TORONTO, ONTARIO–(Marketwired – Nov. 14, 2016) – Aston Hill Financial Inc. (“Aston Hill” or the “Company“) (TSX:AHF) announces it has filed its Consolidated Financial Statements for the quarter ended September 30, 2016 and related Management’s Discussion and Analysis with Canadian securities regulatory authorities.
“The biggest news of the third quarter will not be seen in the financial results,” said James Werry, Interim CEO, “we have structured a transaction with Front Street Capital 2004 that will provide the business with much needed scale and resulting synergies of the combined entity that will provide for a much more viable company for the long-term, complete with a new management team, stronger balance sheet, a relevant and competitive product shelf and strong distribution relationships; all to the benefit of our fund unitholders, debentureholders and shareholders, collectively.”
The transaction with Front Street Capital 2004, that was previously announced on September 9, 2016, and subsequently amended on November 10, 2016, is subject to shareholder and debentureholder votes on November 22, 2016 as well as regulatory approvals and certain mutual conditions. The transaction is expected to close, pending the timing of all approvals, by the end of 2016.
Financial Highlights
| (in thousands of dollars, except assets under management and per share amounts) | ||||||||||
| As at September 30, 2016 | As at June 30, 2016 | As at September 30, 2015 | ||||||||
| Assets under management (in billions) | $ | 2.01 | $ | 2.14 | $ | 3.03 | ||||
| Total assets | 42,659 | 65,390 | 93,996 | |||||||
| Shares outstanding | 103,984 | 98,744 | 96,474 | |||||||
| For the three months ended | September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||
| Total revenues | $ | 5,509 | $ | 5,663 | $ | 8,508 | ||||
| Total expenses excluding finance expense and impairment loss | 6,872 | 7,406 | 7,355 | |||||||
| Total impairment loss | 21,626 | – | – | |||||||
| Total finance expense | 1,070 | 1,065 | 1,116 | |||||||
| (Loss) income before income taxes | $ | (24,059 | ) | $ | (2,808 | ) | $ | 37 | ||
| Income tax (recovery) expense | $ | (6,381 | ) | $ | (662 | ) | $ | 87 | ||
| Net loss | $ | (17,678 | ) | $ | (2,146 | ) | $ | (50 | ) | |
| Net income to non-controlling interest | 62 | 106 | 195 | |||||||
| Net loss to controlling interest | $ | (17,740 | ) | $ | (2,252 | ) | $ | (245 | ) | |
| Per share – Basic | $ | (0.175 | ) | $ | (0.023 | ) | $ | (0.003 | ) | |
| Per share – Diluted | $ | (0.175 | ) | $ | (0.023 | ) | $ | (0.003 | ) | |
| Cash dividends declared per share | $ | -.023 | $ | – | $ | 0.005 | ||||
| EBITDA | $ | (22,157 | ) | $ | (1,113 | ) | $ | 1,839 | ||
| Adjusted EBITDA | $ | (1,035 | ) | $ | (1,116 | ) | $ | 1,256 | ||
Aston Hill’s Assets Under Management, Advisory and Administration (“AUM”) held relatively steady at $2.01 billion at September 30, 2016 as compared to $2.14 billion at June 30, 2016. The slightly lower AUM is mainly the result of reductions in closed and open end funds AUM. During the third quarter, gross sales of mutual funds were $24 million and net redemptions were $104 million.
For the third quarter, Aston Hill’s revenues were $5.5 million, a decrease of 2.7% from the prior quarter revenues of $5.6 million. The revenue decrease was mainly due to net redemptions to open and closed end funds. Revenue generated by Aston Hill managed investment funds remained flat as a percentage of total revenue (currently 88% compared to 88% in the prior quarter) as management remains focused on higher margin mutual fund growth.
| Percent of Revenues by Source for Three Months Ended September 30, 2016 | |
| Aston Hill Managed Investment Funds | 88% |
| Sub-Advisory Mandates | 3% |
| Institutional and Other | 9% |
Total expenses (excluding finance expense and impairment loss) for the third quarter were lower at $6.9 million as compared to $7.4 million for the prior quarter.
Adjusted EBITDA (before stock-based compensation, impairment losses, and net investment gains or losses) for the third quarter was a loss of $1.0 million, a 7% increase from the prior quarter adjusted EBITDA loss of $1.1 million due mainly to lower revenue, more than offset by lower expenses in the quarter. Net loss for the quarter was $17.7 million, as compared to a net loss in the prior quarter of $2.3 million, with the decrease primarily due to the impairment losses.
Impacts on Q3 2016 Results
- Gross open end mutual fund sales totaled $24.0 million in the first quarter of 2016. Redemptions during the quarter totaled $128.0 million, which resulted in net redemptions of $104.0 million. Partially offsetting the net redemptions was market performance, as AUM for open end funds decreased by $85.0 million, or 10.7%, from June 30, 2016.
- Sub-advisory revenue as a percentage of total revenue was 3% compared to 4% in the prior year due to the termination of the sub-advisory relationship with CIBC.
- Revenue from management fees as a percentage of total revenue was 88% for the three months ended September 30, 2016, compared to 82% for the same period in the prior year.
- Other revenue and income as a percentage of total revenue was 9% compared to 8% in the prior year.
- Managed closed end funds AUM decreased by $46.0 million during the quarter as a result of redemptions and changes in market value.
- Non-cash impairment losses on indefinite life intangible assets and notes receivable of $21.3 million and $0.3 million, respectively, were recognized in the third quarter.
Aston Hill Financial Inc. is a diversified asset management company with a suite of retail mutual funds, closed end funds, hedge funds and segregated institutional funds.
The TSX has neither approved nor disapproved the information contained herein.
- Adjusted EBITDA and EBITDA: Adjusted EBITDA and EBITDA are not standardized earnings measures prescribed by IFRS; however, management believes that most of its shareholders, creditors, other stakeholders and investment analysts prefer to use these performance measures in analyzing Aston Hill’s results.
- Forward-Looking Statements: This news release contains certain “forward-looking statements” within the meaning of such statements under applicable securities law. Forward-looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.
For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company’s annual financial statements and management discussion and analysis for the year ended December 31, 2015, both of which are available at www.sedar.com. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward-looking statements.
James Werry
President & Chief Executive Officer
(416) 583-2300
james@astonhill.ca
Aston Hill Financial Inc.
Derek Slemko
Chief Operating Officer & Chief Financial Officer
(416) 583-2300
derek@astonhill.ca