TORONTO, ONTARIO--(Marketwired - Jan. 2, 2018) - LOGiQ Asset Management Inc. ("LOGiQ" or the "Company") (TSX:LGQ) announces it has released its Audited Consolidated Financial Statements for the year ended September 30, 2017 and related Management's Discussion and Analysis.
"2017 has been a transformative year for the Company," said President and Chief Executive Officer, Joe Canavan. "As we prepared for the transition of the Company out of the retail funds business, we have made progress in re-aligning our balance sheet and reducing our debt levels."
Significant highlights of the Company during the year ended September 30, 2017 include:
- The approval on November 22, 2016 of the holders of the Company's 6.50% extendible convertible unsecured debentures of certain amendments, including, amongst other things, a reduction in the conversion price, an increase in the interest rate on the debentures to 7.00%, an extension of the maturity date to June 30, 2021, and increasing the number of common shares in the Capital of the Company that each debentureholder would receive for each $1,000 principal amount of debentures held by such debentureholder on closing of the transaction (the "FSC Transaction") of the Company to combine with LOGiQ Capital 2016 (formerly Front Street Capital 2004)("LGQ2016") and Tuscarora Capital Inc. ("TCI"), as more particularly described in the joint management information circular of the Company dated October 14, 2016, as supplemented by supplement to the joint management information circular dated November 9, 2016.
- The closing of the FSC Transaction on December 8, 2016 and the subsequent integration of LOGiQ, LGQ2016, TCI and LOGiQ Asset Management Ltd. (formerly Aston Hill Asset Management Inc.) ("LAML").
- The appointment of Joe Canavan as President and Chief Executive Officer of the Company.
- The Company's completion of a non-brokered private placement for gross proceeds of $5.2 million on December 20, 2016.
- The acquisition (the "Global Partners Acquisition") by LAML of certain agreements from Integra Capital Limited ("ICL") to form the foundation for the Company's Global Partners Group (the "Global Partners business") on December 22, 2016, and the Global Partners business being successfully rebranded, and assets for which LAML shares in sales-related fee earning arrangements for such business growing $410 million in the year to total approximately $2.9 billion as at September 30, 2017.
- The Company's entering into of a 24-month secured working capital term loan facility (the "RCM Credit Facility") for an amount of up to $6 million and bearing interest on drawn amounts between 16% and 19% per annum with R.C. Morris & Company Special Opportunities Fund III LP.
- A Special Committee of independent members of the Board of Directors being formed to review strategic options for LOGiQ.
- The announcement on September 11, 2017, of the Company entering into a purchase and sale agreement with Purpose Investments Inc. ("Purpose") providing for the acquisition by Purpose of substantially all of the retail asset management agreements owned by LOGIQ and its affiliates (the "Purpose Transaction").
| |
|
|
|
|
|
|
| Selected annual financial information |
| (in thousands of Canadian dollars, except per share numbers) |
| |
|
|
|
|
|
|
| |
|
2017 |
|
|
2016 |
|
| |
|
|
|
|
|
|
|
|
| Total (from continuing and discontinued operations) |
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
28,287 |
|
|
$ |
14,892 |
|
| Net loss for the year |
|
|
(19,568 |
) |
|
|
(75 |
) |
| EBITDA |
|
|
(16,987 |
) |
|
|
(75 |
) |
| Adjusted EBITDA |
|
|
(1,386 |
) |
|
|
(75 |
) |
| Net loss per share, basic & diluted |
|
|
(0.069 |
) |
|
|
(0.001 |
) |
| |
|
|
|
|
|
|
|
|
| From continuing operations |
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
4,272 |
|
|
$ |
- |
|
| Net loss for the year |
|
|
(11,027 |
) |
|
|
- |
|
| EBITDA |
|
|
(8,323 |
) |
|
|
- |
|
| Adjusted EBITDA |
|
|
(4,030 |
) |
|
|
- |
|
| Net loss per share, basic & diluted |
|
|
(0.039 |
) |
|
|
- |
|
| |
|
|
|
|
|
|
|
|
| From discontinued operations |
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
24,015 |
|
|
$ |
14,892 |
|
| Net loss for the year |
|
|
(8,541 |
) |
|
|
(75 |
) |
| EBITDA |
|
|
(8,664 |
) |
|
|
(75 |
) |
| Adjusted EBITDA |
|
|
2,644 |
|
|
|
(75 |
) |
| Net loss per share, basic & diluted |
|
|
(0.030 |
) |
|
|
(0.001 |
) |
| |
|
|
|
|
|
|
|
|
| Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
| (thousands) |
|
|
|
|
|
|
|
|
| Basic and diluted |
|
|
284,447 |
|
|
|
107,563 |
|
| |
|
|
|
|
|
|
|
|
| Financial Position, at September 30 |
|
|
2017 |
|
|
|
2016 |
|
| Assets |
|
|
|
|
|
|
|
|
| |
from continuing operations |
|
|
53,143 |
|
|
|
7,001 |
|
| |
from discontinued operations |
|
|
29,448 |
|
|
|
746 |
|
| Total assets |
|
$ |
82,591 |
|
|
$ |
7,747 |
|
| Liabilities |
|
|
|
|
|
|
|
|
| |
from continuing operations |
|
|
69,061 |
|
|
|
4,566 |
|
| |
from discontinued operations |
|
|
- |
|
|
|
296 |
|
| Total liabilities |
|
$ |
69,061 |
|
|
$ |
4,862 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Notes:
- The September 30, 2016 results are for former LGQ2016 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 share based compensation, impairment losses, and net (gains) losses on financial assets and liabilities at fair value through profit or loss. See "Use of Non-IFRS measures" below.
- As a result of the agreement to sell the retail asset management business during the fourth quarter of the fiscal year ended September 30, 2017, the financial results of the retail asset management business have been reported as discontinued operations and comparative results have been reclassified.
| |
| Assets under Management, Advisory, and Other |
| |
| |
|
|
|
|
|
|
|
|
|
|
(in millions of Canadian dollars) |
|
September
30, 2017 |
|
June 30,
2017 |
|
March 31,
2017 |
|
December
31, 2016 |
|
September
30, 2016 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets Under Management, Advisory, Brokerage and Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Managed funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Open end funds |
|
$ |
722 |
|
$ |
773 |
|
$ |
872 |
|
$ |
1,135 |
|
$ |
566 |
| Closed end funds |
|
|
557 |
|
|
662 |
|
|
703 |
|
|
688 |
|
|
- |
| Hedge funds |
|
|
183 |
|
|
184 |
|
|
196 |
|
|
197 |
|
|
224 |
| Total LOGiQ managed funds |
|
$ |
1,462 |
|
$ |
1,619 |
|
$ |
1,771 |
|
$ |
2,020 |
|
$ |
790 |
| Sub-advised funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Open end funds |
|
|
163 |
|
|
166 |
|
|
169 |
|
|
175 |
|
|
87 |
| Closed end funds |
|
|
8 |
|
|
10 |
|
|
15 |
|
|
14 |
|
|
- |
| Total sub-advised funds |
|
$ |
171 |
|
$ |
176 |
|
$ |
184 |
|
$ |
189 |
|
$ |
87 |
| Other assets |
|
|
245 |
|
|
313 |
|
|
331 |
|
|
321 |
|
|
- |
| Total Assets under Management, Advisory, Brokerage and Other |
|
$ |
1,878 |
|
$ |
2,108 |
|
$ |
2,286 |
|
$ |
2,530 |
|
$ |
877 |
| Assets for which institutional sales-related fee earning contracts apply |
|
$ |
2,910 |
|
$ |
2,901 |
|
$ |
2,550 |
|
$ |
2,465 |
|
$ |
- |
| Total Fee earning assets |
|
$ |
4,788 |
|
$ |
5,009 |
|
$ |
4,836 |
|
$ |
4,995 |
|
$ |
877 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOGiQ's Assets Under Management, Advisory and Administration ("AUM") increased $1 billion year-over-year from $877 million to $1.9 billion at September 30, 2017. The higher AUM is mainly the result of the combination of LOGiQ, LAML, LGQ2016 and Global Partners business during the first quarter. During the year, subscriptions, redemptions and performance of mutual funds resulted in a net decrease in LOGiQ managed funds AUM of $79 million, offset by AUM acquired through business combinations and sale of $1.2 billion. At September 30, 2017, LOGiQ also had $2.9 billion of institutional advisory sales-related fee earning arrangements in respect of assets that are neither managed nor advised that are incremental to the AUM.
For the year ended September 30, 2017, LOGiQ revenues increased to $28.3 million from the prior year's revenues of $14.9 million. The revenue increase was due to the business combinations which occurred during the first quarter.
Net loss for the year was $19.6 million, made up of a net loss from continuing operations of $11 million and a net loss from discontinued operations of $8.6 million, as compared to a net loss in 2016 of $ 0.08 million. This is primarily the result of the business combinations, restructuring charges of $3,765 and the impairment charges against the intangible assets and goodwill in the amount of $16.6 million. Management determined that continued decline of AUM and the potential proceeds of the Purpose Transaction were an indicator of impairment and performed appropriate testing to determine recoverable value.
Updates Subsequent to September 30, 2017 Year End
- On December 15, 2017, the Company closed the Purpose Transaction, whereby the Company sold substantially all of its retail asset management agreements to Purpose for cash proceeds of approximately $32 million.
- Concurrent with the closing of the Purpose Transaction, the outstanding balance and interest under the RCM Credit Facility which was drawn in November, 2017 and was subsequently repaid in full, following which the RCM Credit Facility was terminated.
- As a result of the approval of the Purpose Transaction at a special meeting of the debenture holders on December 8, 2017, and the subsequent closing of the Transaction, certain amendments to the indenture governing the Company's 7.000% senior unsecured convertible debentures due June 30, 2021 became effective December 15, 2017, as more particularly described in the Company's press release dated
December 15, 2017.
- The Company commenced a strategic review of its remaining businesses and commenced to actively seek a merger partner, which may include a concurrent or subsequent sale of some or all of its remaining assets.
- The Company has also significantly reduced operating expenses for the continuing operations, including moving to lower cost and smaller space, reducing headcount and exiting contracts where appropriate.
- On December 28, 2017, Ben Cheng, formerly the Chief Investment Officer for the Company who has been on a leave of absence since September 9, 2016, advised the Board of Directors and management that he is leaving the Company to pursue other opportunities, effective immediately.
- On December 29, 2017, the Company used a portion of the cash proceeds received from the Purpose Transaction to repay the approximately $6.1 million of indebtedness outstanding owed to ICL representing the balance of the purchase price for the Global Partners Acquisition.
About LOGiQ:
LOGiQ (logiqasset.com) is a diversified asset management company focused on the integration of business acquisitions, achievement of synergies, pursuit of merger, acquisition, partnership and divestiture opportunities, growing its suite of product offerings and enhanced delivery with its goal to achieve the benefits of greater scale for its stakeholders. Excluding the retail assets under management that were the subject of the Purpose Transaction, LOGiQ had assets under management or advisement and institutional advisory sales-related fee earning arrangements that are not managed or advised, totaling over $3.1 billion as at September 30, 2017.
The TSX has neither approved nor disapproved the information contained herein.
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, 2017 of the Company, both of which are available on SEDAR under the Company's profile at www.sedar.com.