LOGiQ Asset Management Inc. Announces 2017 First Quarter Results
Marketwired
TORONTO, ONTARIO--(Marketwired - Feb 14, 2017) - LOGiQ Asset Management Inc. ("LOGiQ" or the "Company") (LGQ.TO) announces it has filed its Condensed Consolidated Interim Financial Statements for the quarter ended December 31, 2016 and related Management's Discussion and Analysis with Canadian securities regulatory authorities.
As previously announced by LOGiQ on December 8, 2016, the vendors of LOGiQ Capital 2016 (formerly Front Street Capital 2004)("Front Street Capital") and Tuscarora Capital Inc. ("Tuscarora"), and LOGiQ completed a transaction to combine their respective companies, creating a new, leading independent asset management firm. "Our vision for LOGiQ Asset Management is that in a time of massive industry disruption we can bring together an extraordinary team of managers, traders and analysts. We will have fewer, larger funds in three distinct verticals: specialized equities; specialized yield; and alternatives, offering Canadians access to a single source for sophisticated investing" said newly appointed LOGiQ CEO, Joe Canavan. "Combining these three firms and then acquiring the Institutional Advisory Group, from Integra Capital Limited, with $2.5 billion in institutional fee earning assets adds important scale benefits. We brought all these firms and decades of portfolio management experience together under the LOGiQ banner which has numerous benefits for advisors and their clients. Our financial strength, leadership team, leverage with vendors to reduce fund and corporate operating costs and synergies at the corporate level as well as improved fund performance."
Investors and readers of the Condensed Consolidated Interim Financial Statements for the quarter ended December 31, 2016 and related Management's Discussion and Analysis are cautioned that the results for the period are not necessarily indicative of the ongoing operations of the business because the results include a full quarter of former Front Street Capital, 24 days each of LOGiQ (formerly Aston Hill Financial Inc.) and Tuscarora, and eight days of results from the Institutional Advisory Group.
Financial Highlights
(in thousands of dollars, except assets under management, fee earning arrangements and per share amounts)
As at December
As at December
As at September
31, 2016
31, 2015
30, 2016
Assets under management (in $billions)
$
2,786
$
738
$
877
Institutional advisory sales-related fee earning arrangements (in $billions)
$
2,465
$
Nil
$
Nil
Total fee earning arrangements and assets under management (in $billions)
$
5,251
$
738
$
877
Total assets
$
92,337
$
9,138
$
7,747
Shares outstanding
327,124,503
107,562,666
107,562,666
December 31,
December 31,
September 30,
For the three months ended
2016
2015
2016
Total revenues
$
6,819
$
4,025
$
3,925
Total expenses excluding finance expense
8,088
3,994
4,008
Total finance expense (income)
138
-
-
(Loss) income before income taxes
$
(1,407
)
$
31
$
(83
)
Income tax (recovery) expense
$
(140
)
$
-
$
-
Net income (loss)
$
(1,267
)
$
31
$
(83
)
Net income to non-controlling interest
3
-
-
Net income (loss) to controlling interest
$
(1,270
)
$
-
$
-
Per share - Basic
$
(0.008
)
$
0.000
$
(0.001
)
Per share - Diluted
$
(0.008
)
$
0.000
$
(0.001
)
LOGiQ's Assets under Management or advisement ("AUM") increased from $877 million at September 30, 2016 to $2.8 billion at December 31, 2016. The higher AUM is mainly the result of the combination of LOGiQ (formerly Aston Hill Financial Inc.) and Front Street Capital. During the first quarter, gross sales of mutual funds were $16 million resulting in net redemptions of $27 million for the combined firm. At December 31, 2016, LOGiQ also had $2.5 billion of institutional advisory sales-related fee earning arrangements in respect of assets that are neither managed nor advised that are incremental to the $2.8 billion AUM.
For the first quarter, LOGiQ revenues were $6.8 million, an increase of 74% from the prior quarter revenues of $3.9 million. The revenue increase was mainly due to the combination of LOGiQ (formerly Aston Hill Financial Inc.) and Front Street Capital. Revenue generated by LOGiQ-managed investment funds increased as a percentage of total revenue (currently 92.4% compared to 88.9% in the prior quarter) as management remains focused on in-house managed mutual fund growth.
Percent of Revenues by Source for Three Months Ended December 31, 2016
LOGiQ Managed Investment Funds
92.4
%
Institutional, Institutional Advisory Sales-related Fee Earning Arrangements, and Other
3.7
%
Sub-Advisory Mandates
2.3
%
Brokerage
1.6
%
Total expenses (excluding finance expense) for the first quarter were higher at $8.1 million as compared to $4.0 million for the prior quarter. The higher corporate expense is mainly due to the combination of LOGiQ and Front Street Capital.
Adjusted EBITDA (before stock-based compensation, impairment losses, and net investment gains or losses) for the first quarter was $2.0 million, a 107.3% increase from the prior quarter adjusted EBITDA of $988,000 due mainly to the combining of LOGiQ and Front Street Capital. Net loss for the quarter was $1.3 million, as compared to a net loss in the prior quarter of $83,000, reflecting the aforementioned intangible asset impairment loss in the previous quarter.
Summary of Acquisition of certain Global Advisory Agreements from Integra Capital Limited
On December 22, 2016, LOGiQ entered into an agreement to purchase certain Global Advisory agreements from Integra Capital Limited to form the foundation for its new Institutional Advisory Group. This agreement built on LOGiQ's vision to be a fully-integrated and diversified investment management firm with complementary businesses in all facets of the investment management industry.
LOGiQ wishes to clarify that, further to its press release dated December 22, 2016, as a result of its acquisition of certain Global Advisory agreements from Integra Capital Limited, LOGiQ has institutional advisory sales-related fee earning arrangements in respect of assets that are neither managed nor advised by LOGiQ, totaling approximately $2.5 billion as of December 31, 2016.
Impacts on Q1 2017 Results
Closing of reverse acquisition transaction between Front Street and Aston Hill to form LOGiQ on December 8, 2016 and subsequently commencing trading on the Toronto Stock Exchange as LOGiQ under the ticker symbol "LGQ" on December 14, 2016.
Concurrent with closing the reverse acquisition on December 8, 2016, amending the terms of former Aston Hill's convertible debentures, which, as amended, commenced trading on the Toronto Stock Exchange on December 14, 2016, under the ticker symbol "LGQ.DB". Such amendments included:
amending the maturity date from January 31, 2019 to June 30, 2021;
reducing (in part by virtue of a partial repayment through the issuance of Common shares) the aggregate principal amount of the debentures from $33.7 million to $20.2 million;
increasing the interest rate on the Debentures from 6.50% to 7.00% and changing the corresponding interest payment dates from January 31 and July 31 to June 30 and December 31 of each year;
changing the conversion price for each Common Share to be issued upon the conversion of the Debentures from the existing $0.65 per share to $0.30 per share;
removing the ability of the Company to repay the redemption price, principal amount or accrued interest in Common Shares; and
introducing certain negative covenants in respect of the Company that will provide added protection to the holders of the Debentures.
Completion, on December 20, 2016, of a non-brokered private placement consisting of the issuance of an aggregate of 34.4 million common shares in the capital of the Company (each, a "Common Share") at a price of $0.15 per Common Share for gross proceeds of $5.2 million. Finder's fees of 6% cash and 6% in broker warrants exercisable for 24 months from the date of closing of the private placement at $0.15 per common share were paid in connection with the private placement.
The acquisition of certain Global Advisory agreements from Integra Capital Limited on December 22, 2016.
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 $5.3 billion.
LOGiQ also confirms that following the reverse acquisition transaction between LOGiQ, Front Street Capital and Tuscarora, PricewaterhouseCoopers LLP, Chartered Professional Accountants will act as auditor to LOGiQ as successor.
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 LOGiQ'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 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. 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.
