TORONTO, ONTARIO–(Marketwired – Aug. 14, 2017) – LOGiQ Asset Management Inc. (“LOGiQ” or the “Company“) (TSX:LGQ) announces it has released its unaudited Condensed Consolidated Interim Financial Statements for the quarter ended June 30, 2017 and related Management’s Discussion and Analysis.
For the third quarter ended June 30, 2017, LOGiQ revenues declined slightly to $7.3 million from the prior quarter revenues of $7.5 million.
In the third financial quarter ended June 30, 2017, assets under management or advisement (“AUM”) decreased to $2.1 billion from $2.3 billion at March 31, 2017. During the third quarter, gross sales of mutual funds were $30 million and redemptions were $86 million while institutional advisory sales-related fee earning arrangements (“Global Advisory”) increased to $2.9 billion from $2.6 billion in the prior quarter. Total fee earning arrangements and assets under management grew to $5.0 billion from $4.8 billion.
Total expenses (excluding finance expense and non-cash impairment charges) for the third quarter were lower at $8.1 million compared to $10.1 million for the prior quarter. The lower corporate expense is mainly due to the full quarter impact of the synergies resulting from the combination of LOGiQ (formerly Aston Hill Financial Inc.) and LOGiQ Capital 2016 (formerly Front Street Capital 2004) (“Front Street Capital”).
Adjusted EBITDA for the third quarter was $1,519,000, an increase from the prior quarter adjusted EBITDA of negative $559,000. This was due mainly to the reduction in expenses quarter over quarter. Net loss for the quarter was $10.2 million, as compared to a net loss in the prior quarter of $2.8 million. This is primarily the result of non-cash impairment charges against the intangible assets and goodwill in the amount of $12.5 million.
“Our work to integrate the former Front Street and Aston Hill businesses showed promising results in the quarter,” said Joe Canavan, President & Chief Executive Officer of LOGiQ Asset Management. “Funds flows, while still negative, improved as market awareness of LOGiQ and our product offerings grew. Our focus on cost-cutting yielded significant savings and our liquidity has improved by establishing a working capital credit facility to be drawn if needed. Our financial results are significantly impacted by a non-cash impairment charge, but with this issue behind us and our integration efforts substantially complete, we can focus our attention on achieving the benefits of greater scale for our unitholders and stakeholders. Our Global Advisor business continued to perform extremely well in the quarter, adding over $350 million of net new assets.”
Highlights of the Quarter
LOGiQ continued to take steps to deliver the benefits and synergies expected from the business combinations which occurred in the first quarter.
- Merging and restructuring funds into fewer, larger portfolios with more focused strategies, lowering costs to unitholders and enhancing portfolio management strengths.
- Integrating systems, processes and service providers to reduce cost and maximize efficiencies – cost reduction of $2 million quarter-over-quarter.
- National advertising campaign building brand awareness and growing presence in the advisor channel.
- Successful rebranding of the Global Advisory business resulting in assets growing $351 million in the quarter to total approximately $2.9 billion.
| Financial Highlights | |||||||||||
| (in thousands of dollars, except assets under management, fee earning arrangements and per share amounts) | |||||||||||
| As at June 30, 2017 | As at March 31, 2017 | As at June 30, 2016 | |||||||||
| Assets under management (in $millions) | $ | 2,108 | $ | 2,286 | $ | 856 | |||||
| Institutional advisory sales-related fee earning arrangements (in $millions) | $ | 2,901 | $ | 2,550 | $ | Nil | |||||
| Total fee earning arrangements and assets under management (in $millions) | $ | 5,009 | $ | 4,836 | $ | 856 | |||||
| Total assets | $ | 75,326 | $ | 88,084 | $ | 5,257 | |||||
| Shares outstanding | 327,041,000 | 327,041,000 | 107,563,000 | ||||||||
| For the three months ended | June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||
| Total revenues | $ | 7,278 | $ | 7,548 | $ | 3,973 | |||||
| Total expenses excluding finance expense and impairment charge | 8,085 | 10,104 | 3,848 | ||||||||
| Total finance expense (income) | 763 | 717 | – | ||||||||
| Impairment charge | 12,472 | – | – | ||||||||
| Net losses (gains) on financial assets and liabilities at fair value through profit and loss | 921 | 1 | – | ||||||||
| Net (loss) income before income taxes | $ | (13,121 | ) | $ | (3,272 | ) | $ | 125 | |||
| Income tax (recovery) | $ | (2,851 | ) | $ | (508 | ) | $ | – | |||
| Net loss | $ | (10,270 | ) | $ | (2,764 | ) | $ | 125 | |||
| Net income to non-controlling interest | – | 1 | – | ||||||||
| Net loss to controlling interest | $ | (10,270 | ) | $ | (2,765 | ) | $ | 125 | |||
| Per share – Basic and diluted | $ | (0.031 | ) | $ | (0.008 | ) | $ | 0.001 | |||
| EBITDA2 | $ | (10,476 | ) | $ | (1,006 | ) | $ | 490 | |||
| Adjusted EBITDA2 | $ | 1,519 | $ | (559 | ) | $ | 490 | ||||
Notes:
- The 3 month period ended June 30, 2016 relates to former Front Street Capital only.
- EBITDA is comprised of net loss to controlling interest before finance expense, income tax recovery, amortization of intangible assets – finite life, amortization of deferred sales commissions and depreciation of property and equipment. Adjusted EBITDA is comprised of EBITDA before impairment losses, net (gains) losses on financial assets and liabilities at fair value through profit or loss and share based compensation. See “Use of Non-IFRS measures” below.
| Percent of Revenues by Source for Three Months Ended June 30, 2017 | |
| LOGiQ Managed Investment Funds | 82% |
| Institutional, Global Advisory sales-related Fee Earning Arrangements, and Other | 13% |
| Sub-Advisory Mandates | 2% |
| Brokerage | 3% |
Updates Subsequent to Quarter End
- LOGiQ secured a 24 month working capital term loan facility in the amount of up to $6 million. Nothing has been drawn on the facility to date.
About LOGiQ:
LOGiQ (logiqasset.com) is a diversified asset management company with a suite of retail mutual funds, closed end funds, hedge funds and pooled funds, and also provides segregated institutional managed accounts and institutional advisory sales. LOGiQ has assets under management or advisement and institutional advisory sales-related fee earning arrangements that are not managed or advised, totaling approximately $5.0 billion as at June 30, 2017.
The company will host a conference call on Tuesday August 15, 2017 at 8:30am EDT. The conference call will be chaired by Joe Canavan, President and Chief Executive Officer. The number to use for this call is Toronto local (416) 764-8608 or toll-free (+1) 888-664-6370, Conference ID: 99200208. Please call in at least 10 minutes prior to the call.
Notice to Reader: Use of Non IFRS Measures and Forward-Looking Statements:
- Adjusted EBITDA and EBITDA: Adjusted EBITDA and EBITDA as defined above, are not standardized earnings measures prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Such measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS, such as Net income ( loss) to controlling interest; however, management believes that most of its shareholders, creditors, other stakeholders and investment analysts find these measures useful performance benchmarks in analyzing LOGiQ’s results, as an important indicator to of the Company’s ability to generate operating cash flows and are important measures to increase comparability of performance between periods.
- 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”, “can”, “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. 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.
For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the annual financial statements and management discussion and analysis for the year ended September 30, 2016 of Front Street Capital, both of which are available on SEDAR under the Company’s profile at www.sedar.com in addition to the unaudited condensed consolidated interim financial statements for the three and nine month periods ended June 30, 2017 together with the corresponding Management’s Discussion and Analysis for additional risk factors described under “Risk Management”.
Joe Canavan
President & Chief Executive Officer
(416) 583-2300
LOGiQ Asset Management Inc.
Mary Anne Palangio
Chief Financial Officer
(416) 583-2300
