million for the third quarter of 2012. The aforementioned compensation and benefits expense of $24.7 million excludes $1.3 million of net deferred compensation, which is composed of (a) amortization expense tied to deferred compensation awarded at year-end 2012 though recognized as a GAAP expense in 2013 and 2014 less (b) one quarter of the compensation assumed to be awarded at year-end 2013 and deferred into 2014 and 2015.

For the nine months ended September 30, 2013, compensation and benefits expense was $69.1 million, compared to $55.8 million for the nine months ended September 30, 2012. Non-cash compensation expense attributable to stock-based awards such as stock options and restricted stock units, or RSUs, was $2.7 million, compared to $0.6 million for the nine months ended September 30, 2012. The aforementioned compensation and benefits expense of $69.1 million excludes $3.6 million of net deferred compensation, which is composed of (a) amortization expense tied to deferred compensation awarded at year-end 2012 though recognized as a GAAP expense in 2013 and 2014 less (b) three quarters of the compensation assumed to be awarded at year-end 2013 and deferred into 2014 and 2015.

Excluding the cost of stock-based awards but accelerating and recognizing the cost of net deferred compensation for the period, compensation and benefits expense was 69.0% of adjusted net revenues for the quarter, compared to 59.5% for the third quarter of 2012, and was 65.8% for the nine months ended September 30, 2013, compared to 60.2% for the nine months ended September 30, 2012.

Non-Compensation Expense

Non-compensation expense was $6.8 million, compared to $6.3 million for the third quarter of 2012. For the nine months ended September 30, 2013, non-compensation expense was $22.0 million, compared to $17.9 million for the nine months ended September 30, 2012. The year-over-year increase for the nine-month period is in part due to one-time expenses totaling $2.5 million incurred by JMP Group in connection with Harvest Capital Credit’s initial public offering in May 2013.

As a percentage of adjusted net revenues, non-compensation expense was 18.7% for the quarter, compared to 21.8% for the third quarter of 2012, and was 20.6% for the nine months ended September 30, 2013, compared to 19.6% for the nine months ended September 30, 2012. Excluding the aforementioned expense of $2.5 million, non-compensation expense as a percentage of adjusted net revenues would have been 18.3% for the nine months ended September 30, 2013.

Personnel

At September 30, 2013, the company had 231 full-time employees, up from 218 at June 30, 2013 and 217 at September 30, 2012.

Non-GAAP Financial Measures

In addition to the GAAP financial results presented in this press release, JMP Group presents the non-GAAP financial measures discussed below. These non-GAAP measures are provided to enhance investors’ overall understanding of the company’s current financial performance. Furthermore, company management believes that this presentation enables more meaningful comparison of JMP Group’s financial performance in various periods. However, the non-GAAP financial results presented should not be considered a substitute for results that are presented in a manner consistent with GAAP. A limitation of the non-GAAP financial measures presented is that the adjustments concern gains, losses or expenses that JMP Group generally expects to continue to recognize; the adjustment of these items should not be construed as an inference that these gains or expenses are unusual, infrequent or non-recurring. Therefore, both GAAP measures of JMP Group’s financial performance and the respective non-GAAP measures should be considered together. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies.

Adjusted Net Revenue

Adjusted net revenue is a non-GAAP financial measure that (i) includes asset management fees, net interest income or expense, and other revenues eliminated upon the consolidation of Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit (until its IPO on May 2, 2013), (ii) excludes the net amortization of liquidity discounts on loans held and asset-backed securities issued by JMP Credit Advisors CLO I, (iii) reverses the general loan loss provision taken in connection with the origination of JMP Credit Advisors CLO II, (iv) adjusts for unrealized mark-to-market gains and losses recorded at Harvest Capital Credit, (v) reverses net unrealized gains and losses on strategic equity investments and warrants, and (vi) excludes the non-controlling interest in net unrealized gains and losses on Harvest Growth Capital and Harvest Growth Capital II. In particular, adjusted net revenue adjusts for:

base management and incentive fees earned by Harvest Capital Strategies as manager of Harvest Growth Capital and Harvest Growth Capital II, both venture capital funds, and Harvest Capital Credit, a small business lending strategy; Harvest Capital Strategies is managing member of Harvest Growth Capital and Harvest Growth Capital II and is the external manager of Harvest Capital Credit, and, as a result of its ownership of each (until the IPO of Harvest Capital Credit on May 2, 2013), JMP Group has consolidated the three entities (for the appropriate periods) in accordance with GAAP accounting standards and has eliminated the fees in consolidation; presenting these fees as though Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit were deconsolidated presents the entities’ results in a manner similar to those of the other investment funds managed by Harvest Capital Strategies; the non-cash net amortization of liquidity discounts associated with JMP Credit Advisors CLO I, due to scheduled contractual principal repayments, for periods prior to that ended September 30, 2013; the non-specific, non-cash loan loss provision recorded with regard to the loan portfolio underlying JMP Credit Advisors CLO II, which is required by GAAP; unrealized mark-to-market gains or losses on the investment portfolio at Harvest Capital Credit by reversing them; then, reflecting the company’s IPO, recognizing those previously reversed gains or losses as of May 2, 2013; unrealized mark-to-market gains or losses on the company’s strategic equity investments as well as certain warrant positions; and non-controlling interests in net unrealized gains and losses generated by Harvest Growth Capital and Harvest Growth Capital II, of which Harvest Capital Strategies is manager and managing member; under GAAP, JMP Group consolidates the two funds; however, as presented, unrealized gains and losses that do not accrue to the company are reversed.

A reconciliation of JMP Group’s net revenues to its adjusted net revenues for the quarter and nine months ended September 30, 2013 and for comparable prior periods is set forth below.

Quarter Ended Nine Months Ended (in thousands) Sept. 30, 2013 June 30, 2013 Sept. 30, 2012 Sept. 30, 2013 Sept. 30, 2012 Revenues: Non-interest revenues $ 31,531 $ 34,273 $ 20,316 $ 93,142 $ 83,813 Net interest income/(expense) 4,313 (2,394 ) (1,754 ) (1,222 ) (5,522 ) Loan loss provision (467 ) (975 ) 65 (2,391 ) (1,135 ) Total net revenues 35,377 30,904 18,627 89,529 77,156

Asset management fees earned on Harvest Growth Capital funds and Harvest Capital Credit (1) (2)

386 522 597 1,765 1,282

Dividend distribution from Harvest Capital Credit (2)

– 421 157 678 234

Less: Net interest income and other revenues from Harvest Capital Credit (2)

– (789 ) (772 ) (2,116 ) (1,587 )

Total net revenues including fee revenues from consolidated entities

35,763 31,058 18,609 89,856 77,085 Add back/(subtract):

Net amortization of liquidity discounts on loans and asset-backed securities issued

– 6,239 7,456 14,979 21,631

Loan loss provision – JMP Credit Advisors II

377 1,128 1,505

Unrealized mark-to-market (gain)/loss – Harvest Capital Credit

– – (360 ) (515 ) (373 )

Realization of mark-to-market gain – Harvest Capital Credit

– 772 – 772 –

Net unrealized (gain)/loss on strategic equity investments and warrants

(531 ) (243 ) 107 (617 ) 233

Non-controlling interests in net unrealized losses/(gains) on Harvest Growth Capital funds

619 (895 ) 3,021 323 (6,859 ) Adjusted net revenues $ 36,228 $ 38,059 $ 28,833 $ 106,303 $ 91,717

(1) Adjustments to reflect economic contributions from two Harvest Growth Capital funds and Harvest Capital Credit as though deconsolidated for purposes of financial reporting; upon deconsolidation, fee revenues and dividend payments would be recognized, while net interest income and other revenues generated by these entities would not be recorded by JMP Group.

(2) Subsequent to its IPO on May 2, 2013, Harvest Capital Credit is no longer consolidated; therefore, fees and dividends related to Harvest Capital Credit are included in non-interest revenues following that date.

Company management has utilized adjusted net revenue, adjusted in the manner described above, as an additional device to aid in understanding and analyzing JMP Group’s financial results for the periods presented. Management believes that adjusting net revenue in these ways is useful in that it allows for a better evaluation of the performance of JMP Group’s ongoing business and facilitates a meaningful comparison of the company’s results in a given period to those in prior and future periods.

Asset Management-Related Fee Revenues

Asset management-related fee revenue is a non-GAAP financial measure that sums asset management fees with certain fee revenues (in particular, asset management fundraising fees generated by JMP Securities, loan fees, and revenues from fee-sharing arrangements with other asset managers) that are reported in JMP Group’s financial statements as other income. In addition, asset management-related fee revenues incorporate base management and incentive fees earned by Harvest Capital Strategies as manager of Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit. JMP Group consolidates the two Harvest Growth Capital funds and Harvest Capital Credit (until its IPO on May 2, 2013) in accordance with GAAP accounting standards; however, asset management fees generated by these entities are included in asset management-related fee revenues as though deconsolidated.

A statement of JMP Group’s asset management-related fee revenues for the quarter and nine months ended September 30, 2013 and for comparable prior periods is set forth below.

Quarter Ended Nine Months Ended (in thousands) Sept. 30, 2013 June 30, 2013 Sept. 30, 2012 Sept. 30, 2013 Sept. 30, 2012 Base management fees: Fees reported as asset management fees $ 2,585 $ 2,552 $ 2,195 $ 7,502 $ 7,094 Fees reported as other income – – 339 262 1,654

Fees earned at Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit/HCAP Advisors

636 595 275 1,740 717 Total base management fees 3,221 3,147 2,809 9,504 9,465 Incentive fees: Fees reported as asset management fees 2,493 836 1,560 7,715 3,627

Fees earned at Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit/HCAP Advisors

– 66 322 417 564 Total incentive fees 2,493 902 1,882 8,132 4,191 Other fee income: Fundraising and other fees 267 26 26 319 79 New York Mortgage Trust termination fee – – – – 1,735 Total other fee income 267 26 26 319 1,814 Asset management-related fee revenues: All fees reported as asset management fees 5,078 3,388 3,755 15,217 10,721 All fees reported as other income 267 26 365 581 3,468

All fees earned at Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit/HCAP Advisors

636 661 597 2,157 1,281

Total asset management-related fee revenues

$ 5,981 $ 4,075 $ 4,717 $ 17,955

$

15,470

Company management has utilized asset management-related fee revenue as a means of assessing the performance of JMP Group’s combined asset management activities, including its fundraising and other services for third parties. Management believes that asset management-related fee revenues, as presented above, provide useful information by indicating the relative contributions of base management fees and performance-related incentive fees, thus facilitating a comparison of those fees in a given period to those in prior and future periods. Management also believes that asset management-related fee revenue is a more meaningful measure than standalone asset management fees as reported, because asset management-related fee revenues represent the combined impact of JMP Group’s various asset management activities on the company’s total net revenues.

Operating Net Income

Operating net income is a non-GAAP financial measure that (i) reverses compensation expense related to stock-based awards and deferred compensation, (ii) excludes the net amortization of liquidity discounts on loans held and asset-backed securities issued by JMP Credit Advisors CLO I, (iii) reverses the general loan loss provision taken in connection with the origination of JMP Credit Advisors CLO II, (iv) adjusts for unrealized mark-to-market gains and losses recorded at Harvest Capital Credit, (v) reverses net unrealized gains and losses on strategic equity investments and warrants, and (vi) assumes an effective tax rate. In particular, operating net income adjusts for:

the grant of RSUs and stock options subsequent to the company’s IPO, which together resulted in non-cash compensation expense of $1.0 million and $2.7 million for the quarter and nine months ended September 30, 2013, respectively; net deferred compensation, which, in order to state non-GAAP earnings as conservatively as possible, consists of (a) deferred compensation awarded at year-end 2012 and reflected in operating net income for 2012 though recognized as a GAAP expense in 2013 and 2014 less (b) compensation assumed to be awarded at year-end 2013 and deferred into 2014 and 2015; the non-cash net amortization of liquidity discounts associated with JMP Credit Advisors CLO I, due to scheduled contractual principal repayments, for periods prior to that ended September 30, 2013; the non-specific, non-cash loan loss provision recorded with regard to the loan portfolio underlying JMP Credit Advisors CLO II, which is required by GAAP; unrealized mark-to-market gains or losses on the investment portfolio at Harvest Capital Credit by reversing them; then, reflecting the company’s IPO, recognizing those previously reversed gains or losses as of May 2, 2013; unrealized mark-to-market gains or losses on the company’s strategic equity investments as well as certain warrant positions; and a combined federal, state and local income tax rate of 38% for the quarter ended March 31, 2013 and all future periods, although an assumed rate of 42% was applied for all prior periods; the company’s effective tax rate has proved lower than anticipated as a result of geographic changes in the company’s revenue mix, with revenues generated in California (at the highest marginal rate) comprising less of the total in recent years than in the past.

A reconciliation of JMP Group’s net income to its operating net income for the quarter and nine months ended September 30, 2013 and for comparable prior periods is set forth below.

Quarter Ended Nine Months Ended (in thousands, except per share amounts) Sept. 30, 2013 June 30, 2013 Sept. 30, 2012 Sept. 30, 2013 Sept. 30, 2012 Net gain/(loss) attributable to JMP Group Inc. $3,289 ($1,435) ($1,307) $135 ($2,571) Subtract: Income tax (expense)/benefit (1,634) 644 884 (178) 1,423 Income/(loss) before taxes 4,923 (2,079) (2,191) 313 (3,994) Add back/(subtract): Compensation expense – stock options 262 259 – 658 – Compensation expense – post-IPO RSUs 699 704 194 2,019 582 Compensation expense – deferred compensation (1,277) (1,146) – (3,547) – Net amortization of liquidity discounts – JMP Credit Advisors CLO I – 6,239 7,456 14,979 21,631 Loan loss provision – JMP Credit Advisors CLO II 274 821 – 1,095 – Unrealized mark-to-market (gain)/loss – Harvest Capital Credit (205) 100 (333) (267) (246) Realization of mark-to-market gain – Harvest Capital Credit – 772 – 772 – Unrealized mark-to-market (gain)/loss – strategic equity investments and warrants (326) (343) 107 (512) 233 Operating income before taxes 4,350 5,327 5,233 15,510 18,206 Income tax expense assumed 1,653 2,024 2,198 5,893 7,646 Operating net income $2,697 $3,303 $3,035 $9,617 $10,560 Operating net income per share: Basic $0.12 $0.15 $0.13 $0.43 $0.47 Diluted $0.12 $0.15 $0.13 $0.43 $0.46 Weighted average shares outstanding: Basic 22,014 22,199 22,737 22,271 22,564 Diluted 22,713 22,707 22,830 22,669 22,977

Company management has utilized operating net income on a total and per share basis, adjusted in the manner described above, as an additional device to aid in understanding and analyzing JMP Group’s financial results for the periods presented. Management believes that operating net income provides useful information by excluding certain items that may not be representative of the company’s core operating results or core business activities. Management also believes that operating net income is a useful measure because it allows for a better evaluation of the performance of JMP Group’s ongoing business and facilitates a meaningful comparison of the company’s results in a given period to those in prior and future periods.

Segment Reporting

In order to demonstrate the contribution to the company’s results of each of its primary businesses on a standalone basis, JMP Group presents the operating net income generated by each segment in the tables that follow. Management believes that this presentation enables investors to better understand the separate but interrelated financial operations of the company’s various business lines and to more accurately assess the contribution of each to JMP Group’s aggregate results.

Total net revenues have been adjusted, in part, as detailed above in the section titled “Adjusted Net Revenue,” and the resulting adjusted net revenues (i) include asset management fees, net interest income or expense, and other revenues eliminated upon the consolidation of Harvest Growth Capital, Harvest Growth Capital II and Harvest Capital Credit (until its IPO on May 2, 2013), (ii) exclude the net amortization of liquidity discounts on loans held and asset-backed securities issued by JMP Credit Advisors CLO I, (iii) reverse the general loan loss provision taken in connection with the origination of JMP Credit Advisors CLO II, (iv) adjust for unrealized mark-to-market gains and losses recorded at Harvest Capital Credit; (v) reverse net unrealized gains and losses on strategic equity investments and warrants and (vi) exclude non-controlling interests in net unrealized gains and losses on Harvest Growth Capital and Harvest Growth Capital II. Total non-interest expenses have been adjusted, in part, as detailed above in the section titled “Operating Net Income,” and the resulting adjusted non-interest expense reverses compensation expense related to stock-based awards granted subsequent to JMP Group’s initial public offering. For the purposes of calculating operating net income, an effective tax rate of 38% is assumed.

A statement of JMP Group’s operating net income on a segment basis for the quarter ended September 30, 2013 is set forth below.

Quarter Ended September 30, 2013 Harvest (1) JMP Operating HGC HCC (1) Consoli- JMP Capital Credit Elimin- JMP Consoli- Consoli- dated JMP (in thousands, except per share amounts) Securities Strategies Corp. Corporate ations Group dation dation Group Revenues: Investment banking $ 19,149 – – – ($12 ) $ 19,137 – – $ 19,137 Brokerage 5,750 – – – – 5,750 – – 5,750 Asset management-related fees (2) – $ 5,995 $ 70 – (84 ) 5,981 ($386 ) – 5,595 Principal transactions (3) 354 257 108 $ 10 – 729 (618 ) – 111 Gain on sale and payoff of loans – – 166 – – 166 – – 166 Net dividend (expense)/income 6 – – 237 – 243 – – 243 Net interest (expense)/income (11 ) – 5,306 (983 ) – 4,312 – – 4,312 Provision for loan losses – – (90 ) – – (90 ) – – (90 ) Adjusted net revenues 25,248 6,252 5,560 (736 ) (96 ) 36,228 (1,004 ) – 35,224 Expenses: Non-interest expense/(income) (4) 21,528 5,797 2,032 2,479 (96 ) 31,740 48 – 31,788 Less: Non-controlling interest (5)

(115

) 253 – – 138 (1,052 ) – (914 )

Operating income/(loss) before taxes

3,720 570 3,275 (3,215 ) – 4,350 – – 4,350

Income tax expense/(benefit) (assumed rate of 38%)

1,414 215 1,245 (1,221 ) – 1,653 – – 1,653 Operating net income/(loss) $ 2,306 $ 355 $ 2,030 ($1,994 ) – $

2,697

– – $ 2,697 Operating net income/(loss) per share: Basic $ 0.10 $ 0.02 $ 0.09 ($0.09 ) – $ 0.12 – – $ 0.12 Diluted $ 0.10 $ 0.02 $ 0.09 ($0.09 ) – $ 0.12 – – $ 0.12

(1) Harvest Capital Credit is deconsolidated as of its initial public offering on May 2, 2013. Upon that IPO, HCAP Advisors was formed to act as Harvest Capital Credit’s external manager; revenues and expenses generated by HCAP Advisors are aggregated in the results attributed to Harvest Capital Strategies in this presentation.

(2) Reflects revenues detailed in section above titled “Asset Management-Related Fee Revenues;” management fees of $0.4 million are eliminated upon consolidation of two Harvest Growth Capital funds.

(3) Reverses net unrealized gains and losses on strategic equity investments and warrants. Excludes non-controlling interests in net realized and unrealized gains and losses totaling $0.6 million that are recognized upon consolidation of two Harvest Growth Capital funds.

(4) Reverses stock-based compensation expense as well as accounting adjustments related to deferred compensation expense and excludes fund-related expenses totaling $48,000 that are recognized upon consolidation of two Harvest Growth Capital funds.

(5) Excludes non-controlling interests totaling $1.1 million in the net realized and unrealized losses of two Harvest Growth Capital funds that are recognized upon consolidation of the entities.

A statement of JMP Group’s operating net income on a segment basis for the nine months ended September 30, 2013 is set forth below.

Nine Months Ended September 30, 2013 Harvest (1) JMP Operating HGC HCC (1) Consoli- JMP Capital Credit Elimin- JMP Consoli- Consoli- dated JMP (in thousands, except per share amounts) Securities Strategies Corp. Corporate ations Group dation dation Group Revenues: Investment banking $ 52,636 – – – ($335 ) $ 52,301 – – $ 52,301 Brokerage 17,924 – – – – 17,924 – – 17,924 Asset management-related fees (2) – $ 18,100 $ 206 – (352 ) 17,954 ($1,183 ) ($584 ) 16,187 Principal transactions (3) 739 919 117 $ 2,766 6 4,547 (373 ) 406 4,580 Gain on sale and payoff of loans (4) – – 1,501 – – 1,501 – – 1,501 Net dividend (expense)/income (10 ) 678 – 300 – 968 – (678 ) 290 Net interest (expense)/income (5) (60 ) – 14,145 (2,091 ) – 11,994 1 1,760 13,755 Provision for loan losses – – (886 ) – – (886 ) – – (886 ) Adjusted net revenues 71,229 19,697 15,083 975 (681 ) 106,303 (1,555 ) 904 105,652 Expenses: Non-interest expense/(income) (6)(8) 61,028 19,876 627 10,716 (662 ) 91,585 141 144 91,870 Less: Non-controlling interest (7)(8) – (1,466 ) 674 – – (792 ) (1,696 ) 760 (1,728 )

Operating income/(loss) before taxes

10,201

1,287

13,782

(9,741

) (19 ) 15,510 – –

15,510

Income tax expense/(benefit)(assumed rate of 38%)

3,876 488 5,238 (3,702 ) (7 ) 5,893 – – 5,893

Operating net income/(loss)

$ 6,325 $ 799 $ 8,544 ($6,039 ) ($12 ) $ 9,617 – – $ 9,617 Operating net income/(loss) per share: Basic $ 0.28 $ 0.04 $ 0.38 ($0.27 ) ($0.00 ) $ 0.43 – – $ 0.43 Diluted $ 0.28 $ 0.04 $ 0.38 ($0.27 ) ($0.00 ) $ 0.43 – – $ 0.43

(1) Harvest Capital Credit is deconsolidated as of its initial public offering on May 2, 2013. Upon that IPO, HCAP Advisors was formed to act as Harvest Capital Credit’s external manager; revenues and expenses generated by HCAP Advisors are aggregated in the results attributed to Harvest Capital Strategies in this presentation.

(2) Reflects revenues detailed in section above titled “Asset Management-Related Fee Revenues;” management fees totaling $1.8 million are eliminated upon consolidation of two Harvest Growth Capital funds and Harvest Capital Credit (until its IPO on May 2, 2013).

(3) Reverses net unrealized gains and losses on strategic equity investments and warrants and includes previously reversed net unrealized gains at Harvest Capital Credit. Excludes non-controlling interests in net realized and unrealized gains and losses related to two Harvest Growth Capital funds as well as other principal transaction revenues related to Harvest Capital Credit; net realized and unrealized gains totaling $33,000 are recognized upon consolidation of those entities.

(4) Excludes net unrealized mark-to-market gain of $0.1 million on the loan portfolio at Ha […]

Cash Is King…Sort Of

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Cash is King!

We have all heard that statement, and it is true…sort of.

In a business, you cannot do anything without cash, well at least not for very long. However, the truth is that cash follows profits. Cash can be put in a company through a loan, investment, deposit on a sale or contribution by the owner. However, all of these types of cash inflows are dangerous. That’s because they come with strings attached and represent money that is eventually going back to the bank, investor, owner or customer.

The only cash that you can use without strings attached – meaning one where the source will not want it back plus more – comes from profits. As part of my Triple Bottom Line, this type of money is determined by calculating your Net Cash from Operations. The figure measures your company’s ability to generate cash from profits, and, when paired with the other components of the Triple Bottom Line – Net Operating Income and Net Equity –will tell you everything you need to know to operate a business with health and efficiency.

The formula for calculating Net Cash from Operations is relatively simple. Take your Net Income and subtract out cash you did not collect from customers during that period of time. Add back the cash you were able to keep by pushing out scheduled payments to vendors and suppliers during that same period of time. Because cash comes in from collections and cash goes down when you pay people, net cash from operations measures how effective a business is at making a profit, collecting from customers, and pushing out vendors and suppliers.

Net Income

-Uncollected Cash

+Cash kept

= Net Cash from Operations

Take ABC Electric as an example. In month one of operations ABC makes a profit, but it does not collect from its customers for 30 days; pretty typical of this kind of business. ABC incurred expenses for wiring and tools. Also, in performing its work, it received invoices from other vendors. In month one, although ABC made a profit, it did not collect any cash, but didn’t spend any cash either.

In month two, ABC should collect the cash from the work, and pay the vendors and suppliers. Because it made a profit in month one, the amount it collects will be greater than the amount it spends.

This is positive Net Cash from Operations, and it’s a good thing. It shows that ABC worked for good customers and paid its vendors on a reasonable schedule.

But what happens if it does not collect all of the money? What happens if the amount of cash it pays out to vendors and suppliers is greater than the amount of cash it collects?

In that case, Net Cash from Operations will be negative. This is a bad thing and clearly means one of two things. The worse possible answer is that ABC worked for a bad customer and is not getting paid. The other possible answer is that ABC has not been diligent about getting paid and is inefficient in its operations.

Either way, if Net Cash from Operations is positive, we are doing well. If, however; net cash from operations is negative, we have to look closely at our operations and our customers. But unlike traditional statement of cash flows, this calculation can help you pinpoint where the fault lies so it can be fixed. And knowing the problem is half the battle.

[…]

Alexander Energy Ltd. Announces a 47% Increase in Q1 Cash Flow to $1.8 Million

CALGARY, ALBERTA–(Marketwired – May 28, 2013) – Alexander Energy Ltd. (TSX VENTURE:ALX) (“Alexander” or the “Company”) has filed its Interim Financial Statements and related Management’s Discussion and Analysis for the three months ended March 31, 2013 all of which are available on the Company’s profile at www.SEDAR.com (“SEDAR”).

The Company is pleased to announce its highest quarterly cash flow since Q3 2008. Alexander achieved cash flow of $1.8 million in Q1 2013, up 47% from 2012, despite a 9% decrease in oil prices and an increase in per barrel royalty expense. Importantly, net debt decreased slightly while net debt to annualized cash flow fell sharply from 2.5:1 to 1.7:1.

This was achieved without any production from the $1.5 million first quarter drilling program which resulted in two successful wells. The 7-7-56-26W4 well was put on production in April at 60 bbls/day (48 bbls/day net) and the 12-12-56-27W4 well is expected to be put on production in mid-June at 125 bbls/day (118 bbls/day net).

In Q2 2013 the Company carried out a recompletion/workover on an upper Detrital zone in the 11-12-56-27W4 well that tested at over 260 bbls/day (244 bbls/day net).

Including the 11-12-56-27W4 recompletion/workover, the Company expects over 200 bbls/day (net) of new production to be on-stream by mid-June. We are currently working on preliminary estimates of reserve additions from our recent successes.

This is reflective of the success of the program put into place by the new management team starting from the AGM in September, 2012. Management’s strategy can be summarized as investing in our Alexander property and improving our operations prior to looking to sell or merge the Company when the right opportunity is presented, hopefully by the end of 2013.

Starting from the September 7th, 2012 AGM your Company has directed all spending to Company enhancing activities. We have invested in drilling, workovers, seismic interpretation, geological and geophysical interpretation, critical land activities, and perhaps most importantly on an engineering analysis of a potential waterflood on our property with an associated application to the ERCB for an extension to our maximum allowable production rates which was approved by the ERCB.

In the six months prior to the AGM in September 2012, your Company spent $85,000 per month on legal, proxy, financial advisor and director fees. In the first quarter of 2013 the comparable monthly expense was $1,800, a saving of $83,200 (98%) per month.

Your management team has made significant progress in rebuilding the land files, updating critical leases affecting our oil production, rebuilding the well files, continuing with our required engineering work, analyzing our 3D seismic and drilling successful wells. The result of all of this is a much better understanding of our key property. This is critical for our relationship with the ERCB regarding the possibility of being granted GPP (good production practices) status or waterflood approval, or an additional extension of our allowable maximum production rates.

We now believe that the Detrital zone may continue to the south east of our existing producing wells. We have acquired 2 1/2 sections of land and associated 3D seismic which we are currently processing using our proprietary analysis. We also own other land in the general area which may be prospective for Detrital production.

Alexander will continue to focus on maximizing the Company’s value, reducing the debt, and preparing for a process to maximize shareholder value, possibly this fall.

Recently Alexander has received communication from some significant shareholders who have indicated they would like to take control of the Company. After the numerous expensive distractions and disruptions the Company has experienced over the past few years we have now built positive momentum and a positive environment. We do not believe that yet another management team is in the best interests of shareholders.

Specific accomplishments for Alexander in 2013 include:

Increased cash flow to $1.8 million in Q1 2013 ($0.03/share), up 47% over Q1 2012. Reduced funds spent on legal, proxy, financial advisor and director fees to $1,800 per month, down 98% from the $85,000 per month spent prior to the September 2012 AGM. Oil production increased to 452 bbls/day, up 37% over Q1 2012. Increased average production volumes to 900 barrels of oil equivalent per day representing a 17% increase over the 769 boe per day of production in the first quarter of 2012. Executed a drilling program with 100% success, investing $1.5 million, drilling 2 gross (1.73 net) oil wells. The 7-7 well is on stream and producing at 60 bbls/day (48 bbls/day net), and the 12-12 well tested at 240 bbls/day (226 bbls/day net) and is currently being tied in. Received approval from the ERCB to extend maximum production allowable per well of 125 bbls/day until spring, 2014. Carried out a recompletion/workover on the 11-12 well that tested at over 260 bbls/day (244 bbls/day net). Improved the Company’s operating netback to $26.04 per boe representing an 8% increase over the same period in 2012. Acquired 2.5 sections of land east of our current acreage complete with 3D seismic (East Detrital). Preliminary evaluations indicate the potential of additional Detrital sands. Reduced net debt to annualized cash flow ratio to 1.7:1. Expecting over 200 bbls/day (net) of production additions in Q2 2013.

To receive Press Releases and Corporate Updates directly via email send your email address to info@alexanderenergy.ca.

Highlights

Financial summary

Three months ended March 31, 2013 2012 % Change Oil and natural gas revenue $ 3,647 $ 2,856 28 Cash flow from operations 1 1,802 1,228 47 Per share – basic and diluted 0.03 0.02 32 Comprehensive income (loss) 22 (111) (120) Per share – basic and diluted 0.00 (0.00) – Total assets 33,161 32,321 2 Net debt 1 12,297 12,451 (1) Capital expenditures $ 1,497 $ 846 77 Shares outstanding – end of period 62,239,477 62,239,477 –

thousands of CDN$ – except per share amounts
1 Non-IFRS measure

Production and commodity prices

Three months ended March 31, 2013 2012 % Change Daily production Oil and NGLs (bbl/d) 452 330 37 Natural gas (mcf/d) 2,685 2,631 2 Oil equivalent (boe/d @ 6:1) 900 769 17 Realized commodity prices ($CDN) Oil and NGLs (bbl/d) $ 70.54 $ 77.25 (9) Natural gas (mcf/d) 3.22 2.37 36 Oil equivalent (boe/d @ 6:1) $ 45.05 $ 41.27 9

Oil and natural gas revenue by product

Three months ended March 31, 2013 2012 % Change Oil and NGLs (bbl/d) $ 2,870 $ 2,295 25 Natural gas (mcf/d) 777 561 39 Total revenue $ 3,647 $ 2,856 28 % Oil and NGLs 79% 80% % Natural gas 21% 20%

thousands – CDN$

Netbacks

Three months ended March 31, 2013
($/boe)
2012
($/boe) % Change Operating netback ($ / boe) Revenue 45.05 41.27 9 Royalties 6.40 3.99 60 Operating expenses 12.61 13.18 (4) Operating netback per boe 26.04 24.10 8 Realized gain (loss) on financial derivative instruments 1.63 (1.42) 215 General and administrative expenses 3.68 3.01 22 Interest expense 1.73 1.94 (11) Cash flow from operations per boe 22.26 17.74 25

Liquidity and Financial Condition

As at March 31, 2013, bank debt including working capital (net debt) was $12.3 million. The Company’s net debt to first quarter 2013 annualized cash flow from operations was 1.7:1 (March 31, 2012 – 2.5:1).

Alexander has flexibility to finance future expansions of its capital programs, through the use of its current funds generated from operations and its debt facilities. The Company expects to continue to improve the net debt to cash flow ratio in 2013.

Effective March 20, 2013 the Company renewed its credit facilities with a Canadian Chartered Bank. Facility A is a revolving operating demand loan with a maximum limit of $13.0 million. Facility B is a non-revolving acquisition/development demand loan that provides an additional $2.25 million of financing subject to bank approval. Interest is at prime plus 2.0% per annum for Facility A and prime plus 2.5% per annum for Facility B. The Company has the ability to draw on the development loan for acquisitions and the drilling of new wells subject to certain working capital ratio restrictions.

For the balance of 2013, Alexander plans to invest approximately $5.0 million on its capital program within its core area. Alexander intends on financing this capital program from cash flow from operations.

Financial Derivative Instruments

The Company had the following financial derivative instrument contracts in place at March 31, 2013:

Description Total Quantity Price Remaining
Term
Oil WTI (CDN$) – Swap 150 bbls/day $ 104.94/bbl April 1 – December 31, 2013 Oil WTI (CDN$) – Sold Call 100 bbls/day $ 100.08/bbl April 1 – October 31, 2013 Gas AECO (CDN$) – Bought Put 1,000 gj/day $ 3.00/gj April 1 – October 31, 2013

The following tables summarize the realized and unrealized gains and losses on financial derivative instruments for the period ended March 31, 2013:

Three months ended March 31, 2013 2012 Realized gain (loss) on financial derivative instruments $ 132 $ (98) Unrealized loss on financial derivative instruments (381) (71) Loss on financial derivative instruments $ (249) $ (169)

thousands – CDN$

On April 12, 2013 the Company entered into a financial derivative instrument contract.

Description Total Quantity Price Remaining
Term
Gas AECO – Swap 700 gj/day $ 3.58/gj January 1 – December 31, 2014

Earnings and Cash Flow Summary

Three months ended March 31, 2013 2012 % Change 2013
($/boe)
2012
($/boe) % Change Oil and natural gas revenue 3,647 2,856 28 45.05 41.27 9 Royalties 518 276 88 6.40 3.99 60 Revenue after royalties 3,129 2,580 21 38.65 37.28 4 Production and operating expenses 1,021 912 12 12.61 13.18 (4) Operating netback 1 2,108 1,688 26 26.04 24.10 8 Realized gain (loss) on financial derivative instruments 132 (98) 235 1.63 (1.42) 215 General & administrative expenses 298 208 43 3.68 3.01 22 Interest and other financing charges 140 134 4 1.73 1.94 (11) Cash flow from operations 1 1,802 1,228 47 22.26 17.74 25 Unrealized gain (loss) on financial derivative instruments (381) (71) 437 (4.71) (1.03) 359 Other income 230 (100) 0.00 3.32 (100) Share based compensation 87 (100) 0.00 1.26 (100) Accretion 11 11 – 0.14 0.16 (15) Depletion and depreciation 1,388 1,400 (1) 17.15 20.23 (15) Comprehensive income (loss) 22 (111) (120) 0.27 (1.60) (117) Per Share – Basic 0.00 (0.00) Per Share – Diluted 0.00 (0.00)

thousands of CDN$ – except per share amounts
1 Non-IFRS measure

Forward-Looking Statements: All statements, other than statements of historical fact, set forth in this news release, including without limitation, assumptions and statements regarding the volumes and estimated value of the Company’s proved and probable reserves, future production rates, exploration and development results, financial results, and future plans, operations and objectives of the Company are forward-looking statements that involve substantial known and unknown risks and uncertainties. Some of these risks and uncertainties are beyond management’s control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, environmental risks, industry competition, availability of qualified personnel and management, availability of materials, equipment and third party services, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

These assumptions and statements necessarily involve known and unknown risks and uncertainties inherent in the oil and gas industry such as geological, technical, drilling and processing problems and other risks and uncertainties, as well as the business risks discussed in Management’s Discussion and Analysis of the Company under the heading “Business Risks”. The Company does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise.

Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Contact:

Alexander Energy Ltd.

Hugh M. Thomson

Vice-President Finance and Chief Financial Officer

(403) 523-2505

(403) 264-1348

hughthomson@alexanderenergy.ca
www.alexanderenergy.ca […]

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